New York Appellate Court Affirms Motion to Compel Arbitration Under the FAA and Dismissal of Putative Class Claims Against WWHGD Client
This case arose when the Plaintiff, Lisa Vitiello, brought a putative class action against WWHGD client, Home Buyers Warranty Corporation (“HBW”). Plaintiff alleged that HBW violated New York law for including a mandatory arbitration clause in its Limited Express Warranty program implemented in her construction contract with the builder of her home. Prior to bringing her putative class action against HBW, Plaintiff initiated arbitration against her home builder for alleged construction defects. The arbitration panel determined that some of the defects were covered by the terms of her limited warranty issued by the builder (and administered by HBW) while others were not. Dissatisfied with that decision, the Plaintiff then brought a separate action against the builder in NY state court claiming her warranty violated NY law, that her arbitration agreement was void, and that her claims against the builder were covered by NY’s statutory implied warranty. In that separate action, the trial court determined the arbitration agreement was void in connection with her claims against the builder. Emboldened by that ruling, the Plaintiff then brought a separate putative class action against HBW as the administrator of the warranty seeking to recoup fees she paid in arbitration and for other damages for herself and all others “similarly situated” in NY. Despite its prior ruling against the builder, the same trial court granted HBW’s motion to compel arbitration under the FAA and dismissed the putative class claims. The trial court agreed with WWHGD’s argument that HBW’s warranty affects interstate commerce and that Plaintiff’s state law claims against HBW were preempted by the FAA, mandating arbitration. The Plaintiff appealed that decision.
On appeal, the appellate court affirmed and agreed with WWHGD’s position that the FAA preempted the Plaintiff's state law claims, that her arbitration agreement was valid and enforceable, and that her putative class claims were subject to dismissal under the terms of the warranty.