Background

• DRB contracted with Nelsons to build a home in Berkeley County, WV, including an arbitration provision that required arbitration but allowed DRB to sue for damages if likely to settle late.
• The contract as a whole was supported by adequate consideration despite the arbitration clause's restrictions.
• Nelsons sued in state court for construction defects; DRB moved to compel arbitration under the FAA.
• District Court dismissed DRB’s motion, holding the arbitration clause unenforceable for lack of mutual consideration.
• Fourth Circuit certified a question to the WV Supreme Court: whether WV law requires mutual consideration within an arbitration provision when the contract as a whole has adequate consideration.
• The court noted Marmet and Saylor do not resolve the issue and that WV has no controlling precedent on this point.

Issues

Key Cases Cited

• Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201 (2012) (reaffirmed FAA preemption of state public policy on pre-dispute arbitration)
• Saylor v. Wilkes, 613 S.E.2d 914 (W. Va. 2005) (arbitration agreement's mutuality not present; separate agency contract issue)
• Howard v. King’s Crossing, Inc., 264 F. App’x 345 (4th Cir. 2008) (unpublished; MD law; nonbinding; lack of mutual consideration)
• Tillman v. Commercial Credit Loans, Inc., 629 S.E.2d 865 (N.C. Ct. App. 2006) (contract-as-a-whole consideration suffices; not binding on WV)
• Cheek v. United Healthcare of the Mid-Atlantic, Inc., 835 A.2d 656 (Md. 2003) (mutuality requirement under Maryland law)
• Holmes v. Coverall N. Am., Inc., 649 A.2d 365 (Md. 1994) (consideration issues in Maryland arbitration)
• Perry v. Thomas, 482 U.S. 483 (1987) (federal-law principles govern contract validity questions)