## Facts

- James and Clara Van Blarcum bought a manufactured home from Nationwide Housing Systems, Inc.; American Homestar of Lancaster, Inc. manufactured the home, and a finance company financed the purchase.
- At closing, the purchasers received a written warranty and executed a retail installment contract and a separate arbitration provision.
- The arbitration provision required “final and binding arbitration” for all disputes related to the sale, purchase, or occupancy of the home, including warranty, statutory, tort, and deceptive-trade-practices claims.
- The arbitration provision stated it was governed by the Federal Arbitration Act (FAA) and extended its benefits to the manufacturer as if it were a signatory.
- After installation, the purchasers alleged numerous defects that were not remedied and sued the manufacturer, retailer, and finance company for violations of the Magnuson-Moss Warranty Act (MMWA), Texas Deceptive Trade Practices Act, Texas Manufactured Housing Standards Act, and for breach of express and implied warranties.
- The trial court granted the defendants’ motion to compel arbitration, stayed the case, and ordered arbitration.
- The court of appeals granted mandamus relief to the purchasers, concluding the MMWA barred enforcement of predispute binding arbitration in consumer warranty disputes and directing the trial court to vacate its order compelling arbitration.
- The manufacturer and retailer sought mandamus relief in the Texas Supreme Court.

## Issues

1. Whether the MMWA contains a congressional command that precludes enforcing a predispute binding arbitration agreement for consumer warranty and related statutory claims, thereby displacing the FAA.
2. Whether FTC regulations concerning MMWA “informal dispute settlement mechanisms” render a separate FAA-governed binding arbitration agreement unenforceable.
3. Whether mandamus relief is proper to correct an appellate order that prevents enforcement of an arbitration clause compelled by the FAA.

## Decision

- The Texas Supreme Court held that the MMWA does not prohibit enforcement of predispute binding arbitration agreements covering written warranty claims and related disputes.
- The Court concluded the MMWA does not override the FAA’s requirement that arbitration agreements be enforced according to their terms.
- The Court rejected reliance on FTC regulations governing MMWA informal dispute settlement mechanisms as a basis to bar FAA-governed arbitration.
- The Court conditionally granted mandamus relief and directed the court of appeals to vacate its order that had prevented arbitration, leaving the trial court’s order compelling arbitration in effect.

## Legal Principles

- Arbitration agreements governed by the FAA must be enforced unless Congress clearly intended to preclude arbitration of the statutory rights at issue, as shown by statutory text, legislative history, or an inherent conflict with the statute’s purposes.
- The MMWA’s silence on arbitration does not supply a prohibition on binding arbitration of warranty disputes.
- FTC rules describing nonbinding “informal dispute settlement mechanisms” under the MMWA do not, by themselves, create a statutory bar to separate binding arbitration agreements governed by the FAA.
- A broad arbitration clause that covers warranty and consumer-protection disputes can require arbitration of both federal MMWA claims and related state-law claims when no statutory prohibition applies.
- Mandamus relief is available to correct a clear abuse of discretion that improperly denies or interferes with a party’s right to arbitrate under an enforceable FAA-governed agreement.

## Conclusion

The Texas Supreme Court held that the Magnuson-Moss Warranty Act does not bar predispute binding arbitration and therefore does not displace the FAA; the court conditionally granted mandamus and required the court of appeals to remove its obstacle to enforcing the arbitration order.


In re American Homestar of Lancaster, Inc., 50 S.W.3d 480 (Tex. 2001)