Opinion Information Sheet

			

        IN THE SUPREME COURT OF THE STATE OF WASHINGTON

DONIA TOWNSEND and BOB PEREZ,                       )
individually, on behalf of their marital            )      No. 84422-4
community, and as class representatives;            )
PAUL YSTEBOE and JO ANN YSTEBOE,                    )
individually, on behalf of their marital            )      En Banc
community, and as class representatives;            )
VIVIAN LEHTINEN and TONY LEHTINEN,                  )
individually, on behalf of their marital            )
community, and on behalf of their minor             )
children, NIKLAS and LAUREN;                        )
JON SIGAFOOS and CHRISTA SIGAFOOS,                  )
individually, on behalf of their marital            )
community, and on behalf of their minor             )
children, COLTON and HANNAH,                               )
                                                    )
                      Petitioners,                  )
                                                    )
       v.                                           )
                                                    )
THE QUADRANT CORPORATION, a                         )
Washington corporation; WEYERHAEUSER                )
REAL ESTATE COMPANY, a Washington                   )
corporation; and WEYERHAEUSER                       )
COMPANY, a Washington corporation,                  )
                                                    )
                      Respondents.                  )
                                                    )      Filed January 5, 2012

       ALEXANDER, J.* -- We granted review of a decision of the Court of Appeals in 

which that court reversed the superior court's denial of a motion by a corporate home 

seller and its parent companies to compel certain  home purchasers to engage in 

       *Justice Gerry L. Alexander is serving as a justice pro tempore of the Supreme 
Court pursuant to Washington Constitution article IV, section 2(a). 

No. 84422-4

arbitration pursuant to an arbitration clause in the purchase and sale agreement. We 

affirm the Court of Appeals.

                                                I

       Donia Townsend and Bob Perez (Townsend), Paul and Jo Ann Ysteboe, Vivian 

and Tony Lehtinen, and Jon and Christa Sigafoos                   (collectively Homeowners) 

purchased homes from the Quadrant Corporation (Quadrant). Quadrant, which builds 

and sells homes, is owned by Weyerhaeuser Real Estate Company (WRECO), which, 

in turn, is owned  by the Weyerhaeuser Company (Weyerhaeuser).  At the time of

purchase, each couple       entered into a purchase and sale agreement (PSA)                with 

Quadrant. The PSA contained a clause that required that

       [a]ny controversy or claim arising out of or relating to this agreement, any 
       claimed breach of this agreement, or any claimed defect relating to the 
       property, including without limitation, any claim brought under the 
       Washington State Consumer Protection Act (but excepting any request by 
       Seller to quiet title to the Property) shall be determined by arbitration.
Clerk's Papers (CP) at 640.1

       Several years after the home purchases, Townsend and the  Ysteboes jointly 

filed a lawsuit in King County Superior Court against Quadrant, WRECO,                      and 

Weyerhaeuser,      alleging outrage, fraud, unfair business practices, negligence, 

negligent misrepresentation, rescission, and breach of warranty. In support of these 

allegations, they claimed that Quadrant knowingly engaged in shoddy workmanship in 

building the homes and that this resulted in serious construction defects that caused

       1The arbitration clauses contained in the respective PSAs are not identical, but 
the parties appear to agree that any distinction in the language is insignificant.

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No. 84422-4

personal injuries relating to mold, pests, and poisonous gases. They also claimed that 

the PSA, as well as the arbitration clause contained therein, is unenforceable.

       Shortly after Quadrant received notice of the lawsuit, it filed a motion to stay 

proceedings and compel arbitration. At about               the same time, WRECO and 

Weyerhaeuser filed a motion for summary judgment contending that, aside from the 

parent-subsidiary relationship with Quadrant, "neither [WRECO] nor Weyerhaeuser . . . 

has any connection to the plaintiffs or their houses." CP at 61. The superior court 

denied these motions. 

       The Lehtinens and Sigafoos, individually and on behalf of their minor children, 

then each separately filed a lawsuit against Quadrant, WRECO, and Weyerhaeuser,

asserting causes of action identical to those asserted by Townsend and the Ysteboes. 

A  King County Superior Court judge consolidated all of the actions filed by the 

Homeowners for "pretrial purposes." CP at 144.

       Quadrant again moved to compel arbitration and WRECO and Weyerhaeuser 

sought similar relief. The superior court denied the motions, concluding that there were 

issues  of fact about whether the PSA was a negotiated contract or a contract of 

adhesion. 

       On appeal, the Court of Appeals, Division One, reversed the superior court, 

concluding that  "[t]he issue of the PSA's procedural unconscionability is a matter 

reserved for the arbitrator." Townsend v. Quadrant Corp., 153 Wn. App. 870, 885, 224 

P.3d 818 (2009) (citing RCW 7.04A.060(3)). That court also determined that the claims 

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No. 84422-4

of the children of the Homeowners' were subject to the arbitration clause and that 

WRECO and Weyerhaeuser did not waive their right to arbitration by moving for 

summary judgment. We  thereafter  granted the Homeowners' petition                  for review.

Townsend v. Quadrant Corp., 169 Wn.2d 1021, 238 P.3d 504 (2010).

                                               II

       We engage "in de novo review of a trial court's decision granting a motion to 

compel or deny arbitration." Satomi Owners Ass'n v. Satomi, LLC, 167 Wn.2d 781, 797, 

225 P.3d 213 (2009) (citing Adler v. Fred Lind Manor, 153 Wn.2d 331, 342, 103 P.3d 

773 (2004)). "'The party opposing arbitration bears the burden of showing that the 

agreement is not enforceable.'" Id. (quoting Zuver v. Airtouch Commc'ns, Inc., 153 

Wn.2d 293, 302, 103 P.3d 753 (2004)).

                                               III

       The  primary    issue before us is whether the procedural unconscionability 
question presented by these facts is one to be decided by an arbitrator or the court.2

The Homeowners contend that "where there is a challenge to an integrated arbitration 

clause, the court, not an arbitrator, must evaluate evidence of contract formation when 

determining whether an arbitration provision is procedurally unconscionable." Pet'rs'

Suppl. Br. at 12. Quadrant, WRECO, and Weyerhaeuser respond that the question is 

to be decided by an arbitrator, rather than the court, because the Homeowners framed 

       2The Court of Appeals determined that "the arbitration clause is not substantively 
unconscionable" because it neither explicitly nor in effect prevents the Homeowners 
from resolving their claims in a single class action. Townsend, 153 Wn. App. at 883. 
The Homeowners have not challenged that decision here.

                                               4 

No. 84422-4

the procedural unconscionability issue in terms of the PSA generally, rather than "only and 

specifically" as to the arbitration clause. Answer to Pet. for Review at 11.

       The Court of Appeals agreed with Quadrant and its parent companies, holding

that under these facts the question of procedural unconscionability is for an arbitrator to 

decide because the Homeowners challenged the enforceability of the PSA as a whole. 

It said that under RCW 7.04A.060(2), "a court may entertain only a challenge to the 

validity of the arbitration clause itself, not a challenge to the validity of the contract 

containing the arbitration clause." Townsend, 153 Wn. App. at 879-80 (citing McKee v. 

AT&T Corp., 164 Wn.2d 372, 394, 191 P.3d 845 (2008)).

       In reaching its decision, the Court of Appeals looked to provisions of the uniform 

arbitration  act (UAA),   chapter 7.04A RCW.        Although it   acknowledged that courts 

generally apply the rules of statutory construction only after deeming a               statutory 

provision ambiguous, the Court of Appeals turned to the official comments to the UAA

prior to examining the relevant statute for ambiguity. Townsend, 153 Wn. App. at 878 

n.7 (citing Cerrillo v. Esparza, 158 Wn.2d 194, 201, 142 P.3d 155 (2006)). It properly 

did so because "RCW 7.04A.901 requires that '[i]n applying and construing this uniform 

act, consideration must be given to the need to promote uniformity of the law with 

respect to its subject matter among states that enact it.'" Id. (alteration in original)

(citing Lewis River Golf, Inc. v. O.M. Scott & Sons, 120 Wn.2d 712, 718, 845 P.2d 987 

(1993) (citing the official Uniform Commercial Code (U.C.C.) comments in its analysis 

of U.C.C. § 1 -- 106); Olmsted v. Mulder, 72 Wn. App. 169, 177, 863 P.2d 1355 (1993))).

                                               5 

No. 84422-4

       The Court of Appeals then set forth the statutory provisions that it considered

relevant to its inquiry: RCW 7.04A.060(3) states that an arbitrator "'shall decide . . .

whether a contract containing a valid agreement to arbitrate is enforceable'"               and

whether subsection (2) of that statute provides that the "'court shall decide whether an 

agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.'"

Townsend, 153 Wn. App. at 879 (quoting RCW 7.04A.060). The Court of Appeals also 

cited  a comment to the UAA,  which explains that the above-cited subsections are 

intended to

       "incorporate the holdings of the vast majority of state courts and the law 
       that has developed under the FAA [Federal Arbitration Act, 9 USC §§ 
       1 -- 14] that, in the absence of an agreement to the contrary, issues of 
       substantive arbitrability, i.e., whether a dispute is encompassed by an 
       agreement to arbitrate, are for a court to decide and issues of procedural 
       arbitrability, i.e., whether prerequisites such as time limits, notice, laches, 
       estoppel, and other conditions precedent to an obligation to arbitrate have 
       been met, are for the arbitrators to decide."

Id. at 879 (alteration in original) (quoting UAA § 6 cmt. 2, 7 U.L.A. 24 (2005)). The 

Court of Appeals further explained that comment 4 to section 6 of the UAA notes that 

the language in RCW 7.04A.060(3), "whether a contract containing a valid agreement 

to arbitrate is enforceable, is intended to follow the 'separability' doctrine outlined in

Prima Paint Corp. v. Flood & Conklin Manufacturing Co. [388 U.S. 395, 87 S. Ct. 1801, 

18 L. Ed. 2d 1270 (1967)]." Townsend, 153 Wn. App. at 880 (internal quotation marks 

omitted) (quoting UAA § 6 cmt. 4, 7 U.L.A. at 25). In Prima Paint, a corporation brought 

suit against another corporation to rescind a consulting agreement, claiming fraudulent 

inducement of the contract. The plaintiff, Prima Paint Corporation, did not, however, 

                                               6 

No. 84422-4

specifically allege fraud in the inducement of the arbitration clause within the contract. 

Applying the then-extant United States Arbitration Act of 1925 (9 U.S.C. §§ 1-14), the 

United States Supreme Court determined that "if the claim is fraud in the inducement of 

the arbitration clause itself -- an issue which goes to the 'making' of the agreement to 

arbitrate -- the federal court may proceed to adjudicate it," but that court cannot 

"consider claims of fraud in the inducement of the contract generally." Prima Paint, 388 

U.S. at 403-04.

       The United States Supreme Court reaffirmed its Prima Paint decision in Buckeye 

Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445, 126 S. Ct. 1204, 163 L. Ed. 2d 

1038 (2006). In Buckeye, individuals alleged that a company, Buckeye Check Cashing, 

had charged usurious interest rates under an agreement signed by the parties that 

contained an arbitration clause. The Court held that "because respondents challenge 

the Agreement, but not specifically its arbitration provisions, those provisions are 

enforceable apart from the remainder of the contract. The challenge should therefore 

be considered by an arbitrator, not a court." Id. at 446.

       After Buckeye was decided, we were presented in McKee with the question of 

whether the court or an arbitrator was to decide a challenge that was "only and 

specifically" directed to an arbitration clause in a consumer services agreement, rather 

than to the agreement as a whole. McKee, 164 Wn.2d at 394. We concluded there that 

the enforceability of the arbitration provision was to be decided by the court, not an 

arbitrator. In reaching our decision in McKee, we distinguished Buckeye on the basis 

                                               7 

No. 84422-4

that the challenges raised therein related only and specifically to the arbitration clause, 

whereas in Buckeye the challenge was directed to the contract as a whole rather than 

simply to the arbitration clause. Thus, we concluded that the court must decide whether 

the agreement to arbitrate was enforceable, whereas that question was properly 

reserved for an arbitrator in Buckeye.

       Here, as we have observed, the Court of Appeals concluded that an arbitrator 

should   decide whether the arbitration clause is enforceable. In                  making     its

determination, that court reviewed the record and observed that the Homeowners failed 

to allege facts relating specifically and only to the arbitration agreement but, instead, 

alleged facts "relat[ing] to the PSA as a whole." Townsend, 153 Wn. App. at 885. It 

further stated that the "Homeowners' challenge to the validity of the arbitration clause 

rests on their argument that the PSAs themselves were invalid for procedural 

unconscionability as contracts of adhesion." Id. Here we must similarly review the facts 

to determine whether the Homeowners' challenge to the arbitration clause is sufficiently 

discrete to be decided by the court under McKee or whether it is so wrapped into their 

general allegations regarding the PSA that both            issues  must be decided       by an 

arbitrator under Prima Paint and Buckeye. 

       In what the Homeowners titled their eighth cause of action in their complaint,

they asserted that the PSA was an adhesion contract and that the arbitration clause

within it was unenforceable. Significantly, they also asserted in that cause of action that 

their "claims for antecedent or subsequent fraud and for personal injury arise 

                                               8 

No. 84422-4

independently of the [PSA]; the arbitration clause contained therein is voidable and 

unenforceable on such claims." CP at 26. It is apparent, however, that they did not 

claim  that the arbitration clause itself was procured by fraud. Significantly, the 

Homeowners testified in pretrial proceedings that Quadrant told them the terms of the 

PSAs were not negotiable and that they had to agree to all of the terms, including the 

arbitration clause, in order to purchase a Quadrant home. They also claimed that they 

were denied the opportunity to review and question the terms of the agreements before 

signing them, they were subjected to "high-pressure sales tactics," and had they been 

told the truth, they "would never have agreed to purchase a Quadrant home, let alone 

enter  a purchase and sale agreement to buy a Quadrant home that contained an 

arbitration clause." CP at 674. In our view, each of the Homeowners' allegations pertain 

to the PSA as a whole because each time they separately mention the arbitration 

clause within the PSA, they do so by relating it to their general allegation that the PSA 

is  procedurally unconscionable. In sum, the Homeowners have framed their claims 

pertaining to the arbitration clause and the PSA in a way that renders the two 

inseparable.   In our view, one could decide whether the arbitration clause is 

unenforceable only by deciding whether the PSA as a whole is unenforceable.

       Under these facts, the Court of Appeals properly determined that because the 

facts alleged by the Homeowners relate to the PSA as a whole, the "issue of the PSA's 

procedural unconscionability is a matter reserved for the arbitrator." Townsend, 153 

Wn. App. at 885.

                                               9 

No. 84422-4

                                               IV

       We must also decide whether the Court of Appeals correctly  held that the 

children of the Lehtinens and Sigafoos are bound by the arbitration clause to the same 

extent as their parents. The Court of Appeals determined that the children's claims 

"relate to the PSA" and there is "no distinction in the complaints" between the children's 

claims and the parents' claims. Id. at 888. We affirm the Court of Appeals on this issue 

as well, but we do so for reasons that differ from those given by the Court of Appeals.

       As a general rule, nonsignatories are not bound by arbitration clauses. In 

Satomi, we held that "'"arbitration is a matter of contract and a party cannot be required 

to submit to arbitration any dispute which he has not agreed so to submit."'" Satomi, 

167 Wn.2d at 810 (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 

123 S. Ct. 588, 154 L. Ed. 2d 491 (2002) (quoting United Steelworkers v. Warrior & Gulf 

Nav. Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960))). However, 

courts have    recognized limited exceptions to this rule, including the principle of 

equitable estoppel. See id. at 811 n.22; Mundi v. Union Sec. Life Ins. Co., 555 F.3d 

1042, 1046 (9th Cir. 2009). Equitable estoppel "'"precludes a party from claiming the 

benefits of a contract while simultaneously attempting to avoid the burdens that 

contract imposes."'" Mundi, 555 F.3d at 1045-46 (quoting Comer v. Micor, Inc., 436 

F.3d 1098, 1101 (9th Cir. 2006) (quoting Wash. Mut. Fin. Group, LLC v. Bailey, 364 

F.3d 260, 267 (5th Cir. 2004))). In this regard, equitable estoppel may require a

nonsignatory to arbitrate a claim if that person, despite never having signed the 

                                              10 

No. 84422-4

agreement, "'"knowingly exploits"'" the contract in which the arbitration agreement is 

contained. Id. at 1046 (quoting Comer, 436 F.3d at 1101)  (quoting  E.I. DuPont de 

Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 199 (3d 

Cir. 2001))).

       Here, the Lehtinens and Sigafoos contend that their children "do not attempt to 

enforce the terms of the PSAs, nor do they base their claims on any alleged warranty 

contained in them." Pet'rs' Suppl. Br. at 7. We disagree. Throughout the pleadings filed 

by the Lehtinens and Sigafoos, the parents and children are referred to collectively as 

the "plaintiffs" and they present eight identical causes of action. Additionally, two of the

causes of action alleged by the parents and their children relate directly to the PSAs,

including  an  allegation of   breach of warranty      and a request for rescission. It is 

apparent, contrary to the contention made by the Lehtinens and Sigafoos,  that  the 

children are attempting to enforce the terms of the PSA and that they base their claim 

for breach of warranty on the warranties contained therein. Although the children 

received the benefit of the bargain in the transaction with Quadrant to the same extent 

as their parents, they now seek to avoid the burden of arbitration imposed by the PSA. 

The children, therefore, can be said to be knowingly exploiting the terms of the contract 

and, under Mundi, cannot avoid the arbitration clause within it. The children are, thus,
bound by the arbitration agreement to the same extent as their parents.3

       3Contrary to the dissent's suggestion, our decision does not reduce the 
children's action to the sum total of two claims. See dissent at 3. The children, like their 
parents, will have the opportunity to arbitrate their claims. As we have noted above, it is 
significant that the pleadings in this case, which were filed jointly by the parents and 
their children and which present identical causes of action among the parents and their 

                                              11 

No. 84422-4

                                               V

       The final issue before us is whether WRECO and Weyerhaeuser waived their

right to seek arbitration by moving for summary judgment based on a contention that 

they were not proper parties to the lawsuit and that the Homeowners submitted 

evidence outside of the pleadings.  In addressing the issue, the Court of Appeals 

properly observed that "a waiver of arbitration cannot be found if there is conduct 

suggesting a lack of intention to forgo the right to arbitrate." Townsend, 153 Wn. App. 

at 888-89 (citing Lake Wash. Sch. Dist. No. 414 v. Mobile Modules Nw., Inc., 28 Wn. 

App. 59, 62, 621 P.2d 791 (1980)).

       In the Homeowners' view, "a party who chooses to litigate by moving for 

summary judgment on the merits waives any right to later seek arbitration of the same 

claims." Pet. for Review       at  18-19.  They do not, however, cite any case that 

unequivocally states that a party that moves for summary judgment necessarily waives 

its right to compel arbitration. Instead, the Homeowners rely on the case of Naches 

Valley School District No. JT3 v. Cruzen, 54 Wn. App. 388, 395-96, 775 P.2d 960 

(1989). There the Court of Appeals was faced with a dispute about the meaning of a 

sick-leave buy-out provision in a teachers' collective bargaining agreement. The trial 

court granted summary judgment to the teachers named in the lawsuit while denying a 

motion to arbitrate that had been filed by a teachers association. Although the teachers 

never requested arbitration, the teachers association appealed the decision to deny 

children, plainly indicate that the children are attempting to enforce the terms of the PSAs to the 
same extent as their parents.

                                              12 

No. 84422-4

arbitration. The Court of Appeals concluded that  the teachers association was not 

entitled to arbitration because the individual teachers had waived their right to compel 

arbitration by moving for and obtaining summary judgment. The facts before us are 

quite different because unlike the teachers in Naches Valley who prevailed on summary 

judgment and therefore waived their right to arbitrate, WRECO and Weyerhaeuser 

moved to compel arbitration after the trial court denied their motion for summary 

judgment.

       In Otis Housing Ass'n v. Ha, 165 Wn.2d 582, 201 P.3d 309 (2009), we cited with 

approval the rule that the right to arbitrate is waived by conduct inconsistent with any 

other intent and stated that "'a party to a lawsuit who claims the right to arbitration must 

take some action to enforce that right within a reasonable time.'" Id. at 588 (quoting 

Lake Wash. Sch. Dist. No. 414, 28 Wn. App. at 64). We concluded that, "[s]imply put, 

we hold that a party waives a right to arbitrate if it elects to litigate instead of arbitrate." 

Id. Here, WRECO and Weyerhaeuser moved to compel arbitration promptly after the 

superior court denied their motion for summary judgment based on their assertions that 

they had no connection to the lawsuit. In our view, this conduct did not evince intent to 

waive arbitration. Accordingly, we affirm the Court of Appeals' holding that WRECO 

and Weyerhaeuser did not waive arbitration.

                                               VI

       We affirm the Court of Appeals' holdings that (1) the Homeowners' procedural 

unconscionability claim that pertained to the entire PSA, including the arbitration clause 

                                              13 

No. 84422-4

contained therein, is to be decided by an arbitrator; (2) the children of the Lehtinens 

and Sigafoos are bound by the arbitration clause; and (3) WRECO and Weyerhaeuser

did not waive their right to arbitrate by moving for summary judgment prior to seeking to 

compel arbitration.

AUTHOR:
        Gerry L. Alexander, Justice Pro 
        Tem.

WE CONCUR:
        Chief Justice Barbara A. Madsen                  Justice James M. Johnson

        Justice Susan Owens

                                              14