5th Circuit Refuses to Enforce One-Sided Arbitration Clause – What Could this Mean for Your Agreements?
The Fifth Circuit, on August 6, 2026, in MAPP, L.L.C. v. Floor and Decor Outlets of America, Incorporated, refused to enforce an arbitration provision in a commercial agreement. The court held that the arbitration clause at issue was an unenforceable contract of adhesion. Here are some key takeaways, worth a look if your agreements use arbitration clauses.
Background
Floor and Decor hired MAPP, a Louisiana construction company, to build a retail store. Floor and Decor later terminated the agreement, citing delays.
MAPP sued under the Louisiana Private Works Act, seeking more than three million dollars for work performed before termination.
Floor and Decor asked the court to compel arbitration under a clause stating that unresolved claims “may, in the sole discretion of Owner, be decided by arbitration.”
The district court denied the motion to compel arbitration, and Floor and Decor appealed.
Fifth Circuit’s Ruling
Under the Federal Arbitration Act, an arbitration clause can be invalidated using the same defenses available to any contract, including adhesion under state law.
Louisiana courts apply a four factor test from Duhon v. Activelaf to decide whether a party truly consented to an arbitration clause. The test looks at the physical characteristics of the clause, its distinguishing features, mutuality, and the parties’ relative bargaining strength.
The court found the clause here was clearly labeled and not buried in boilerplate, which weighed against adhesion.
The court found the clause lacked mutuality because only Floor and Decor could elect arbitration, and a related fee provision effectively rewarded only Floor and Decor for enforcing it.
The court also found MAPP, a local contractor competing for a national retailer’s business, had far less bargaining power than Floor and Decor.
Weighing these factors together, the court concluded the clause was adhesionary and affirmed the denial of arbitration.
A concurring judge would have affirmed on narrower grounds, finding that Floor and Decor never completed the contract’s required pre-arbitration steps of internal review and mediation before invoking arbitration.
A Note for Mortgage Companies and Small Businesses
This case suggests courts may look past a well-drafted arbitration provision if only one side can invoke it, particularly when paired with an attorneys’ fees term that benefits only that side.
Standard form contracts used with loan officers, contractors, or other counterparties deserve a fresh look, particularly if the arbitration term gives one party discretion the other lacks.
Adding reciprocal rights to elect arbitration, or removing one-sided fee provisions tied to compelling arbitration, may reduce the risk of a court declining to enforce the clause entirely.
Companies with multi-step dispute resolution procedures, such as internal review before mediation before arbitration, should confirm those steps are actually followed before moving to compel arbitration, as the concurrence here suggests noncompliance can defeat a motion on its own.
Bottom Line
MAPP is a reminder that courts may scrutinize arbitration clauses that favor the drafting party, and that mutuality and fair process matter. If your business relies on standard agreements, such as for employment and other relationships, you may wish to review your standard arbitration language with this decision in mind.
Questions about how this decision affects your contracts or dispute resolution procedures? Contact troy@garrishorn.com.