CHARLESTON – The West Virginia Supreme Court of Appeals ruled that a lawsuit regarding an oil and gas lease issue needed to be sent to arbitration.
SWN Production Company and Richard E. Long and Mary D. Long were parties to an oil and gas lease that included an arbitration provision, according to a Nov. 7 opinion.
The Longs sued SWN to recover payments to which they claim to be entitled to under the lease and various other damages. They alleged parts of the lease invalidated the arbitration provision and the circuit court agreed.
“However, we find that the arbitration provision is clear and unambiguous and thus reverse the circuit court’s order and remand with directions that the case be dismissed and referred to arbitration,” Justice Beth Walker said in the majority opinion.
The Longs alleged they are entitled to an up-front bonus payment of $113,710 in consideration for execution of the lease, but they only received $44,544.
The Longs sought a declaration that the lease was invalid as a result of SWN’s failure to pay the full bonus amount. SWN filed a motion to compel arbitration and to dismiss the complaint, which the circuit court denied.
“In this case, there is no question that the severability clause and forfeiture clause ‘do not relate to or support the operation of the arbitration clause, nor are they otherwise entangled with its operation,’” the opinion states. “Accordingly, it was improper for the circuit court to go outside of the provisions of the arbitration clause to find language to create an ambiguity.”
As SWN properly contended, “because the two references to civil action in the Lease…are not located within the same provision as the arbitration agreement” and neither clause directs the respondents that they have a right to file a civil action, the arbitration provision is not ambiguous and therefore should be enforced.
“For these reasons, we reverse the circuit court’s order denying petitioner’s motion to compel arbitration and remand the case to the circuit court for entry of an order compelling arbitration and dismissing the civil action,” the opinion states.
The Supreme Court ordered to reverse the Oct. 31, 2016 order of the circuit court and remanded the case with directions that it be dismissed and referred to arbitration.
W.Va. Supreme Court of Appeals case number: 16-1131