MARTINSBURG – A federal judge has ruled that two lawsuits filed by Berkeley County couples against a home builder must be sent to arbitration.
U.S. District Judge Gina Groh, of the Northern District of West Virginia, made the rulings July 3 in lawsuits brought by David and Gabriella Schultz and Robert and Bobbie Kucharek against Dan Ryan Builders, Inc.
The rulings come the U.S. Court of Appeals for the Fourth Circuit certified a question of law to the state Supreme Court in another case against Dan Ryan Builders.
The state Supreme Court was given the question: “Does West Virginia law require that an arbitration provision, which appears as a single clause in a multi-clause contract, itself be supported by mutual consideration when the contract as a whole is supported by adequate consideration?”
The Fourth Circuit had decided state law was unclear on the issue and submitted the question to the court, which answered it in November.
In the answer, the state’s high court recognized that litigants, such as the plaintiffs in this case, often challenge arbitration clauses that appear not to impose equal duties to arbitrate on each of the parties.
Arbitration clauses are challenged on the grounds that they “lack consideration” or “lack mutuality of obligation.”
Justice Menis Ketchum wrote in the opinion: “We conclude that West Virginia’s law of contract formation only requires that a contract as a whole be supported by adequate consideration. Hence, a single clause within a multi-clause contract does not require separate consideration. However, we further conclude that under the doctrine of unconscionability, a trial court may decline to enforce a contract clause – such as an arbitration provision – if the obligations or rights created by the clause unfairly lack mutuality.”
The Kuchareks and Schultzes both hired Dan Ryan Builders to construct a home in Hedgesville, but filed lawsuits against the company in 2012. The company removed the cases from Berkeley Circuit Court to federal court in Martinsburg and argued there was an arbitration provision in the contracts they signed.
Groh wrote that the contracts did not contain substantive unconscionability.
“(T)his contract does not attempt to exculpate DRB from any alleged misconduct,” Groh wrote.
“The contract did not contain any provisions requiring Plaintiffs to waive any statutory or common law warranties. The contract did not state that DRB is not liable for special, indirect, or consequential damages.
“Additionally, the contract did not prohibit Plaintiffs from retaining their own attorney to review the contract, and Mrs. Schultz acknowledged that they could have retained an attorney.”
“In sum, considering the totality of the circumstances in this case, Plaintiffs have failed to demonstrate that the contract and its terms were so unfair that it resulted in an overall imbalance or one-sidedness of the contract.”
The Kuchareks and Schultzes were represented by Charles Town attorney Kirk H. Bottner, while Jason S. Murphy and Susan R. Snowden of Martin & Seibert in Martinsburg represented Dan Ryan Builders.
From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.
