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United States Home Corporation (U.S.H.) built homes in a Nevada common-interest community, subject to a Covenant, Conditions, and Restrictions agreement (CC&R), which provided that any dispute would be resolved by arbitration.
Between August 2013 and February 2015, twelve home purchasers filed pre-litigation notices against U.S.H. for alleged construction defects. Three of the purchasers had direct purchase and sales agreements with U.S.H. that contained arbitration clauses; the remaining homeowners did not sign such agreements, but took title subject to the CC&R. U.S.H. demanded arbitration, but the homeowners brought claims in a Nevada district court seeking damages for breach of contract and other claims. U.S.H. moved to compel arbitration. The court held that the transaction did not involve interstate commerce, so the Federal Arbitration Act (FAA) did not apply, and invalidated the arbitration agreements as unconscionable.