Nationstar Mortgage v. Adam and Bethany West, 237 W. Va. 84

Background

In 2003 Adam and Bethany West executed a mortgage loan that included a one‑page "Arbitration Agreement" rider specifying AAA commercial rules; the rider warned in all caps above the signature line that arbitration waives court and jury rights.
The Wests sued Nationstar in 2013 alleging predatory lending, unconscionable contract, and fraud; Nationstar moved to compel arbitration in 2014 after the case was remanded to state court.
The Wests opposed arbitration, filing an affidavit asserting they could not afford "substantial arbitration costs" and offering to arbitrate only under the AAA consumer rules; Nationstar refused because the rider specified AAA commercial rules.
The Circuit Court denied the motion to compel, finding the arbitration provision procedurally and substantively unconscionable (citing lack of opt‑out, alleged borrower unsophistication, one‑sided promises, and oppressive arbitration costs).
The West Virginia Supreme Court reversed: it held the record did not support procedural unconscionability (terms were conspicuous, no evidence borrowers lacked opportunity to read) and did not show substantive unconscionability (exceptions for foreclosure are common and alleged arbitration costs were speculative).

Issues

Issue	Plaintiff's Argument (Wests)	Defendant's Argument (Nationstar)	Held
Procedural unconscionability of arbitration rider	Rider was adhesive, borrowers unsophisticated, no meaningful choice, no opt‑out	Rider was conspicuous (all caps above signature); absence of opt‑out not dispositive; no evidence of coercion or incapacity	Reversed circuit court: plaintiffs did not meet burden to prove procedural unconscionability; rider was conspicuous and no record support for claimed lack of understanding
Substantive unconscionability: lack of mutuality	Carve‑outs allowing lender to use courts (foreclosure, injunctive relief, receivers) make clause one‑sided and unfair	Carve‑outs are common/necessary for lenders to protect security interests; only modest bilateral obligation required	Reversed: exceptions for foreclosure and security‑interest enforcement do not render clause substantively unconscionable
Substantive unconscionability: arbitration costs	AAA commercial fees would be "oppressive" and effectively bar Wests from vindicating rights (cannot afford substantial costs)	Allegations of high costs are speculative; Nationstar pays first $250 and arbitrator can allocate fees; Nationstar offered alternative non‑AAA forum	Reversed: plaintiffs failed to prove likelihood of prohibitive costs; bare, hypothetical assertions insufficient
Requirement of separate bargaining or opt‑out	Absence of opt‑out and lack of separate negotiation shows unfair adhesion	No requirement that arbitration clause be separately bargained for when whole contract has consideration; opt‑out absence is only one factor	Reversed: court erred to treat lack of separate bargaining or opt‑out as dispositive; whole‑contract consideration suffices and opt‑out omission alone is not determinative

Key Cases Cited

Brown ex rel. Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (defining procedural and substantive unconscionability and burden on challengers)
Credit Acceptance Corp. v. Front, 231 W.Va. 518, 745 S.E.2d 556 (interlocutory appeals of orders denying motions to compel arbitration)
State ex rel. Ocwen Loan Servicing, LLC v. Webster, 232 W.Va. 341, 752 S.E.2d 372 (discussing opt‑out provisions and lender carve‑outs in mortgage arbitration clauses)
Dan Ryan Builders, Inc. v. Nelson, 230 W.Va. 281, 737 S.E.2d 550 (arbitration clause enforceability when contract as whole has adequate consideration)
State ex rel. AT & T Mobility v. Wilson, 226 W.Va. 572, 703 S.E.2d 543 (adhesion contracts may be enforceable; case‑by‑case unconscionability review)
Brown v. Genesis Healthcare Corp., 229 W.Va. 382, 729 S.E.2d 217 (Brown II) (sliding‑scale approach between procedural and substantive unconscionability)