Lennar Homes Of Texas Inc. v. Rafiei (Per Curiam)
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A homeowner, Mohammad Rafiei, sued his builder, Lennar Homes, alleging personal injuries due to a construction defect. The purchase contract between Rafiei and Lennar contained an agreement to submit disputes to arbitration under the Federal Arbitration Act, including issues of formation, validity, or enforceability of the arbitration agreement. Lennar moved to compel arbitration, but Rafiei argued that the arbitration agreement was unconscionable because the cost of arbitration was prohibitively high. The trial court denied Lennar's motion to compel arbitration.
The Court of Appeals for the Fourteenth District of Texas affirmed the trial court's decision, holding that Rafiei had sufficiently demonstrated that the cost to arbitrate was excessive, making the arbitral forum inadequate to vindicate his rights. The court of appeals concluded that if Rafiei were required to pay more than $6,000, he would be precluded from pursuing his claims.
The Supreme Court of Texas reversed the judgment of the court of appeals. The court held that the record failed to support a finding that the parties' delegation clause was itself unconscionable due to prohibitive costs to adjudicate the threshold issue in arbitration. The court noted that Rafiei had not provided sufficient evidence to show that he could not afford the cost of arbitrating the arbitrability question. The court also noted that Rafiei had not provided evidence of how the fee schedule would be applied to resolve the unconscionability issue. The court remanded the case to the trial court for further proceedings consistent with its opinion.
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