STATE EX REL. BARDEN AND ROBESON v. Hill

• Decision Date: 12 July 2000
• Docket Number: No. 26837.,26837.
• Citation: 539 S.E.2d 106,208 W. Va. 163
• Court: West Virginia Supreme Court
• Parties: STATE of West Virginia ex rel. the BARDEN AND ROBESON CORPORATION, a New York corporation; and Bob Hutton and Gene Hutton, d/b/a Buildings, Inc., Petitioners, v. The Honorable George W. HILL, Jr., Judge of the Circuit Court of Wood County; and Fellowship Baptist Church, By and Through Its Trustees, Glen Gainer, III, Clayton Bond and Kermit Polan, Respondents.

539 S.E.2d 106

208 W. Va. 163

STATE of West Virginia ex rel. the BARDEN AND ROBESON CORPORATION, a New York corporation; and Bob Hutton and Gene Hutton, d/b/a Buildings, Inc., Petitioners, v. The Honorable George W. HILL, Jr., Judge of the Circuit Court of Wood County; and Fellowship Baptist Church, By and Through Its Trustees, Glen Gainer, III, Clayton Bond and Kermit Polan, Respondents.

No. 26837.

Supreme Court of Appeals of West Virginia.

Submitted January 11, 2000.

Decided July 12, 2000.

John F. Loehr, Esq., Shawn R. Romano, Esq., Daniels Law Firm, PLLC, Charleston, West Virginia, Attorneys for Petitioners.

Robert L. Bays, Esq., C. Edward McDonough, Esq., Bowles Rice McDavid Graff & Love PLLC, Parkersburg, West Virginia, Attorneys for Respondent Fellowship Baptist Church.

McGRAW, Justice:

In this original jurisdiction proceeding, petitioners seek a writ of prohibition requiring the Circuit Court of Wood County to vacate a default-judgment order entered in a breach-of-contract action brought against them by respondent Fellowship Baptist Church ("Church"). Petitioners assert that the lower court lacked subject-matter jurisdiction over the underlying suit due to the existence of an arbitration provision in a contract between the Church and petitioner Barden and Robeson Corporation ("Barden"). We reject petitioners' request for prohibition relief, finding that an agreement to arbitrate a dispute does not divest a court of subject matter jurisdiction.

I. BACKGROUND

The pertinent facts of this case, as stated in the pleadings before us, are straightforward. Petitioners were involved in designing and constructing an addition to the Church's building in Vienna, West Virginia. After the work was completed, the Church asserted that the height of the ceiling in the basement of the addition was lower than what was agreed to. Specifically, it has maintained that it specified the ceiling height at nine feet, and that while early plans provided by Barden indicated such height, the ceiling was subsequently lowered to seven feet, eight inches without the Church being given adequate notice of such change.

The work was performed pursuant to two contracts: one between the Church and petitioners Bob and Gene Hutton, doing business as Ray Builders, Inc.; and another between the Church and Barden. The latter contract, dated July 30, 1998, contains the following arbitration clause:

Any dispute arising out of this Agreement will be submitted to arbitration in accordance with the Rules of the American Arbitration Association. The Purchaser shall be responsible for all attorneys fees incurred as a result of the failure to make timely payments to The Barden & Robeson Corporation, including legal expenses of Arbitration. The non-prevailing party shall pay all costs attended to as a result of Arbitration.

The Church maintains, inter alia, that there was no agreement to arbitrate due to the fact that the trustees of the Church executed a facsimile copy of the contract, wherein the small print of the arbitration clause was "virtually unreadable as a faxed document."

Following unsuccessful efforts at negotiating a settlement to the dispute,¹ the Church brought an action against petitioners in the Circuit Court of Wood County. There is apparently no dispute that petitioners were served with the complaint on April 7, 1999. After petitioners failed to respond to the complaint, the Church moved for, and on June 1, 1999 was granted, a default judgment pursuant to W. Va. R. Civ. P. 55. Petitioners subsequently moved to set aside the default judgment under Rules 55(c) and 60(b) of the West Virginia Rules of Civil Procedure. In their motion, petitioners relied upon the criteria set forth in syllabus point three of Parsons v. Consolidated Gas Supply Corp., 163 W.Va. 464, 256 S.E.2d 758 (1979), and asserted they should be relieved from judgment because (1) the delay in answering the complaint resulted from excusable neglect in that Barden was required to engage in the time-consuming task of retaining local counsel; and (2) the circuit court lacked subject matter jurisdiction over the action as a result of the purported agreement to arbitrate.² According to petitioners, the circuit court, at a hearing conducted on July 16, 1999, indicated its intention to deny this motion. It is unclear as to whether an order giving effect to such ruling has ever been entered by the court below.

II. STANDARD FOR PROHIBITION RELIEF

In accord with the provisions of W. Va.Code § 53-1-1 (1923), "`[p]rohibition lies only to restrain inferior courts from proceeding in causes over which they have no jurisdiction, or, in which, having jurisdiction, they are exceeding their legitimate powers and may not be used as a substitute for writ of error, appeal or certiorari.' Syl. pt. 1, Crawford v. Taylor, 138 W.Va. 207, 75 S.E.2d 370 (1953)." Syl. pt. 2, Cowie v. Roberts, 173 W.Va. 64, 312 S.E.2d 35 (1984). Although petitioners in this case may have other avenues for challenging the jurisdiction of the circuit court, this Court has previously indicated that "where it appears that a court is proceeding without jurisdiction ... prohibition will issue regardless of the existence of other remedies." State ex rel. West Virginia Truck Stops, Inc. v. McHugh, 160 W.Va. 294, 302, 233 S.E.2d 729, 734 (1977). See also Health Management, Inc. v. Lindell, 207 W.Va. 68, 528 S.E.2d 762, 767 n. 6 (1999)

; State ex rel. City of Huntington v. Lombardo, 149 W.Va. 671, 679, 143 S.E.2d 535, 541 (1965); syl. pt. 1, Lake O'Woods Club v. Wilhelm, 126 W.Va. 447, 28 S.E.2d 915 (1944).

Importantly, "[a] writ of prohibition does not lie in the absence of a clear showing that a trial court is without jurisdiction to hear and determine a proceeding...." Syl. pt. 1, in part, Fahey v. Brennan, 136 W.Va. 666, 68 S.E.2d 1 (1951). See also Fisher v. Bouchelle, 134 W.Va. 333, 335, 61 S.E.2d 305, 306 (1950)

("the writ will not be awarded in cases where it does not clearly appear that the petitioner is entitled thereto"); syllabus, Vineyard v. O'Brien, 100 W.Va. 163, 130 S.E. 111 (1925) ("The writ of prohibition will issue only in clear cases, where the inferior tribunal is proceeding without, or in excess of, jurisdiction.") Thus, we undertake limited review in this case to determine whether the circuit court's action in entering default judgment against petitioners was distinctly outside of its jurisdiction.

III. DISCUSSION

We begin our analysis in this case with the fundamental premise that for "a court to hear and determine an action, suit or other proceeding it must have jurisdiction of the subject matter and jurisdiction of the parties; both are necessary and the absence of either is fatal to its jurisdiction." Syl. pt. 3, State ex rel. Smith v. Bosworth, 145 W.Va. 753, 117 S.E.2d 610 (1960). See also syl. pt. 1, McClay v. Mid-Atlantic Country Magazine, 190 W.Va. 42, 435 S.E.2d 180 (1993); syl. pt. 1, Schweppes U.S.A. Ltd. v. Kiger, 158 W.Va. 794, 214 S.E.2d 867 (1975) ("In order to render a valid judgment or decree, a court must have jurisdiction both of the parties and of the subject matter and any judgment or decree rendered without such jurisdiction will be utterly void."). In this case, our focus is solely upon whether the default judgment entered by the circuit court must be vacated for want of subject matter jurisdiction, based upon the alleged existence of a binding and enforceable agreement to arbitrate.³ In syllabus point one of Board of Educ. of Berkeley County v. W. Harley Miller, Inc., 160 W.Va. 473, 236 S.E.2d 439 (1977) [hereafter "Miller II"], we held, in pertinent part, that "[w]here parties to a contract agree to arbitrate ... all disputes... arising under the contract, and where the parties bargained for the arbitration provision, such provision is binding, and specifically enforceable." This Court's past cases have recognized that a contract provision requiring arbitration of disputes "creates a condition precedent to any right of action or suit arising under the contract." Syl. pt. 3, in part, Pettus v. Olga Coal Co., 137 W.Va. 492, 72 S.E.2d 881 (1952). See also State ex rel. Center Designs, Inc. v. Henning, 201 W.Va. 42, 45, 491 S.E.2d 42, 45 (1997) (per curiam)

("the parties to a contract may agree that a decision of arbitrators or a third person is a condition precedent to the right to bring an action upon the contract"). As a condition precedent to litigating a dispute in the courts, a valid and enforceable arbitration clause "preclud[es] any right of action until the procedure has been completed." Board of Educ. of Berkeley County v. W. Harley Miller, Inc., 159 W.Va. 120, 126, 221 S.E.2d 882, 885 (1975) [hereafter "Miller I"].

This more recent view of arbitration as condition precedent to litigation has its roots in cases that did, in fact, speak of arbitration in jurisdictional terms. At common law, an agreement to arbitrate could be revoked prior to an award being made. See Miller I, 159 W.Va. at 122, 221 S.E.2d at 883. This rule was predicated on the antiquated notion that arbitration agreements are unenforceable because parties cannot, by agreement, oust a court of jurisdiction.⁴ The only exception was that arbitration was not revocable where it was made a condition precedent to a right of action. In Condon v. South Side R.R. Co., 55 Va. (14 Grat.) 302 (1858), the Court explained that

parties by their contract may lawfully make the decision of arbitrators or of any third person a condition precedent to a right of action upon the contract. In that case such decision is a part of the cause of action. Until the decision is made and the cause of action thus becomes complete, the courts have no jurisdiction of the case, and therefore cannot be said to be ousted of their jurisdiction by the contract.

Id. at 314 (emphasis added). In Miller I, however, we indicated that this common-law preoccupation with "prevent[ing] parties by agreement from ousting courts of...