DAVIS, Circuit Judge:
In this putative class action, prospective luxury home buyers allege that a real estate development company unlawfully refused to return deposits when the prospective buyers could not obtain mortgage financing. The named Plaintiffs-Appellees are Mehdi Noohi and Soheyla Bolouri ("Plaintiffs"), a husband and wife; Defendants-Appellants are Toll Bros., Inc., a real estate development company, and several of its subsidiaries (collectively, "Toll Brothers"). Plaintiffs contracted with a subsidiary of Toll Bros., Inc., for the construction of a luxury home in Maryland. The Agreement of Sale ("the Agreement") required that Plaintiffs seek approval of a mortgage, and included an arbitration provision. Though Plaintiffs received a "Mortgage Loan Commitment" letter from at least one lender that was later rescinded, and though several other of their mortgage applications were all denied, Toll Brothers sought to keep $77,008 in Plaintiffs' deposits.
Plaintiffs sued Toll Brothers individually and on behalf of a class of other prospective buyers who allegedly lost deposits to Toll Brothers in a similar manner. The district court denied Toll Brothers' motion to dismiss or stay the suit pending arbitration, finding that the Agreement's arbitration provision lacked mutuality of consideration
For the reasons that follow, we hold that this appeal is properly before us under 9 U.S.C. § 16(a), and that the Agreement's arbitration provision is unenforceable for lack of mutual consideration under Maryland law.
We begin by setting out the facts Plaintiffs have alleged, which we take as true for purposes of this appeal, see Hill v. Peoplesoft USA, Inc., 412 F.3d 540, 543 (4th Cir.2005), although "the decision to deny [a] motion for stay and to compel arbitration is reviewed de novo," Patten Grading & Paving, Inc. v. Skanska USA Bldg., Inc., 380 F.3d 200, 204 (4th Cir. 2004) (citing MicroStrategy, Inc. v. Lauricia, 268 F.3d 244, 250 (4th Cir.2001)). See also Johnson v. Circuit City Stores, 148 F.3d 373, 377 (4th Cir.1998).
Toll Brothers, a publicly traded real estate development company, sells luxury residences in a number of states, including Maryland. One of Toll Brothers' subsidiaries, TBI Mortgage Company ("TBI Mortgage"), provides mortgage banking primarily to buyers of Toll Brothers homes. Other subsidiaries contract with individual home buyers for the purchase of newly constructed or planned homes. One such subsidiary, Toll Land Corp. No. 43, is the General Partner in Toll MD V Limited Partnership, with whom Plaintiffs contracted to purchase a home.
On February 17, 2008, Plaintiffs made an "initial reservation deposit" of $5,000. On February 24, 2008, they entered into the Agreement with Toll MD V to purchase a preconstruction home in Glenelg, Maryland, for $1,006,975. Plaintiffs made an additional deposit of $45,348 and later deposited another $26,660. By February 28, 2008, the deposit total had reached $77,008.
The Agreement contained a number of relevant provisions. Section 2 of the Agreement provided that Toll Brothers would hold the deposit until it was either refunded or forfeited by Plaintiffs. Section 4 dealt with mortgage application obligations, and directed Plaintiffs to complete the mortgage approval process within 60 days. In order to do so, Plaintiffs agreed to make a good-faith, "truthful and complete application to TBI Mortgage and any other lender of [their] choosing," accept a loan commitment, and comply with all terms imposed by the lender. Compl. ¶ 35; J.A. 49.
Plaintiffs applied to TBI Mortgage on February 25, 2008, but their application was rejected. On Toll Brothers' recommendation, Plaintiffs then applied for a
On July 24, 2008, Plaintiffs sent a letter to Toll Brothers, informing them that they were unable to secure a mortgage, and demanding a refund of their deposit pursuant to the Agreement of Sale. On August 21, 2008, Toll Brothers responded to Plaintiffs by asserting that the First Preferred Financial commitment letter, although now terminated, had satisfied the mortgage contingency and Plaintiffs were still obligated to perform under the Agreement. The response further stated that Toll Brothers would retain Plaintiffs' deposit if they did not submit additional mortgage applications and proceed to closing. Specifically, the letter suggested that Plaintiffs contact APEX Funding Group.
On August 27, 2008, Plaintiffs wrote to Toll Brothers, stating that they would continue to work to receive a mortgage. On September 22, 2008, APEX Funding Group gave Plaintiffs a loan commitment letter but then declined to approve them for a mortgage. Plaintiffs also sought mortgage approvals from other lenders, but were unable to secure financing.
Plaintiffs further allege that Toll Brothers has neither begun construction on the lot in question, nor incurred expenses toward the construction of the home. Plaintiffs claim that because Toll Brothers refused to refund their deposits after the failure of their repeated good-faith attempts to secure a mortgage, Toll Brothers breached the Agreement.
Plaintiffs sued, filing a class action complaint against Toll Brothers on March 3, 2011, on behalf of themselves and home buyers around the country who they alleged lost their deposits in a similar manner. Federal jurisdiction was founded on the Class Action Fairness Act; the complaint asserted an amount in controversy of over $5 million, and at least one member of the putative class is a citizen of a different state from one of the defendants. See 28 U.S.C. § 1332(d)(2). The complaint contained four causes of action: (1) breach of contract; (2) breach of the duty of good faith and fair dealing; (3) unjust enrichment; and (4) unfair and deceptive trade practices, in violation of Md.Code Ann., Commercial Law § 13-301 et seq.
Toll Brothers filed a motion to dismiss or stay Plaintiffs' complaint pending arbitration based on the Agreement's arbitration provision, Section 13. After a hearing, the district court issued an order and memorandum opinion denying the motion. See Noohi v. Toll Bros., Inc., 2012 WL 273891 (D.Md. Jan. 30, 2012). The court noted that state contract formation law determines the validity of arbitration agreements, and that under Maryland law as articulated in Cheek v. United Healthcare of Mid-Atlantic, Inc., 378 Md. 139, 835 A.2d 656 (2003), an arbitration provision is treated as a severable contract that must be supported by adequate consideration. After determining that the arbitration provision required only Plaintiffs — but not Toll Brothers — to submit disputes to arbitration, the court relied on Cheek to hold that Section 13 of the Agreement was unenforceable for lack of consideration. The court did not, however, address the possibility that the rule set forth in Cheek was preempted under AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740,
Plaintiffs first argue that we lack jurisdiction over this interlocutory appeal from the district court's denial of Toll Brothers' motion to dismiss or stay pending arbitration.
As we recently reiterated, "[c]ourts of appeal ordinarily may review only final decisions of district courts." Rota-McLarty v. Santander Consumer USA, Inc., 700 F.3d 690, 696 (4th Cir. 2012). See also 28 U.S.C. § 1291. "Although [a] district court's order denying [a] motion to compel arbitration and stay proceedings is not a final decision, we may nevertheless exercise appellate jurisdiction if the order falls within an exception to the final judgment rule established by the FAA." Rota-McLarty, 700 F.3d at 696.
Under the FAA, courts must stay any suit "referable to arbitration" under an arbitration agreement, where the court has determined that the agreement so provides, and one of the parties has sought to stay the action. 9 U.S.C. § 3. Under 9 U.S.C. § 16(a)(1)(A), an "appeal may be taken from" an order "refusing a stay of any action under" 9 U.S.C. § 3. In short, a party may appeal the denial of a motion to stay an action concerning a matter that a written agreement has committed to arbitration. See Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 86, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (holding that § 16(a)(3) "preserves immediate appeal of any `final decision with respect to an arbitration,' regardless of whether the decision is favorable or hostile to arbitration"). See also Am. Cas. Co. of Reading, Pa. v. L-J, Inc., 35 F.3d 133, 135 (4th Cir.1994) (abrogated on other grounds by Green Tree, 531 U.S. at 89, 121 S.Ct. 513).
Plaintiffs acknowledge the above principles but argue that because Toll Brothers' motion was primarily a motion to dismiss, and a motion to dismiss is not an appealable "final decision," § 16(a)(1)(A) is inapplicable. In other words, according to Plaintiffs, for Toll Brothers' motion to be immediately appealable, the motion must seek only a stay.
This overly formal argument fails for at least two reasons. First, Toll Brothers moved "to dismiss or stay," not simply to dismiss. See Defs.' Mem. in Supp. of Mot. to Dismiss or Stay Pls.' Compl. Pending Arbitration at 1 (hereinafter, "Defs.' Mot. to Dismiss or Stay") (emphasis added); J.A. 35. The motion's conclusion specifically requested that the court "dismiss, or in the alternative stay, Plaintiffs' Complaint pending arbitration between Plaintiffs and Defendants." Defs.' Mot. to Dismiss or Stay at 11; J.A. 45. As noted above, under § 16(a)(1)(A), a party may appeal the denial of a motion to stay federal proceedings pending arbitration; at least to the extent that an appeal concerns the denial of a motion to stay, the fact that the motion also seeks dismissal does not affect its appealability.
Second, in assessing whether a motion adequately invoked the FAA, "the proper inquiry focuses on substance rather than nomenclature." Rota-McLarty, 700 F.3d at 698. Thus, "we look to whether a motion evidences a clear intention to seek enforcement of an arbitration clause rather than on whether it adhered to a specific form or explicitly referenced §§ 3 or 4." Id. Though Toll Brothers never sought to have the district court compel arbitration, its entire brief focused on the enforceability of the arbitration provision. Toll Brothers
This Court therefore has jurisdiction over the instant appeal.
We next examine whether the district court correctly held that the arbitration provision in Section 13 of the Agreement was unenforceable for lack of mutual consideration under Cheek.
Toll Brothers makes the following arguments in support of its view that the court erred in so holding: (1) the arbitration provision was supported by the consideration underlying the Agreement as a whole; (2) the arbitration provision binds both parties to arbitration, and the district court failed to resolve ambiguities in favor of arbitration when it held otherwise; (3) Cheek is distinguishable on its facts; and (4) Cheek is inconsistent with the Supreme Court's holding in Concepcion because it singles out arbitration provisions by imposing on them a requirement inapplicable to other contract provisions.
Plaintiffs make the following arguments in support of the district court's holding: (1) under Maryland law, mutual consideration must exist in the arbitration provision itself; (2) the arbitration provision here unambiguously binds only Plaintiffs, leaving no ambiguities to interpret in favor of arbitration; (3) Cheek's facts do not render it distinguishable; and (4) neither Concepcion nor other recent Supreme Court cases abrogate Cheek's requirement that an arbitration provision contain mutual consideration. We think Plaintiffs have the more persuasive arguments.
"We review de novo a district court's determination on arbitrability of a civil action." Aggarao v. MOL Ship Mgmt. Co., Ltd., 675 F.3d 355, 365 (4th Cir.2012). "At the same time, we give due regard to the federal policy favoring arbitration and resolve `any doubts concerning the scope of arbitrable issues ... in favor of arbitration.'" Hill v. Peoplesoft USA,
Section 2 of the FAA, its "primary substantive provision," Moses H. Cone Mem'l Hosp., 460 U.S. at 24, 103 S.Ct. 927, makes agreements to arbitrate "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract," 9 U.S.C. § 2.
Moses H. Cone Mem'l Hosp., 460 U.S. at 24, 103 S.Ct. 927. Under this federal substantive law, "courts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms." Concepcion, 131 S.Ct. at 1745 (internal citations omitted).
However, § 2 also permits arbitration agreements to be declared unenforceable "upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "This saving clause permits agreements to arbitrate to be invalidated by `generally applicable contract defenses, such as fraud, duress, or unconscionability,' but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." Concepcion, 131 S.Ct. at 1746 (citation omitted).
Applying the above framework, the Supreme Court has
Concepcion, 131 S.Ct. at 1748-49 (emphasis in original). In Concepcion, the Supreme Court further prohibited courts from altering otherwise valid arbitration agreements by applying the doctrine of unconscionability to eliminate a term barring classwide procedures. Id. at 1750-53.
The Maryland case at the center of this appeal is Cheek v. United Healthcare of Mid-Atlantic, Inc., 378 Md. 139, 835 A.2d 656 (2003). In Cheek, the plaintiff was presented with an offer of employment conditioned on acceptance of the employer's arbitration policy. Id. at 657-58. That policy left to the employer the unilateral right to "alter, amend, modify, or revoke the [p]olicy at its sole and absolute discretion at any time with or without notice." Id. at 658. The plaintiff accepted the offer of employment on the employer's terms, but was terminated about seven months later. Id. He then filed suit in Maryland state court, alleging a number of state-law violations. Id. at 659. The employer filed a "Motion to Dismiss and/or Compel Arbitration and Stay" the suit, which the trial court granted. Id. The Court of Appeals of Maryland (which granted certiorari prior to any proceedings in the intermediate appellate court) agreed with the plaintiff's argument that the employer's unfettered discretion to change the arbitration agreement rendered its promise to arbitrate illusory, and that the agreement was therefore unenforceable for
Toll Brothers' first argument is that the arbitration provision in the Agreement is enforceable because it was supported by the consideration underlying the Agreement as a whole. To assess that argument, we must first determine what law applies. "The Supreme Court has directed that we `apply ordinary state-law principles that govern the formation of contracts'" when assessing whether the parties agreed to arbitrate a matter. Hill, 412 F.3d at 543 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)). See also Rota-McLarty, 700 F.3d at 699 ("The question of whether an enforceable arbitration agreement exists ... is a matter of contract interpretation governed by state law, which we review de novo."). Maryland generally follows the "lex loci contractus" principle, under which "the law of the jurisdiction where the contract was made controls its validity and construction." Kramer v. Bally's Park Place, Inc., 311 Md. 387, 535 A.2d 466, 467 (1988). The Agreement was executed in Maryland between Toll Brothers' Maryland subsidiary — Toll MD V Limited Partnership — and Plaintiffs, who resided in Maryland at the time it was executed. The Agreement also references numerous provisions of Maryland law. For example, Section 17 references the "Maryland Homeowners Association Act," Section 19 references "Section 8-402.2 of the Real Property Article of the Annotated Code of Maryland," and Section 20 references "§ 17-404 of the Business Occupations and Professions Article of the Annotated Code of Maryland." J.A. 52-53. We therefore look to Maryland law.
As already discussed, that law was set forth in Cheek. There, after a thorough analysis discussing cases that reached conflicting conclusions, Maryland's highest court specifically rejected the notion that consideration for an underlying contract can serve as consideration for an arbitration provision within that contract. See Cheek, 835 A.2d at 667 ("We disagree with cases from other jurisdictions that determine that consideration for an underlying contract also can serve as consideration for an arbitration agreement within the contract, even when the arbitration agreement is drafted so that one party is absolutely bound to arbitrate all disputes, but the other party has the sole discretion to amend, modify, or completely revok[e] the arbitration agreement at any time and for any reason."). The court reasoned that to do otherwise would require "straying into the prohibited morass of the merits of the claims" by looking to the parties' obligations (and their potential breach) underlying the lawsuit itself. Id. at 665. That merits inquiry "could eclipse the role of the arbitrator, should a valid agreement exist, and therefore run afoul of strong Federal and Maryland policies favoring arbitration as a viable method of dispute resolution." Id. at 668. In other words, where it is asserted that a dispute is bound to arbitration, the role of courts is limited to determining the enforceability of an arbitration provision; "straying" into areas outside that provision is an impermissible encroachment on the arbitrator's authority. Cf. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) (holding that courts may adjudicate claims of
There are two published Fourth Circuit cases that cite Cheek. The first is Hill v. Peoplesoft USA, Inc., 412 F.3d 540 (4th Cir.2005).
The second Fourth Circuit case that cites Cheek is Dan Ryan Builders, Inc. v. Nelson, 682 F.3d 327 (4th Cir.2012), a case involving facts strikingly similar to those Plaintiffs have alleged here. In Dan Ryan Builders, the defendant builder constructed a new home in West Virginia for the plaintiff buyer. The contract contained an arbitration provision purportedly binding both parties, but giving the builder "the right to seek arbitration or to file an action for damages if [the buyer] `fail[ed] to settle on the Property within the time required under [the] Agreement.'" Id. at 327 (emphasis in original, first alteration added). The buyer sued, arguing "that the arbitration provision was unenforceable as a matter of law because it was not supported by mutual consideration, notwithstanding the fact that the contract as a whole was supported by adequate consideration." Id. at 328. The district court agreed and dismissed the builder's motion to compel arbitration. Id. Because "the parties' contract [was] governed by West Virginia law," and there was no West Virginia law directly controlling, this Court certified the following question to the West Virginia Supreme Court of Appeals: "Does West Virginia law require that an arbitration provision, which appears as a single clause in a multi-clause contract, itself be supported by mutual consideration when the contract as a whole is supported by adequate consideration?" Id. at 327.
In the face of clear Maryland law that consideration for an arbitration provision must be in the provision itself, Toll Brothers argues that we may look outside that provision. Its arguments are not persuasive. First, Toll Brothers cites a string of cases that it claims have rejected challenges to arbitration clauses on mutuality grounds where the underlying contract is supported by adequate consideration. But, as Plaintiffs point out, all of those cases are based on the law of states other than Maryland. Because the relevant inquiry depends on Maryland law, cases based on the law of other states are inapposite.
Second, Toll Brothers cites an unpublished district court opinion from New Jersey, Arakelian v. N.C. Country Club Estates Limited Partnership, 2009 WL 4981479 (D.N.J. Dec. 18, 2009), that enforced an arbitration provision contained in an agreement with Toll Brothers similar to the provision at issue here. Not only does Arakelian apply North Carolina law, however, but it does not even examine the issue of consideration, instead focusing its analysis on the plaintiffs' unconscionability argument and which Toll Brothers subsidiaries were bound by the arbitration provision. 2009 WL 4981479, at *7-*13. The reasoning in that case is similarly inapposite.
In short, we apply Maryland law to determine the validity of the arbitration provision in the Agreement. Under Maryland law as articulated in Cheek, an arbitration provision must be supported by consideration independent of the contract underlying it, namely, mutual obligation. Under Maryland law, therefore, the validity of the arbitration provision in the Agreement drafted and employed by Toll Brothers must satisfy that requirement, an issue to which we now turn.
Toll Brothers' first fallback argument is that the arbitration provision is supported by consideration within the provision itself because it binds both parties to arbitration. Plaintiffs argue, and the district court held, that the clause binds only Plaintiffs. The arbitration provision reads as follows:
J.A. 51 (emphasis in original). In the district court's view, this provision is "quite simply one-sided and onerous" because it
Noohi, 2012 WL 273891, at *6.
Toll Brothers disagrees with the district court's interpretation of the provision. In Toll Brothers' view, the provision
Toll Brothers' Br. 13 (alterations in original; citation to J.A. omitted).
We agree with the district court that the provision binds only Plaintiffs to arbitration, and thus lacks mutuality of consideration. First, as Plaintiffs point out, all the subject and verb pairings relate to the buyer's obligations (i.e., buyer agrees, buyer waives, etc.); nowhere does the provision state that "Buyer and Seller agree," or the passive "it is agreed." Second, the provision adds additional procedures that only the buyer must perform prior to initiating arbitration, such as giving the seller written notice of each claim and an opportunity to cure any default. Third, all the types of claims given as examples in the provision are claims that the buyer would bring against the seller. Fourth, the capitalized, bolded paragraph at the end of the provision states that only the buyer, but
Because the arbitration provision unambiguously binds only the buyer, there is no ambiguity to interpret by application of a presumption in favor of arbitration.
Toll Brothers' second fallback argument attempts to distinguish Cheek on its facts, pointing out that the arbitration provision in Cheek was illusory because one party could revoke its promise to arbitrate at any time, whereas the issue here is whether one party has bound itself at all. This argument warrants little discussion, as the distinction Toll Brothers draws is one without a difference; the point is that in both cases, the "agreement" is illusory and lacks consideration. Similarly, Toll Brothers' reliance on Holloman v. Circuit City Stores, Inc., 391 Md. 580, 894 A.2d 547 (2006), does not further its argument. That case held that the Cheek rule did not apply where an arbitration agreement permitted one party to modify the agreement on 30 days' notice, among various other restrictions on altering the agreement. Id. at 592. Unlike in Holloman, the issue here is the same as in Cheek — whether the arbitration agreement is supported by any consideration at all.
Toll Brothers' final fallback argument is that the Cheek rule is preempted by the FAA.
The Supremacy Clause provides, in relevant part, that "the Laws of the United States ... shall be the supreme Law of the Land." U.S. Const. art. VI, cl. 2. A state law that "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" is preempted by the Supremacy Clause. Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941). See also Concepcion, 131 S.Ct. at 1753.
In Concepcion, 131 S.Ct. at 1740, the Court held that the FAA preempted California's judicial rule (known as the Discover Bank rule) regarding the unconscionability of class arbitration waivers in consumer contracts. Under the Discover Bank rule, class waivers in consumer arbitration agreements were deemed unconscionable if (1) the waiver was in an adhesion contract, (2) disputes between the parties would likely have involved small amounts of damages, and (3) the party with inferior bargaining power alleged a
But the Cheek rule neither increases formality nor risks to defendants; it merely requires that for an arbitration provision to be valid, both parties bind themselves to it. The primary concerns underlying Concepcion are therefore inapplicable here.
It is true that the Court in Concepcion was also concerned with ensuring, in general terms, that arbitration agreements are enforceable as written, including "with whom a party will arbitrate its disputes." Id. at 1748-49 (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 130 S.Ct. 1758, 1773, 176 L.Ed.2d 605 (2010) (emphasis in original)). But both Concepcion and Stolt-Nielsen involved issues of classwide arbitration; when the Court stated that parties may specify "with whom" they choose to arbitrate, the point was that they may, under the FAA, choose to arbitrate with an individual rather than a class. The Supreme Court has never held that the FAA preempts state law rules requiring that arbitration provisions themselves contain consideration (i.e., that they not be illusory), and it would require a substantial extension of existing precedent to do so here.
Perhaps, Toll Brothers' strongest contention is that the Cheek rule "imposes a requirement on arbitration clauses (mutuality within the clause itself) that does not apply to other contract clauses." Reply Br. 4. This contention properly gives us pause. The Supreme Court has long held that "[c]ourts may not ... invalidate arbitration agreements under state laws applicable only to arbitration provisions." Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996) (emphasis in original). The Court has explained that "[b]y enacting § 2, ... Congress precluded States from singling out arbitration provisions for suspect status, requiring instead that such provisions be placed `upon the same footing as other contracts.'" Id. (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 511, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974)).
In a basic sense, the Cheek rule does single out an arbitration provision in a larger contract, and assess whether that provision binds both parties to arbitrate at least some claims. But on closer inspection, we are persuaded that all Cheek does is treat an arbitration provision like any stand-alone contract, requiring consideration. Lack of consideration is clearly a generally applicable contract defense. The Cheek rule does not bar the arbitration of entire categories of claims. See Marmet Health Care Ctr., Inc. v. Brown, ___ U.S. ___, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012) (per curiam) (holding that West Virginia's prohibition against predispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes was preempted by the FAA). Nor does it ignore an arbitration provision to gauge the enforceability of a different provision within the same contract. See Nitro-Lift Technologies, L.L.C. v. Howard, ___ U.S. ___, 133 S.Ct. 500, 184 L.Ed.2d 328 (2012) (per curiam) (reversing, as inconsistent with the FAA, the Oklahoma Supreme Court's invalidation of a noncompetition agreement on public policy grounds, where that agreement contained a valid arbitration clause).
Moreover, we are not persuaded that Cheek disfavors arbitration; Cheek can just as readily be viewed as encouraging arbitration by requiring that both parties
In any event, this Court has recognized Cheek's vitality as recently as this year, noting that "[u]nder Maryland contract law, an arbitration provision must contain a mutually coextensive exchange of promises to arbitrate, regardless whether the contract as a whole is supported by adequate consideration." Dan Ryan Builders, 682 F.3d at 329-30 (citing Cheek, 835 A.2d at 665).
We note here the gravity of the issue presented. Toll Brothers asks us to overturn a decision of the high court of one of the 50 states — relying on our Constitution's Supremacy Clause — despite the fact that the United States Supreme Court has never held that Congress, in enacting the FAA, intended to preempt states from requiring mutual consideration in an arbitration provision. This we decline to do. The Supreme Court may eventually hold that the FAA preempts such a rule, but doing so now would require an extension of existing precedent — and abrogation of our own. We also note that Toll Brothers could easily have avoided this serious constitutional question — one implicating federalism and state sovereignty, as well as the constitutional right to a jury trial-by adding just a few words to the arbitration provision,
For the reasons set forth, we conclude that this Court has jurisdiction over Toll Brothers' appeal, and that the district court correctly held that the arbitration provision was unenforceable for lack of mutual consideration. The judgment of the district court is therefore
Aggarao, 675 F.3d at 376 n. 18. In Aggarao, however, we "need[ed] not resolve this disagreement" because the issues raised by the plaintiff were not all subject to arbitration, and thus dismissal was inappropriate. Id. Similarly here, Toll Brothers' motion was appealable irrespective of Choice Hotels for the reasons discussed above. We therefore again decline to "resolve this disagreement."