836 S.E.2d 23
W. Va.2019Background
- Willow Run Energy (plaintiff) and Golden Eagle Resources (defendant) entered a March 2015 purchase contract that included an arbitration clause; a July 2015 letter agreement (for 220.5 net mineral acres) incorporated the March contract and its arbitration provision.
- The July 2015 agreement acknowledged a cloud on title and withheld a reserve until the cloud was cured; Golden Eagle recorded the deed but withheld part of the purchase price claiming the cloud was not cured.
- Willow Run sued in Pleasants County circuit court asserting breach, unjust enrichment, and seeking a declaratory judgment to remove the cloud on title.
- Golden Eagle moved to dismiss and to compel arbitration; Willow Run later amended to add non-signatory defendants alleged to have created the cloud.
- The circuit court allowed the amendment but denied the motion to compel arbitration, reasoning (1) W. Va. Code § 51-2-2(d) vested exclusive public-policy jurisdiction in circuit courts to remove clouds on title and (2) necessary non-signatory parties prevented arbitration.
- Golden Eagle appealed; the Supreme Court of Appeals reversed, holding (inter alia) that parties may agree to arbitrate cloud-on-title disputes and that arbitration must be compelled as to arbitrable claims even if non-signatories remain in the litigation.
Issues
| Issue | Plaintiff's Argument (Willow Run) | Defendant's Argument (Golden Eagle) | Held |
|---|---|---|---|
| May parties submit cloud-on-title disputes to arbitration despite §51-2-2(d)? | §51-2-2(d) vests circuit courts with jurisdiction to remove clouds on title; public policy therefore bars arbitration of property-title disputes. | The Revised Uniform Arbitration Act permits arbitration of “any” controversy between parties; the statute does not exclude real-property/title disputes from arbitration. | Held: Parties may agree to arbitrate cloud-on-title disputes; §51-2-2(d) does not bar arbitration. |
| Does adding non-signatory defendants who allegedly caused the cloud preclude compelling arbitration between signatories? | The dispute is so intertwined with claims against non-signatories that arbitration would produce inefficient, piecemeal litigation; necessary parties are not before the arbitrator. | Federal and state arbitration law require enforcement of valid arbitration agreements even if this produces piecemeal proceedings; a court cannot refuse arbitration merely because non-signatories are involved. | Held: Arbitrable claims must be sent to arbitration despite the presence of non-signatory defendants; piecemeal litigation is permitted. |
| What is the court’s role when a motion to compel arbitration is filed? | (implicit) Court may consider practical concerns and decline arbitration to avoid inefficiency. | The court’s role is limited to deciding (1) whether a valid arbitration agreement exists and (2) whether the dispute falls within its scope. | Held: Under W. Va. Code § 55-10-8(b) the trial court’s inquiry is limited to existence and scope; delegation provisions alter this analysis only if present. |
Key Cases Cited
- Credit Acceptance Corp. v. Front, 231 W. Va. 518, 745 S.E.2d 556 (W. Va. 2013) (order denying motion to compel arbitration is immediately appealable)
- W.Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W. Va. 465, 796 S.E.2d 574 (W. Va. 2017) (de novo review of denial to compel arbitration)
- State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W. Va. 250, 692 S.E.2d 293 (W. Va. 2010) (court’s FAA-role limited to existence and scope of arbitration agreement)
- Schumacher Homes of Circleville, Inc. v. Spencer, 237 W. Va. 379, 787 S.E.2d 650 (W. Va. 2016) (explaining delegation provisions and severability)
- State ex rel. Johnson Controls, Inc. v. Tucker, 229 W. Va. 486, 729 S.E.2d 808 (W. Va. 2012) (FAA requires sending arbitrable claims to arbitration even if piecemeal litigation results)
- Chesapeake Appalachia, L.L.C. v. Hickman, 236 W. Va. 421, 781 S.E.2d 198 (W. Va. 2015) (nonsignatory generally cannot be compelled to arbitrate absent traditional contract/agency theories)