On December 8, 2020, in Taylor Morrison of Texas, Inc.
v. Kohlmeyer, a Texas Court of Appeals rejected a
contractor's appeal of a trial court order denying the
contractor's motion to compel arbitration in a home
construction defect dispute. The appellate court concluded that the
theories of direct benefits estoppel and implied assumptions did
not permit the contractor to bind a subsequent purchaser to
mandatory arbitration required under the original purchase
agreement.
In 2013, the contractor, Taylor Morrison, executed a purchase
agreement with a homeowner for the construction of a new home in
League City, Texas. The purchase agreement included a mandatory
arbitration provision and provided that it may not be assigned
without the prior written consent of Taylor Morrison. In March
2016, the homeowner sold the house, and, later that year, the
property was sold again to the Kohlmeyers. In 2018, the Kohlmeyers
sued Taylor Morrison “asserting that the house had
