Home Inspections of VA & WV, LLC v. Hardin
| Decision Date | 24 November 2020 |
| Docket Number | No. 19-0905,19-0905 |
| Citation | 852 S.E.2d 240 |
| Court | West Virginia Supreme Court |
| Parties | HOME INSPECTIONS OF VA AND WV, LLC, Petitioner v. Jesse HARDIN, Respondent |
Joseph L. Caltrider, Esq., Bowles Rice LLP, Martinsburg, WV, Counsel for Petitioner.
Kathy M. Santa Barbara, Esq., The Law Office of Kathy M. Santa Barbara, Martinsburg, WV, Counsel for Respondent.
This is an interlocutory appeal of a circuit court's order denying a motion to compel arbitration. Petitioner Home Inspections of VA and WV, LLC ("Home Inspections") and Respondent Jesse Hardin ("Mr. Hardin") are parties to a contract that includes an arbitration provision. After Mr. Hardin filed a civil suit against Home Inspections and others, Home Inspections moved the circuit court to dismiss the case as it relates to Home Inspections or, in the alternative, to compel arbitration. Mr. Hardin argued that the arbitration provision was ambiguous, and the circuit court agreed. However, upon consideration of the parties’ briefs, the record before us, and the applicable law, we find that the arbitration provision is clear and unambiguous and thus reverse the circuit court's order and remand the case for further proceedings.
On or about August 17, 2017, Mr. Hardin purchased two parcels of real estate improved with several structures from William and Sharon Paxson ("The Paxsons").1 The sales contract was contingent upon a home inspection being performed on the structures. Mr. Hardin's realtor arranged for Paul Barnhart of Home Inspections to inspect the Structures.
Mr. Hardin alleges that after the inspection was performed, he was provided with a contract to sign. Mr. Hardin admits to signing the contract. Over one year later, on or about August 6, 2018, Mr. Hardin alleges that he discovered a number of issues with his property so he telephoned petitioner to discuss his concerns about the inspection report. Following this phone call, Mr. Hardin alleges that he was provided with a copy of the inspection contract.
In his response to this motion, Mr. Hardin argued that the disputed provision was ambiguous and "anticipates only that any disputes between the parties ‘shall be resolved informally between the parties.’ "
On September 13, 2019, the circuit court entered an order denying Home Inspection's motion to compel arbitration.3 The Court acknowledged that the provision contains a heading that reads: "ARBITRATION." However, the circuit court found the provision to be ambiguous because the sentence following the heading "ARBITRATION" required the parties to resolve certain disputes "informally." Additionally, the circuit court was critical of the provision because it did not "include terms such as how are arbiters to be selected, how many arbiters will decide the issue, where arbitration will take place, by what rules and by whose authority and whether or not the arbiters grant or denial of a reward [sic] is binding or appealable."
This appeal by Home Inspections followed.
Home Inspections appeals an interlocutory order denying its motion to dismiss, or, alternatively, to compel arbitration. "Typically, interlocutory orders are not subject to this Court's appellate jurisdiction." Credit Acceptance Corp. v. Front, 231 W. Va. 518, 522, 745 S.E.2d 556, 560 (2013). However, this case is properly before this court because "[a]n order denying a motion to compel arbitration is an interlocutory ruling which is subject to immediate appeal under the collateral order doctrine." Syl. Pt. 1, Credit Acceptance Corp. v. Front , 231 W. Va. 518, 745 S.E.2d 556. "When an appeal from an order denying a motion to dismiss and compel arbitration is properly before this Court, our review is de novo. " Syl. Pt. 1, W. Va. CVS Pharm. LLC v. McDowell Pharm., Inc. , 238 W. Va. 465, 796 S.E.2d 574 (2017). Further, when we review contractual issues, "we apply a de novo standard of review to [a] circuit court's interpretation of [a] contract." Id. at 469, 796 S.E.2d at 578 (quoting Finch v. Inspectech, LLC , 229 W. Va. 147, 153, 727 S.E.2d 823, 829 (2012) ).
In this case, we are being asked to determine whether the arbitration agreement contained in the parties’ contract is valid. The provision at issue provides:
ARBITRATION: Any dispute concerning the interpretation of this agreement or arising from this inspection report, except one for inspection fee payment, shall be resolved informally between the parties.
Relying upon this provision, Home Inspections moved to compel arbitration under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (2002) ("FAA"). The FAA provides that arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (1947). In response, Mr. Hardin argued that the provision was ambiguous. We have previously held:
When a lawsuit is filed implicating an arbitration agreement, and a party to the agreement seeks to resist arbitration, [this Court] has interpreted the FAA to require application of the doctrine of "severability" or "separability." The gist of the doctrine is that an arbitration clause in a larger contract must be carved out, severed from the larger contract, and examined separately. The doctrine "treats the arbitration clause as if it is a separate contract from the contract containing the arbitration clause, that is, the ‘container contract.’ " Under the doctrine, arbitration clauses must be severed from the remainder of a contract, and must be tested separately under state contract law for validity and enforceability.
Schumacher Homes of Circleville, Inc. v. Spencer , 237 W. Va. 379, 387-388, 787 S.E.2d 650, 658-659 (2016) (internal citations omitted) (" Schumacher Homes II ").
When a party moves to compel arbitration, this Court has held that "the authority of the trial court is limited to determining the threshold issues of (1) whether a valid arbitration agreement exists between the parties; and (2) whether the claims averred by the plaintiff fall within the substantive scope of that arbitration agreement." Syl. Pt. 2 (in part), State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W. Va. 250, 692 S.E.2d 293 (2010).4
The first issue – whether a valid arbitration agreement exists – is one of state law. Brown ex rel. Brown v. Genesis Healthcare Corp. , 228 W. Va. 646, 724 S.E.2d 250 (2011), overruled on other grounds by Marmet Health Care Center, Inc. v. Brown, 565 U.S. 530, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012) (" Brown I "). This same issue --- ‘whether a valid arbitration agreement exists’—is really two intertwined issues. First, is there an agreement? Second, if there is an agreement, is it valid (i.e., in the sense of being enforceable)?" Certegy Check Serv., Inc. v. Fuller , 241 W. Va. 701, 704, 828 S.E.2d 89, 92 (2019).
Home Inspections asserts that the circuit court erred in concluding that the arbitration provision was ambiguous. Specifically, Home Inspections challenges the circuit court's holding that "by agreeing to resolve any dispute informally," the parties did not assent to be bound by arbitration. Mr. Hardin alleges that the arbitration provision is ambiguous because the word "ARBITRATION" is followed by language that requires certain disputes to be resolved "informally between the parties." We concede that the arbitration provision could certainly have been more artfully drafted. However, this simple fact does not render it ambiguous or unenforceable.
Syl. Pt. 1, Berkeley Cty. Pub. Serv. Dist. v. Vitro Corp. , 152 W. Va. 252, 162 S.E.2d 189 (1968). Further, this Court has acknowledged the general rule that "words in a contract will be given their usual and primary meaning at the time of the execution of the contract." Oresta v. Romano Bros., Inc. , 137 W. Va. 633, 644, 73 S.E.2d 622, 628 (1952).
The heading of the disputed provision contains one word – that word is ARBITRATION. Home Inspections argues that the heading is conspicuous and clearly evidences the parties’ intent to arbitrate. We agree. The provision is explicitly titled "ARBITRATION." In addition to identifying the provision as the "ARBITRATION" provision of the contract, the parties then agree to informally resolve certain disputes that could arise between them, except for inspection fee payment.
We are not persuaded by respondent's argument that the disputed provision contains two very contradictory terms. The provision contains a one word heading – "ARBITRATION" – which is followed by a sentence that that requires certain disputes be "resolved informally between the parties." Arbitration is an informal process. Both this Court and the Supreme Court of the United States have described arbitration as being informal. In 2011, the United States Supreme Court noted that "the principal advantage of arbitration [is] its informality. AT&T...
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