Wayne and Joyce Kirby v. Lion Enterprises, Inc.

action, circuit court acted of this stances respondents’ mo-

properly granting summary judgment. The Circuit

tions for County’s of Putnam final order en-

Court 8,2013, January is affirmed.

tered on

Affirmed. Joyce

Wayne Kirby, KIRBY and Below,

Plaintiffs

Petitioners ENTERPRISES,

LION INC. and T/A Homes,

Bastian Defendants

Below, Respondents.

No. 13-0379.

Supreme Appeals Virginia.

Submitted Jan. 2014.

Decided March Hinton, Fairmont, WV,

Gregory Esq., T. for Petitioners. Demosky, Esq., Meyer, Darragh,

Lee R. Buckler, Eck, P.L.L.C., Bebenek & Greens- PA, burg, Respondents. for WORKMAN, Justice: This case is before Petitioners, appeal Wayne Kirby Kirby, Joyce from March order entered the Circuit Court of Marion County, Virginia, granting a motion to compelling dismiss and arbitration in favor of Inc., Respondents Enterprises, Lion (referred collectively Bastían Homes T/A/ Homes”). argue “Bastían The Petitioners sen the Owner and the third shall be concluding the circuit court erred designees.1 chosen the two 1) that: the arbitration was “bar- Homes, turn, Bastían subcontracted 2) for”; gained Dwire, with Ed doing business as Dwire 3) “fairly negotiated”; the Petitioners’ (“Dwire Plumbing Plumbing”), provide to the are within the terms of the arbitration claims plumbing necessary service for the home be- provision. upon par- Based a review of the ing constructed. Before the new home was arguments, appendix ties’ briefs and oral the constructed, fully there was a water leak that record, and all other matters submitted be- allegedly substantially damaged major por- Court, fore the we affirm the decision of the court, reverse, partially-constructed tions of the home. part, part, circuit in in development and remand for further on the February On the Petitioners filed uneonscionability. of issue complaint against a Bastían Homes and History I. Facts and Procedural Plumbing, alleging Dwire that when their 16,2009, On March the Petitioners entered home was under construction it sustained agreement into a written with Bastían damage substantial and there was a ten- Homes for the construction of a new home in delay completion month in of the home Fairmont, Virginia. agreement The completely caused by joint negligence clause, contained an arbitration which re- Bastían Plumbing. Homes and Dwire quired that Bastían Homes moved to dismiss the com- parties hereby agree [t]he and acknowl- plaint on the basis that the arbitration clause edge any in disagreement the event or in the required construction contract par- dispute pertaining shall arise to the terms ties to submit the matter to Agreement, arbitration. of this all matters and contro- Bastían upon Homes relied this versies shall be submitted to a Court’s deci- board of sion in Board arbitrators, (3) Harley Education v. W. which shall consist of three Miller, Inc., by members one of whom shall be chosen 236 S.E.2d 439 II”)2 Contractor, (1977) (“Harley one of whom shall Miller support be cho- in of its para- entry judgment any 1. The full arbitration competent clause set forth in in court of graph agreement jurisdiction by provided: procedures 19 of the or other established by law. The cost board of arbitrators parties hereby 19. ARBITRATION:The attorney’s prevailing party and the fees acknowledge any that in the event dis- paid by losing party. shall be Notwith- agreement dispute pertaining shall arise to standing anything contained herein to the con- Agreement, the terms of this all matters and trary, responsible party agrees pay to to the controversies shall be submitted to a board of party any required party any other third arbitrators, (3) which shall consist of three dispute. Any amounts which are not in by members one whom shall be chosen dispute subject amounts which are in to Contractor, by one of whom shall chosen paid by responsible arbitration shall be the Owner and the third shall be chosen party bearing into an interest escrow account designees. two Each of the board of arbitra- mutually parties established aat bank or qualified tors shall be a residential contractor other financial institution and the funds shall (or substantially similar classification of arbi- be released to the accordance with trator as maintained the American Arbitra- the board of arbitrator’s determination. Association) having tor an office con- and/or ducting primary amount of its work within a II, backdrop Harley 2. As a Miller Board of reasonable radius of the Bastían Homes office Miller, Inc., Harley Education W. Agreement originated. in which this The I"), ("Harley Miller aforesaid arbitration shall be conducted in ac- great advancing this Court made strides cordance with the rules of the American Arbi- by determining law of arbitration that a contrac- tration Association and shall be held in the obligation dispute tual to submit a to arbitration Agreement Bastían Homes office which that precedent right creates a condition to a of action originated mutually acceptable or such other upon I contract. Id. The Miller deci- office. The determination of the board of arbi- jurisprudence sion removed from the of this state binding upon trators shall be final and party the notion under common law that "a subject appeal, hereto and not promise in the could revoke its to submit to arbitration fraud, prevailing party may any absence of and the at [an] time before award.” Id. at by application enforce the determination for S.E.2d at 883. argued repair Homes that under would correct or defects in work- motion.3 Bastían II, “the contract between the manship Miller if discovered either of us and bargained parties was and each has submitted to Bastion Homes within a [sic] for home____”4 provided consideration for the contract. year possession of said Kirbys agreed pay Bas- Specifically, the parties agreed to the circuit court dwelling constructing tían for its work in deciding the motion to dismiss without agreed to under the contract and Bastían hearing. In an order entered March (Em- according to perform the contract.” court, relying the circuit added); 473-74, phasis see 160 W.Va. at II, determined the Petitioner’s 440-41; supra note 3. see also subject claims were to arbitration. The cir- filed a The Petitioners memorandum reviewing cuit found “[a]fter court that opposition to the motion The to dismiss. contract, contracting entire the nature of the argued, upon Harley Petitioners based Mil- parties’ bargaining positions, and the II, ler that the arbitration clause at issue was provision fairly nego- ... the arbitration was “bargained for” and was therefore inval- not unconscionable, having tiated and is not not support position, id. In of their the Petition- presented been with evidence sufficient for Wayne Kirby er stated an affidavit that he overcoming general presumption all that presented containing with the contract was provisions bargained arbitration are for.” clause, objec- the arbitration that he “raised appealed This followed. tion” to the arbitration clause with William II. of Review Standard Burkett of Bastían Homes and that he was worry they “Appellate “told not to about it because were review of a circuit Further, bonded.” he stated that “it was court’s granting order a motion to dismiss a pointed complaint out to me that Bastion Syl. [sic] Homes is de novo." Pt. State ex II, Harley again provision 3. Miller the case was before whether an arbitration was bar- upon question. ques- gained the Court a certified The for and valid is a matter of law for the posed tion was "whether by the circuit court has court to determine contract, reference to the entire jurisdiction upon to enforce an arbitration award contracting parties, the nature of the summary judgment by a motion for undertakings by and the nature of the covered prevailing at arbitration.” 160 W.Va. at the contract. question 473-74, 440-41, The Court answered the Syl. Id. at 236 S.E.2d at Pts. in the affirmative. Id. at 236 S.E.2d at and 3. ("Where, fraud, Syl. 2Pt. in the absence of an by award arbitration has been made arbitrators argued 4. The Petitioners also that their claims do pursuant sion, bargained-for provi- to a arbitration provisions not fall within the of the construction by award is enforceable a motion for agreement. summarily reject We the Petitioners’ summary judgment upon complaint setting argument on this issue. The Petitioners main- contract, provision, forth the and Dwire, they right doing tain that have a to sue Ed arbitrators.”). the award of the The Court also Plumbing negligence business as Ed Dwire "for syllabus point Harley held in one and three of irrespective agreement of the construction be- II that: Miller petitioners respondent.” tween the and the That is not the issue that was before the court below Where to a contract to arbi- appeal or now on to this Court. The issue is disputes, particular trate either all limited clause, provides whether the arbitration which disputes arising under the and where "[tjhe parties hereby agree acknowledge that parties bargained provi- for the arbitration any disagreement dispute sion, that in the event provision binding, specifically such is pertaining enforceable, Agree- shall arise to the terms of this arising and all causes of action ment, all matters and controversies shall be sub- under the contract which the contract terms arbitrators, governs mitted to a board of ...” merged, are made arbitrable are in the absence fraud, pursued against claims Bastían Homes into the award of the arbitrators. alleged presumed provision Petitioners. Petitioners have that It is that an arbitration jointly alleged bargained Bastían Homes is liable for in a written contract was for and negligence plumbing subcontractor that arbitration was intended to be the exclu- resolving disputes arising was sive means of hired Bastían Homes as a result of under contract; however, party alleges where a construction contract between the Petitioner and arbitration Bastían Homes. It is clear that the unconscion- Petitioners’ able, against or was thrust him because he was claims Bastían Homes constitute a "dis- of, unwary advantage pute pertaining and taken or that the ... to the terms of” the construc- adhesion, question contract was one of tion contract. Runyan “bargained id.; Pontiac- a contract rel. v. Scott must be for.” McGraw See Inc., Buick, supra 194 W.Va. (setting see also note 3 forth full text (1995). Further, syllabus point). The Court also estab- presumption lished a that when “an arbitra- required to rule a trial court is [w]hen tion in a written contract was bar- compel pursu- upon a motion to arbitration gained for ... Act, that arbitration was intended ant to the Federal Arbitration to be the exclusive (2006), resolving means of authority §§ dis- U.S.C. 1-307 putes arising Id., under Syl. the1 determining contract[.]” court limited to the trial 3; (1) supra Pt. (setting see note 3 threshold issues of whether a valid forth full text syllabus point). agreement exists between the parties; whether the claims I Miller II Miller were plaintiff averred fall within the sub- important they decisions greatly insofar as scope agree- stantive of that arbitration advanced the law of arbitration in this State ment. decisions, however, in the 1970s.5 Both were Ameritrade, Syl. Pt. State ex rel. TD Inc. guidance rendered without the benefit of and Kaufman, set forth in Supreme United States (2010). opinions6 that followed the review, Applying foregoing standard of and applicability eases addressed the of the parties’ arguments. we consider the (“FAA”), Federal Arbitration Act 9 United III. Discussion (West §§ States Code Annotated 1 to 16 2009), to agreements. arbitration Subse- Improper Application A. quent to those more recent United States Miller II decisions, Supreme Court we discussed the We first the issue of whether address applicability agree- of the FAA to arbitration correctly the circuit court found that in ments this State in State ex rel. Richmond provision “bargained arbitration for” un American Virginia, Homes West Inc. v. der the law in established Miller II. Sanders, 125, 228 717 W.Va. S.E.2d 909 473-74, See 160 W.Va. at 236 S.E.2d at 440- (2011),as follows: 41, Syl. argued Pts. 1 and 3. The Petitioners by begin discussing agree applicable that there was no valid arbitration We parties relating law ment between the because the to the FAA. In arbi Brown v. 646, agreement “bargained Corp., tration was not Genesis Healthcare [228 for.” W.Va. issue, (2011), resolving In 724 acknowledge part we that S.E.2d 250 overruled in on II, in Harley grounds Miller the Court in held 1977 other sub nom. Marmet Health — provision Center, Brown, U.S.-, that an arbitration contained within Care Inc. v. principles they may 5. See Brown ex rel. Brown v. eral Genesis Healthcare contract law invali- 646, 57, Corp., 228 W.Va. nn. 52 & 724 670-71 'upon grounds an date arbitration clause such as 250, (2011), S.E.2d 274-75 nn. 52 & 57 overruled equity any exist at law or for the revocation of part grounds on other sub nom. Marmet added). (emphasis § contract.’ 9 U.S.C. 2 What - Ctr., Brown, -, Health Care Inc. v. U.S. may States not do is decide that a contract is fair 1201, (2012) (referring 132 S.Ct. 182 L.Ed.2d 42 enough (price, all to enforce its basic terms ser- setting to Virginia Miller II as forth "[t]he West vice, credit), enough but not fair to enforce its corollary 2 [of common-law to Section any arbitration clause. The Act makes such state recognizing prior Harley FAA]” that to unlawful, policy policy for that kind of would II, routinely the Court held our cases place unequal 'footing,' " arbitration clauses on an agreement that [a]t common law an to submit directly contrary language to the Act’s and Con- any to arbitration was revocable at time before Sciences, gress’ intent. See Volt award____A Information [an] contract to submit future dif Inc., [468], 474, [1248], 489 U.S. at 109 S.Ct. at ”). binding.’ ferences to arbitration is not (1989)].”); 1253 [103 L.Ed.2d 488 Southland 1, 852, Cos., Dobson, Corp. Keating, 6. See Allied-Bruce 465 U.S. 104 S.Ct. 79 Terminix Inc. v. (1984) (deciding Congress 513 U.S. 115 S.Ct. 130 L.Ed.2d 1 L.Ed.2d that would (1995) ("In event, any gives § 753 2 States a have not wanted state and federal courts to reach protecting against method for consumers unfair validity different outcomes about the of arbitra- pressure to to a contract with an unwanted concluding tion in similar cases and that the FAA provision. may regulate arbitration States con- law). preempts state tracts, clauses, including gen- arbitration under 164 (2012)], answering question, 42 In this Court 182 L.Ed.2d we this S.Ct.

132 provi- “primary recognized of a “[t]he substantive first that elements noted FAA is 2.7 We inter- acceptance sup of the Section are an sion” contract offer and an saying 2 that “a written preted Section as ported consideration.” Id. a contro- to settle arbitration (citing at 556 Bank First Nat’l versy arising that evi- Co., out of a contract Gallipolis Mfg. v. Marietta affecting interstate a transaction (1967); dences v. Gam see New irrevocable, valid, and en- Inc., is commerce eStop, 753 S.E.2d forceable, (2013) (“West is found to unless Virginia contract law invalid, or unenforceable revocable be requires mutual assent a valid con to form tract____ equity that exists at law or for ground mutuality “‘In order for this to contract.” other exist, revocation necessary proposal it there be words, parts: Section contains two “the part on or offer of one an part arbitration holds that written first part on the acceptance of the other. Both affecting commerce agreements word, interstate acceptance may the offer act enforceable,’ ‘valid, irrevocable, and are or conduct that evince the intention ‘savings part the second is a clause’ but contract. That their minds have those arbi- that allows courts to invalidate may met be shown direct evidence of an agreements using general contract (citations tration agreement____’”) actual and foot- principles.” omitted.)”). acknowledged note We then that, purpose impel is to just of the FAA the instant wherein the ease agreements argues to treat “courts arbitration Petitioner that the clause for,” “bargained Act like other contract. The does not was not agreements or elevate arbitration favor frequently challenge contracts importance all other a level of above con- enforceability the of clauses— arbitration tracts; simply private it ensures that impose parallel which do not clauses duties agreements to arbitrate are enforced ac- on both the to arbitrate —on cording to their terms.” that ground the clauses lack consideration Homes, 133, Am. W.Va. at Richmond (that is, equivalent promises or lack lack (footnote 717 S.E.2d at 917 added foot- However, mutuality obligation). the omitted). supported by contract is sufficient consider- law, parties and the circuit court contin $179,371. in ation the amount of Given our rely upon principles ued to in enunciated determination that the construction contract II,8 Harley Miller which was in error. To properly supported by formed and suffi- prevent prin this continued adherence to the consideration, cient we affirm the circuit ciples set forth Miller II from issue, court’s determination on this even eases, occurring again in future we hold that though wrong it was reached for the reason.9 syllabus point law enunciated six of Builders, Nelson, Ryan Dan Inc. v. 230 Unconscionability B. 281, (2012), S.E.2d W.Va. 737 550 that “the multiple formation of a contract compelled with clauses The next issue we are only requires consideration for the entire address is the circuit court’s determination contract, and not for proee- each individual clause” that the arbitration clause was neither ’ II, 473, 127, Shehan, Quoting, 8. See 160 W.Va. at 236 court.” State v. 242 Kan. 440, Syl. 131, 5, S.E.2d at Pt. 1 & 3. (1987).”); Syl. 744 P.2d 824 Pt. Hustead Oil, Inc., 55, ex rel. v. Adkins Ashland 197 W.Va. Bank, 9. See Cadle Co. v. Nat’l 200 W.Va. Citizens (1996) ("This may, ap- S.E.2d 475 55 on 515, 518, 334, (1997)("We 490 S.E.2d 337 be- peal, judgment affirm the the lower of court lieve the circuit court reached the correct result appears judgment when it that such is correct on case, wrong in this but for the reasons. We record, any legal ground regard- disclosed Topeka Topeka with the court in Bank IV ground, theory assigned less of the reason or Co., Kan.App.2d Bank & Trust 15 807 judgment.” 686, the lower court as the basis for its P.2d 688 that "‘"where the trial 3, 246, Syl. Wolfolk, 140 Pt. Barnett v. 149 W.Va. court reaches the correct result based reason, (1965).”). wrong will [C]ourt this affirm the trial 166 durally substantively unconscionable. The consideration all and circum- facts part circuit court made this determination as particular stances case. ruling Respondent’s of its on the motion to analysis “An of whether a contract term though dismiss even a review of the record necessarily is unconscionable involves an

plainly reveals that this issue was not devel- inquiry into the circumstances surround oped by below. ing the execution the contract and the correctly The circuit court stated its Syl the contract as a whole.” fairness of concerning uneonseionability order the law 3, Troy Mining Corp. labus Point v. It insofar as a contract term must be both Co., mann Coal 346 S.E.2d “proeedurally10 substantively uncons (1986). eionable[,]11” Syl. see Pt. Brown ex rel. Brown v. Corp., Genesis Healthcare 261, Syl. 228 W.Va. at 724 S.E.2d at Pts. (2012) (footnote added). (emphasis 12 and 13 added),12 to be found unenforceable. The A circuit court’s determination of uncon- circuit court then determined that the arbi scionability necessarily involves a fact-inten- unconscionable, tration clause was not find id.; ing analysis range sive procedural that there into a of factors. See was no unconseion ability “looking at supra the four corners of the see also necessary, notes 10-12. “If agreement,” construction and that “the terms may the trial court consider the context of set forth in are sub the arbitration clause within the four corners stantively fair.” The circuit court found that contract, or consider extrinsic there “tending was a lack of evidence detailing evidence the formation and use of support a procedural foundational claim for Homes, the contract.” Richmond Am. uneonseionability.” or substantive Syl. W.Va. at 717 S.E.2d at Pt. Yet, part. the circuit court decided the issue syllabus points

This Court held in uneonseionability in this case without twelve and thirteen of Brown: being fairly argued by issue The doctrine uneonseionability means without development. factual Given this that, gross because of an overall and imba- below, any development lack of legally both lance, lop-sidedness one-sidedness or in a factually, concerning uneonseionability, may justified a court be in refus- we ing reverse the circuit court’s decision on this enforce the contract as written. concept issue and uneonseionability development remand for further must be manner, applied in a taking flexible into the record. Brown, syllabus point seventeen of we held: contract term is one-sided will have an overly disadvantaged party. harsh effect on the uneonseionability Procedural is concerned weighed assessing The factors to substan- inequities, improprieties, with or unfairness in uneonseionability vaty tive with the content of bargaining process and formation of the agreement. Generally, the courts should con- uneonseionability contract. Procedural in- sider the commercial reasonableness of the variety inadequacies volves a of that results in terms, purpose contract the of effect the voluntary meeting the lack of a real and of the terms, the allocation of the risks between the parties, considering minds of the all the cir- parties, public policy concerns. surrounding cumstances the transaction. 262, Syl. 228 W.Va. at 724 S.E.2d at Pt. 19. include, inadequacies These to, but are not limited age, literacy, sophistication the or lack of Brown, 12.As this Court held in party; unduly complex a hidden or contract terms; contract; the adhesive nature of the [a] contract term is unenforceable if it is setting and the manner and in which the con- proeedurally substantively both uncon- formed, including par- However, tract was whether each present scionable. both need not be ty opportunity had a reasonable to understand degree. apply to the same Courts should a the terms of the contract. "sliding making scale” in this determination: 261, Syl. 228 W.Va. at 724 S.E.2d at Pt. 17. substantively oppressive the more term, the contract procedural the less evidence of uncon- syllabus point

11. We held in nineteen of Brown scionability required is to come to the conclu- that: unenforceable, sion the clause is and vice uneonseionability Substantive un- involves versa. fairness in the Syl. contract itself and whether a 228 W.Va. at 724 S.E.2d at Pt. 20.

167 generally challenging to IV. Conclusion contract as a whole, permitted ais trial court to consider foregoing opinion, the de- upon the Based challenge to the arbitration clause. affirmed, part, circuit court is cision of the However, may rely gen- the trial court on pro- for further and reversed and remanded principles eral of state contract law in de- ceedings opinion. with this consistent termining enforceability of the arbitra- reversed, Affirmed, part, part; necessary, tion clause. If the trial court remanded. may consider the context of the arbitration clause within the four corners of the con- Justice KETCHUM concurs and reserves tract, any or consider extrinsic evidence right concurring opinion. to file a detailing the formation and use of the con- KETCHUM, concurring: Justice tract.3 way, majority Put another “the law

I with the this case of this state —and virtually every other should be remanded to the trial court to state —is that anal- ‘[a]n ysis of provision whether the whether a contract term determine arbitration is uncon- necessarily scionable inquiry it involves an is unenforceable because is unconscionable into surrounding the circumstances Virginia’s general under contract law. the execution of the contract and the fairness of the con- contract from Because this involves tract as a whole.”4 different states it affects interstate com two my review of provision Therefore, interpretation merce. and the terms of relating the contract to the provision governed arbitration the Fed provision, I find within' several issues (“FAA”)1 eral Arbitration Act and not may contract that render enforcement of the principles common law of arbitration dis provision arbitration unconscionable. These I cussed and II.2 problems should be considered the circuit The FAA raises the doctrine of severabili- during unconscionability court analysis ty only party explicitly which holds that if a on remand. For instance: challenges enforceability of the arbitra- Paragraph Confessing Judgment provision permitted tion is a court to consid- 12— challenges er to the arbitration clause. How- (the requires petitioners The contract ever, permitted, the trial court is still under house) owners of the new to arbitrate all of law, weigh state contract the unconsciona- disputes arising their from the contract. bility light of the arbitration (and Conversely perversely), Paragraph 12 provisions other in the contract that affect (contractor) respondent bring allows a operation provision. arbitration against lawsuit the owners for breach of said, As this Court has Worse, any provision of the contract. Para- Act, graph “irrevocably”

Under the Federal Arbitration authorizes and em- 2,§ powers attorney U.S.C. and the doctrine of severabili- contractor hire an “to ty, only if explicitly appear judgement to a contract for and confess [sic]” challenges enforceability against of an arbitra- the owners in court of record in elsewhere,” “Pennsylvania opposed provid- tion clause within the without Act, Berkeley Cnty. 1."Under the Federal Arbitration 9 U.S.C. 2. See Bd. Ed. v. W. Inc., § Miller, a written to settle controversy arising out of a contract that evi Berkeley Cnty. and Bd. Ed. v. W. affecting dences a com transaction interstate Miller, Inc., valid, irrevocable, enforceable, merce is and 439, (1977). S.E.2d 441 invalid, provision the unless is found to be re upon ground vocable or unenforceable a that 4, Syllabus 3. Point State ex Am. rel. Richmond equity exists at law or in for the revocation of Sanders, Virginia, Inc. v. 228 W.Va. Homes of W. 6, any Syllabus contract.” Point Brown ex rel. 125, (2011). Corp., Brown v. Genesis Healthcare 228 W.Va. 646, 656, 250, (2011) 724 S.E.2d 260 cert. Id., 134, 4. W.Va. at 717 granted, judgment 228 S.E.2d at 918. vacated nom. sub Marmet - Ctr., Brown, -, Health Care Inc. v. U.S. (U.S.2012). 132 S.Ct. 182 L.Ed.2d 42 168

ing any Paragraph owners. 12 S. Paragraph pf notice to the 19—choice arbitrators attorney also allows the contractor to recover The contractor’s business in Un- office is fees, costs, interest, litigation and all 15% iontown, Pennsylvania. Paragraph 19 re- to the remedies that are denied owners. quires of the that each three arbitrators be qualified having “a residential contractor” an any This provision contract lacks modicum primarily doing office or a work within rea- bilaterality mutuality A obligation. or sonable the radius of Uniontown office. reciprocal contract that mutual lacks obli- unconscionable, may provision This be be- (for instance, “a gations contract which re- appears give cause it to lop-sided, unfair quires any the weaker to arbitrate advantage Only to the contractor. the con- have, may permits claims he or she but qualified tractor knows residential contrac- stronger party through to redress seek office, tors in the of its opposed area to courts”) may be so one-sided and unreason- Fairmont, Virginia. the owners from West ably part unfair to one that it is unconsciona- Paragraph between k. 19—Conflict ble.5 and contract AAA rules Paragraph 2. 19—Venue Paragraph requires parties’ 19 arbitra- tion to be “conducted accordance with dispute The was built plot house in on a rules of American Arbitration Assoeia- Fairmont, petitioners land owned provide tion[.]” The AAA rules Virginia. originated The contract AAA will choose a neutral arbitrator. Nev- Uniontown, located in the contractor’s office ertheless, Paragraph 19 conflicts with Pennsylvania. Paragraph 19 of the contract rules, says AAA parties pick and that the will (which provision) requires is the arbitration three who arbitrators are residential contrac- proceeding be conducted tors located near contractor’s office. in the office in originat- which contract appear These anything arbitrators to be but is, Uniontown, (some Pennsylvania ed—that neutral. or away petitioner’s 45 50 miles from the Paragraph 5. Prepayment 19— residence) agrees unless the contractor oth- disputed amounts erwise. Paragraph requires pay to the owner The petition- distance from the site of the “any into an account escrow amounts which contractor’s, home to er’s office is a factor dispute subject are in to arbitration” weigh the trial court if determining can being before allowed to file an arbitration provision is unconscionable. proceeding against the I contractor. As not- If a contract impose “would unrea- ed previously, provision imposes this costs sonably upon may burdensome costs or that certainly discourage would the owner pursuing have a from upon substantial deterrent effect arbitration and an arbi- causes tration dispute resolution of the person seeking enforce to cost and vindicate prohibitive. rights protections statutory or to obtain common-law relief remedies that are present did not any uncon- afforded under arise state law that scionability issues the circuit On court. protection exists for the benefit remand, it toup study public,” may then the court consider the develop facts about unfair- making unconscionable.6 ness in the and terms of the arbitra- Builders, Nelson, Ryan 5. Dan v. Inc. Virgi- 230 W.Va. State ex rel. Richmond Am. Homes W. (2012) ("Such nia, Sanders, 737 S.E.2d Inc. v. 228 W.Va. 'unilateral' arbitration clauses lend themselves (quoting Syllabus Point extremely application well to the doctrine Dunlap Berger, State ex the. rel. right unconscionability because the the clause (2002)). beneficiary bestows wholly its is so one- sided and unfair that courts should feel no (citations finding unacceptable” reluctance in omitted)). it clause, present- rights clearly tion and read the law before weaker provided by the common law statute.”7 ing the matter to the circuit court. remand,

And the circuit court on must

keep in mind that “the courts of this State

are not hostile to arbitration to adhesion

contracts. are hostile toward contracts We rely

of adhesion that are unconscionable and

upon arbitration as an artifice to defraud a Virgi-

7. State ex rel. Richmond Am. Homes W. S.E.2dat913. nia, Sanders, Inc. v. 228 W.Va. at notes majority of courts conclude the that recognizing interplay Since the the FAA separate not have need consideration for State, agreements with arbitration in this clause, equivalent, recip- the arbitration or Builders, presented Ryan was Court in Dan arbitrate, long duties to as rocal so Nelson, 281, Inc. 737 S.E.2d 550 W.Va. underlying sup- contract as a is whole (2012), with question a certified from the by ported valuable consideration. States Court for Appeals United 288, at 737 S.E.2d at 557. The W.Va. Circuit, Fourth which the issue cur- resolves syllabus point Ryan held in Dan six of rently Ryan, before the Court. In Dan that following posed question: Fourth Circuit Virginia require “Does law that an formation of a with mul- [t]he contract appears tiple only requires which as a sin- clauses consideration contract, contract, gle clause in a itself multi-clause be entire for for the and not each supported by long mutual consideration when the individual clause. So overall by adequate as a whole supported supported by contract is contract is consid- sufficient eration, 283, 737 requirement consideration?” Id. at S.E.2d at there is no of con- within promise sideration for each ("A writing § agreement 9 U.S.C.A. 2 in 7. See written to submit to arbitration an evidencing existing controversy arising maritime transaction or a contract such a con- out of transaction, refusal, valid, tract, involving by transaction to settle arbi- be irre- commerce shall vocable, enforceable, controversy arising upon tration thereafter out of save such transaction, equity grounds such contract or or the refusal to as exist at law or in for the thereof, contract.”). perform any part the whole or an revocation “mutuality obligation,” modified or of the law set forth in Board Edu Miller, Inc., in order for a contract to be formed. cation v. W. (1977), to the extent that Id. at 737 S.E.2d at 552. an arbitration clause in a contract need not holding Ryan, Pursuant to our Dan specifically “bargained for.” challenging enforceability because when supported by clause was not Consequently, while the circuit court de- consideration, for, bargained was not or was termined that the arbitration clause at issue for, negotiated upon the focus is not not for,” “bargained had been the determination bargain singular consideration or for the ar- of no Applying moment. the law enunci- Instead, long bitration clause. as the “[s]o Ryan, long ated Dan so as the construc- by supported overall contract sufficient entirety tion contract in its supported is well consideration, requirement there is no of con- offer, by acceptance an and sufficient consid- promise sideration for each within the con- eration, requirement there is no that tract, ‘mutuality obligation,’ or of in order independently arbitration clause be “bar- for a contract to be formed.” Id. gained for” in order for a contract to be decision, II Since the Miller formed. See 230 W.Va. at 737 S.E.2d at law of arbitration this State as set forth in 552, words, Syl. Pt. 6. other the Petitioner largely II preempted has been could not have defeated the arbitration fully FAA explained as this Court has argument clause based See, in our more recent arbitration cases. bargained clause Having was not for. re- e.g., Ryan, Dan at 737 S.E.2d issue, viewed the contract at there is no Homes, Richmond Am. 228 W.Va. at question that the entire contract is derived change 717 S.E.2d at 917. An additional offer, acceptance from an and sufficient con- preemption that has occurred because of the Every page agreement sideration. FAA, recognized which we Dan signed was either or initialed the Peti- Ryan, legal requirement is the lack of a tioners, including specific handwritten details specifically the arbitration clause be “bar- for the home set forth in “Construction gained for.” 230 W.Va. at 737 S.E.2d at Detail,” Agreement all of which demonstrates 552, Syl. Pt. 6. acceptance an offer and between the con- Further, tracting parties. the construction Notwithstanding changes these clear in the

Case Details

Case Name: Wayne and Joyce Kirby v. Lion Enterprises, Inc.

Court Name: West Virginia Supreme Court

Date Published: Mar 7, 2014

Citation: 756 S.E.2d 493

Docket Number: 13-0379

Court Abbreviation: W. Va.