Parsons v. Halliburton Energy Servs., Inc.

• Decision Date: 11 April 2016
• Docket Number: No. 14–1288.,14–1288.
• Citation: 237 W.Va. 138,785 S.E.2d 844
• Court: West Virginia Supreme Court
• Parties: Richard PARSONS, Petitioner v. HALLIBURTON ENERGY SERVICES, INC., Respondent.

237 W.Va. 138

785 S.E.2d 844

Richard PARSONS, Petitioner

v.HALLIBURTON ENERGY SERVICES, INC., Respondent.

No. 14–1288.

Supreme Court of Appeals of West Virginia.

Submitted Feb. 24, 2016.

Decided April 11, 2016.

Justice Loughry May 12, 2016.

Concurring and Dissenting Opinion of

Jonathan R. Marshall, Esq., Ryan McCune Donovan, Esq., Bailey & Glasser, LLP, Charleston, WV, Rodney A. Smith, Esq., Todd S. Bailess, Esq., Joy B. Mega, Esq., Bailess Law, PLLC, Charleston, WV, for Petitioner.

Marla N. Presley, Esq., Bethany S. Wagner, Esq., Jackson Lewis P.C., Pittsburgh, Pennsylvania, for Respondent.

Chief Justice, KETCHUM :

In this appeal from the Circuit Court of Kanawha County, we address the state common law doctrine of waiver as it relates to arbitration. The plaintiff asserts that the defendant implicitly waived a contractual right to arbitration by participating in litigation.

The circuit court entered an order finding the defendant had not waived its right to arbitration because it did not participate in the plaintiff's lawsuit, and because the defendant's first court filing asserted the contractual right to arbitration. As set forth below, we affirm the circuit court's order compelling the parties to arbitrate their dispute.

I.FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Richard Parsons was employed by defendant Halliburton Energy Services, Inc. Within the plaintiff's employment agreement was a provision that all disputes with the defendant “shall be finally and conclusively resolved through arbitration ... instead of through trial before a court.”

The plaintiff worked for the defendant from June until October 2013. On December 3, 2013, the plaintiff filed a complaint in the Circuit Court of Kanawha County alleging that the defendant did not timely pay him his final wages as required by the West Virginia Wage Payment and Collection Act (“the WPCA”).¹ The plaintiff's complaint also sought to create a class action composed of other former employees of the defendant who were not timely paid their final wages.

On July 7, 2014, some seven months after the plaintiff filed his complaint, the defendant's first court filing was a motion seeking to compel the plaintiff to participate in arbitration. The plaintiff responded to the motion by arguing that the defendant had waived its contractual right to arbitration by failing to timely raise arbitration, and by acting inconsistently with its contractual right to arbitration in the previous seven months. The defendant never filed an answer to the plaintiff's complaint before moving to compel arbitration, yet the plaintiff contends the defendant still participated in the litigation.

As evidence of the defendant's participation, the plaintiff asserts that shortly after the complaint was filed, on December 16, 2013, counsel for the defendant exchanged e-mails with plaintiff's counsel asking for a 45–to–60 day filing extension to plead in the lawsuit. Defense counsel stated the defendant was “in the process of tracking down whether and to what extent” other employees were not paid in accordance with the WPCA, and offered to produce information about other employees to “short-circuit” discovery and litigation. Plaintiff's counsel agreed to the delay by the defendant.

On April 21, 2014, defense counsel contacted plaintiff's counsel by e-mail and asked for additional time to plead. Defense counsel asked if he was “still okay with the responsive pleading deadline and, if we're close, can I ask that it be pushed out again?” In a subsequent phone conversation with plaintiff's counsel, defense counsel said he expected to respond to the plaintiff's needs within two to three weeks.

Some five months after the complaint was filed, on May 22, 2014, plaintiff's counsel wrote an e-mail to defense counsel. Plaintiff's counsel noted that defense counsel had not produced the promised information, and said the plaintiff was not providing “an open-ended extension for Halliburton to respond[.]” A new defense lawyer (within the same firm) promptly responded to the e-mail from plaintiff's counsel. The new defense lawyer stated the prior lawyer was no longer working on the case, and said she would need additional time to “get a handle on the status” of the case. Two new lawyers noted their appearances as counsel for the defendant in the last week of June 2014, and the defendant's first substantive filing in the court record—the motion to compel arbitration—was filed on July 7, 2014.

In an order dated November 14, 2014, the circuit court granted the defendant's motion, dismissed the plaintiff's complaint and compelled the parties to participate in arbitration. The circuit court determined that the defendant had not waived its rights under the arbitration provision. Although the defendant admitted to a seven-month delay before moving for arbitration, the circuit court found that the defendant had “not actively participated in this lawsuit.” Moreover, the circuit court found the plaintiff was required, but had failed, to prove he was prejudiced by the defendant's actions or delay.

The plaintiff now appeals the circuit court's order dismissing his complaint and compelling him to arbitrate his claims against the defendant.

II.STANDARD OF REVIEW

“Appellate review of a circuit court's order granting a motion to dismiss a complaint is de novo. ” Syllabus Point 2, State ex rel. McGraw v. Scott Runyan Pontiac–Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995).

III.ANALYSIS

The facts below are not disputed, and the parties agree that the plaintiff's claims fall within the scope of a clear and unambiguous arbitration agreement. Additionally, the plaintiff does not challenge the enforceability of the arbitration agreement under West Virginia's general contract law. The sole question on appeal is whether the defendant's actions, viewed under principles of state contract law, served to waive its contractual right to arbitration.

The plaintiff insists the defendant actively participated in the underlying litigation by volunteering to produce class-wide discovery and by repeatedly seeking extensions of time to file a responsive pleading. The plaintiff argues the defendant's actions were contrary to its contractual right to avoid the court system and demonstrated the defendant's intent to waive the protection afforded by the contractual arbitration provision.

The defendant counters that these actions did not rise to a level of “substantial participation” in the litigation process, and on balance are not of enough significance to demonstrate waiver. Furthermore, the defendant asserts the plaintiff was required to establish “actual prejudice” before a court could find waiver of a contract right, and asserts the plaintiff failed to meet this burden.

It is a well-established principle of contract law that contract rights can be waived. Under West Virginia contract law (and the contract law of most other states), the “waiver” of a contract right is “defined as the voluntary, intentional relinquishment of a known right.” Hoffman v. Wheeling Sav. & Loan Ass'n, 133 W.Va. 694, 712, 57 S.E.2d 725, 735 (1950).² “To effect a waiver, there must be evidence which demonstrates that a party has intentionally relinquished a known right.” Syllabus Point 2, in part, Ara v. Erie Ins. Co., 182 W.Va. 266, 387 S.E.2d 320 (1989). “There must be first, the existence of the right; second, knowledge of the existence of such right; and third, voluntary intention to relinquish.” Hoffman, 133 W.Va. at 713, 57 S.E.2d at 735. Once a right has been waived, it is forever gone and cannot be reclaimed. “The contractual doctrine of waiver, whether express or implied, seems ... to rest on an idea no more complicated than that any competent adult can abandon a legal right and if he does so then he has lost it forever.” McElroy v. B.F. Goodrich Co., 73 F.3d 722, 724 (7th Cir.1996).

Waiver of a contract right may be made by an express statement or agreement, or it may be implied from the conduct of the party who is alleged to have waived a right. “Waiver may be established by express conduct or impliedly, through inconsistent actions.” Ara, 182 W.Va. at 269, 387 S.E.2d at 323. “Of course a waiver may be express or it may be inferred from actions or conduct, but all the attendant facts, taken together, must amount to an intentional relinquishment of a known right, in order that a waiver may exist.” Blue v. Hazel–Atlas Glass Co., 106 W.Va. 642, 650, 147 S.E. 22, 25–26 (1929).

To rely upon the doctrine of waiver under the common law, a party is not required to show prejudice or detrimental reliance caused by the opposing party's waiver of a contract right. As Chief Justice Davis stated, “The doctrine of waiver focuses on the conduct of the party against whom waiver is sought, and requires that party to have intentionally relinquished a known right. There is no requirement of prejudice or detrimental reliance by the party asserting waiver.” Potesta v. U.S. Fid. & Guar. Co., 202 W.Va. 308, 315–16, 504 S.E.2d 135, 142–43 (1998).

Waiver does not require proof of prejudice or detrimental reliance because “[w]aiver is within the control of the party who chooses to relinquish a condition [in the contract], quite apart from whether another party relies on relinquishment.” 8 Catherine M.A. McCauliff, Corbin on Contracts § 40.1 (1999). “Waiver is essentially unilateral in its character; it results as a legal consequence from some act or conduct of the party against whom it operates; no act of the party in whose favor it is made is necessary to complete it.” Equitable Life Assur. Soc'y of U.S. v. Ellis, 105 Tex. 526, 147 S.W. 1152, 1157 (1912). See also Nathan Miller, Inc. v. N. Ins. Co. of New York,

39 A.2d 23, 25 (Del.Super.1944) (“In strictness, waiver is referable to the act or conduct of one party only. It depends on what one party intended to do, rather than upon what he induced his adversary to do, as in estoppel.”); Salloum Foods & Liquor, Inc. v. Parliament Ins. Co., 69 Ill.App.3d...