Board of Education v. W. Harley Miller, Inc.

judgments Court Accordingly, Circuit record. August County, in this action on 21, entered Hancock reversed, the verdict and December aside, trial awarded. jury and a new is set

Reversed, jury verdict aside; new trial set awarded. Berkeley County Board of Education Harley Miller, corp. Inc., W. CC899)

(No. July 5,

Decided 1977. Underwood, Steptoe, Robert M. Herbert plaintiff. for G. Rice, Douglas, Rice, Lacy Jr., Hannis & I. Martin & Seibert, Martin, Jr., E. Clarence for defendant. Neely, Justice: granted appeal purpose

The Court this for of set tling the law of arbitration in State. is exact majority sues before us were raised in and discussed opinion by concurring by Haden opinion Justice and the appeared this writer when the case first before us two years ago. See, Ed., Miller, Harley Board etc. W. _ W. Inc., _, Va. 221 S.E.2d 882 The basic issue before us now to what and in extent what man award, ner a court should enforce an arbitration which pursuant is rendered without fraud to a standard arbi provision in tration a commercial contract. appeal question

This is a certified which asks whether jurisdiction the circuit court has to enforce an arbitra- upon summary tion award motion for party prevailing at arbitration. The Circuit Court Berkeley County jurisdic- held that it have did not such tion, and we reverse. factual context present- the issues were dispute Berkeley County

ed involves between (Board), owner, Board Harley of Education as and W. Miller, (Miller), contractor, Inc. as over Miller’s excava- Berkeley High tion and removal of rock from the North Miller construction site. claimed Board owed School money agreed him sum of above the con- a substantial price work. The Board tract for this resisted Miller’s by asserting claim Miller did not follow the contract’s procedures computing place. the volume of rock in To dispute pursuant settle the Miller demanded arbitration provision to a arbitration contained in the con- standard provi- struction contract with the Board. That contract sion is: claims, disputes

“All and other matters question arising of, relating out to this Con- thereof, tract or the breach ... shall be decided accordance the Construc- Industry Arbitration Rules the American tion obtaining then Arbitration Association unless parties mutually agree otherwise. This specifically to arbitrate shall be en- prevailing law. forceable under rendered the arbitrators shall be The award judgment may upon final and be entered any applicable law in court accordance with hav- ing jurisdiction thereof.” responded to demand for

The Board Miller’s arbitra- declaratory by filing judgment in the tion action Cir- Berkeley County prelimi- seeking and cuit Court of restraining nary injunction proceeding Miller from to injunction against preliminary The arbitration. issued Miller, pending declaratory the outcome of the Following action. the Circuit Court’s denial of Miller’s preliminary injunction, ap- the Miller motion to dissolve injunction pealed order to this Court where we re- the and remanded the case with versed the circuit court preliminary injunction and instructions to dissolve parties proceed so that could to to abate the action Ed., Miller, Harley supra. Board etc. v. W. of duly dispute then submitted to a selected The was arbitrators, panel who rendered their award for $323,291.52 in favor of Miller November 1976. After award, receiving a Petition to Enforce Miller filed declaratory judg- of Arbitrators in the abated Award 476 parties, petition

ment action. motion of On Miller’s summary judgment was taken as a motion for and petition answer was as an Board’s to taken affidavit opposition summary judgment to the motion. cir- grant summary cuit then court refused to for motion judgment, jurisdiction, ground on the it lacked and the jurisdictional question circuit court certified the to this Court.

I. large conflicting has read a number Court cases State,1 on arbitration in this the mother Commonwealth jurisdictions. Virginia, Arbitration, appar- and other ently, potential good has an both enormous and for concurring opinion recognized evil. As in the first case, supra, litigation poor Board v. Miller way is a to expensive, consuming, resolve It controversies. time engender jeopardizes ill tends will which continu- ing relationships. Consequently, business where both speedy, economical, are concerned with conflict resolution, relations, and harmonious business will prefer litigation, often incorporate preference in their contracts. writer This in his concurring opinion case, supra, in the Miller first tended emphasize advantages giv- of arbitration without ing disadvantages. sufficient attention to its Board v. Miller, supra, 221 at S.E.2d 886. 1 cases These include: Ed., Harley Miller, Inc., Va. _, Board etc. v. W. W. 221 S.E.2d Browder, Court, County Earl (1975); T. v. Webster 406, 882 143 W.Va. Olga Co., Pettus v. Coal (1958); 425 S.E.2d 137 W.Va. (1952); Hughes Fuel National S.E.2d 881 121 W.Va. Osenton, (1939); Boomer Coal & Coke Co. v. S.E.2d 621 101 W.Va. Department Lewis, 381, (1926); 133 S.E. Morrison Co. v. Stores 277, 122 S.E. 747 (1924); Kohlsaat v. Main Island Creek 96 W. Va. Co., Coal (1922); S.E. 213 v. 656, Flavelle Red Jacket W. Va. 112 90 Co., Consolidated Coal & Coke 96 S.E. 600 295, (1918); Va. 82 W. Co.,

Lawson v. Williamson & Coke Coal 57 S.E. 258 61 W. Va. (1907); Riley Jarvis, (1896); Kinney v. 26 S.E. 366 v. Assn., Baltimore & Bean, Ohio (1891); S.E. 8 Bean v. 35 14 W. Va. Divine, (1885); and Tennant v. Va. 25 W. 604 24 W. Va. 387 (1884).

477 Many disadvantages of arbitration are detailed Virginia in the factual contexts of earlier West cases agreements. which denied enforcement of arbitration prior may Virginia While the results these West cases correct, legal confusing gives reasoning be no problem answer to the at hand. clear early directly Case, Vynior’s cases draw on 8 Co. 80a, (1609), decided Lord This 81b Coke. case is the authority proposition for the that at basic common law may submission to arbitration be revoked.2 Kill v. Hollis (K. ter, 1746), up Vynior’s 1 B. Wilson 129 followed on by explaining the rationale for the doctrine of revo- Case seemed, cability: agreements, ousted jurisdiction. persisted courts of their This rationale has cases, perhaps law into modern common with significant modification, one doctrine condition Avery, precedent. v. H. L. Scott Cas. 811 is the doctrine, English authority holding foremost on this may agree that no cause action arise upon their contract until after there has been arbitra disputes. The tion of contractual Commonwealth of Vir ginia, Virginia state, incorpo before West became a had Avery v. well rated the doctrine of Scott as as the revocability underlying doctrine of into her common law See, passed our own law. which then into Condon (14 Gratt.) R. 55 Va. South Side Very regard proper little illumination rule underlying policy support- for arbitration and the social Vynior’s As Coke stated case: account; assign I if I make “... if auditors to take an or one myself arbitrament; my factor; although or if I submit to an by express irrevocable, grant made words or that I these are irrevocably, yet may am bound that all these shall stand my irrevocable, if I make and last will be revoked: so testament yet may it, my my act or words cannot alter I revoke irrevocable, the law to make that which is of its nature revocable.” own Ironically, in this case of the doctrine of revocabi- statement Nonetheless, despite lity agreements dictum. of arbitration was its firmly origin, questionable in the the doctrine became established law. common

ing gleened prior Virgin- rule can be from the West “jurisdiction,” ia cases because talk terms of precedent”, “implied precedent”, “conditions conditions “revocability”. prior Virginia and Most West cases indulge in what this writer would call a rule selection analysis. process, cogent and contain little functional II. problem proba-

The basic in all arbitration cases could bly explained legal best be terms of characteriza- precedent,” “ousting tions such as “conditions courts of jurisdiction,” “revocability,” by their but rather a hypothetical case in the tradition of the ancient fableist Aesop. Let us assume for a minute that for some reason all the rabbits and all the foxes decided to enter into a security, provision contract for mutual one of which any disputes arising were that out of the contract would by panel be arbitrated a of foxes. Somehow that shocks consciences, help very and it our doesn’t the rabbits much either.

Now, happens if what we have the same contract with provision, except disputes the same arbitration will by panel be arbitrated a of wolves? Is there such a community among of interest foxes and wolves that impartial? Possibly. happens wolves cannot be what Now disputes panel composed if will be a resolved of one squirrel, elephant, might one and one wolf? One con- squirrels rabbits, clude that look like wolves look like foxes, elephants ought surely impartial. and to be procedurally very complex

Animal law becomes if for a arguendo absolutely moment we assume that we will prohibit provision provides an arbitration for ar- panel foxes, pro- bitration a and that we will also panel recognition hibit wolves community happens their of interest with foxes. What panel then if there is a sincere effort to obtain a fair arbitrators, example squirrel, elephant, as for wolf, forthcoming dispute expect- and the decision in a legitimately go against ed the rabbits? rabbits, may logically whom we assume will have represent them,

retained the services of some sharks go plead “wolfery”, say, will into court and is to elephant community also has of interest wolves, the foxes and pur- so that for all intents poses wolf, it is the same as if he were a which is the obviously as same a fox. The rabbits will demand a hear- ing jury question and a full-blown trial on the of wheth- elephant squirrel er an like looks more a or more a like wolf, gives and as soon hearing, as the law the rabbits a foxes, relying good arbitration, might in faith on as goodbye, only they well kiss themselves because not will go they be forced to but will also be go through again thing forced to the whole in court either in the first instance when the rabbits seek to enjoin arbitration, they, or after arbitration when foxes, purpose seek to enforce their award. The of arbi- tration, namely just, speedy, economical conflict resolu- is defeated if tion the foxes must demonstrate the fair- procedure disprove allegation ness of the in order to “wolfery”. of

However, attempt problem if the courts to avoid the of plea “wolfery”, by writing strong sylla- the frivolous of points making provisions absolutely bus arbitration cases, binding in and enforceable all then all the fox lawyers begin writing come out of the woodwork and provisions, arbitrators, with wolves for into contracts, regardless all of the nature of the transaction. strong bargaining posi- If the foxes are with a blessed advantage unwary tion will be able to take rab- prosecution just bits on all occasions and defeat against claims themselves.

III. analysis Virginia A functional of the West cases which do not favor arbitration demonstrates this Court provision by countenance an arbitration would agree disputes all will which be arbi- by panel exclusively by par- trated a chosen one situation, ties. This is the classic rabbits and foxes stacking panel the foxes the arbitration their favor. inherently inequitable provision is Such a contract way unconscionable because in a it nullifies all the other provisions of the contract. While we do not have a case facts, may presenting conceptualize set of we as spectrum going one extreme from arbitration as a defeating just means claims to arbitration as a speedy, economical means of conflict resolution. The con- curring opinion case, supra, in the first Miller reaches just problem defeating part claims discuss- ing problem presented provisions party contracts of adhesion where one to a contract is monopolistic confronted another which holds a oligopolistic position. Virginia Kinney case of v. Baltimore West & Ohio Assn., Employees’ S.E. 8 Relief representative apparently of a line of cases predicated concept disapprove on the of fairness In that arbitration. case widow sued for death benefits payable killing because of the accidental of her husband Although on the railroad. the constitution of the relief required disputes all association be submitted to panel and the included one arbitrator select- by two, ed each and a third selected the first applied principle the court the common law con- Kinney parties to arbitrate In tracts revocable. large association; were a widow and a the Court obvious- ly purpose, concluded that arbitration served no useful and that somehow under these circumstances the arbi- procedure only just tration could be used to defeat a particularly, claim. More one can infer that the arbitra- provision bargained policy- tion was not for and that legitimate expectations holder had her defeated re- provision meaningless course to a which was to the Generally person. untrained cases where arbitration rejected compelling has been the facts are more than logic. also: Lawson v. See Williamson Coal & Coke Co., 61 W. Va. 57 S.E. 258 and Kohlsaat v. Co., Main Island Creek Coal 112 S.E. 213 (1922).

However, Virginia also has a line of cases which West arbitration. These cases resulted from this favors development Court’s and extension of the doctrine which, out, gives precedent, as it turns courts condition escape rigid a to strictures convenient means revocability A law doctrine. look at the facts common and the results these cases indicates Court precedent using the doctrine of condition has been agreements enforce arbitration whenever a close exami- agreements nation of the reveals their fundamental fair- process, good example of this see Pettus v. ness. For a Olga Va. 72 S.E.2d 881 It is Coal W. situation, opposite the exact of the rabbits and foxes parties probably in Pettus because both were foxes. brought In Pettus members of a labor union an action they against employer pay in court their overtime employer wrongfully claimed the withheld. These em- comply provisions ployees with the of their col- did requiring disputes bargaining lective contract to be set- by arbitration, employer tled and the resisted their suit clearly The situation called for the court on this basis. stay grievance proce- labor contract its hand so legitimate purposes for which dures could serve law were intended. Yet the common doctrine of revocabi- freely lity parties bypass indicated that could arbi- proceed to court. The obvious solution was tration precedent, apply the doctrine of condition which the Pettus court did. The doctrine was extended somewhat language expressly there was no condi- Pettus since compliance tioning right action on with arbitration a procedures. the court was forced to find such Thus by implication, and stated the rule as follows: condition procedure providing “A for arbitration contract claims, disputes, providing that ‘all de- growing therefrom or involved mands or actions contracting set- therein shall be exclusively by the machin- determined tled and contract, ery provided creates a condition in the’ arising any right suit precedent to of action or Syllabus point Pettus v. under the contract.” Co., supra. Olga Coal

482 really for, Pettus

What stands after the haze of its legal reasoning settled, convoluted has is that where sophisticated parties, there are two on the one hand employees major unionized and on the other a coal .com- pany, and where the bargained clause was by parties for and was provide intended both to an effec- litigation, tive alternative then the courts should re- quire parties proceed both to arbitration.

Under the facts of the case before us what we have sophisticated parties, are two one a substantial contrac- governmental unit; tor and the other a there is a stan- providing dard arbitration clause for arbitrators to be through selected the American Arbitration Association panel experienced from a of impartial arbitrators; parties represented by counsel, were or should have represented by counsel, been and could repre- have been by counsel; and, sented dispute which arose under the contract dispute is standard rock excavation which predictable occurs with regularity such that both devel- opers routinely expect and contractors Furthermore, it. rock disputes clause and similar common are more sus- ceptible equitable resolution when the decision is experienced made building arbitrators in the indus- try who can take notice of far more information than a judge safely common law could notice.

IV. spite In being all the reasons suspicious of arbi- tration, weight modern, enlightened authority fa- preferred vors arbitration as a means of conflict resolu- process tion.3 probably has fully been most jurisdictions parties current rule in most who have agreed disputes to resolve their arbitration are bound their F.Supp. word. McCormack v. (S.D.N.Y., S. S. Bloomfield 1974); Borough Ambridge Authority Columbia, Water v. 458 Pa. (Pa. 1974); (Colo. MacKay, 328 A.2d 498 Loukonen v. 490 P.2d 78 1971). App. form, viz., This rule is often stated in obverse required any dispute cannot be to arbitrate agreed have not to arbitrate. United Steelworkers America v. Navigation Co., 574, (1960); Warrior & 363 U.S. Butler Prod Gulf Company Corp., (7th Cir., ucts 1966); Unistrut 367 F.2d 733 Divi

483 developed law,4 unique in the area of labor which is a having necessarily applicable area rules which are not 1205, Greyhound Lines, Inc., F.Supp. sion Amal. Trans. v.U. 323 (D.C. Mass., 1971),Anheuser-Busch, 219 Inc. v. Brewers and Malt 1972). F.Supp. (E.D.Mo., By sters Local No. Union 346 239 6, agreements general princi rule ples to arbitrate are enforceable under subject only of contract law and therefore to invalidation inso general provides. Shipping far as contract law Son Co. v. DeFosse (2d Tanghe, 1952); Cir., Lowry 199 F.2d & 687 v. & Co. S. S. Le Moyne D’Iberville, F.Supp. (S.D.N.Y., 1966), appeal 253 396 dis (2d. missed, Cir., 1967); Shrager, 372 F.2d 123 Mendelson v. 432 Pa. 383, 234, (1968); Supply A.2d 248 Riccardi v. Modern Linen Silver Co., Inc., 872, (1974),aff'd., 356 N.Y.S.2d 45 A.D.2d 191 373 N.Y.S.2d 551, 335 N.E.2d 856 among jurisdictions today The debate is not whether an agreement binding, to arbitrate is but how far courts should reach agreement expressly provid to infer an such where none has been parties. Although jurisdictions ed some hold that the court go beyond explicit cannot of terms the contract to find an agreement arbitrate, Country 91, Flood v. Mut. Ins. 41 Ill.2d (1968); Cook, App. 313, 242 N.E.2d Allstate v. Ins. Co. 21 Ariz. (1974), jurisdictions among 519 P.2d 66 the trend is to hold that ordinary apply principles interpretation the court is to of contract impliedly agreed to determine whether the trate, have to arbi particular Tepper Realty or submit issues to arbitration. Company Company, F.Supp. (S.D.N.Y.,1966); Cir., 1972); v. Mosaic Tile 259 688 (8th Ludwig Laboratories, Inc., v. Marion 465 F.2d 114 Super Corp. Drivers, Etc., Mkt. Serv. General Loc. U. 340 1972). (M.D.Pa., F.Supp. certainly 1143 These latter decisions accord harmoniously approach more ing with the current contract to enforc agreements. 4 trilogy Supreme “.. in the landmark Steelworkers of challenge indicated that Court arbitration awards most cases. The Court limited the courts’ role courts would be closed to the of ascertaining seeking making ‘to whether arbitration is governed by contract,’ claim which on its face [United Steel Manufacturing Co., America v. American workers 363 U.S. 564 (1960)] strong presumption favoring created a arbitration in con disputes, tract America v. [United Steelworkers Warrior & Gulf (1960)] Navigation Co., and, finally, 363 U.S. 574 held that if the agreement, arbitrator’s award is based on the relevant the courts novo, must enforce regardless and not consider the case de agrees whether the court with the award or even if it ambiguous, [United finds the award is America v. Steelworkers of (1960)].” Enterprise Corp., U.S. Board Wheel& Car 593 Edu _ W. Va. _ 221 Harley Miller, Inc., cation v. W. 888, S.E.2d 882 at (Neely, concurring.) J. something gleened in other areas. Yet there is still to be by analogy Fairly from labor situation. hard and general developed fast rules can be in labor law because patterns predictable regularity. the factual recur with always Labor contracts entered into business parties, i.e., organization on the one hand an of workers paid experienced counsel, with a staff and on the an enterprise other hand industrial or commercial also experienced agreements usually counsel. Labor re- bargaining sult from real about the terms of the con- tract, particularly the “no strike” clause and the arbi- management tration clause. Both union and have a continuing solvency interest in the of the business en- terprise providing profits management which is to and employment workers, to and both sides want to avoid stoppages profits work which will curtail on one side and wages Any attempt eliminate on the develop other. to general rule about precedent arbitration from labor law parties must take account both of the nature of the to a goals parties. labor contract and of the of those presents again difficulty The case before us have years. courts wrestled for three hundred Experience seems to in formulating indicate rules of one must either make the rule that an specifically to arbitrate is enforceable any extinguished cause of action is the award of the merged it, appears arbitrators into whenever from reading a fair parties contract intended to resolving be the exclusive means con- disputes, forget tractual or one must about arbitration aas viable alternative to the normal litiga- common law process. tion attempts incorporate As soon as the law to protections unwary for the the law of purpose then the entire defeated, of arbitration at regard litigious, least with recalcitrant, to or contuma- parties. hypothetical above, cious In the this is the case plead “wolfery” where the rabbits and demand a hear- ing with proceedings, full-blown court avoiding thus speedy, economical, conflict resolution. say,

If we as this writer concurring opinion did case, Miller supra: first spelled “Procedures for arbitration can be out procedures the contract. When such are not spelled fully out the arbitrators should be free to any procedure they use scope see fit. The agreements to liberally arbitrate should be con- parties strued. The arbitrator, contract for an procedure. process Due does not necessari- ly Anglo-American mean legal evidence, rules of nor winner-take-all substantive rules. Further- more, parties agreed once the arbitrate, have they ought not to be re-litigate allowed to same system issues in the courts. The of review of arbitration up awards should be set to avoid delay losing caused in arbitration challenging arbitrators, award of the espe- cially procedural grounds! on mere The strict governing rules an action at law have never applicable been to an arbitration proceeding, Boomer Osenton, Coal & Coke Co. v. 133 S.E. 381 should know they agree

this when arbitrate, should not be complain heard later on an issue procedure. can, Arbitration and almost inev- itably does, decide the substance of the contro- versy justice regardless substantial pro- of cedure.”

then we have created a rule where the arbitration award is enforceable and there are no frivolous defenses which relitigation would be conducive of the entire However, issue the circuit court. we have then creat- equally frightful ed a monster of possible mien. Is it any protection unwary devise for the which is not an invitation to a trial de guise novo under searching the procedural errors, prejudice part on the of arbitra- tors, and numerous other issues which will make arbi- tration a blessing? curse instead of a How can we create any defense other than fraud to an arbitration award having without the defenses eat the rule and frustrate process? the

V. place in ever to have a useful our If arbitration is prob- jurisprudence, it is essential that we address which we caricature as the contract between lem foxes, impose in which the foxes the clause rabbits and by foxes, disputes panel a or that all will be resolved envisage panel In life we can a of wolves. real arbi- being imposed upon provisions consumers in con- tration totally ignorant where consumers are tract situations implications signing, are and of what where away many bargain protections which consumers difficulty them with such at com- have been secured for mon law. problem

To solve this we enounce new rule of law generally prior which is consistent with the results cases, conceptualizes problem different, which but parties agree functional terms. Where to a contract disputes particular arbitrate either all limited dis- contract, putes arising under and where the bargained provision, then, for the arbitration mandatory, any of action under causes con- the contract terms are made arbitrable tract merged, fraud, are in the absence of with the arbitration upon award and the arbitration award is enforceable contract, complaint setting pro- forth the vision, upon the award of the arbitrators motion for summary judgment proper made at the time. important words in the new rule are that “bargained to arbitrate must have been for.” concurring opinion case, supra, in the first Miller spoke of the traditional contract of adhesion situation may party which one to a contract be confronted monopolistic another which holds either a or oli- gopolistic position particular in some line of commerce. exception appear While this would to address most likely in the law avenue for abuse there specifically two more which should be mentioned. bring can an arbitration clause Whenever within unconscionability § provisions 2-302 of the Uni- Code, Code, form Commercial (1963), W. Va. 46-2-302 then that, too, would indicate meaningful there was no bargaining regard provision to the arbitration Furthermore, should invalidate it. when arbitration is wholly inappropriate, given the contract, nature of the only and could just have been claims, intended to defeat provision cannot be considered to have been bar- gained for. question provision whether an arbitration is

“bargained must, for” in order to make workable, always abe matter of law for the court question determine and never a of fact. Under modern jurisdictions case law other strong pre- there is a sumption provision an arbitration part is of the bargain. Virginia only Therefore appears West if it from the four corners of a written contract or from the obvious nature contracting parties, or from the activity obvious nature contract, covered provision the arbitration is so inconsistent with the other oppressive terms of the contract or so under circumstances bargained for, could not have been should a court provi- refuse to enforce the arbitration sion.5 today end result of the rule which we enounce provisions

that all arbitration in all contracts which in- dicate that intended to arbitrate their differ- litigate rather presumptively ences than them are bind- 5 Determining agreements as a matter of law whether arbitration experienced should be enforced is a that courts are making. example, covering property For insurance contracts against casualty provide loss often for arbitration if the insured dispute and his insurer the amount of loss. Courts must refuse to agreement, however, total, enforce the arbitration when the loss is though every respect. even the arbitration is valid Maynard Hartford, v. National Fire Insurance Co. 147 W.Va. (1963); Co., 129 S.E.2d 443 Nicholas v. Fire Granite State Ins. 125 W. (1943); Va. S.E.2d 280 Hinkle v. North River Ins. W. Va. 75 S.E. 54 While such determinations stem in part Virginia’s policy Code, from West “valued law” W. Va. 33-17-9 (1957), they competence nevertheless demonstrate the courts’ make such decisions as matters of law.

488 Accordingly we hold specifically ing, and enforceable. erred in not the circuit court us that the case before enforcing award. the arbitrators’

VI. bar, Board, alleges that in the case at The defendant Virginia at the time it in West law of arbitration was as to with Miller such into the contract entered nullity. procedure of arbitration Con- the whole make argues pro- contract that when the sequently, the Board says the arbitrators shall be that the award of vision law, general the clause is in accordance enforceable general law neither made arbi- meaningless because the precedent litigation nor made the to tration a condition specifically enforceable. award the law on arbitration has concedes Court years; jurisdiction for a number of unclear in this been prece- however, persuaded the collected we are together prop- read stood for the of this State when dent agreements were nullities and ositions that arbitration At would not be enforced. least that arbitration awards case, supra, that arbitration would Pettus indicated litigation intention precedent if such a condition be implied provision, and thoroughly in the contract were cases have indicated numerous other appropriate circum- be enforced under awards would compelling the Consequently, we do not find stances.6 upon argument detriment an it relied to its Board’s interpretation decisional law at State’s obvious order, was entered into. In howev- the time the contract resulting er, in future cases from eliminate confusion may perplexing which have conflicting earlier cases and results, through reasoning but arrived at correct obsolete, hereby today’s standards we functional 6 Corporation, e.g., Fuel Fuel Co. v. Columbian See United Gas Co., 1948); Hughes Fuel (4th v. National 121 W. Va. 165 F.2d 746 Cir. Osenton, v. (1939); Boomer Coal & Coke Co. 101 W. 3 S.E.2d Billmyer Hamburg-Bremen Fire (1926); Va. 133 S.E. 381 (1905). 42, 49 S.E. 901 Ins. reasoning prior overrule of all inconsistent West Vir- ginia cases.7 surveys Virginia’s significant footnote This some of West older attempt developed cases in an to show how the law has date, impact today’s to assess decision on these older cases, prior and to overrule so much of decisional law as is inconsis

tent with the rule enounced the case before us. The first case to Bean, be examined is Bean v. Va. 604 25 W. This case in dispute brothers, Bean, volved a between two A. M. Bean and J. J. brought against one of whom suit the other both on the law side chancery and on the side of the court. Both brothers had served as administrators of their father’s estate and the two suits related to arising matters out of the of their settlement father’s estate in out of transactions between the brothers connection with that pending, following estate. While the suits were the order was en tered in both of them: By parties consent of this cause is referred to J. E. Middleton plaintiff as arbitrator to take and settle all accounts between finally and defendant to determine their claims in full against upon each other evidence taken and laid him before give days and the arbitrator is ordered to ten notice to the place taking counsel of record of the time and of the account. arbitrator, Middleton, investigated named the matter and filed report report part his with the court. His was limited to “such opinion legitimately the matters referred to him as in his came authority, scope being within the of his the matters involved in the only.” report court, at law the filed with suit When was the the requiring court entered an order the to show in the cause why law case alone the arbitration award should not be entered as judgment Responding order, the of the court. to the show-cause the objected entry the defendant to the arbitration award as the ground judgment the of the court on the award varied from arbitration, the submission to as it did not resolve the terms of chancery pending the trial matters then on the side of court. The judgment entered the arbitration award as its in court nonetheless case, appealed Supreme the law after which the defendant to the Court, expressed in which reversed. The rule of the case as its certain, syllabus pt. be final and it 2 is “an award to be valid must adjudicate submitted, any all matters and if it leaves such must open controversy, for future it is invalid.” This rule is not matter today’s possible holding, disturbed and it is still to attack collat- erally award which varies from the terms of submis- an arbitration sion to arbitration. Riley Jarvis, 43, 26 S.E. deals The case of procedural concerning primarily formalities but Riley brought here. In case Oscar F. deserves some mention Taylor County against assumpsit in the Circuit Court the defen- addition, provision question

In in arbitration was one, for, bargained provided a fair it was and it a rea- sonable method of conflict resolution. The Board owes Harley money pay Miller and should without further delay; provision provided the arbitration for two eventu- dants Claude S. Jarvis and Granville E. Jarvis and the circuit court judgment against appeal rendered the defendants. On the defen- against ground dants resisted the entered them on the pending against that another action for the same cause was them justice peace controversy before a which action the had been submitted to arbitration. The submission to arbitration was pending brought still at the time the circuit court action was against appeal Supreme the defendants. In the Court reviewed existing common law of arbitration to determine whether pending arbitration would bar the suit the circuit court. Because any a submission to arbitration was revocable at common law time award, Supreme before Court determined the submission However, Supreme could not stand as a bar to suit. Court noted in this case the submission to arbitration was irrevocable pursuant Accordingly, since it was made to rule of court. the sub- pleaded any subsequent suit, mission could be in abatement although limiting plea bar. The reason for to abatement alone, although irrevocable, was the submission did not and dispute. logical procedure could not resolve the merits of the delay pending was to the second suit or abate it the final outcome Upon entry of the submission to the first suit. following submission, an challenges award and after all resolved, to the award had been there would be time in the second pro- suit to determine if the arbitration award would bar further ceedings. Today’s Riley decision does not affect the rule v. Jarvis pleaded insofar as an irrevocable submission to arbitration can be subsequent in abatement to suits on the same cause of action. However, today’s it should be clear that decision makes irrevocable Riley submissions to arbitration which the court would have revocable, considerably enlarging termed thus the number of cases brought scope Riley holding. within the of the Riley While v. Jarvis concerned the effect of a submission to case, Divine, (1884), an earlier Tennant v. 24 W. Va. 387 impact concerned the an arbitration award itself. Tennant proposition proceed stands for the basic that when arbitration has parties agreed ed to award and the have that the award shall be up judgment court, entered as a of the the court cannot refuse to judgment upon enter the award unless there are circumstances legitimately impeach shown which the award. In Tennant the cir cuit court refused to enter the arbitration award as its appeal by Supreme Today’s and was reversed on the Court. deci- arose, par- First, dispute the in the event that a alities. arbitrate; second, if after arbitration one agreed to ties by the arbitrators’ parties declined to abide of the bring award, an action on the the other could agreement sion, primarily effect of an concerns the force and arbitrate, way changes long-standing forth in the rule set no Tennant v. Divine. significant early is Lawson v. arbitration case William- Another question Co., Va. 57 S.E. 258 son & Coke 61 W. Coal right has the to recover in Lawson was whether a coal lessor provided royalty payments in the and certain tax for minimum possession who never took written lease from the lessee assigned premises. and dis- a number of errors leased While only important opinion, one is here: the defendant in the cussed company’s assignment plaintiff lessor’s cause of ac- that coal made until after an arbitration award had been tion did not accrue written lease. The court did with the terms of the in accordance assignment error, long pause in consideration of this Assn., Kinney authority upon v. Baltimore 35 W. Va. & Ohio (1891) above] in the text concluded [discussed 14 S.E. 8 by to suit the lessor in these was no bar expressly was not made condition circumstances since arbitration Today’s right precedent the contract. decision to the to sue on Kinney. reasoning Likewise the of both Lawson and overrules reasoning v. Red case of Flavelle Jacket Consolidated of the similar 96 S.E. 600 is overruled. Coke Coal & company dispute whether the defendant coal in Flavelle concerned in accordance with the all available marketable coal had removed concerning dispute arose between the of its lease. A terms required matter, to be submitted to arbitra- which the lease authority, Kinney, supra, Court, relying Supreme for on tion. The provision expressly did not or neces- the arbitration found precedent sary implication a condition make such arbitration and Flavelle cases in both the Lawson It should be noted suit. Supreme may have been concerned with the fact Court using companies clauses were the defendant coal just delay plaintiffs dis- in the resolution of their harass Supreme putes. able to hold in which the Court was The means plaintiffs was the common law revocabi- in these cases favor of the Today’s lity the use of that doctrine in decision eliminates doctrine. However, that our discus- it should be noted circumstances. similar power holding disparity bargaining in that re- and our sion of dealing ground may provide spect alternate in the future an company presented in the two coal such as those with situations cases, may opinion be that as to those we offer no cases. While gained sympathetic plaintiff ear of the court lessors 492 If, indeed, cynically

award in court. Board the entered agreement an into to arbitrate with full the intention of declining deliberately fulfill to its commitment and of defrauding party the other from benefit bestowed bargain virtue of an unfair struck them the with defendant coal companies. case, why If such were the we would understand the plaintiffs in court Lawson and in Flavelle was anxious for day regard in have their court. In this see also Kohlsaat Main (1922). Island Creek 90 W. Va. 112 Coal S.E.213 After today’s decision, however, means the courtroom door opened, namely manipulation revocability was of the law common doctrine, longer Accordingly, no would be available. when in courts problem, future are concerned this must address it directly guidelines today’s opinion and follow the set forth in on unfairly agreements arbitration which are exacted. Department Lewis, Morrison Stores Co. v. 122 S.E. dispute adjoining city 747 involved a between owners of two party lots which had a In common wall. arbitration their under plaintiff contract been defendant had found liable to certain relating to the costs construction wall. The defendant ground expressly resisted arbitration award on the that he had agreement. accept revoked the arbitration court declined to argument upheld and instead the arbitration award. This is a very approve result with which we much accord and we encourage Morrison to extent it seeks arbitration uphold However, arbitration to reach it awards. the result did Morrison, procedural formality. is, the court resorted to a That it found that defendant’s revocation of arbitration was ineffective (without seal) equal since was set forth in a document (under dignity originally establishing to the document arbitration seal). Morrison, Given the state of the law at common the time of approach imaginative. However, today’s the court’s was after deci- procedural unnecessary. resort sion to such technicalities would be Supreme again procedural technicality Court resorted to a ground Browder, as a for decision in the case Earl T. Inc. v. County Court, W. Va. Webster S.E.2d 425 This dispute Browder, Inc., building case involved a T. between Earl contractor, County, concerning and Webster on Browder’s work County Hospital. Interestingly, Webster Memorial the fact situa- tion is the converse of Morrison. In Morrison the defendant at- tempted ground an resist arbitration award on the Browder, been had revoked. In the defend- attempted ant to resist the lower court’s favor building ground contractor on the for in called place. fairly their contract had not taken The Browder court took a revocability modern view and did not use the traditional doctrine contract, the then hardly the Board can be heard to complain good that “in upon relied faith” the state of the rely decisional It good law. did not in turpi faith. Ex causa non oritur actio. precedent justify or plaintiffs the condition bring- doctrine to the

ing the place. cause of action before Rather, arbitration had taken closely the court examined the record to find that the defendant right had in fact waived its to demand arbitration. today We do not overrule the Browder case insofar as it holds by good can be “excused waiver or for other cause by party proceed aas refusal or failure to with the arbitration.” Syllabus pt. 3, party Browder. Thus a participate cannot refuse to in process, or otherwise obstruct the arbitration and be complain heard later to in court brought the cause of action is prematurely against it because there has been no arbitration. De- spite today the fact agreements that we hold that arbitration irrevocable, most circumstances that does not mean that one party to an arbitration can never institute court action against party concluded, the other before arbitration is if the other perform obligations refuses to its under the arbitration agreement. remaining Hughes The final case to be considered is v. National Co., Fuel dispute Hughes W. Va. 3 S.E.2d 621 defendant, lessee, concerned whether the National Fuel as had height removed coal to a by sufficient from a coal seam leased to it plaintiff parties the lessors. The coal lease between the contained fairly following, language: the common “In the event of difference arising lessee, between the lessors the under the terms of this agreement, any thereof, or the rights construction clause or the obligations hereunder, of the lessors or the lessee all such questions by arbitration, pending shall be determined but arbitra- parties hereto, tion between the there shall be no cancellation agreement. forfeiture of this In all such cases the matters differ- arbitrators, ence shall be by referred to two one to be chosen the lessee, lessors and one the agree, and if said arbitrators cannot third, any shall select a. and the decision of two of such three binding, accepted arbitrators shall be final and and shall be as parties provision, such the hereto.” Pursuant to this the controversy arbitrators, submitted their two out of the three of whom rendered an arbitration award adverse to the claim of the plaintiff Following award, plaintiffs lessors. instituted chancery Monongalia County suit in the Circuit Court of for the purpose abrogating the arbitration award. Their attack on the grounds award had three main stated in the decision as follows: “(1) advocate, that arbitrator McCutcheon acted as an witness and agent controversy for the being defendant when the matter was (2) arbitrators; responsive heard the award was not judgment foregoing of the Circuit reasons For Berkeley County question the certified on Court to the circuit court the case is remanded reversed and upon enter forthwith directions to award of the arbitrators.

Rulings on certified question reversed and remanded with directions. arbitration; questions the award on its submitted palpable error.” The circuit court struck out face discloses plaintiffs allegations and invalidated defendant’s answer hearing Supreme evidence. The award without and remanded the case with directions for the cir- Court reversed allegations. proof respect plaintiffs to take with cuit court clearly unwilling Hughes to countenance an attack court was proof irregularity against of an arbitration award unless should except approach appear. endorse even this limited to the We do not alleged. fraud rather than mere mistake is To extent that actual grant hearing Hughes implied a court the extent should challenges amounting upon to the arbitration award not to actual fraud, overruled, and to the extent it stands for the it is awards, enforceability presumptive regularity of arbitration it approved. is syllabus pt. Finally emphasis we state and endorse 3 case; favorably Hughes are to be and liber “Awards they appear ally to be construed and are not to be set aside unless clearly grounds illegal.” an elaboration on such on For founded Ed., Harley Miller, Inc., _ W. grounds, see Board etc. v. W. Va. of _, (1975), (Neely, J.concurring), which states as 221 S.E.2d 882 “Furthermore, showing there be a clear of follows: unless manifest error, fraud, corruption, resort to the courts after or clerical sub summary judgment in to arbitration should meet mission corruption I hasten to add that fraud and favor of the award. irregularity.” procedural at far different animals than Id. 888 The Miller, majority opinion supra reasoning in Board v. is ex of pressly overruled. survey Virginia law means ex- While this of West case is no haustive, representative sampling include a of most varie- does principles Virginia law arbitration cases. The ties of West common upon opinion in and elaborated in this footnote are announced presenting substantially applicable cases the same or to all other distinguished, patterns, and such cases are over- similar fact other ruled, in the measure as the cases discussed or endorsed same above.

495 Miller, Justice, concurring:

If, majority intones, litigation way poor as the is a expensive resolve controversies as it and time con- suming, what must to this arbitration case efficacy think as to of arbitration in the context of years appeals the two and two to this Court? simple:

The issue before us was whether arbitra tion original declaratory award could be enforced action, judgment proceeding fully which is more outlined County in Board Berkeley Education v. W. Har ley Miller, Inc., _ W. Va. _, S.E.2d uncomplicated procedural question relating This is an to how one can enforce an arbitration award. As our pointed out, first decision this case the arbitration did Code, statute, arise under W. Va. 55- 10-1, private but on the rested contractual parties. clearly Hughes

This Court stated v. National Fuel Company, (1939), S.E.2d 621 order to enforce common law award of it is necessary bring upon an based action the award. only remaining question to be answered here was contractor, Harley Inc., Miller, whether W. award, existing had obtained could enforce it in the declaratory required action whether it was to file a suit. new the of

Rule 15 of W. Va. Rules Civil Procedure accords liberality great supplemental pleadings. to amended and __ Loucas, _, In Nellas v. Va. S.E.2d W. 191 160 _ W. Garron, (1972), Inc., _, and Rosier Va. 199 (1973), rejected any rigid we S.E.2d 50 test amend pleadings of ment terms whether the cause of ac changed Syl tion in lieu has been thereof stated 3, Garron, Inc., supra: labus Rosier v. Point purpose of words ‘and [to “The the leave freely justice given be when so re- shall amend] 15(a) R.Civ.P., quires’ in Rule W.Va. is to secure controversy adjudication an on the merits of the 496 identical factual situ- be secured under

as would procedural impediments; of ations in the absence always therefore, should be motions to amend (1) when: the amendment granted under Rule 15 presentation the ac- permits of the merits of (2) prejudiced tion; is not the adverse subject of the amend- the sudden assertion given ment; party can be the adverse opportunity the issue.” ample to meet jurisdiction Clearly, under Rule 15 had the lower court to enforce the arbitration admit an amended claim award. theory only pre- upon issue in the

Based procedural question of how an arbitra- sent case was courts, in the I consider tion award can be enforced majority opinion to be mere dicta. The refer- bulk of the only inapt, completely law” is not but ence to “animal any issue in the case. extraneous Finally, object of cases in- I to the use federal labor precedent volving in the area of commer- as America v. In Steelworkers cial arbitration. United of Co., 564, Manufacturing 363 U.S. L. Ed. 2d American (1960), the foundation federal 80 S. Ct. 203(d) labor arbitration law was based on Section Act, 1947, Management Relations 61 Stat. Labor §173(d), labor arbitration as a which established U.S.C. policy grievances. favored for resolution only dissenting opinion in to read the United One has Navigation America v. Warrior & Steelworkers Gulf of 574, (1960), 4 L. Ed. 2d 80 S. Ct. 1347 363 U.S. majority’s apply at the failure to to sense the distress principles arbitra- law to labor commercial majority tion, although had taken considerable these pains to demonstrate the difference between two concepts of arbitration: and arbitration the context of most

“Courts are resorted to because commercial contracts working in the there has been a breakdown rela- tionship parties; such resort is the un- exception. grievance machinery wanted But bargaining agreement' under a collective is at the very system self-gov- heart industrial ernment.” at [363 581] U.S.

Regrettably majority Court, by entwining labor cases with commercial cas- es, ignores Justice Cardozo’s admonition Lowden v. 160, 165, Northwestern Bank & Trust 298 U.S. 80 L. (1936): Ed. 56 S. Ct. 696 things “When called same name is easy assumption for the mind to slide into an identity accompanied the verbal in all its sequences by identity meaning.” I am joins authorized state Justice McGraw opinion. concurring me in this Virginia

State of West McAboy Jackie Lee (No. 13687) July Decided 1977.

Case Details

Case Name: Board of Education v. W. Harley Miller, Inc.

Court Name: West Virginia Supreme Court

Date Published: Jul 26, 1977

Citation: 236 S.E.2d 439

Docket Number: CC899

Court Abbreviation: W. Va.