## Facts

- Mehdi Noohi and Soheyla Bolouri contracted with a Toll Brothers affiliate to purchase a pre-construction luxury home in Maryland and paid $77,008 in deposits.
- The agreement required the buyers to pursue mortgage financing in good faith and to meet specified timing and documentation requirements.
- If financing was not obtained within a set period, the seller could extend the period or declare the agreement void and refund the deposit.
- The buyers applied to multiple lenders; a loan commitment was issued and later rescinded, and other applications were denied.
- Toll Brothers refused to return the deposits, asserting the financing contingency was satisfied or that the buyers failed to comply with financing-related obligations.
- The agreement included an arbitration provision requiring the purchasers to arbitrate disputes against Toll Brothers, without a corresponding obligation requiring Toll Brothers to arbitrate its claims against the purchasers.

## Issues

1. Whether the court of appeals had interlocutory jurisdiction under 9 U.S.C. § 16(a) to review an order denying a motion to compel arbitration and stay the action.
2. Whether, under Maryland contract law, the arbitration provision was unenforceable for lack of mutual consideration because it required only the purchasers to arbitrate.
3. Whether applying Maryland’s mutuality-of-consideration requirement to invalidate the arbitration provision was preempted by the Federal Arbitration Act.

## Decision

- The Fourth Circuit held it had jurisdiction under 9 U.S.C. § 16(a) to review the denial of arbitration.
- The court affirmed the district court’s order denying Toll Brothers’ motion to compel arbitration and stay the case.
- The court held the arbitration clause was unenforceable under Maryland law because, treated as a severable agreement, it lacked mutual consideration where only the buyers were bound to arbitrate.
- The court held the Federal Arbitration Act did not preempt Maryland’s generally applicable contract rule requiring consideration for a stand-alone arbitration agreement.

## Legal Principles

- Under the FAA, interlocutory appellate review is available from an order denying a stay pending arbitration or denying a petition to compel arbitration.  
- Maryland law treats an arbitration provision as severable and requires it, as an independent agreement, to be supported by consideration.  
- A one-sided arbitration clause that binds only one party to arbitrate, while leaving the other free to litigate, can fail for lack of mutual consideration under Maryland law.  
- The FAA permits arbitration agreements to be invalidated by generally applicable state-law contract defenses; state consideration doctrines are not preempted when they do not single out arbitration for disfavored treatment.

## Conclusion

The Fourth Circuit allowed the purchasers’ claims to proceed in court because the home-sale agreement’s arbitration clause imposed arbitration only on the buyers, rendering the clause unsupported by mutual consideration under Maryland law, and that state-law basis for invalidation was not preempted by the FAA.


Noohi v. Toll Bros., Inc., 709 F.3d 599 (4th Cir. 2013)