Toll Brothers, Inc. is a real estate development company that builds and sells luxury homes across the country. Spouses Mehdi Noohi and Soheyla Bolouri (plaintiffs) deposited a total of $77,008 toward the $1,006,975 purchase price of a Toll Brothers home to be built in Maryland. The agreement for sale included an arbitration clause that required the plaintiffs—but not Toll Brothers—to submit to arbitration any disputes regarding the agreement. The agreement of sale required that the plaintiffs seek a mortgage to finance the purchase of the home. The plaintiffs applied for a mortgage from many lenders but could not get approval for a loan. Toll Brothers had not yet started to build the home and had incurred no costs at the time plaintiffs sought to rescind the agreement and obtain the return of their deposit. When Toll Brothers refused to return the deposit, the plaintiffs sued Toll Brothers in U.S. district court for breach of contract individually and on behalf of a class of other prospective buyers who allegedly lost deposits to Toll Brothers in a similar manner. Toll Brothers made a motion to have the case removed for arbitration pursuant to the arbitration clause in the agreement. The plaintiffs asserted that the arbitration clause was unenforceable because it lacked mutuality of consideration because it required only the buyer—but not the seller—to submit disputes to arbitration. 

Had Toll Brothers given consideration for the arbitration agreement? 

Noohi v. Toll Brothers, Inc., 708 F.3d 599, 2013 U.S. App. Lexis 4188 (United States Court of Appeals for the Fourth Circuit, 2013)

Answer rating: 100% (QA)

The court held that the arbitration clause was enforceable because it was supported ... View the full answer