State ex rel. U-Haul Co. v. Zakaib
232 W. Va. 432
| W. Va. | 2013Background
- U-Haul and three plaintiffs entered into a Rental Contract with U-Haul; an Addendum containing an arbitration clause was not signed and was not provided before signing.
- Addendum was physically presented after signing and was designed as a document holder/advertising, not an obvious contractual term.
- The Rental Contract referenced the Addendum but did not clearly disclose arbitration terms.
- Circuit Court ruled the Addendum was not incorporated by reference and thus arbitration could not be compelled.
- U-Haul sought a writ of prohibition to enforce arbitration; court denied writ, upholding non-incorporation.
- West Virginia law recognizes incorporation by reference but requires a clear, unequivocal reference and assent, which was lacking here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Addendum was incorporated by reference into the Rental Contract | U-Haul failed to properly incorporate the Addendum | Addendum reasonably incorporated by reference | Not incorporated by reference |
| Whether mutual assent to arbitration existed | No assent since Addendum not presented prior | Assent shown by reference to Addendum in contract | No mutual assent; arbitration not enforceable |
| Whether the arbitration clause is enforceable under contract law and the FAA | Clause not part of contract; not enforceable | FAA allows incorporation by reference; enforceable if proper | Enforceability not established due to lack of incorporation |
| Whether the circuit court properly applied the doctrine of severability | Severability supports severing arbitration clause | Severability not applicable since not part of contract | Circuit court properly applied severability; clause not enforceable |
Key Cases Cited
- Brown v. Genesis Healthcare Corp., 228 W.Va. 646 (2011) (arbitration agreements require clear assent and proper contract formation)
- Rashid v. Schenck Constr. Co., Inc., 190 W.Va. 363, 438 S.E.2d 543 (1993) (FAA incorporation by reference and contract formation principles)
- PaineWebber Inc. v. Bybyk, 81 F.3d 1193 (2d Cir. 1996) (incorporation by reference requires clear identification and assent)
- Logan & Kanawha Coal Co., LLC v. Detherage Coal Sales, LLC, 514 F.App’x 365 (4th Cir.2013) (West Virginia noted lack of articulated requirements for effective incorporation by reference)
- Art’s Flower Shop, Inc. v. Chesapeake & Potomac Tel. Co. of West Virginia, Inc., 186 W.Va. 613, 413 S.E.2d 670 (1991) (recognizes incorporation of provisions by reference in general contract)