W. Va. Inv. Mgmt. Bd., Body Corporate v. Variable Annuity Life Ins. Co. ( 2018 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2018 Term FILED
_______________ June 5, 2018
released at 3:00 p.m.
No. 17-0486 EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
_______________ OF WEST VIRGINIA
THE WEST VIRGINIA INVESTMENT MANAGEMENT BOARD, a public body
corporate, and THE WEST VIRGINIA CONSOLIDATED PUBLIC RETIREMENT
BOARD, a public agency,
Plaintiffs Below, Petitioners
v.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY,
Defendant Below, Respondent
____________________________________________________________
Appeal from the Business Court Division
The Honorable Christopher C. Wilkes, Judge; The Honorable Joanna I. Tabit, Judge; and
The Honorable Paul T. Farrell, Judge
Civil Action No. 09-C-2104
AFFIRMED
____________________________________________________________
Submitted: May 16, 2018
Filed: June 5, 2018
Benjamin J. Bailey, Esq. Thomas J. Hurney, Jr., Esq.
Jonathan R. Marshall, Esq. Michael M. Fisher Esq.
Thomas B. Bennett, Esq. JACKSON KELLY PLLC
Raymond S. Franks, II, Esq. Charleston, West Virginia
BAILEY & GLASSER LLP
Charleston, West Virginia Erin R. Stankewicz, Esq.
Counsel for Petitioner JACKSON KELLY PLLC
The West Virginia Investment Wheeling, West Virginia
Management Board
Richard J. Doren, Esq. (pro hac vice)
J. Jeaneen Legato, Esq. GIBSON, DUNN & CRUTCHER LLP
Consolidated Public Retirement Board
Los Angeles, California
Counsel for Respondent
Gerard R. Stowers, Esq.
Special Assistant Attorney General
John M. Canfield, Esq.
J. Mark Adkins, Esq. Charleston, WV
S. Andrew Stonestreet, Esq. Counsel for Amicus Curiae
BOWLES RICE LLP West Virginia Chamber of Commerce
Charleston, West Virginia
Counsel for Petitioners Mychal S. Schulz, Esq.
Babst Calland
Andrew J. Katz, Esq. Charleston, West Virginia
Charleston, West Virginia and
Counsel for Amicus Curiae Todd A. Mount, Esq.
West Virginia Education Association Shaffer & Shaffer, PLLC
Madison, West Virginia
Jeffrey G. Blaydes, Esq. Counsel for Amicus Curiae
Carbone & Blaydes, P.L.L.C Defense Trial Counsel of West Virginia
Charleston, West Virginia
Counsel for Amicus Curiae
American Federation of Teachers,
WV AFL-CIO
Robert M. Bastress, Jr., Esq.
Morgantown, West Virginia
Counsel for Amicus Curiae
West Virginia Association of Retired
School Employees
West Virginia Employment Lawyers
Association
JUSTICE WALKER delivered the Opinion of the Court.
JUSTICE DAVIS concurs and reserves the right to file a concurring opinion.
SYLLABUS BY THE COURT
“Where the issue on an appeal from the circuit court is clearly a question of
law or involving an interpretation of a statute, we apply a de novo standard of review.”
Syllabus Point 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415 (1995).
WALKER, Justice:
This appeal is the latest chapter in a long-existing contractual dispute
between the West Virginia Investment Management Board (IMB), the West Virginia
Consolidated Public Retirement Board (CPRB) (together, Petitioners) and the respondent,
The Variable Annuity Life Insurance Company (VALIC). The first time the parties were
before this Court, we reversed summary judgment in favor of VALIC and remanded for
further proceedings.1 This Court also directed that the matter be referred to the Business
Court Division. Eventually, the parties agreed to submit the dispute to binding, non-
appealable arbitration before a panel of three business court judges due to the complexity
of the case. The panel unanimously found in favor of VALIC. Petitioners now contend
that the creation and makeup of the arbitration panel was illegal. Petitioners additionally
argue that the panel, even if validly created, misapplied the law in reliance on erroneous
findings of fact, altogether failed to apply the law of the case created in IMB I, and
neglected to decide all issues before it.
We disagree and find that the Business Court Division Rules provide
sufficient flexibility to allow for arbitration by panel if agreed to by the parties. Because
the parties were sophisticated and represented by able counsel, we find no cause to void
the parties’ agreement to submit the matter to binding arbitration, including their agreement
1
West Virginia Investment Management Bd. v. Variable Annuity Life Ins. Co., 234
W. Va. 469, 766 S.E.2d 416 (2014) (IMB I).
1
to waive appellate review. While we disagree with the characterization of Petitioners’
merits-based arguments as challenges to the panel’s subject-matter jurisdiction, we
nonetheless find Petitioners’ arguments that the panel failed to apply the law of the case
and neglected to decide all issues before it unavailing. Accordingly, we affirm the order
below dismissing the matter from the Business Division docket in reliance on the
conclusions reached in the panel’s Final Decision.2
I. FACTUAL AND PROCEDURAL BACKGROUND
As we did when this case was previously before this Court in IMB I, we again
find it necessary to provide the appropriate background for the proceedings at issue, despite
that the substantive facts are of little use to our analysis in the current appeal because it
delves into matters of constitutionality and the legality of the procedures employed below.
In IMB I, we explained history of the teachers’ retirement plans and the 1990 legislation
affecting those plans:
The State Teachers Retirement System (“TRS”) was
created in 1941 to provide retirement benefits for public school
teachers and other school service personnel. From 1941 to
1970, teachers and other professional and school service
personnel were required to participate in TRS. While
originally a defined contribution plan, TRS became a defined
2
This Court would like to acknowledge the participation of amici curiae in this
case. Briefs in support of Petitioners were filed by the West Virginia Education
Association, the American Federation of Teachers, as well as the West Virginia
Association of Retired School Employees and West Virginia Employment Lawyers
Association. Briefs in support of Respondent were filed by the West Virginia Chamber of
Commerce and the Defense Trial Counsel of West Virginia.
2
benefit plan in 1970. Due to funding problems affecting the
solvency of TRS, the Legislature enacted the “Teacher’s
Retirement Reform Act” (“Reform Act”) in 1990, pursuant to
which a defined contribution plan (“DCP”) was created. See
W. Va. Code §§ 18–7B–1 to –21 (2012 & Supp. 2014). Subject
to the provisions of the Reform Act, participants were
permitted to allocate their retirement funds among various
investment options in the DCP.[3]
So, on October 8, 1991, the CPRB entered into an annuity contract with
VALIC to offer DCP enrollees a high-yield, fixed annuity investment. The 1991 Contract
provided that VALIC would guarantee a minimum annual interest rate of at least 4.5% in
perpetuity, and contained an endorsement providing that “in the case of withdraw for
transfer to another funding entity only 20% of the Surrender Value may be withdrawn once
a year” (the 20% Rule). Application of the 20% Rule was subject to only two exceptions:
(1) the surrender value remaining would be less than $500; or (2) the withdrawal is for
transfer to the funding entity for the West Virginia ORP Common Stock Fund or the West
Virginia ORP Bond Fund. In March 2008, the Legislature passed House Bill 101, which,
effective July 1, 2008, permitted DCP members to elect to transfer their retirement funds
from DCP to TRS if at least sixty-five percent of the total DCP membership opted to do
so.4 Seventy-eight percent of the members opted to transfer their funds to TRS. Because
the threshold requirement had been met, the State requested liquidation of the investments
3
IMB I, 234 W. Va. at 472-73, 766 S.E.2d at 419-20.
4
See generally W. Va. Code §§ 18–7D–1 to –12 (2008).
3
of the transferring members from all DCP fund providers, including VALIC. VALIC
invoked the 20% Rule and agreed, in accordance with that rule, that it would transfer 20%
of the funds each year over a five-year period, or, in the alternative, would agree to a fee
of $11.2 million for an immediate withdrawal of the full amount.
This issue prompted discussions between CPRB, IMB, and VALIC, during
which a transfer of the funds to a bond fund option (as an exception to the 20% Rule) was
contemplated, but ultimately failed because IMB could not agree to the bond fund’s
requirements. The parties then negotiated a new contract in November 2008 (the 2008
Contract). VALIC received assurances that the 2008 contract was “not an attempt by the
CPRB or IMB to liquidate the assets in the new fixed annuity contract.” The parties agreed
that the 2008 Contract would be “materially similar (i.e., form, endorsements, rates, and
terms) to the [1991] contract issued to the CPRB for the [DCP].” The 2008 Contract did,
however, designate IMB as signatory.5 Critically, the 20% Rule was not altered in any way
from the 1991 Contract to the 2008 Contract. On December 10, 2008, Petitioners requested
that VALIC transfer $248 million from the fund governed by the 1991 Contract to one
governed by the 2008 Contract. Eight days later, IMB requested withdrawal of all funds
held under the 2008 Contract on or before December 21, 2008. Pursuant to the 20% Rule,
VALIC again refused to allow withdrawal of the full $248 million in one lump sum, but
5
CPRB and IMB are co-trustees and fiduciaries of the TRS. IMB dictates how
those funds are invested while CPRB acts in more of an administrative capacity. For those
who did not elect to transfer to the TRS, CPRB is the sole administrator and fiduciary.
4
agreed to transfer 20% per year over a five year period.6 Petitioners filed this action
initially seeking only a declaratory judgment that VALIC was required to pay the amount
in a lump sum rather than in five equal installments over the period of 2009 to 2013. After
removal and remand from federal court, however, Petitioners amended their complaint to
seek damages in the form of “lost investment opportunities,” claiming that had they been
permitted to withdraw all of the funds in a lump sum, they could have made a greater rate
of return than VALIC’s guaranteed 4.5% interest.
The parties filed cross-motions for summary judgment. VALIC argued,
among other things, that the suit with regard to the 1991 Contract did not present a
justiciable controversy, and the CPRB did not have standing to assert relief in connection
with the 2008 Contract. Petitioners argued, among other things, that the 20% Rule
endorsement should be construed in their favor. The circuit court granted VALIC’s motion
for summary judgment, finding that Petitioners presented no justiciable controversy, and
determined that the 20% Rule endorsement was unambiguous and should be construed in
favor of VALIC. Accordingly, the circuit court entered summary judgment in favor of
VALIC. Petitioners then appealed that order to this Court in IMB I.
6
VALIC eventually agreed that the contract terms did not provide that it could
assess a surrender fee.
5
In IMB I, we held that both IMB and CPRB had standing to pursue the
action.7 And, we held that the suit presented a justiciable controversy.8 More important
for our review of this appeal, however, we explained that the 20% Rule endorsement
language was “decidedly ambiguous.”9 We reasoned that because the 1991 contract
formed the basis of the 2008 contract, which the parties agreed were “materially similar,”
the circuit court should not have precluded from its review evidence relating to the 1991
contract.10 Thus, we reversed the grant of summary judgment and remanded the matter for
further proceedings consistent with the opinion.11 We also referred the matter to the
Business Court Division.12
Following the remand in IMB I, the parties engaged in extensive discovery
that focused on developing parol evidence consistent with this Court’s directive. The
additional discovery included written discovery, affidavits, and seven additional
depositions. The deponents included the CPRB executive director who participated in
negotiations for the 1991 Contract, VALIC’s former chief actuary, CPRB’s Executive
7
IMB I, 234 W. Va. at 481, 766 S.E.2d at 428.
8
Id. at 477, 766 S.E.2d at 424.
9
Id. at 485, 766 S.E.2d at 432.
10
Id. at 483-84; 766 S.E.2d at 430-31.
11
Id. at 485; 766 S.E.2d at 432.
12
Id.
6
Director from 2003 to 2005, and CPRB’s Rule 30(b)(7) witness.13 Most relevant for
purposes of this appeal, CPRB’s representatives conceded that VALIC could not have
guaranteed the 4.5% interest rate if the funds could be withdrawn at any time, in total and
without restriction; that no one at CPRB had ever stated the view—prior to this litigation—
that the 20% Rule did not apply to the transfers attempted in 2008; and that it had been
reported to the CPRB Board upon review of the 20% Rule that the “annuity could only be
liquidated through five annual withdrawals over a multi-year period.”
Prior to the pretrial conference, Judge Christopher C. Wilkes—the Business
Court Division Chair and Presiding Judge—expressed concern, echoed by the parties, that
the complexity of the issues involved might prove difficult for resolution by a lay jury.14
These concerns prompted Judge Wilkes to offer to hold a bench trial or other alternative
dispute resolution. The parties reportedly “liked the idea of arbitration, but worried that
13
Rule 30(b)(7) of the West Virginia Rules of Civil Procedure provides that, upon
subpoena, an organization is required to produce for deposition a representative designated
to testify as to matters known or reasonably available to the organization.
14
As discussed below, Petitioners petitioned this Court for a writ of prohibition in
conjunction with this appeal, which was denied. In Judge Wilkes’s response to Petitioners’
petition for a writ of prohibition, he provided a detailed account of the events and
discussions that transpired surrounding the agreement to arbitrate. Neither party has
offered anything to dispute Judge Wilkes’s account of the events, and have likewise
condoned the writ of prohibition as a complement to, and duplication of, the issues raised
in this appeal. Accordingly, we find it appropriate to include and consider his account
since the parties’ accounts were more general to the effect that they had agreed to the joint
stipulation. Consequently, Judge Wilkes’s response is more instructive as to how the
present procedural anomaly came to fruition.
7
the case presented too much information for one arbitrator to absorb.” In response, Judge
Wilkes offered to secure a panel of arbitrators to hear their dispute according to whatever
terms were agreed upon by the parties. Counsel for the parties sought the possibility of
securing three business court judges to serve as the arbitration panel to be conducted the
next day, but it could not be arranged on such short notice. Judge Wilkes advised the
parties that he would not serve on the panel, but the parties requested that Judge Wilkes do
so because he was already intimately acquainted with the admittedly complex issues,
having presided over the case for the past year. The parties then took leave to consult with
their respective clients and reconvened, at which time all counsel agreed to the alternative
dispute resolution and at the parties’ request, Judge Wilkes cancelled the jury trial
scheduled to begin the following day. The parties then agreed that they would attempt to
mediate the case once more, and asked that Judge Wilkes serve as the mediator since he
not only was aware of all issues, but also was available to conduct the mediation the
following day due to cancellation of the jury trial. In the event that the mediation was
unsuccessful, the parties agreed that the matter would be submitted to binding, non-
appealable arbitration before Judge Wilkes, and Business Court Judges Joanna I. Tabit and
Paul T. Ferrell, who were specifically chosen by the parties. The parties likewise stipulated
to detailed parameters for the arbitration. The parties reduced the pertinent points of their
agreement to writing and submitted it to the Business Court on September 20, 2016 as a
Joint Stipulation:
8
WHEREAS, the parties came to an agreement to stay
this action and submit to binding arbitration if they are not able
[to] resolve it through mediation;
NOW THEREFORE, IT IS HEREBY STIPULATED
AND AGREED, by and between the parties, as follows:
1. This action will be stayed.
2. The parties have waived their right to trial by
jury or bench.
3. The parties shall mediate this dispute before
Judge Wilkes on September 20, 2016.
4. In the event the action is not resolved through
mediation, the parties shall submit to binding arbitration before
a three-judge panel comprise of Judge Wilkes, Judge Joanna I.
Tabit, and Judge Paul T. Farrell (“the arbitration”). Any
dispute arising prior to the arbitration shall be resolved by
Judge Wilkes.
5. The arbitration shall take place over a three-day
period that is mutually convenient to the panel members and
parties.
a. On the first day of arbitration, Plaintiffs
shall have up to five hours to present a
proffer of evidence.
b. On the second day of arbitration,
Defendant shall have up to five hours to
present a proffer of evidence.
c. On the third day of arbitration, both
parties shall have up to three hours to
present argument.
6. Seven (7) calendar days before the arbitration is
scheduled to begin, the parties may submit pre-arbitration
memoranda not to exceed twenty-five (25) pages.
9
7. At the arbitration, the proffers must be drawn
from materials and testimony in the discovery record in the
case or publicly available sources.
a. In the event a party intends to proffer
testimony of a witness that is not in the
discovery record, that testimony must be
provided by affidavit in advance of the
arbitration.
b. Any affidavit prepared pursuant to
paragraph 6(a), above, shall be served on
opposing party by e-mail at least fourteen
(14) calendar days before the arbitration
is scheduled to begin.
c. The opposing party may, at their election,
depose any witness whose testimony is
presented by affidavit. The deposition
shall occur prior to the first date the
arbitration is scheduled to begin. The
deposition shall be limited to the subject
matter of the testimony set forth in the
affidavit.
8. Within fourteen (14) calendar days following the
conclusion of the arbitration, the parties may submit written
arguments in memoranda not to exceed (thirty) 30 pages in
length.
9. The arbitration panel shall issue a reasoned
decision applying West Virginia law within thirty (30)
calendar days after the conclusion of the arbitration.
10. The arbitration shall be confidential, except to
the extent disclosure is required by law.
11. The decision of the arbitrators is final and non-
appealable.
10
12. Upon issuance of the panel’s reasoned decision,
the above-captioned action shall be dismissed with prejudice.
13. The parties shall bear their own costs, including
attorneys’ fees.
After entering the parties’ Joint Stipulation, Judge Wilkes conducted a
mediation, but not before informing the parties that any information they did not wish him
to know as a member of the arbitration panel should be kept confidential from him during
the mediation. The mediation was unsuccessful and the matter was scheduled on the
court’s public docket for a three-day arbitration on January 18-20, 2017, but was continued
by agreement of the parties to March 7-9, 2017.
Beginning March 7, 2017, the arbitration took place in Kanawha County’s
Ceremonial Courtroom. Because the arbitration was to take place in a county courthouse,
and relating to the parties’ agreement that arbitration be confidential, except to the extent
disclosure is required by law, Judge Wilkes explained to the parties that “you cannot
preclude the public or anyone from . . . observing [the arbitration]. So I think we’re not
going to be able to blanket much, if anything, in confidentiality.” The parties thereafter
made their five-hour proffers of evidence to the panel, presented three-hour oral arguments,
and submitted post-arbitration written arguments. On April 28, 2017, the panel issued a
unanimous Final Decision in favor of VALIC, finding that “the legal conclusion of [the]
case rests upon the formation of the December 2008 replacement contract[,]” and after
reviewing the parol evidence, negotiating history, and course of performance, it was
11
apparent that all parties (specifically CPRB representatives), at the time of contracting in
2008, shared VALIC’s interpretation that the 20% Rule applied to Petitioners’ attempted
withdrawal unless the transfer was made to the WV ORP Common Stock Fund or the WV
ORP Bond Fund. The panel reasoned:
[a] party (like IMB) that enters into a contract with knowledge
of the other party’s interpretation is bound by that
interpretation and cannot later claim it thought the contract
meant something else. U.S. v. Stuart, 489 U.S. 353, 368 n.7
(1989) (“It is hornbook contract law that the proper
construction of an agreement is that given by one of the parties
when ‘that party had no reason to know of any different
meaning attached by the other, and the other had reason to
know the meaning attached by the first party.’” (quoting
Restatement (2d) of Contracts § 201(2)(b) (1981)).
The panel determined that Petitioners were not entitled to withdraw the funds in one lump
sum without restriction, and therefore were not entitled to damages resulting from alleged
lost investment opportunities.
Despite agreeing that the panel’s order would be binding and non-appealable,
Petitioners then applied to this Court for a writ of prohibition and filed a corresponding and
complementary appeal. We denied the writ of prohibition, but address the arguments made
therein as they were duplicated in this appeal.
II. STANDARD OF REVIEW
Determining the legality of the parties’ agreement to arbitrate before the
Business Court Division requires analysis of the Trial Court Rules and the Rules of Judicial
12
Conduct. Likewise, one aspect of this appeal relates to whether review is proper given
Petitioners’ agreement to waive appellate review, or whether Petitioners retain that right as
a matter of law. Accordingly, our review is plenary. As we have previously held, “[w]here
the issue on an appeal from the circuit court is clearly a question of law or involving an
interpretation of a statute, we apply a de novo standard of review.”15
III. ANALYSIS
On appeal, Petitioners argue that the Business Division did not have the
authority to conduct an arbitration and that their consent to the arbitration and its terms was
ineffective because the proceedings were illegal. As a facet of that argument, Petitioners
argue that to deem the proceedings “confidential” was a violation of the public’s
constitutional right to access to the courts. Petitioners further argue that even if the
Business Division did have the authority to conduct an arbitration, and conducted it
properly, the panel did not apply West Virginia law because it did not apply the so-called
“law of the case” from IMB I, nor did it rule on Petitioners’ declaratory judgment. Thus,
Petitioners argue that the award must be vacated either because the Business Court lacked
the authority to conduct an arbitration, because the arbitration, as conducted, violated the
West Virginia Constitution, or because the arbitration panel exceeded its jurisdictional
15
Syl. Pt. 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415 (1995).
13
authority by violating the agreement to arbitrate insofar as it failed to apply West Virginia
law as agreed and failed to decide all issues before it.
VALIC counters that Petitioners have waived any procedural objection to the
arbitration by agreeing to it below, but argue that, even so, the Business Court Rules
provide the framework for conducting an arbitration and the parties’ agreement was not
“illegal.” As to Petitioners’ argument that the panel did not apply West Virginia law and
did not rule on Petitioners’ declaratory judgment claim, VALIC argues that Petitioners
have waived appellate review on the merits by agreement and are simply attempting to
recast their arguments on the merits in terms of subject-matter jurisdiction to circumvent
that agreement.
A. Putative illegality of the parties’ voluntary arbitration
Turning first to the Business Division’s authority to conduct arbitrations,
Petitioners do not dispute that they agreed to arbitrate, nor do they claim fraud or any other
untoward inducement to enter into the agreement. Instead, Petitioners claim that their
consent to the arbitration, while willingly given, was nevertheless ineffective because it
was made toward an illegal purpose. Petitioners argue that because the agreement to
arbitrate was made at the eleventh hour prior to trial, they were deprived of the time to
research the validity of the alternative dispute resolution to which they were agreeing. And,
upon availability of time to further inquire, Petitioners reached the resolute conclusion that
the proceedings were illegal.
14
Petitioners’ contention is self-serving and flagrantly untrue in light of the fact
that Petitioners are not only sophisticated parties represented by highly-qualified counsel,
but also because the arbitration did not take place for six months after the agreement to
arbitrate was executed. At no point during those six months, during the pendency of the
arbitration proceedings, or in submission of their post-arbitration briefs did Petitioners ever
take issue with the legal validity of the proceedings. Extraordinarily, Petitioners arrived at
their current position that the alternative dispute resolution to which they agreed was
unquestionably illegal only after the arbitration panel rendered its decision in favor of
VALIC. Not surprisingly, we are disinclined to relieve Petitioners from the self-imposed
conditions in the Joint Stipulation on that premise.
Nonetheless, we agree with Petitioners that if the agreement to arbitrate was
illegal, the fact that Petitioners agreed to the proceedings is of no consequence.16
Petitioners’ arguments are three-fold. First, Petitioners argue that the Rules of Judicial
16
See syl. pt. 2, Ben Lomond Co. v. McNabb, 109 W.Va. 142, 153 S.E. 905 (1930)
(“A court of equity will not, at the instance of the original parties or others claiming under
them, enforce a contract entered into to accomplish a fraudulent or illegal purpose.”); Dorr
v. Chesapeake & O. Ry. Co., 78 W.Va. 150, 157, 88 S.E. 666, 668 (1916) (“An illegal
contract is as a rule void—not merely voidable—and can be the basis of no judicial
proceeding. No action can be maintained upon it, either at law or in equity. This
impossibility of enforcement exists whether the grant is illegal in its inception, or whether,
being valid when made, the illegality has been created by subsequent statute . . . . ‘If a
contract is tainted with the vice of illegality, it is held to create no obligation, not from any
consideration of the individual rights of the parties, who may be equally in fault, but from
regard for the public.’ Generally, the illegality of a contract is a perfect defense to its
enforcement, because the law will not require one to do, or punish him for not doing, that
which it forbids him to do.” (internal citations omitted)).
15
Conduct preclude Business Division judges from conducting arbitrations. Second, but
relatedly, Petitioners argue that the Business Division Rules do not authorize arbitration,
generally, and specifically, they do not authorize the makeup of the one impaneled here.
Third, Petitioners argue that the confidential nature of the proceedings renders them
unconstitutional, and, therefore, void.
Rule 3.9 of the Code of Judicial Conduct states that “[a] judge shall not act
as an arbitrator or mediator or perform other judicial functions apart from the judge’s
official duties.” The commentary to that rule provides “[t]his Rule does not prohibit a
judge from participating in arbitration, mediation, or settlement conferences performed as
part of assigned judicial duties. . . .” Trial Court Rule 29.09(h), a specific Business Court
Rule, provides that “[t]he Resolution Judge is authorized to schedule and conduct
mediation of the case or any Alternative Dispute Resolution as agreed to by the parties and
the Resolution Judge in an attempt to resolve the case in an expedient and efficient
manner.” Likewise, Trial Court Rule 29.04(e) defines the Resolution Judge as “[a] member
of the Division assigned by order of the Division Chair, with the advice and consent of the
Division, to mediate, arbitrate, or provide any other form of dispute resolution agreed to
by the parties. . . .” When read together, it requires no stretch of reasoning to conclude that
arbitration, if that is the agreed-upon Alternative Dispute Resolution, falls within the scope
of a Business Division judge’s official duties, and therefore does not run afoul of Rule 3.9
of the Code of Judicial Conduct.
16
Trial Court Rule 29.09(h) is likewise general enough to imbue the Business
Court Division with the authority to conduct an arbitration by panel, if agreed to by the
parties and the Resolution Judge. The term “any” within that Rule necessarily includes
arbitration by panel as a form of alternative dispute resolution, particularly where the
Resolution Judge is given the authority to arbitrate generally under Rule 29.04(e).17 The
Business Division’s rules to this end are aimed at flexibility and allow some degree of
creativity for resolution of particular types of disputes so long as the creature of that
creativity is agreed to by the parties involved.18 Thus, because we do not find that the
Business Division wholly lacked authority to conduct an arbitration by panel or otherwise,
there is no cause to conclude that the parties’ agreement to do so was “illegal.”
17
See infra n. 35.
18
We find no fault in the agreement to submit this matter to arbitration in general,
but merely find that the agreement, by its very nature as an agreement, and one to arbitrate
at that, limits our appellate review. Consistent with the parties’ and Judge Wilkes’
concerns, our review of the record suggests that this matter was particularly well-suited for
arbitration considering the complexity of the issues involved as well as the sheer volume
of evidence to be proffered. Business disputes, as contemplated by the creation of the
Business Division, often require a departure from the typical civil case structure. As the
parties themselves contemplated, arbitration by panel not only provided the parties with
three highly-skilled judges to hear their dispute, but likewise allowed the parties to more
capably present their cases through an agreed-upon structure unavailable to litigants in civil
cases. The parties here were enabled to present their evidence as they saw fit in five hour
blocks in order to serve cohesive factual development, were provided three hours of legal
argument, and were permitted to submit written legal arguments prior to and at the close
of the arbitration for consideration. Where the legal arguments are complex, the often-
crippling time limitation of closing arguments to a jury cannot be understated, and these
parties had the foresight to contract around that limitation.
17
More troubling are the manifold roles of Judge Wilkes as the Presiding Judge
and Resolution Judge, as well as his ultimate position on the arbitration panel in light of
Trial Court Rule 29.07, which provides that “the Division Chair may serve as a Presiding
or Resolution Judge.”19 Here, Division Chair Judge Wilkes began the case as the Presiding
Judge and thereafter mediated the case and served on the arbitration panel as the Resolution
Judge. The rules inform us that the policy behind having two separate judges assigned to
these tasks is in effort to protect the confidentiality of mediation, and, for that reason,
communication between the two is limited: “[t]o protect the confidentiality of the
mediation process, communication between the presiding judge and the resolution judge
regarding the mediation during or after the process shall be limited to procedural status or
other matters agreed to by all parties.”20 It is clear from the language of Rule 29.04(e)
that the parties may agree to full disclosure of information as between the presiding and
resolution judges, and that the parties in this case agreed to just that. For that reason, we
see no illegality in the makeup of the arbitration panel so as to void the proceedings.
Moreover, the matter before us is not the archetypal waiver issue arising from
the parties’ failure to lodge an objection: the parties here explicitly agreed that Judge
Wilkes would mediate the case and then serve on the arbitration panel. Indeed, the parties
asked Judge Wilkes to mediate the case, and later asked him to serve on the arbitration
19
Emphasis added.
20
W. Va. Tr. Ct. R. 29.04(e) (emphasis added).
18
panel after he offered to impanel three new judges. Judge Wilkes further informed the
parties that any information they did not wish him to know as a member of the arbitration
panel should not be presented to him during the mediation. Given these circumstances, we
find that the policy implications of dual roles as presiding judge and resolution judge have
been rendered moot by agreement of the parties and the proceedings are not rendered void
or illegal for that reason. Further, we find that Petitioners, again by virtue of their
agreement, cannot now be heard to complain of the makeup of the panel.
Turning to Petitioners’ argument that the arbitration was unconstitutional
because it violated the public’s constitutional right to access the courts,21 we find that
argument ill-suited to the actual circumstances of the arbitration conducted below. As
discussed by Petitioners, the Court of Appeals for the Third Circuit examined this issue in
Delaware Coalition for Open Government, Inc. v. Strine.22 In Strine, the Third Circuit
struck down a Delaware statutory scheme relating to private, court-sponsored arbitration.23
21
See W. VA. CONST. art 3, § 17 (“The courts of this state shall be open[.]”).
22
733 F.3d 510 (3d Cir. 2013).
23
Strine, 733 F.3d at 521. But see, Strine, 733 F.3d 510 (Fuentes, J., concurring)
(“The crux of today’s holding is that the proceedings set up by § 349 violate the First
Amendment because they are conducted outside the public view, not because of any
problem otherwise inherent in a Judge-run arbitration scheme. . . . Nothing in today’s
decision should be construed to prevent sitting Judges of the Court of Chancery from
engaging in arbitrations without those confidentiality provisions.”). See also, Strine, 733
F.3d 510 (Roth, J., dissenting) (“[The majority opinion] looks “‘not to the practice of the
specific public institution involved, but rather to whether the particular type of government
proceeding [has] historically been open in our free society.’” . . . [h]istorically, arbitration
has been private and confidential. Logically, the resolution of complex business disputes,
19
The Strine court reasoned that because the arbitrations were conducted in state courthouses
by officials elected by the public, to preclude the public from the proceedings was a
violation of the well-instilled constitutional right to access the courts.24 Petitioners argue
that pursuant to Strine, the parties’ agreement that the proceedings would be confidential
was unconstitutional and the award should be vacated. We find Strine’s theoretical
arguments with regards to the rights of the public persuasive, and, indeed, this Court has
also reiterated that “[o]ne fundamental aspect of our Anglo-American system of justice is
its openness,” and “[w]ith respect to any judicial or quasi-judicial proceeding, the public
must always be afforded the opportunity to realize that there is a careful, reasoned and
judicious decision-making process at work[.]”25 In application to the underlying
proceeding, however, the facts in this case are utterly distinct from those in Strine, and the
outcome necessarily different.
In Strine, the Delaware statutory scheme barred public access by providing
that the proceedings could only be attended by the parties and their representatives, and
involving sensitive financial information, trade secrets, and technological developments,
needs to be confidential so that the parties do not suffer the ill effects of this information
being set out for the public—and especially competitors—to misappropriate. For these
reasons, there is here no First Amendment right of public access.”) (internal citations
omitted).
24
See id. at 513-14.
25
Daily Gazette Co., Inc. v. Comm. on Legal Ethics of the W. Va. State Bar, 174 W.
Va. 359, 364; 368, 326 S.E.2d 705, 710; 714 (1984) (internal quotations and citations
omitted).
20
that the petition for arbitration and supporting documents would not be included on the
public docketing system.26 In stark contrast, the date, time and location of the parties’
arbitration proceedings below were publicly docketed by the court as they would be in any
other civil case, and transcripts of the arbitration were available to the public. While the
Final Decision was issued under seal, it was unsealed by this Court, and Petitioners do not
allege that members of the public ever sought to review the Final Decision and were denied.
Likewise, as Judge Wilkes aptly noted prior to the arbitration, “you cannot preclude the
public or anyone from . . . observing [the arbitration]. So I think we’re not going to be
able to blanket much, if anything, in confidentiality.” Petitioners do not allege, nor is there
any evidence in the record to suggest that anyone was precluded from observing the
arbitration. Rather, Petitioners contend that “[t]he hearing was held in the Kanawha
County Courthouse, but it was not publicized and it was not attended by the public or press,
though the transcript of the three-day proceeding has been placed on the public docket.”
Seemingly, Petitioners conflate the concepts of publicity and public access. The
constitutional right of the public to access the courts requires that the courts be open as a
check on the judiciary; it does not require that the court actively provide publicity for
already publicly-docketed proceedings, nor does it require actual attendance of the press
or the public. Accordingly, we view the parties’ agreement to keep matters confidential to
the extent allowable by law as little more than an agreed protective order, ultimately
26
Strine, 733 F.3d at 513.
21
rendered moot when this Court unsealed the record. For those reasons, we do not find that
the proceedings violated the constitutional right to access the courts.
B. Availability of appellate review
Having determined that the arbitration, as conducted, was not “illegal” so as
to void the agreement of the parties, we turn next to the availability of appellate review.
As discussed above, the parties agreed that the arbitration would be “binding” and “non-
appealable.” Consequently, VALIC argues that appeal to this Court is altogether
foreclosed. Petitioners, by contrast, argue that the issues raised in the appeal are ones
relating to subject-matter jurisdiction, which the parties cannot agree to waive.27
Petitioners further contend that there is no such thing as “binding judicial arbitration”
because “judicial arbitration, in jurisdictions offering it all, appears to be uniformly of the
non-binding variety.”28
27
See, e.g., State ex rel. Smith v. Thornsbury, 214 W. Va. 228, 233, 588 S.E.2d 217,
222 (2003) (“[s]ubject-matter jurisdiction may not be waived or conferred by consent and
must exist as a matter of law for the court to act.”).
28
Petitioners argue in their reply brief that there are aspects of public policy that
suggest that sitting judges should not act as arbitrators. Initially, we observe that the cases
on which Petitioners rely analyze other states’ statutory schemes or rules relating whether
a judge may, within the confines of those statutes or rules, conduct arbitration. As we have
already established, this state’s framework for the Business Court Division does not
preclude arbitration by business court judges. As to general public policy, first, Petitioners
argue that sitting judges may not act as arbitrators because private arbitration cannot be
conducted in public courthouses without running afoul of constitutional access to the
courts. As we have previously discussed, this was not a private arbitration and the public
was not precluded access. Second, Petitioners argue that sitting judges may not act as
22
Addressing Petitioners’ initial argument as to whether judicial arbitration
may be binding by agreement of the parties, we readily dismiss it. Petitioners cite to the
following states’ court-annexed arbitration schemes as authority for the proposition that
judicial arbitration is uniformly non-binding because the state statutes or rules that create
that form of dispute resolution afford the parties the right to appeal by trial de novo: Ariz.
Rev. Stat. § 12-133 (2012) (neutral arbitrators and right of appeal with trial de novo); Fla.
Stat. § 44.103 (2007) (same); Haw. Rev. Stat. § 601-20 (2000) (non-binding arbitration
with neutral arbitrators); Ill. S. Ct. R. 86-87, 93 (neutral arbitrators with right of appeal);
Nev. Rev. Stat. 38.250 (2005), Nev. Arb. R. 7, 18 (same); N.C. Gen. Stat. § 7A-37.1 (2013)
(same); R.I. Super. Ct. Arb. R. 2, 5 (neutral arbitrators and right of appeal with trial de
novo); Wash. Rev. Code § 7.06040-.050 (2011) (same).
A closer review of those statutes and court rules reveals that there is one
glaring and consequential difference between the arbitrations conducted under those
schemes and the one conducted here: the arbitration conducted in this case was not
arbitrators because arbitrators need not adhere to the Rules of Evidence or other facets of
West Virginia law, which conflicts with the duties of an elected judge. But, pursuant to
their agreement, and as discussed below, the panel did apply West Virginia law. Third,
Petitioners argue that judicial arbitrators should not be permitted to “wear both hats,” that
is, to hear in their judicial capacity grounds for vacating the awards they rendered in their
capacity as an arbitrator. This argument is moot on the facts of this case, however, because
Petitioners never made such motion to vacate the award below. Thus, Petitioners raise
these public policies in the abstract, but has not alleged that any of those public policies
were at stake or violated here. Consequently, we find those arguments unavailing under
the current factual circumstances.
23
mandatory.29 Arizona, Florida, Hawaii, Illinois, Nevada, North Carolina, Rhode Island,
and Washington have, by statute or court rule, court-annexed arbitration. Those states
require that when certain conditions are met,30 the parties arbitrate their disputes.
Accordingly, appeal by trial de novo is a constitutional prerequisite to such mandatory
arbitration so as to preserve the right to a jury trial. When examining its statutory scheme,
Arizona’s courts have discussed that “[t]he right to trial de novo is essential to the
constitutionality of compulsory arbitration, since both the United States and Arizona
Constitutions guarantee the right to trial by jury.”31 Likewise, in defending the
constitutionality of its court-annexed arbitration, Hawaii’s courts have discussed
the United States Supreme Court has stated that the seventh
amendment “does not prescribe at what stage of an action a
trial by jury must, if demanded, be had; or what conditions may
be imposed upon the demand of such a trial, consistently with
29
We note that Petitioners also cite to New Jersey’s court-annexed arbitration
scheme, N.J. Stat. § 2A;23A-1, et seq. (1987) (APDRA), as providing parties to an
arbitration with the right of appeal, but not by trial de novo. Consonant with the facts of
this case, New Jersey’s arbitration scheme may be voluntarily invoked by agreement of
parties to an already-existing dispute. It provides for limited appellate review, see N.J. Stat.
§ 2A:23A-13, but as New Jersey courts have discussed, “[a]lthough limited judicial review
is a central component of the APDRA, the APDRA’s procedures are entirely voluntary,
and thus, parties are free to invoke its procedure in toto or subject to agreed upon
modifications.” Weinstock v. Weinstock, 871 A.2d 776 (N.J. Super. Ct. 2005) (internal
quotations and citations omitted). Petitioners likewise cite Tennessee’s voluntary, non-
binding ADR scheme (Tenn. S. Ct. R. 31) in support of their argument. However,
Appendix B of those rules permits parties to “stipulate[] in writing that the award shall be
final and binding.” See Tuetken v. Tuetken, 320 S.W.3d 262 (2010).
30
In most of these states, these requirements typically center on a given dollar
amount in controversy, or particular types of litigants.
31
Valler v. Lee, 949 P.2d 51, 53 (Ariz. Ct. App. 1997) (footnote omitted) (emphasis
added).
24
perserving the right to it.” [Kimbrough v. Holiday Inn], 478
F.Supp. at 569 (quoting Capital Traction Co. v. Hof, 174 U.S.
1, 23, 19 S.Ct. 580, 589, 43 L.Ed. 873 (1899)). Thus, with
regard to mandatory arbitration programs that afford a right to
trial de novo, it has been held that:
[t]he only purpose of the [seventh amendment] is
to secure the right of trial by jury before rights of
person or property are finally determined. All
that is required is that the right of appeal for the
purpose of presenting the issue to a jury must not
be burdened by the imposition of onerous
conditions, restrictions or regulations which
would make the right practically unavailable.[32]
North Carolina, too, in its enacting legislation, provided that the constitutional right to a
jury trial be preserved through appeal by trial de novo:
(a) The General Assembly finds that court-ordered,
nonbinding arbitration may be a more economical, efficient
and satisfactory procedure to resolve certain civil actions than
by traditional civil litigation and therefore authorizes court-
ordered nonbinding arbitration as an alternative civil
procedure, subject to these provisions.
(b) The Supreme Court of North Carolina may adopt rules
governing this procedure and may supervise its
implementation and operation through the Administrative
Office of the Courts. These rules shall ensure that no party is
deprived of the right to jury trial and that any party dissatisfied
with an arbitration award may have trial de novo.[33]
32
Richardson v. Sport Shinko (Waikiki Corp.), 76 Haw. 494, 513, 880 P.2d 169, 188
(1994) (finding that mandatory arbitration program was constitutional because it provides
for a trial de novo).
33
N.C. Gen. Stat. Ann. § 7A-37.1 (emphasis added).
25
While preserving the availability of right to appeal by trial de novo, all of
these states require affirmative conduct or reservation of the right to appeal by trial de novo
in the course of the parties’ mandatory arbitration. Here, just the opposite occurred: the
parties were not subject to mandatory arbitration, but rather willingly entered into a
contractual agreement to resolve their dispute through arbitration and explicitly waived
their right to a trial by jury or bench and to subsequent appellate review.
Petitioners’ reliance on these foreign authorities is further undercut because
Petitioners do not argue that in these jurisdictions the parties may not agree to waive
appellate review altogether as the parties did here. To the contrary, many of these
jurisdictions offering court-annexed arbitration appear to honor the agreement of the parties
to limit or otherwise preclude appellate review, whether waiver is contemplated in the
court-annexed arbitration framework itself or is provided for under the applicable
arbitration statutes. 34
34
See, e.g., 16 A.R.S. Rules of Civil Procedure 77(e) (providing that parties may
stipulate that arbitration award entered be binding upon parties thereby precluding
appellate attack on award except as provided in arbitration act); N.C. R. ARB 9 (parties
may consent to limit issues considered on appellate review; parties may consent in writing
to rescind demand for trial de novo); Darcy v. Lolohea, 886 P.2d 759, 763 (Haw. Ct. App.
1994) (court review of arbitration award limited by provisions of arbitration statute); R.I.
Super. Ct. R. Arb. 1(b) (“Arbitration by Agreement. The court may submit any other civil
action to arbitration under these Arbitration Rules or any modification thereof, pursuant to
agreement by the parties approved by the court provided that the parties agree in writing
that the award shall be binding.”); Valler, 949 P.2d at 53 (“[A]bsent a stipulation by the
parties, the resulting arbitration award is nonbinding if a timely appeal is filed.” (emphasis
added)); Cozzolino v. Cozzolino, No. A-4770-10T1, 2012 WL 6097090 (N.J. Super. Ct.
26
It follows, then, that while we find the foreign authority advocated by
Petitioners inapposite, we must still consider the validity of the parties’ agreement to
“binding, non-appealable” arbitration under West Virginia law. In the absence of Business
Court Division Rules outlining any specific procedure concerning appellate review, or
otherwise, for arbitrations conducted in the Business Court Division,35 consistent with the
parties’ arguments invoking the provisions therein, we apply the West Virginia Revised
Uniform Arbitration Act (the Act).36
West Virginia Code § 55-10-6(a) provides that “[e]xcept as otherwise
provided in subsections (b) and (c) of this section, a party to an agreement to arbitrate or
to an arbitration proceeding may waive or the parties may vary the effect of the
requirements of this article to the extent permitted by law.” Applicable to these
circumstances is subsection (c), which dictates what provisions of the Act may be waived
when the agreement to arbitrate is entered after a controversy has arisen.37 Subsection (c),
App. Div. Dec. 10, 2012) (precluding appellate review where parties agreed to waive right
to appeal arbitration award).
35
Trial Court Rule 29.09 provides that “[i]f these Rules conflict with other rules or
statutes, these rules shall apply[.]” While we do not wish to hamstring the creativity of the
Business Division within the currently liberal framework of the Business Court Rules, it is
apparent from the issues raised in this appeal that, at least in the context of arbitrations,
litigants and courts would benefit from additional rulemaking pursuant to Rule 29.05(c).
36
See W. Va. Code § 55-10-5(a) (2016 Repl. Vol.) (“This article governs an
agreement to arbitrate made on or after July 1, 2015.”).
37
Compare W. Va. Code § 55-10-5(c), with W. Va. Code § 55-10-5(b).
27
in relation to appellate review, indicates that the parties may not vary the effects of West
Virginia Code § 55-10-22 (party may move arbitrator to modify or correct an award); West
Virginia Code § 55-10-24 (party may move court for confirmation of award if no grounds
to modify, correct or vacate award); West Virginia Code § 55-10-25 (party may move court
for vacation of award if limited circumstances are met); or West Virginia Code § 55-10-26
(party may move court to modify or correct an award).38 Subsection (c) does not, however,
preclude the parties from waiving appellate review to this Court under West Virginia Code
§ 55-10-30.
This is consistent with the general view relating to the language of an
agreement in which parties agree to final, non-appealable arbitration:
And generally, a contract provision stating that arbitration is
“non-appealable” signifies that the parties to the contract may
not appeal the merits of the arbitration; not that the parties
agree to waive a right to appeal the district court’s judgment
confirming or vacating the arbitration decision. See Tabas v.
Tabas, 47 F.3d 1280, 1288 (3d Cir.1995) (en banc) (observing
that, where a contract provided for “final, binding, and non-
appealable” arbitration, the Court must adhere to the arbitration
decision on the merits); see also Rollins, Inc. v. Black, 167
Fed.Appx. 798, 799 n. 1 (11th Cir. 2006) (“[A ‘binding, final,
and non-appealable’ arbitral award] simply means the parties
have agreed to relinquish their right to appeal the merits of their
dispute; it does not mean the parties relinquish their right to
appeal an award resulting from an arbitrator’s abuse of
authority. . . .”).[39]
38
W. Va. Code § 55-10-5(c).
39
Southco, Inc. v. Reell Precision Mfg. Corp., 331 F. App’x 925, 927 (3d Cir. 2009).
28
Stated differently,
“an arbitration agreement . . . between two sophisticated
business parties, each represented by counsel, that clearly
precludes judicial review of an arbitration award beyond the
trial court level, is enforceable.” Supra, 394 N.J.Super. at 257
(emphasis added). We explained that just as parties may
expand review of an arbitration award by contract, they may
also “privately contract to further constrict the scope of limited
judicial scrutiny by, for instance, eliminating the added layer
of appellate review altogether.” Id. at 265. “The only caveat is
that their intention to do so must be clear and unequivocal.”
Ibid. (internal quotation marks and citation omitted). We also
recognized that in “rare circumstances” private restrictions on
judicial review would not be upheld, citing as an example a no-
appeal clause prohibiting review by the trial court. Id. at
266.[40]
Accordingly, we find that by virtue of the agreement that the arbitration would be “final,
and non-appealable” these sophisticated parties, both represented by counsel, have waived
the right to appellate review of the merits under West Virginia Code § 55-10-30. Given
that Petitioners never moved under West Virginia Code §§ 55-10-22, -24, -25 or -26 to
modify, correct or vacate the award below, our review would be particularly inappropriate.
However, insofar as Petitioners argue that the matter is reviewable by couching their
merits-based arguments in terms of subject-matter jurisdiction for the panel’s alleged
failure to apply the law of the case in IMB I and failure to rule on issues before it, we find
it necessary to review those arguments.
40
Cozzolino, 2012 WL 6097090, at *6 (citing Van Duren v. Rzasa-Ornes, 394 N.J.
Super. 254 (App. Div. 2007), aff’d o.b., 195 N.J. 230 (2008).
29
Petitioners initially argue that the arbitration panel did not fulfill its charge
to make a final and definite award because it did not address Petitioners’ request for
declaratory judgment and, by not deciding all of the issues submitted to it has ceded
jurisdiction over the entire dispute. As a consequence, Petitioners argue that the award
must be vacated. We easily dispose of Petitioners’ assertion that the panel neglected to
decide all issues before it because it did not rule on Petitioners’ declaratory judgment.
Petitioners’ sought a declaration as to whether there could be transfers outside the DCP
without restriction. By virtue of the fact that the panel determined that “[b]efore 2008,
every CPRB representative that evaluated the 1991 Contract agreed that the 20% [Rule]
would apply to any mass withdrawal by the State” and concluded that the 20% Rule
applied, that issue was answered in the negative, rendering the point moot.
Relating to the alleged failure of the panel to apply the law of the case,
Petitioners refer to IMB I as “dispositive” and conclude that the panel’s Final Decision
(which was not in their favor) was rendered without subject-matter jurisdiction because it
did not comply with this Court’s legal conclusions in IMB I.41 In particular, Petitioners
take issue with the panel’s finding that “the legal conclusion of [the] case rests upon the
41
Although the Business Division unquestionably had subject-matter jurisdiction
over the dispute by order of this Court, Petitioners’ arguments to this end are grounded in
the authority that an arbitrator’s subject-matter jurisdiction is derived from the parties’
agreement, which, in this case, provided that the panel would make a reasoned decision
applying West Virginia law. Thus, Petitioners’ contend that the panel ignored IMB I, and,
therefore, acted without subject-matter jurisdiction.
30
formation of the December 2008 replacement contract[,]” while IMB I emphasized the
1991 Contract.
In IMB I, we reversed the circuit court’s grant of summary judgment, having
found that the circuit court erred in accepting VALIC’s argument that there was no
justiciable controversy, which was premised on the finding that the CPRB never requested
a cash payout under the 1991 Contract.42 Likewise, we determined that the circuit court
erred in finding that the endorsement language was unambiguous.43 Its finding that the
endorsement was unambiguous prompted the circuit court to preclude review of the
documents incorporated as part of the 1991 Contract, which we felt “arguably address[ed]
the parties’ intentions with regard to the subject endorsement language[,]” since the 2008
Contract was intended by the parties to be “materially similar” to the 1991 Contract.44
So, having found that the 2008 Contract was “decidedly ambiguous,” we
discussed that “we would be hard pressed to wholly disregard evidence that may relate to
the meaning of the endorsement language in dispute.”45 While we cited with favor the
notion that ambiguities should be construed against the drafter (VALIC, in this case), we
42
IMB I, 234 W. Va. at 477, 766 S.E.2d at 424. See also, infra n. 50.
43
IMB I, 234 W. Va. at 485, 766 S.E.2d at 432.
44
Id. at 482-83, 766 S.E.2d at 429-30 (emphasis added).
45
Id. at 484, 766 S.E.2d at 431.
31
likewise recognized that “in those cases where uncertainty or ambiguity exists regarding
the construction of the terms used in a written instrument, evidence of custom or usage
may be considered.”46 Consistent with those findings, we determined that summary
judgment was not appropriate and remanded the matter for further proceedings with
instructions that the case be transferred to the Business Court Division.47
Notwithstanding the obvious caveat that IMB I was postured as an appeal
from summary judgment,48 having closely compared the panel’s Final Decision and IMB
I, we reject Petitioners’ argument that the Final Decision somehow departs from our
decision in IMB I. In IMB I, we were of the opinion that the 2008 Contract provision was
ambiguous and could benefit from examination of the 1991 Contract formation, extrinsic
46
Id. at 484-85, 766 S.E.2d at 431-32. See also, Marson Coal Co. v. Ins. Co. of
State of Pa., 158 W. Va. 146, 150, 210 S.E.2d 747, 750 (1947) (Contra proferentem
construction principle should not be applied to “contravene the intention of the parties.”);
Cline v. Rose, 96 Ohio App. 3d 611, 615 (1994) (“When interpreting ambiguous contracts,
courts must make a legitimate attempt, after hearing the relevant parol evidence, to
determine the intent of the contracting parties.”); Urban Assoc., Inc. v. Standex Electronics,
Inc., No. 04-CV-40059, 2012 WL 1079720 (E.D. Mich. March 30, 2012) (“[t]he general
rule of construing an ambiguous contract against the drafter does not mean automatically
holding in favor of the other party. . . . Otherwise, extrinsic evidence would be irrelevant.”
(citations omitted)).
47
IMB I, 234 W.Va. at 485, 766 S.E.2d at 432.
48
“A trial court’s denial of a motion for summary judgment, or an appellate court’s
decision to overturn the granting of such a motion, does not reflect an opinion on the
ultimate merits of the case. . . . The final verdict in a case should be the result of the proof
offered by the parties. . . .” McGinnis v. Cayton, 173 W. Va. 102, 312 S.E.2d 765 (1984)
(citations omitted).
32
evidence, and custom and usage. For the circuit court to have precluded that evidence from
its review at the summary judgment stage was error. We are still of that opinion.
Upon remand and extensive additional discovery relating to the 1991
Contract and further evidence as to custom and usage, the panel, being in possession of all
such evidence not before this Court in IMB I,49 concluded that whatever the parties’ intent
was at the formation of the 1991 Contract, Petitioners entered into the 2008 Contract with
the absolute knowledge and understanding that VALIC also interpreted the 20% Rule as
applicable to the withdrawals Petitioners were attempting to make. Further, Petitioners
effectively conceded, and evidenced by conduct that they also held the view that the 20%
Rule applied to the attempted withdrawals prior to entering the 2008 Contract,50 and were
49
See, e.g., Feesers, Inc. v. Michael Foods, Inc., 591 F.3d 191, 207-08 (3d Cir.
2010) (law of the case inapplicable where the “full record established at trial . . . was not
available to this Court when we decided [the] appeal from summary judgment”); Cal. First
Amendment Coal. v. Woodford, 299 F.3d 868, 879-80 (9th Cir. 2002); Stagl v. Delta Air
Lines, Inc., 117 F.3d. 76, 79-80 (2d Cir. 1997).
50
Petitioners cherry-pick portions of IMB I taken out of context in support of its
argument that this Court effectually decided the case in its favor in IMB I: “[o]nly by
turning a blind eye to the events that transpired in this case can it even be suggested that
the Board failed to assert its claimed right to an aggregate payout of the subject funds.”
Quoted from our discussion relating to whether a justiciable controversy existed,
Petitioners misapply it to interpretation of the contract, i.e., contending that this Court had
determined that VALIC was aware that IMB held a different interpretation of the
applicability of the 20% Rule to the withdrawals. To the contrary, this Court discussed
that VALIC was aware of IMB’s objective to withdraw the funds, which, in part, created
the justiciable controversy, and, in fact, lends itself to the conclusion reached in the Final
Decision.
33
therefore bound to that interpretation consistent with contract law.51 We see no cause to
upset the panel’s decision on the basis that it does not comport with whatever “law of the
case” Petitioners contend that IMB I created. Had this Court believed that the additional
evidence proffered to the panel regarding the 1991 Contract and custom and usage was
superfluous, we would have entered judgment rather than remand the matter for further
proceedings when this case was previously before us.
IV. CONCLUSION
For the foregoing reasons, we affirm the order of the Business Court Division
dismissing the underlying matter from its docket in reliance on the conclusions reached in
the arbitration panel’s final decision.
Affirmed.
51
Petitioners contend in their first assignment of error that this legal application was
error. By Petitioners’ own concession, the first assignment of error is a merits-challenge
to the Final Decision, not jurisdictional, and, therefore, is precluded from this Court’s
review.
34