State ex rel. Johnson Controls, Inc. v. Tucker
229 W. Va. 486
| W. Va. | 2012Background
- Glenmark Holding, LLC sues seven defendants over HVAC design, construction, and maintenance issues from a 2004 Suncrest building.
- Morgan Keller, Inc. seeks to compel arbitration under an AIA contract; York petitioners seek arbitration under a 2004 maintenance agreement with an arbitration clause.
- Circuit court denied both arbitration motions, finding the clauses unconscionable and that arbitration would fragment litigation and waste resources.
- Glenmark argues FAA requires enforcement of arbitration and that the clauses are unconscionable only where appropriate; the circuit court disagreed with the scope and unconscionability findings.
- Writ of prohibition petitions are granted, vacating the circuit court’s blanket denial and directing enforcement of the arbitration agreements as to the respective claims.
- Court analyzes whether FAA limits or permits discretion and applies Brown I/Brown 7 unconscionability framework to two distinct arbitration provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FAA discretion in compelling arbitration | Glenmark: FAA requires enforcement; court should compel. | Morgan Keller/York: FAA mandates blanket compulsion. | FAA allows consideration of defenses; court may deny if unconscionable. |
| Piecemeal litigation and FAA | Glenmark: multi-party litigation supports unconscionability of bifurcating arbitration. | Morgan Keller/York: FAA requires arbitration of arbitrable claims even if piecemeal. | FAA permits sending arbitrable claims to arbitration; must not refuse arbitration solely for inefficiency. |
| Morgan Keller AIA agreement unconscionability | Glenmark: clause is procedurally and substantively unconscionable. | Morgan Keller: clause is not procedurally or substantively unconscionable. | Arbitration clause not unconscionable; circuit court erred in denying enforcement. |
| York petitioners' maintenance arbitration scope | Glenmark: maintenance arbitration should extend to pre-maintenance design/installation. | York: arbitration limited to post-2004 maintenance disputes only. | Arbitration applies only to post-2004 maintenance disputes; pre-maintenance claims not compelled. |
Key Cases Cited
- Brown v. Genesis Healthcare Corp., 228 W.Va. 646 (2011) (unconscionability framework; Brown I guiding standard)
- Brown v. Genesis Healthcare Corp., Brown II, 229 W.Va. 382, 729 S.E.2d 217 (2012) (expands unconscionability considerations)
- Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Univ., 489 U.S. 468 (1989) (arbitration policy vs. economy of litigation; enforce terms)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) (intertwining doctrine; favors enforcing arbitration agreements)
- Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1 (1983) (FAA thresholds and arbitrability concepts)
- KPMG LLP v. Cocchi, 565 U.S. - (2011) (per curiam; clarifies FAA interplay post-Byrd/Volt)
- Perini Corp. v. Greate Bay Hotel & Casino, Inc., 129 N.J. 479, 610 A.2d 364 (1992) (consequential damages limitations in arbitration agreements)
- Brown v. Genesis Healthcare Corp., Brown I, 228 W.Va. 646, 724 S.E.2d 250 (2011) (Brown I syllabus points on unconscionability and adhesion)
- Saylor v. Wilkes, 216 W.Va. 766, 613 S.E.2d 914 (2005) (state standards on prohibition and arbitration)