Lennar prevails on cross-appeals of arbitration rulings in "yellow brass" fitting actions

Client(s) Lennar Corporation

Two Las Vegas valley homeowners' associations (HOAs) asserted representative claims relating to allegedly defective high-zinc-content brass plumbing fittings (often called "yellow brass" fittings) in homes constructed by Nevada subsidiaries of Jones Day client homebuilder, Lennar Corporation ("Lennar"). The Lennar entities sued the HOAs in federal court to enforce arbitration clauses in the original purchase and sale agreements for the homes and the covenants, conditions, and restrictions for one of the HOAs. The district court granted the Lennar entities' motions to compel the original purchasers of the homes to arbitration, but sua sponte held that the Lennar entities could not compel arbitration against subsequent purchasers of the homes. The parties cross-appealed.

Less than a month after hearing the cross-appeals, the Ninth Circuit issued a decision entirely in favor of the Lennar entities. On the Lennar entities' appeal, the Ninth Circuit reversed and remanded the district court's ruling with respect to subsequent purchasers, holding that the Lennar entities had been deprived of notice and an opportunity to present evidence and argument as to the arbitrability of those homeowners' claims. On the cross-appeal, the Ninth Circuit affirmed the judgment compelling original purchasers to arbitration, rejecting the HOAs' arguments based on standing, subject matter jurisdiction, and the applicability of the Federal Arbitration Act.

Greystone Nevada, LLC, et al. v. Anthem Highlands Community Association, Case Nos. 12-16768, 12-16769 (9th Cir.)