Michalowski v. Dist. Ct. (Lennar Reno, LLC)

 INDIVIDUALLY,
Petitioners,
vs.
THE SECOND JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA,
IN AND FOR THE COUNTY OF
WASHOE; AND THE HONORABLE
PATRICK FLANAGAN, DISTRICT
JUDGE,
Respondents,
and
LENNAR RENO, LLC, A NEVADA
LIMITED LIABILITY COMPANY,
Real Party in Interest.

ORDER GRANTING IN PART AND DENYING IN PART PETITION
FOR WRIT OF MANDAMUS

This is an original petition for a writ of mandamus challenging
a district court order granting a motion to compel arbitration in a
construction defect action.
Petitioners purchased homes built by real party in interest
Lennar Reno, LLC. Roughly half of the petitioners signed purchase
agreements as original purchasers (though Lennar failed to produce
purchase agreements for four of the original purchasers), while the
remaining petitioners were subsequent purchasers who did not sign
purchase agreements. Lennar presented four different form purchase
agreements to petitioners depending on when each original purchaser
executed the agreement. All four agreements contain an arbitration
provision (or multiple arbitration provisions) and an independent
severability clause. Following the purchases, petitioners served Lennar
with NRS Chapter 40 notices. Petitioners then filed a complaint asserting
breach of contract and construction defect causes of action against Lennar.

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 Lennar moved to compel arbitration under the purchase agreements. The
district court granted Lennar's motion. This petition for writ of
mandamus followed.
Except for the few for whom Lennar cannot produce purchase
agreements, the district court was correct to compel petitioners to
arbitrate. There is no immediate right of direct appeal from an order
compelling arbitration. Clark Cnty. v. Empire Elec., Inc., 96 Nev. 18, 19-
20, 604 P.2d 352, 353 (1980) (noting that the law's policy favoring
arbitration would be defeated should the defaulting party be permitted to
appeal at the threshold of a proceeding and indefinitely delay the
arbitration matter). However, mandamus affords interlocutory appellate
review where the party seeking extraordinary writ relief demonstrates
that: (1) an eventual appeal does not afford "a plain, speedy and adequate
remedy in the ordinary course of law," and (2) mandamus is needed either
to compel the performance of an act that the law requires or to control the
district court's manifest abuse of discretion. NRS 34.160; NRS 34.170;
Tallman v. Eighth Judicial Dist. Court, 131 Nev., Adv. Op. 71, P.3d
(2015).
Regarding the first requirement, petitioners contend that they
have no adequate remedy at law besides mandamus because waiting for
an eventual appeal would force them to arbitrate claims that they never
agreed to arbitrate and/or arbitrate provisions that are unenforceable due
to unconscionability. In response, Lennar contends that petitioners have
the ability to appeal from a future court order approving an arbitration
award with which they are dissatisfied, constituting an adequate remedy
at law. Both petitioners and Lennar fail to address the second
requirement for extraordinary writ relief. We nonetheless accept

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 mandamus review of this petition under a theory similar to that
articulated in Tallman. Our case law prior to Tallman had not yet clearly
delineated a party's burden when moving for extraordinary writ relief
from an order compelling arbitration, and this court's prior decision in
Kindred v. Second Judicial District Court suggested that orders
compelling arbitration automatically satisfy NRS 34.170's requirement
that there not be a "plain, speedy and adequate remedy" at law. See

Kindred, 116 Nev. 405, 409, 996 P.2d 903, 906 (2000); see also Tallman,
131 Nev., Adv. Op. 71, P.3d at n.1. Tallman clarified petitioners'
burden, stating that the unavailability of an immediate appeal from an
order compelling arbitration may present a situation in which eventual
appeal is not an adequate remedy at law, but the same does not hold true
in all cases. 131 Nev., Adv. Op. 71, P.3d at n.1. While we conclude that
the district court erred in part by granting Lennar's motion to compel
arbitration with respect to four of the petitioners, it correctly granted the
motion with respect to the majority of petitioners. See id. (explaining that
when reviewing a district court's handling of an order to compel
arbitration, this court reviews questions of law de novo, and questions of
fact for clear error).
Contrary to petitioners' contentions with respect to the
subsequent purchasers who did not sign purchase agreements, the district
court did not err in compelling such petitioners to arbitrate. As explained
in Truck Insurance Exchange xi. Palmer J. Swanson, Inc., "[u]nder a theory
of estoppel, [a] nonsignatory is estopped from refusing to comply with an
arbitration clause when it receives a direct benefit from a contract
containing an arbitration clause." 124 Nev. 629, 636-37, 189 P.3d 656,
661-62 (2008) (internal quotations omitted). Here, petitioners received a

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 direct benefit from the contracts containing arbitration clauses when they
asserted breach of contract causes of action under said contracts. Thus,
the original purchasers for whom Lennar produced signed purchase
agreements and the nonsignatory subsequent purchasers are estopped
from refusing to comply with the purchase agreements' arbitration
clauses. However, the petitioners for whom Lennar failed to produce
purchase agreements—Peter and Jacquelyn Andada and Robert and
Cristina Schwitters—cannot be compelled to arbitrate.' The district court
erred in granting Lennar's motion to compel arbitration pertaining to
these petitioners. See Tallman, 131 Nev., Adv. Op. 71, P.3d.
(internal citations omitted).
Further, any unconscionable clauses contained within the
home purchase agreements can be severed according to each agreement's
severability clause. While an agreement may contain substantively
unconscionable clauses, a severability clause allows the offensive language
to be severed without invalidating the remainder of the agreement,
including an arbitration provision. See Serpa v. Darling, 107 Nev. 299,
303-04, 810 P.2d 778, 781-82 (1991). Not only does this contractual
reading preserve the parties' intent, but it also furthers Nevada's general
public policy favoring enforcement of arbitration agreements. See D.R.
Horton, Inc. v. Green, 120 Nev. 549, 553, 96 P.3d 1159, 1162 (2004).
Because the district court failed to adequately address the
unconscionability of each home purchase agreement, we decline to reach

'During oral argument, Lennar conceded that these petitioners
cannot be bound to the arbitration clauses contained in the purchase
agreements.

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 the issue. Instead, we instruct the district court to revisit each agreement
and provide an in-depth analysis of any unconscionable language within
each. The district court shall sever only the language in the agreements
which constitutes an unconscionable abrogation of the homeowners' rights.
Accordingly, we
ORDER the petition GRANTED IN PART AND DENIED IN
PART AND DIRECT THE CLERK OF THIS COURT TO ISSUE A WRIT
OF MANDAMUS instructing the district court to vacate its order as to
Peter and Jacquelyn Andada and Robert and Cristina Schwitters, and to
reassess all the purchase agreements and sever only the unconscionable
clauses. 2

rtiffer___
Saitta

Gibbons

2 We have considered the parties' remaining arguments and conclude
that they are without merit.

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 cc: Hon. Patrick Flanagan, District Judge
Shinnick, Ryan & Ransavage P.C.
Gordon & Rees, LLP
Washoe District Court Clerk

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