Schuiling v. Harris
747 S.E.2d 833
Va.2013Background
- In 2007, Harris signed a one-page arbitration agreement as a condition of employment with Schuiling’s Brown Automotive Group, naming NAF as the arbitrator.
- Paragraph 1 of the Agreement provides that disputes shall be resolved exclusively by arbitration administered by NAF; a severability provision appears later in the document.
- In 2011, Harris filed a 10-count complaint; Schuiling moved to compel arbitration under Code § 8.01-581.02(A) and notified that NAF was no longer available.
- Harris urged that the exclusive designation of NAF made the arbitration agreement unenforceable if NAF could not administer the arbitration, and no substitute arbitrator was provided.
- The circuit court denied the motion to compel arbitration, prompting Schuiling to appeal under Code § 8.01-581.016(1).
- The issue presented is whether NAF’s designation is an integral part of the agreement or severable, affecting the enforceability of the arbitration clause if NAF is unavailable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is NAF's designation integral to the agreement? | Harris: designation is integral; unenforceable without NAF. | Schuiling: severable via severability clause; arbitration can proceed with substitutes. | Not integral; severable; arbitration can proceed. |
| Does the severability clause permit severance of NAF's designation for any reason? | Harris: severability clause does not imply severance of NAF designation. | Schuiling: severability clause broad enough to sever NAF designation if unenforceable. | Severance permitted; NAF designation severable. |
| Does Virginia's arbitration statute control when a designated arbitrator is unavailable and no substitute is provided? | Harris: statute cannot be overridden by the contract; designates NAF exclusively. | Schuiling: statute provides mechanism to appoint substitutes; contract may limit it only if clearly stated. | Statute controls; absence of express limitation means substitute appointment applies. |
Key Cases Cited
- TM Delmarva Power, L.L.C. v. NCP of Va., 263 Va. 116 (2002) (arbitration policy favoring enforcement but allows severability where intended)
- Wilson v. Holyfield, 227 Va. 184 (1984) (interpret contract in light of intent, harmonize provisions)
- Eschner v. Eschner, 146 Va. 417 (1926) (integral vs. severable contract provisions—fact-specific inquiry)
- Hood v. Virginian Railway Co., 152 Va. 254 (1929) (purpose to harmonize contract terms; severability considerations)
- O'Quinn v. Looney, 194 Va. 548 (1953) (statutory framework and contract interpretation for severability)
- Waterfront Marine Constr. v. North End 49ers Sandbridge Bulkhead Groups A, B and C, 251 Va. 417 (1996) (presumed knowledge of appointment provisions in arbitration statutes)
- Stewart v. GGNSC-Canonsburg, L.P., 9 A.3d 215 (Pa. Super. Ct. 2010) (assessing intent to determine whether a provision is integral)
- Jones v. GGNSC Pierre LLC, 684 F.Supp.2d 1161 (D.S.D. 2010) (integral vs. ancillary analysis in severability contexts)