State ex rel. U-Haul Co. of W. Va. v. Zakaib

• Decision Date: 26 November 2013
• Docket Number: No. 13-0181,13-0181
• Parties: State of West Virginia ex rel. U-Haul Co. of West Virginia, a West Virginia Corporation v. The Honorable Paul Zakaib, Jr., Amanda Ferrell, John Stigall, and Misty Evans
• Court: West Virginia Supreme Court

State of West Virginia ex rel. U-Haul Co. of West Virginia,a West Virginia Corporation v. The Honorable Paul Zakaib, Jr., Amanda Ferrell,John Stigall, and Misty Evans

No. 13-0181

Supreme Court of Appeals of West Virginia

Date: November 26, 2013

Justice Ketchum, dissenting:

I respectfully dissent. The majority opinion, although well reasoned, fails to consider several West Virginia statutes which would have led to a different outcome in this case. A fair reading of these statutes requires that the plaintiffs' lawsuit be resolved in arbitration.

These statutes, which were not applied by the circuit court, are in Article 2A of the Uniform Commercial Code ("the UCC"), titled the "Uniform Commercial Code - Leases."¹ This article of the Uniform Commercial Code "applies to any transaction, regardless of form, that creates a lease."² By "lease," the Legislature meant "a transfer of the right to possession and use of goods for a term in return for consideration."³

The plaintiffs' rental of U-Haul's equipment was a "lease" governed by Article 2A of the UCC. The terms of the lease agreement between the plaintiffs and U-Haul should, therefore, have been addressed by the parties and the circuit court under Article 2A. The UCC states that a "lease agreement" has the following meaning (with emphasis added):

"Lease agreement" means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this article. . . .⁴

Plainly, the Legislature intended that a lease agreement may include not just the explicit terms of the writing signed by the parties, but also includes the parties' "course of dealing," that is, the sequence of conduct between the parties previous to the agreement. The parties' course of dealing may be regarded as establishing a common basis of understanding for interpreting the lease. The UCC offers the following definition of "course of dealing":

A "course of dealing" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.⁵

The circuit court in this case found that the plaintiffs were not bound by the arbitration provision in the U-Haul Addendum because the circuit court found there wasnothing in the record to show each plaintiff had knowledge of, and assented to, U-Haul's arbitration provision when they signed the Rental Contract. The plaintiffs argue that, as a company policy, U-Haul never presented, discussed, or noted the arbitration clause to its customers before the Rental Contract was signed. The plaintiffs therefore contend that a typical U-Haul customer signing a Rental Contract would never know they had agreed to arbitrate any disputes until after they had reviewed and agreed to the Rental Contract. If I relied solely on this presentation of the facts by the plaintiffs, at first blush the circuit court's reasoning would seem to be sound.

But the substantial record reveals additional facts beyond those cited by the plaintiffs that the circuit court clearly did not consider, and which misinformed the circuit court's construction of the parties' agreement. The record shows that these three plaintiffs did not make isolated, sporadic, or one-time transactions, but rather had an established "course of dealing" with U-Haul. The three plaintiffs had repeatedly signed agreements with U-Haul, and repeatedly received copies of U-Haul's Addendum. For example, one plaintiff signed Rental Contracts and received copies of the Addendum at least eleven times before filing the underlying lawsuit. Another plaintiff signed the Rental Contract and received the Addendum at least four times.⁶ On this record, I cannotin good conscience countenance the circuit court's finding that the plaintiffs were oblivious to the existence, let alone the contents, of the U-Haul Addendum.

I firmly believe that "an agreement to arbitrate must be clear and direct, and must not depend upon implication, inveiglement or subtlety. . . . [It's] existence . . . should not depend solely upon the conflicting fine print of commercial forms which cross one another but never meet."⁷ But as the unique facts of this case have been presented to this Court, I believe that the circuit court exceeded its jurisdiction. The sequence of conduct concerning previous transactions between the plaintiffs and U-Haul established that the plaintiffs each received multiple copies of the Addendum and the arbitration provision. The Rental Contract makes a clear reference to the Addendum, and even if the identity of the Addendum was vague in the first transaction between the parties, the numerous subsequent transactions would have allowed the plaintiffs to ascertain the identity and contents of the Addendum beyond doubt. Their course of conduct should fairly be regarded as establishing a common basis for understanding the parties' agreement.

It was therefore inconsistent for the circuit court to find the plaintiffs had absolutely no knowledge of the Addendum's existence or the terms of the arbitration provision, without violating the fundamental rule that "[a] party to a contract has a dutyto read the instrument."⁸ U-Haul has, in my judgment of the record, established that the agreement with the plaintiffs fairly incorporated an arbitration provision. A writ of prohibition is therefore warranted, and the majority opinion was wrong to deny the writ.

In addition, I believe this case is significantly flawed going forward. The plaintiffs in their complaint have asked the trial court to certify a class action. Under Rule 23(a) of the Rules of Civil Procedure, the plaintiffs bear the burden of establishing four prerequisites: numerosity,...