820 S.E.2d 416
W. Va.2018Background
- CPRB (1991) contracted with VALIC for a fixed annuity containing a “20% Rule” limiting transfers to 20% per year (unless remaining surrender value < $500 or transfer to two ORP funds). IMB was later designated signatory on a materially similar 2008 replacement contract that preserved the 20% Rule.
- In 2008 the Legislature enabled mass transfers from the DCP to TRS; the State sought liquidation and VALIC refused lump‑sum withdrawal, invoking the 20% Rule (offering either five annual 20% transfers or an $11.2M buyout).
- Petitioners (IMB/CPRB) sued for declaratory relief and damages for lost investment opportunities; the trial court granted VALIC summary judgment, and this Court reversed in IMB I and remanded for further proceedings in the Business Court Division.
- The parties agreed to mediate and, if unsuccessful, to binding, non‑appealable arbitration before a three‑judge Business Court panel (including the presiding judge who had mediated). The agreement limited procedure, made the award final and nonappealable, and required a reasoned decision applying West Virginia law.
- After discovery and arbitration, the unanimous panel found for VALIC—concluding the 2008 contract was formed with knowledge that the 20% Rule applied—and dismissed Petitioners’ claims. Petitioners appealed, arguing the arbitration was illegal and waived public access and appellate rights; the Supreme Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority of Business Court judges to conduct arbitration | Arbitration agreement was invalid because judges may not act as arbitrators and the panel makeup (including the presiding judge) was improper | Business Court Rules authorize a Resolution Judge to mediate/arbitrate; parties consented to panel | Court held Business Division rules permit judge‑led arbitration if within official duties and by party agreement; panel makeup not illegal |
| Confidentiality / public access | Agreement to make proceedings confidential violated WV constitutional right of open courts | Proceedings were publicly docketed; transcripts available; confidentiality provision functioned as protective order | Court distinguished Strine and held no constitutional violation here; public access was not precluded |
| Waiver of appellate review / binding arbitration | Parties cannot waive subject‑matter jurisdiction or appellate review; judicial arbitration is always nonbinding | Parties are sophisticated; agreement clearly waived appellate review of merits; statutory arbitration provisions do not bar waiver of appellate review to this Court | Court held parties validly waived appellate review of merits under the Act; final, nonappealable award enforceable though statutory remedies (motions to confirm/vacate) remain available |
| Application of law / law of the case (IMB I) | Panel failed to apply IMB I and thus exceeded jurisdiction; award should be vacated | Parties waived merits appeal; petitioners recast merits objections as jurisdictional to avoid waiver | Court declined to void award; found panel considered IMB I, examined extrinsic evidence developed after remand, and law‑of‑the‑case did not preclude the panel’s findings |
Key Cases Cited
- West Virginia Investment Management Bd. v. Variable Annuity Life Ins. Co., 234 W. Va. 469, 766 S.E.2d 416 (W. Va. 2014) (prior opinion reversing summary judgment and remanding for Business Court proceedings)
- U.S. v. Stuart, 489 U.S. 353 (U.S. 1989) (contract interpretation principle that a party is bound by a meaning known to the other party)
- Delaware Coalition for Open Government, Inc. v. Strine, 733 F.3d 510 (3d Cir. 2013) (court‑sponsored private arbitration that barred public access violated constitutional access principles)
- Ben Lomond Co. v. McNabb, 109 W. Va. 142, 153 S.E. 905 (W. Va. 1930) (equity will not enforce a contract made for illegal purpose)
- Tabas v. Tabas, 47 F.3d 1280 (3d Cir. 1995) (contractual provision for final, binding, nonappealable arbitration limits appellate scrutiny of merits)