State ex rel. Ranger Fuel Corp. v. Lilly

• Citation: 267 S.E.2d 435,165 W.Va. 98
• Decision Date: 10 June 1980
• Docket Number: No. 14791,14791
• Court: Supreme Court of West Virginia
• Parties: STATE of West Virginia ex rel. RANGER FUEL CORPORATION v. Honorable C. Berkley LILLY, Judge, etc.

Page 435

267 S.E.2d 435

165 W.Va. 98

STATE of West Virginia ex rel. RANGER FUEL CORPORATION v. Honorable C. Berkley LILLY, Judge, etc.

No. 14791.

Supreme Court of Appeals of West Virginia.

June 10, 1980.

Syllabus by the Court

1. "Where the parties to a contract agree to arbitrate either all disputes, or particular limited disputes arising under the contract, and where the parties bargain for the arbitration provision, such provision is binding, and specifically enforceable, and all causes of action arising under the contract which by the contract terms are made arbitrable are merged, in the absence of fraud, into the award of the arbitrators." Syl. pt. 1, Board of Education v. Harley Miller, Inc., W.Va., 236 S.E.2d 439 (1977).

2. The question of whether an arbitration provision was bargained for and valid is a matter of law for the court to determine by reference to the entire contract.

3. It is the general rule that the duty to arbitrate under an arbitration clause in a contract survives the termination of the contract.

File, Payne, Scherer & Brown and W. H. File, Jr., Beckley, for relator.

Lynch, Mann & Knapp and Jack A. Mann, Beckley, for respondent.

PER CURIAM.

On February 21, 1980, upon the petition of Ranger Fuel Corporation, acting under our original jurisdiction, we issued a rule requiring the respondent judge to show cause why a writ of mandamus should not be awarded to compel him to grant specific performance of an arbitration agreement and to stay certain civil proceedings pending the outcome of arbitration.

In July 1975, Ranger Fuel Corporation entered into an agreement with certain individuals whereby Ranger leased certain tracts of land for the purposes of exploring for and mining coal. In March 1976, Ranger exercised their unquestioned right to terminate the lease. Subsequently, the lessors instituted a civil action alleging Ranger had breached the lease agreement by failing to drill two of the six exploratory bore holes that had been agreed to in the lease. Ranger moved to dismiss the action on the ground the lease contained an arbitration provision which was a condition precedent to any litigation. ¹ Denying Ranger's motion to dismiss, the court indicated that although the arbitration clause had been bargained for and was valid, it terminated when Ranger terminated the lease.

Plaintiffs filed an amended complaint which for the first time alleged a failure of consideration with regard to the "lease option agreement." Ranger filed a second motion to dismiss seeking specific performance of the arbitration clause and a stay of the civil proceedings pending the outcome of arbitration. Plaintiffs filed a motion for summary judgment which the court granted on the limited issue of liability, leaving the question of damages to the jury. In its opinion the court, for the first time, specifically construed the lease agreement as two separate contracts. Based upon this construction the court reasoned that when Ranger terminated the agreement the "second part of this contract" containing the arbitration clause never came into effect, and was not therefore a condition precedent to litigation.

While the relator's action in this Court is styled in mandamus, we believe that the most appropriate method of disposition is by writ of prohibition under this Court's original jurisdiction. Accordingly, we treat this cause as one in prohibition.

Citing Board of Education v. Harley Miller, Inc., W.Va., 236 S.E.2d 439 (1977) as authority, Ranger contends the trial court should have granted its motion for specific enforcement of the arbitration clause:

"Where the parties to a contract agree to arbitrate either all disputes, or particular limited disputes arising under the contract, and where the parties bargain for the arbitration provision, such provision is binding, and specifically enforceable, and all causes of action arising under the contract which by the contract terms are made arbitrable are merged, in the absence of fraud, into the award of the arbitrators." Syl. pt. 1, Miller, supra.

Miller went on to hold in syllabus point 3 that an arbitration provision should be enforced unless the contract is unconscionable or is one of adhesion. Neither has been alleged in this case. In fact, the trial court correctly concluded this arbitration provision was bargained for and was valid, a matter of law which the court could properly determine. Syl. pt. 3, Miller, supra. We can determine no impediment to the validity of this arbitration clause. The arbitration clause is binding on the parties and specifically enforceable. By its own terms it is expressly intended to be a condition precedent to any litigation. It was error for the respondent judge to fail to grant Ranger's motion seeking specific performance of the arbitration clause and a stay pending the outcome of arbitration.

The award of a writ of prohibition in this case falls squarely within the parameters of our decision in Hinkle v. Black, W.Va., 262 S.E.2d 744 (1979). The error of the respondent judge in failing to grant the motion seeking specific performance of the arbitration clause and a stay of the civil proceedings was a substantial, clear-cut, legal error. There was then, and is now, no factual dispute to hamper...