State Ex Rel. Richmond American Homes of West Virginia, Inc. v. Sanders
228 W. Va. 125
| W. Va. | 2011Background
- West Virginia Supreme Court reviews writ of prohibition to compel arbitration in radon-related home construction actions against Richmond American Homes.
- 40 adults and children across 11 Jefferson County lawsuits allege radon-related injuries from homes Richmond built.
- Richmond sought to compel arbitration based on Purchase Agreements; 17 plaintiffs signed, 18 were relatives of signatories, 5 purchased from non-parties who had agreements.
- Circuit Court held arbitration clause ambiguous, unconscionable, and unenforceable after reviewing the Purchase Agreement as a whole and considering extrinsic contract circumstances.
- Circuit Court found the clause constrained damages, limited remedies, and included an impermissible class-action waiver; it also found ambiguity in Section 21’s mediation/arbitration language.
- Richmond petitioned for writ of prohibition; Supreme Court denies the writ, upholding the circuit court’s ruling that arbitration was unenforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the circuit court could consider non-clause contract terms in determining unconscionability | Richmond: FAA severability requires limiting review to the arbitration clause itself. | Richmond: extrinsic contract terms and full context may be used under the FAA savings clause. | Circuit court may rely on the contract as a whole under the FAA; severability contextual review permitted. |
| Whether the arbitration clause was unconscionable due to the class-action waiver | Richmond: class waiver does not presumptively render arbitration unconscionable and Concepcion preempts per se invalidation. | Richmond: class waiver supports unconscionability; should be dispositive. | Arbitration clause found unconscionable on multiple grounds; class waiver not of itself dispositive, but remaining factors supported unconscionability. |
| Whether Section 21's mediation/arbitration language was ambiguous | Richmond: Section 21 should be read as separate parts or read in isolation to show clear assent to arbitration. | Richmond: Section 21 should be treated as integrated; not ambiguous. | Section 21 is ambiguous; construed against the drafter, Richmond. |
| Whether nonsignatories could be bound to arbitration | Richmond: nonsignatories may be bound under theories of contract or agency. | Court did not address nonsignatories; decision focuses on signatories and ambiguity. | Not necessary to decide binding nonsignatories; arbitration clause unenforceable as to signatories. |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitration clause severability and contract formation standards under FAA)
- Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000) (arbitration costs and unconscionability considerations in FAA context)
- AT&T Mobility LLC v. Concepcion, 563 U.S. _ (2011) (per se invalidation of class-action waivers preempted by FAA; meaningful review required)