Golden Eagle Resources,II, L.L.C. v. Willow Run Energy, L.L.C.

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2019 Term
_______________ FILED
November 19, 2019
No. 18-0384 released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
_______________ SUPREME COURT OF APPEALS
OF WEST VIRGINIA
GOLDEN EAGLE RESOURCES, II, L.L.C.,
Defendant Below, Petitioner
v.
WILLOW RUN ENERGY, L.L.C.,
Plaintiff Below, Respondent
________________________________________________________
Appeal from the Circuit Court of Pleasants County
The Honorable Timothy Sweeney, Judge
Civil Action No. 16-C-14
REVERSED AND REMANDED
________________________________________________________
Submitted: October 15, 2019
Filed: November 19, 2019
Manmeet Waila, pro hac vice M. Paul Marteney, Esq.
Siltstone Capital, LLC Parkersburg, West Virginia
Houston, Texas Counsel for the Respondent
Christopher Brumley, Esq.
Richard R. Marsh, Esq.
Flaherty Sensabaugh Bonasso PLLC
Charleston, West Virginia
Counsel for the Petitioner
JUSTICE HUTCHISON delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. “An order denying a motion to compel arbitration is an interlocutory
ruling which is subject to immediate appeal under the collateral order doctrine.” Syllabus
Point 1, Credit Acceptance Corp. v. Front, 231 W.Va. 518, 745 S.E.2d 556 (2013).
2. “When an appeal from an order denying a motion to dismiss and to
compel arbitration is properly before this Court, our review is de novo.” Syllabus Point 1,
W.Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W.Va. 465, 796 S.E.2d 574(2017).
3. Under the West Virginia Revised Uniform Arbitration Act, West
Virginia Code § 55-10-8(a) (2015), a written agreement to submit to arbitration any
controversy between the parties to the agreement is valid, enforceable, and irrevocable,
unless the agreement is found to be invalid, unenforceable, or revocable upon a ground that
exists at law or in equity for the revocation of any contract.
4. When a trial court is required to rule upon a motion to compel or stay
arbitration, the West Virginia Revised Uniform Arbitration Act, West Virginia Code § 55-
10-8(b) (2015), limits the authority of the trial court to determining whether a litigant has
established: (1) the existence of a valid, enforceable agreement to arbitrate between the
parties; and (2) that the parties’ controversy falls within the substantive scope of that
agreement to arbitrate.
i
5. Parties may agree to submit to arbitration questions concerning clouds
on the title to any estate, right, or interest in real property, despite West Virginia Code §
51-2-2(d) (2017) vesting circuit courts with jurisdiction to resolve those same questions.
6. The West Virginia Revised Uniform Arbitration Act, West Virginia
Code § 55-10-8(a) (2015), requires that if a lawsuit presents multiple claims, some subject
to an arbitration agreement and some not, the former claims must be sent to arbitration –
even if this will lead to piecemeal litigation. A trial court may not issue a blanket refusal
to compel arbitration of some of a party’s claims, merely because the party has other claims
that are not subject to the arbitration agreement, or because other parties in the lawsuit are
not subject to the arbitration agreement.
ii
HUTCHISON, Justice:
In this appeal from the Circuit Court of Pleasants County, we address a
simple question: may individuals agree to arbitrate a dispute regarding a cloud on the title
to real estate? We hold that they may.
As we discuss below, the circuit court decided otherwise and refused to
enforce an arbitration agreement. We reverse the circuit court’s decision and remand the
case with directions that the circuit court enforce the agreement to arbitrate the parties’ real
estate dispute.
I. Factual and Procedural Background
This case involves the conveyance of an interest in real estate, specifically,
ownership interests in minerals. Plaintiff Willow Run Energy, L.L.C. (“Willow Run”),
owned 1,856.281 acres of mineral interests. In early 2015, defendant Golden Eagle
Resources, II, L.L.C. (“Golden Eagle”), sought to buy a share of those mineral interests.
On March 17, 2015, Willow Run and Golden Eagle entered into an eleven-
page contract whereby Willow Run would convey 944.131 acres of mineral interests to
Golden Eagle in exchange for $3.9 million.1 Additionally, the parties’ March 2015 contract
1
Willow Run is apparently owned by John P. Riggs and Brenda J. Riggs.
The Riggs also signed the contract as individuals.
1
contained an arbitration clause that required the parties to refer any dispute about the
2
parties’ performance of the contract to an arbitrator.
After the parties signed the March 2015 contract, the parties agree that a
dispute arose concerning defects in the title to the mineral interests.
Willow Run and Golden Eagle subsequently entered into a new, two-page
agreement, the agreement that is the subject of this case. On July 24, 2015, the parties
signed a “Letter Agreement Bill of Sale,” wherein Willow Run agreed to convey to Golden
Eagle 220.5 net acres of mineral rights. The parties stated that their new agreement was
“subject to the terms and conditions” of their earlier, March 2015 contract. The parties
concede that the July 2015 agreement incorporates the arbitration clause agreed to by the
parties in the March 2015 contract.
The July 2015 agreement contains a statement that “[t]here is a cloud on [the]
title” of Willow Run’s mineral estate and goes on to specify a payment formula to account
2
The arbitration clause provided:
In the event of a disagreement between the Parties
concerning this Agreement or performance thereunder, the
resolution of all such disputes shall be determined by
arbitration in accordance with the rules of the American
Arbitration Association. Arbitration shall be the exclusive
remedy and cover all disputes, including but not limited to, the
formation, execution, validity and performance of this
Agreement. All fees and costs associated with the arbitration
shall be shared by the Buyer and the Seller.
2
for that title defect. The contract provides that Golden Eagle would eventually pay a total
price of $537,597.38 for the 220.5 net acres of mineral interests. However, because of the
title defect, the parties agreed that Golden Eagle “shall hold a reserve of $221,363.62
(‘Reserve’) . . . until the cloud on title . . . has been cured, at which point, [Golden Eagle]
will release the Reserve to [Willow Run] less any costs required to cure said cloud on title.”
Willow Run delivered a deed for the subject mineral interests, and Golden
Eagle promptly recorded the deed with the county clerk. The record suggests that
discussions continued between Willow Run and Golden Eagle, but that the parties reached
an impasse regarding whether the cloud on the title to the mineral interests had been cured.
Golden Eagle insisted that Willow Run was responsible for removing the cloud and had
failed to do so. Golden Eagle therefore refused to pay the remaining $221,363.62 due
under the July 2015 agreement.
On April 8, 2016, Willow Run filed a complaint against Golden Eagle in the
Circuit Court of Pleasants County. Willow Run asserted three causes of action. First, it
alleged that Golden Eagle had breached the July 2015 agreement. Second, it asserted that
Golden Eagle was unjustly enriched because it accepted the deed to the mineral interests,
but failed to pay the “agreed-upon price for the subject property.” Third, Willow Run
asked the circuit court for a declaratory judgment to determine whether a cloud still exists
on the title to the mineral interests at issue.
3
Defendant Golden Eagle promptly responded by filing a motion to dismiss
the complaint and to compel the parties to arbitrate. Golden Eagle argued to the circuit
court that the parties’ contracts contained an unambiguous arbitration provision that
specifically covers disputes regarding Golden Eagle’s performance under the July 2015
agreement. It therefore asked the circuit court to dismiss Willow Run’s complaint, and to
enter an order compelling Willow Run to arbitrate according to the process spelled out in
the parties’ contracts.
In January 2018, twenty-one months after filing suit, plaintiff Willow Run
moved to amend its complaint. Willow Run sought permission to add several new
defendants to the case, defendants that might have been operating an oil and gas well on
Willow Run’s property interests since the 1980s and might have created a cloud on Willow
Run’s title. None of these new defendants was a signatory to any contract between Golden
Eagle and Willow Run. Willow Run’s proposed amended complaint sought a declaratory
judgment clarifying that none of the new defendants had an ownership right to the disputed
mineral interests purchased by Golden Eagle.3
Golden Eagle again promptly responded to Willow Run’s motion. Golden
Eagle asked the circuit court to deny the motion to amend the complaint. More importantly,
3
The new defendants include Fuel Management Services, Inc.; Gerald L.
Shipley; Lippizan Petroleum, Inc.; Bald Eagle Oil & Gas, Inc.; Beebob Energy, LLC, a.k.a.
Sun Valley Oil and Gas, LLC; and Robert Matthey, Jr.
4
Golden Eagle again asked the circuit court to refer its dispute with Willow Run to
arbitration.
In an order dated March 28, 2018, the circuit court granted Willow Run’s
motion to amend its complaint to add the new defendants and claims.
However, the circuit court refused Golden Eagle’s motion to refer Willow
Run’s claims against Golden Eagle to arbitration. The circuit court found that “the
arbitration clause contained in the . . . [parties’] Agreement is valid[.]” Nevertheless, the
circuit court found the claims against Golden Eagle fell outside the scope of the arbitration
clause for two reasons. First, West Virginia Code § 51-2-2(d) (2017) grants circuit courts
jurisdiction “to remove any cloud on the title to real property, or any part of a cloud, or any
estate, right or interest in the real property[.]” Because of this statute, the circuit court
concluded that “[a]s a matter of public policy, property rights are not subject to arbitration”
and that “the actual dispute relates back to an issue over which no arbitrator would have
jurisdiction[.]” Second, the circuit court found that the new defendants added by Willow
Run’s amended complaint were necessary parties to the full resolution of the dispute.
However, those new defendants were not a party to the Willow Run–Golden Eagle
arbitration agreements, and thus, could not be compelled to participate in an arbitration
proceeding. The circuit court concluded, therefore, that it could not compel Willow Run
to arbitrate its claims against Golden Eagle.
5
Golden Eagle now appeals that part of the circuit court’s March 28, 2018,
order denying its motion to compel Willow Run to arbitrate its dispute against Golden
Eagle.
II. Standard of Review
“An order denying a motion to compel arbitration is an interlocutory ruling
which is subject to immediate appeal under the collateral order doctrine.” Syl. pt. 1, Credit
Acceptance Corp. v. Front, 231 W.Va. 518, 745 S.E.2d 556 (2013).
We review the circuit court’s order de novo. “When an appeal from an order
denying a motion to dismiss and to compel arbitration is properly before this Court, our
review is de novo.” Syl. pt. 1, W.Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc.,
238 W.Va. 465, 796 S.E.2d 574 (2017). Additionally, to the extent we are required to
examine the circuit court’s interpretation of the parties’ written agreements, this Court
applies a de novo review. Zimmerer v. Romano, 223 W.Va. 769, 777, 679 S.E.2d 601, 609
(2009) (per curiam) (“[W]e apply a de novo standard of review to the circuit court’s
interpretation of the contract.”); Syl. pt. 2, Riffe v. Home Finders Assocs., Inc., 205 W.Va.
216, 517 S.E.2d 313 (1999) (“The interpretation of an insurance contract . . . is a legal
determination that . . . shall be reviewed de novo on appeal.”). Lastly, because the circuit
court’s decision relied on the interpretation of a statute, our review is de novo. Syl. pt. 1,
Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995) (“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.”).
6
III. Discussion
Defendant Golden Eagle assigns two errors to the circuit court’s order. First,
Golden Eagle asserts the circuit court erred in finding that West Virginia’s law or public
policy prohibits submitting disputes about title to real property to arbitration. Second,
Golden Eagle asserts the circuit court erred in refusing to refer the dispute between Willow
Run and Golden Eagle to arbitration, because Willow Run’s amended complaint added
new defendants to the lawsuit who were not parties to the arbitration agreements. We agree
with Golden Eagle on both of these points.
Golden Eagle contends that the West Virginia Revised Uniform Arbitration
Act (“the Arbitration Act”) controls this case. See W.Va. Code §§ 55-10-1 to -33 (2015).4
The Arbitration Act governs any “agreement to arbitrate made on or after July 1, 2015.”
W.Va Code § 55-10-5(a) (2015). The agreement at issue in this case was signed by the
parties on July 24, 2015, and is therefore within the ambit of the Arbitration Act.
4
Golden Eagle also asserts that the case is controlled by the Federal
Arbitration Act, 9 U.S.C. §§ 1 to 16 (“the FAA”). The FAA requires proof of a transaction
affecting interstate commerce; the West Virginia Arbitration Act does not. See Syl. pt. 6,
Brown ex rel. Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250(2011), vacated on other grounds by Marmet Health Care Ctr., Inc. v. Brown, 565 U.S.
530 (2012) (“Under the Federal Arbitration Act, 9 U.S.C. § 2, a written provision to settle
by arbitration a controversy arising out of a contract that evidences a transaction affecting
interstate commerce is valid, irrevocable, and enforceable, unless the provision is found to
be invalid, revocable or unenforceable upon a ground that exists at law or in equity for the
revocation of any contract.” (Emphasis added)). Because of this additional factor, we need
not reach the question of whether the FAA governs this case.
7
The Arbitration Act recognizes that arbitration is simply a matter of contract
between the parties, and is a way to resolve those disputes (but only those disputes) that
the parties have properly agreed to submit to arbitration. W.Va. Code § 55-10-2 (2015)
(declaring legislative policy encouraging arbitration). The Arbitration Act provides:
An agreement contained in a record to submit to
arbitration any existing or subsequent controversy arising
between the parties to the agreement is valid, enforceable and
irrevocable except upon a ground that exists at law or in equity
for the revocation of a contract.
W.Va. Code § 55-10-8(a) (2015). The phrase “agreement contained in a record” means
that, in some manner, the initial arbitration agreement must be in writing, and must be
agreed to by the parties.5
The Arbitration Act defines a “record” as “information that is inscribed on
5
a tangible medium or that is stored in an electronic or other medium and is retrievable in
perceivable form.” W.Va. Code § 55-10-3 (2015). “More than a piece of paper is
contemplated by the [Arbitration Act’s] use of the broader term record . . . Drawn from
the Uniform Commercial Code, a record includes electronic evidence from business and
governmental transactions.” Thomas H. Oehmke, Joan M. Brovins, Binding
Nonsignatories to Arbitration – Beware of Foot in Door, 127 Am.Jur. Trials 107 (2012).
See, e.g., Lane v. Urgitus, 145 P.3d 672, 679-80 (Colo. 2006) (dispute between two realtors
over property sale must be submitted to arbitration, because both realtors were members of
a professional organization with a membership agreement (that is, a “record”) that required
arbitration between members).
The Revised Uniform Arbitration Act (“RUAA”) (upon which the
Legislature based West Virginia’s Arbitration Act) was drafted and adopted by the
National Conference of Commissioners on Uniform State Laws in 2000. The reporter’s
comments to the RUAA note that while this section (Section 6(a) of the RUAA and W.Va.
Code § 55-10-8(a)) requires arbitration agreements to initially be in writing, those written
agreements can be modified orally:
8
Stated simply, we hold that under the West Virginia Revised Uniform
Arbitration Act, West Virginia Code § 55-10-8(a) (2015), a written agreement to submit to
arbitration any controversy between the parties to the agreement is valid, enforceable, and
irrevocable, unless the agreement is found to be invalid, unenforceable, or revocable upon
a ground that exists at law or in equity for the revocation of any contract.
When a party to an arbitration agreement makes a motion to compel
arbitration in a case, the authority of the trial court to proceed is constrained. In the context
of cases affected by the Federal Arbitration Act, we have found that courts are limited to
This [section] follows both the [former Uniform Arbitration
Act] and [Federal Arbitration Act] requirements that
arbitration agreements be in writing. However, a subsequent,
oral agreement about terms of an arbitration contract is valid.
This position is in accord with the unanimous holding of courts
that a written contract can be modified by a subsequent, oral
arrangement provided that the latter is supported by valid
consideration. Premier Technical Sales, Inc. v. Digital Equip.
Corp., 11 F. Supp. 2d 1156 (N.D. Cal. 1998); Cambridgeport
Savings Bank v. Boersner, 413 Mass. 432, 597 N.E.2d 1017(1992); Pellegrene v. Luther, 403 Pa. 212, 169 A.2d 298(1961); Pacific Dev., L.C. v. Orton, 982 P.2d 94 (Utah App.
1999). Indeed it is typical in the arbitration context, for many
parties to have only a short statement in their contracts
concerning the resolution of disputes by arbitration, and
perhaps a reference to the rules of an arbitration organization.
It is oftentimes only after the initial arbitration agreement is
written and when a dispute arises that the parties enter into
more detailed agreements as to how their arbitration process
will work. Such subsequent understandings, whether oral or
written, are part of the arbitration agreement.
National Conference of Commissioners on Uniform State Laws, Revised Uniform
Arbitration Act, Section 6, cmt. 1 (2000) in Bette J. Roth, Randall W. Wulff, Charles A.
Cooper, 2 Alternative Dispute Resolution Practice Guide, Appendix II-13 (2008).
9
weighing only two questions: does a valid arbitration agreement exist? And do the claims
at issue in the case fall within the scope of the arbitration agreement? As we held in
Syllabus Point 2 of State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692
S.E.2d 293 (2010):
When a trial court is required to rule upon a motion to
compel arbitration pursuant to the Federal Arbitration Act, 9
U.S.C. §§ 1–307 (2006), the authority of the trial court is
limited to determining the threshold issues of (1) whether a
valid arbitration agreement exists between the parties; and (2)
whether the claims averred by the plaintiff fall within the
substantive scope of that arbitration agreement
The West Virginia Revised Uniform Arbitration Act similarly limits the
authority of trial courts. West Virginia Code § 55-10-9 (2015) permits a party to file a
motion to either compel or stay arbitration. West Virginia Code § 55-10-8(b) provides that
when such a motion is filed, “The court shall decide whether an agreement to arbitrate
exists or a controversy is subject to an agreement to arbitrate.” This latter section of the
Arbitration Act is “intended to incorporate the holdings of the vast majority of state courts
and the law that has developed under the [Federal Arbitration Act] that, in the absence of
an agreement to the contrary, issues of substantive arbitrability, i.e., whether a dispute is
encompassed by an agreement to arbitrate, are for a court to decide[.]” National
Conference of Commissioners on Uniform State Laws, Revised Uniform Arbitration Act,
Section 6, cmt. 4 (2000) in Bette J. Roth, Randall W. Wulff, Charles A. Cooper, 2
Alternative Dispute Resolution Practice Guide, Appendix II-13 (2008).
10
We therefore hold that when a trial court is required to rule upon a motion to
compel or stay arbitration, the West Virginia Revised Uniform Arbitration Act, West
Virginia Code § 55-10-8(b) (2015), limits the authority of the trial court to determining
whether a litigant has established: (1) the existence of a valid, enforceable agreement to
arbitrate between the parties; and (2) that the parties’ controversy falls within the
6
substantive scope of that agreement to arbitrate.
6
We emphasize, however, that this process is altered if the parties have added
a “delegation provision” to their arbitration agreement. Under the Federal Arbitration Act,
9 U.S.C. § 2, and the West Virginia Revised Uniform Arbitration Act, W.Va. Code § 55-
10-8(a), parties may agree to “delegate” questions about the validity, revocability, and
enforceability of an arbitration agreement away from the circuit court and to an arbitrator.
See Syl. pt. 4, Schumacher Homes of Circleville, Inc. v. Spencer, 237 W. Va. 379, 787
S.E.2d 650 (2016) (“A ‘delegation provision’ is a clause, within an agreement to arbitrate,
which clearly and unmistakably provides that the parties to the agreement give to the
arbitrator the power to decide the validity, revocability or enforceability of the arbitration
agreement under general state contract law.”). We found in Schumacher Homes that if an
arbitration agreement contains a delegation provision, then the parties cannot initially
challenge the arbitration agreement in the circuit court. Instead, the parties must first
challenge the validity, revocability or enforceability of the delegation provision; only if the
circuit court finds the delegation provision unenforceable may it then proceed to weigh the
arbitration agreement. We said in Syllabus Points 5 and 7 of Schumacher Homes that:
5. Under the Federal Arbitration Act, 9 U.S.C. § 2, and
the doctrine of severability, where a delegation provision in a
written arbitration agreement gives to an arbitrator the
authority to determine whether the arbitration agreement is
valid, irrevocable or enforceable under general principles of
state contract law, a trial court is precluded from deciding a
party’s challenge to the arbitration agreement. When an
arbitration agreement contains a delegation provision, the trial
court must first consider a challenge, under general principles
of state law applicable to all contracts, that is directed at the
11
There is no dispute in this case regarding whether Golden Eagle and Willow
Run have a valid, enforceable arbitration agreement. The parties’ July 2015 letter
agreement indisputably incorporates the arbitration clause contained in the parties’ March
2015 contract. Moreover, the circuit court concluded that the arbitration agreement was
valid and enforceable. Because a valid, enforceable arbitration agreement exists between
validity, revocability or enforceability of the delegation
provision itself.
7. Under the Federal Arbitration Act, 9 U.S.C. § 2, there
are two prerequisites for a delegation provision to be effective.
First, the language of the delegation provision must reflect a
clear and unmistakable intent by the parties to delegate state
contract law questions about the validity, revocability, or
enforceability of the arbitration agreement to an arbitrator.
Second, the delegation provision must itself be valid,
irrevocable and enforceable under general principles of state
contract law.
Schumacher Homes, 237 W.Va. at 383, 787 S.E.2d at 654.
We also note that West Virginia Code § 55-10-8(c) requires that every
“decision as to whether the arbitration agreement is enforceable shall be made by a court
of competent jurisdiction” regardless of what the parties may have otherwise agreed. As
we said in Schumacher Homes, 237 W. Va. at 389 n. 28, 787 S.E.2d at 660 n. 28, in some
circumstances, this paragraph might be preempted by federal law:
As to contracts affecting interstate commerce, Section 8(c)
appears to conflict with the Supreme Court’s holdings that any
state statute which impedes an arbitration agreement and
targets it for treatment not usually applied to other kinds of
contracts is preempted by the FAA. Under the holdings of the
United States Supreme Court, Section 8(c) may be preempted
by the FAA if an arbitration agreement contains a valid and
enforceable delegation clause.
The agreements between Willow Run and Golden Eagle do not contain a
delegation provision.
12
the parties, we focus on the second part of the required analysis: does the parties’
controversy fall within the substantive scope of that arbitration agreement?
As noted earlier, for two reasons, the circuit court found the parties’ dispute
was outside of the scope of the arbitration agreement: the circuit court found that only a
circuit court has jurisdiction to resolve clouds on title, and the cloud on title alleged here
could only be resolved with the involvement of defendants that were not signatories to the
arbitration agreement. We find neither of these reasons is sufficient to disregard the
parties’ valid, enforceable arbitration contract.
As to the first reason, the circuit court ruled that, “[a]s a matter of public
policy, property rights are not subject to arbitration.” The circuit court based this finding
on a statute that creates jurisdiction for circuit courts, and provides:
The circuit court shall have original and general
jurisdiction in all cases in equity, including jurisdiction in
equity to remove any cloud on the title to real property, or any
part of a cloud, or any estate, right or interest in the real
property, and to determine questions of title with respect to the
real property without requiring allegations or proof of actual
possession of the real property.
13
7
W.Va. Code § 51-2-2(d) (2017). Golden Eagle correctly argues, however, that this statute
does not give the circuit courts exclusive or sole authority over real property disputes.
Those limiting terms are not contained in the jurisdiction statute.
Moreover, the Arbitration Act does not exclude real property disputes from
the realm of arbitration. To the contrary, the Arbitration Act allows parties to submit to
arbitration “any existing or subsequent controversy arising between the parties[.]” W.Va.
Code § 55-10-8(a) (emphasis added). It is a fundamental rule of statutory construction that
“the Legislature is presumed to intend that every word used in a statute has a specific
purpose and meaning.” State ex rel. Johnson v. Robinson, 162 W. Va. 579, 582, 251 S.E.2d
505, 508 (1979). The Legislature’s use of the word “any” in West Virginia Code § 55-10-
8(a) is not superfluous language, but was intended to mean that parties may craft binding
arbitration agreements to cover disputes of whatever kind they may choose.
Various authorities have concluded that parties may enter into contracts to
arbitrate real property disputes. Williston on Contracts provides that, “In the absence of a
statute to the contrary, both personal and real property questions may be arbitrated.”
Richard A. Lord, 21 Williston on Contracts § 57:29 (4th ed. 2017). Similarly, American
Jurisprudence has concluded that disputes regarding real estate may be arbitrated: “Where
a[n arbitration] statute validates written agreements to submit any controversy between the
7
Effective July 7, 2017, the Legislature amended W.Va. Code § 51-2-2 to
raise the jurisdictional limit on amounts in controversy. The amendment has no effect on
this case.
14
parties to arbitration, a controversy involving title to real property is included in the term
‘any controversy.’” 4 Am. Jur. 2d, Alternative Dispute Resolution § 39 (2018). The
leading case cited by most authorities comes from the California Court of Appeals, which
concluded:
According to modern authority, there is no reason why
controversies affecting real property may not be authorized to
be submitted to arbitration by written agreements of the parties
involved. . . . It is now well settled that, in the absence of
statutory restrictions, contests or disputes as to the title to, or
interests in, real estate may be submitted to arbitration.
Snyder v. Superior Court in & for Amador Cty., 24 Cal. App. 2d 263, 266, 74 P.2d 782,
784 (1937) (citations and quotations omitted).
Additionally, it is indisputable that the parties in this case could, if they so
choose, enter into a contractual settlement of their dispute. The parties could contractually
resolve their controversy regarding title to the real estate interests, and any circuit court
would be obliged to enforce that contract. The arbitration clause at issue in this case is
likewise a contractual means for resolving the parties’ controversy. Any award by an
arbitrator is enforceable in circuit court. See W.Va. Code §§ 55-10-24 (confirming an
arbitrator’s award) and -27 (requiring a court to enter judgment on an arbitrator’s award)
(2015).
We therefore hold that parties may agree to submit to arbitration questions
concerning clouds on the title to any estate, right, or interest in real property, despite West
15
Virginia Code § 51-2-2(d) (2017) vesting circuit courts with jurisdiction to resolve those
same questions. The circuit court erred in holding otherwise.
The second reason the circuit court refused to compel plaintiff Willow Run
and defendant Golden Eagle to arbitrate their dispute was the presence in the case of non-
signatories to the arbitration agreement. As noted earlier, the circuit court permitted
Willow Run to amend its complaint and add new defendants to the case. While these new
defendants are the alleged cause of the cloud on title, none of these defendants is a party
to, or signatory on, the July 2015 agreement and its arbitration clause.
Arbitration is usually perceived as a simple, two-party dispute-resolution
mechanism based upon contractual assent. This perception begins to fray, however, when
multiple parties are involved in a controversy, with some parties bound by one or more
arbitration agreements and some not bound by any agreement. Questions arise and
confusion abounds regarding how a court is to give all of the parties a fair hearing of their
grievances, while simultaneously meeting the requirement of the Federal Arbitration Act
and the West Virginia Revised Uniform Arbitration Act that courts enforce valid arbitration
agreements without any regard for the consequences.
In this case, no party contends that the non-signatory defendants must submit
to arbitration. This is well, because “[a] party generally cannot be forced to participate in
an arbitration proceeding unless the party has, in some way, agreed to participate.”
Chesapeake Appalachia, L.L.C. v. Hickman, 236 W.Va. 421, 439, 781 S.E.2d 198, 216
16
(2015). As a general rule, “[a] court may not direct a nonsignatory to an agreement
containing an arbitration clause to participate in an arbitration proceeding absent evidence
that would justify consideration of whether the nonsignatory exception to the rule requiring
express assent to arbitration should be invoked.” Syllabus Point 3, State ex rel. United
8
Asphalt Suppliers, Inc. v. Sanders, 204 W.Va. 23, 511 S.E.2d 134 (1998).
Instead, Willow Run argued (and the circuit court agreed) that no part of this
case can be arbitrated because the controversy between Willow Run and Golden Eagle is
too intertwined with the controversy involving the non-signatory defendants. Essentially,
the circuit court avoided the problems that could arise from “piecemeal” litigation, and
determined that judicial economy required that Willow Run’s arbitrable claims against
Golden Eagle be litigated in the circuit court alongside the non-arbitrable claims against
the new defendants.
8
In Syllabus Point 10 of Chesapeake Appalachia, L.L.C. v. Hickman, 236
W.Va. at 426, 781 S.E.2d at 203, we recognized five limited circumstances where a non-
signatory might be compelled to participate in arbitration:
A signatory to an arbitration agreement cannot require
a non-signatory to arbitrate unless the non-signatory is bound
under some traditional theory of contract and agency law. The
five traditional theories under which a signatory to an
arbitration agreement may bind a non-signatory are: (1)
incorporation by reference; (2) assumption; (3) agency; (4)
veil-piercing/alter ego; and (5) estoppel.
The parties have not suggested any of these circumstances exist in this case.
17
We rejected a similar ruling by a circuit court in State ex rel. Johnson
Controls, Inc. v. Tucker, 229 W.Va. 486, 729 S.E.2d 808 (2012). There, we concluded,
“the circuit court’s orders are eminently reasonable, logical and just. They are also,
unfortunately, directly contrary to the United States Supreme Court’s interpretations of the
Federal Arbitration Act.” 229 W.Va. at 497, 729 S.E.2d at 819. We went on to explain
that the Federal Arbitration Act (“the FAA”) requires inefficient, fragmented, piecemeal
resolution of arbitrable and non-arbitrable claims:
The Supreme Court has interpreted the FAA to require
that if a dispute presents multiple claims, some arbitrable and
some not, the former must be sent to arbitration even if this will
lead to piecemeal litigation. A court may not issue a blanket
refusal to compel arbitration merely on the grounds that some
of the claims could be resolved by the court without arbitration.
As early as 1983, the Supreme Court concluded that the FAA
requires piecemeal resolution when necessary to give effect to
an arbitration agreement. Under the [Federal] Arbitration Act,
an arbitration agreement must be enforced notwithstanding the
presence of other persons who are parties to the underlying
dispute but not to the arbitration agreement. In 1985, the
Supreme Court emphasized that the FAA requires a court to
enforce the bargain of the parties to arbitrate and not substitute
its own views of economy and efficiency for those of Congress.
A court is therefore required to compel arbitration of pendent
arbitrable claims when one of the parties files a motion to
compel, even where the result would be the possibly inefficient
maintenance of separate proceedings in different forums.
229 W.Va. at 497, 729 S.E.2d at 819 (footnotes, citations and quotations omitted). We
went on to hold, in Syllabus Point 9 of State ex rel. Johnson Controls v. Tucker, that
signatories to an arbitration agreement cannot be deprived of their right to arbitration:
The Federal Arbitration Act, 9 U.S.C. § 2, requires that
if a lawsuit presents multiple claims, some subject to an
arbitration agreement and some not, the former claims must be
18
sent to arbitration—even if this will lead to piecemeal
litigation. A trial court may not issue a blanket refusal to
compel arbitration of some of a party’s claims, merely because
the party has other claims which are not subject to the
arbitration agreement, or because other parties in the lawsuit
are not subject to the arbitration agreement.
229 W.Va. at 490, 729 S.E.2d at 812. A circuit court must enforce the bargain of the parties
to arbitrate, even where the result might be the inefficient maintenance of separate
proceedings in different forums.
The same reasoning applies to the Arbitration Act. The West Virginia
Revised Uniform Arbitration Act, West Virginia Code § 55-10-8(a) (2015), requires that
if a lawsuit presents multiple claims, some subject to an arbitration agreement and some
not, the former claims must be sent to arbitration – even if this will lead to piecemeal
litigation. A trial court may not issue a blanket refusal to compel arbitration of some of a
party’s claims merely because the party has other claims that are not subject to the
arbitration agreement, or because other parties in the lawsuit are not subject to the
arbitration agreement.
We acknowledge the reasoning of the circuit court, and recognize that the
claims by Willow Run against Golden Eagle might be best and most efficiently resolved
concurrently with Willow Run’s cloud-on-title claims against the new defendants. But
Willow Run and Golden Eagle are commercial entities that had previously agreed to
arbitrate their disputes. As we noted in State ex rel. Johnson Controls v. Tucker, the parties
have a right to have their contract enforced, despite the fact that one party’s insistence on
arbitration “may foster inefficiency and inconsistency.” 229 W.Va. at 496, 729 S.E.2d at
19
818 (quoting Thomas E. McCurnin, “Two-Party Arbitrations in a Multiple-Party World,”
26 Construction Lawyer 5 (Winter, 2006)). In sum, federal and state arbitration laws
“permit[] courts to protect parties from grossly unfair, unconscionable bargains; [they do]
not permit courts to protect commercial litigants from stupid or inefficient bargains
willingly and deliberately entered into.” 229 W.Va. at 497, 729 S.E.2d at 819.
The contract between Willow Run and Golden Eagle specifies that disputes
regarding performance of the contract are a matter for arbitration. Willow Run’s suit has
alleged, in effect, that Golden Eagle has breached its performance of the parties’ contract.
Put simply, there is a valid, enforceable agreement to arbitrate, and the parties’ controversy
falls within the scope of that agreement to arbitrate. The circuit court’s order refusing to
enforce the parties’ bargain is contrary to the statutory mandate that any valid agreement
to arbitrate be enforced. The order must, therefore, be reversed.
IV. Conclusion
We reverse the circuit court’s March 28, 2018, order refusing to compel
Willow Run to arbitrate its dispute against Golden Eagle, and remand the case for further
proceedings.9
Reversed and remanded.
9
We note that the circuit court’s order also granted Willow Run’s motion to
amend its complaint, and Golden Eagle did not appeal that portion of the order.
Accordingly, the circuit court’s ruling on the complaint amendment remains undisturbed.
20