CHARLESTON – The West Virginia Supreme Court of Appeals reversed an earlier decision in a case involving Golden Eagle Resources and Willow Run Energy.
In this appeal from the Pleasants Circuit Court, the court addressed the question of whether or not individuals may agree to arbitrate a dispute regarding a cloud on the title to real estate, according to the Nov. 19 majority opinion authored by Justice John Hutchison. The court held that it may.
"As we discuss ... the Circuit Court decided otherwise and refused to enforce an arbitration agreement," Hutchison wrote. "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."
Golden Eagle and Willow Run entered into a contract in 2015 whereby Willow Run would convey 944 acres of mineral interests to Golden Eagle for the price of $3.9 million. Later, a dispute arose concerning defects in the title to the mineral interests.
"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," the opinion states. "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 filed a complaint against Golden Eagle on April 8, 2016, and on March 28, 2018, the Circuit Court granted a motion to amend the complaint to add new defendants and claims, but the court denied a motion by Golden Run to refer Willow Run's claims against Golden Eagle to arbitration. Golden Eagle then appealed.
"Various authorities have concluded that parties may enter into contracts to arbitrate real property disputes," Hutchison wrote.
The court found that arbitration should be allowed.
"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," Hutchison wrote. "But Willow Run and Golden Eagle are commercial entities that had previously agreed to arbitrate their disputes."
The Supreme Court found that 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.”
Hutchison wrote 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," Hutchison wrote. "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 Supreme Court, therefore, reversed the decision.
West Virginia Supreme Court of Appeals case number 18-0384