        IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA


                               January 2015 Term                     FILED
                                _______________                  April 24, 2015
                                                                  released at 3:00 p.m.
                                                                RORY L. PERRY II, CLERK
                                  No. 14-0441                 SUPREME COURT OF APPEALS
                                                                   OF WEST VIRGINIA
                                _______________

              SCHUMACHER HOMES OF CIRCLEVILLE, INC.,

                        a foreign corporation,

                     Defendant Below, Petitioner


                                       v.

                                JOHN SPENCER

                          and CAROLYN SPENCER,

                          Plaintiffs Below, Respondents


      ____________________________________________________________

                 Appeal from the Circuit Court of Mason County

                    The Honorable David W. Nibert, Judge

                           Civil Action No. 13-C-116


                               AFFIRMED

      ____________________________________________________________

                           Submitted: March 11, 2015

                              Filed: April 24, 2015


Don C.A. Parker, Esq.                       Randall L. Trautwein, Esq.

Nicholas P. Mooney II, Esq.                 Michael L. Powell, Esq.

Sarah B. Smith, Esq.                        Lamp, Bartram, Levy, Trautwein &

Spilman Thomas & Battle PLLC                Perry P.L.L.C.

Charleston, West Virginia                   Huntington, West Virginia

Counsel for the Petitioner                  Counsel for the Respondents



JUSTICE KETCHUM delivered the Opinion of the Court.


JUSTICE BENJAMIN dissents, and reserves the right to file a separate opinion.

JUSTICE LOUGHRY dissents, and reserves the right to file a separate opinion.
                              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.     “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.”         Syllabus Point 6, Brown v. Genesis

Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), reversed on other grounds by

Marmet Health Care Ctr., Inc. v. Brown, 132 S.Ct. 1201 (2012).

              3.     “Under the Federal Arbitration Act, 9 U.S.C. § 2, and the doctrine of

severability, only if a party to a contract explicitly challenges the enforceability of an

arbitration clause within the contract, as opposed to generally challenging the contract as

a whole, is a trial court permitted to consider the challenge to the arbitration clause.

However, the trial court may rely on general principles of state contract law in

determining the enforceability of the arbitration clause. If necessary, the trial court may

consider the context of the arbitration clause within the four corners of the contract, or

consider any extrinsic evidence detailing the formation and use of the contract.” Syllabus

Point 4, State ex rel. Richmond American Homes of West Virginia, Inc. v. Sanders, 228

W.Va. 125, 717 S.E.2d 909 (2011).


                                              i
              4.     “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.” Syllabus

Point 2, State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293

(2010).

              5.     A “delegation provision” is a clause, within an agreement to

arbitrate, which explicitly states that the parties to the agreement give the arbitrator the

sole power to decide the validity, revocability or enforceability of the arbitration

agreement under general state contract law.

              6.     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 state contract law challenge to the arbitration

agreement. When an arbitration agreement contains a delegation provision, the trial court

may only consider a challenge that is directed at the validity, revocability or

enforceability of the delegation provision itself.

              7.     “Nothing in the Federal Arbitration Act, 9 U.S.C. § 2, overrides

normal rules of contract interpretation. Generally applicable contract defenses—such as

laches, estoppel, waiver, fraud, duress, or unconscionability—may be applied to

                                              ii
invalidate an arbitration agreement.” Syllabus Point 9, Brown v. Genesis Healthcare

Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), reversed on other grounds by Marmet

Health Care Ctr., Inc. v. Brown, 132 S.Ct. 1201 (2012).

              8.     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

not be invalid, revocable or unenforceable under state contract law.




                                            iii
Justice Ketchum:

               In recent years, the United States Supreme Court has doled out several

complicated decisions construing the Federal Arbitration Act, 9 U.S.C. §§ 1-16. Read

together, these decisions create an eye-glazing conceptual framework for interpreting

contracts with arbitration clauses that is politely described as “a tad oversubtle for

sensible application.”1 The Supreme Court sees its arbitration decisions as a series of

“clear instruction[s].” Marmet Health Care Ctr., Inc. v. Brown, 132 S.Ct. 1201, 1203

(2012). But experience suggests that the rules derived from these decisions are difficult

for lawyers and judges – and nearly impossible for people of ordinary knowledge – to

comprehend.2       Still, no matter how confounding the Supreme Court’s arbitration

decisions may seem, we are constitutionally bound to apply them to arbitration clauses

that involve interstate transactions.

               We now attempt to peel back a few of the onion layers of the Supreme

Court’s arbitration decisions. We are asked to apply the Supreme Court’s rulings to a

construction contract which contains an arbitration clause. Nestled within the arbitration

clause is what the Supreme Court terms a “delegation provision.” Under the Federal

Arbitration Act, the validity and enforceability of the arbitration clause is normally


               1
               Alan Scott Rau, Arbitral Power and the Limits of Contract: The New
Trilogy, 22 Am. Rev. Int’l Arb. 435, 519 (2011).
               2
                The rulings of the Supreme Court in this field are “difficult for any
lawyer—or any person—to accept.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
87, 130 S.Ct. 2772, 2787 (2010) (Stevens, J., dissenting).


                                            1
determined by a circuit court applying state contract law. However, the contracting

parties may incorporate a delegation provision into the arbitration clause saying that the

validity and enforceability of the arbitration clause under state contract law will be

decided by the arbitrator. We are specifically asked to enforce an alleged delegation

provision in the parties’ construction contract.

              When a party invokes a delegation provision, United States Supreme Court

cases interpreting the Federal Arbitration Act require that the language of the written

delegation provision 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.      The burden is on the party who opposes

enforcement of the delegation provision to challenge the provision in the trial court. The

party opposing enforcement must show why under precepts of state contract law that the

delegation provision itself is invalid, revocable or unenforceable.

              The Circuit Court of Mason County entered an order refusing to enforce the

arbitration clause that contained a delegation provision after finding the arbitration clause

was unconscionable. On appeal of that order, we find that the delegation provision does

not clearly and unmistakably reflect an intention by the parties to assign to the arbitrator

all questions about the enforceability of the arbitration clause. As set forth below, we

affirm the circuit court’s order.




                                              2
                                   I.

                  FACTUAL AND PROCEDURAL BACKGROUND


              In June 2011, plaintiffs John and Carolyn Spencer signed a form contract

with defendant Schumacher Homes of Circleville, Inc. (“Schumacher”), for the

construction of a house in Milton, West Virginia. The contract contains an arbitration

clause by which the parties agreed “that any claim, dispute or cause of action, of any

nature . . . shall be subject to final and binding arbitration by an arbitrator[.]”

              Within the arbitration clause is a provision that Schumacher contends is a

“delegation provision” saying that the parties agreed to delegate, from the courts to an

arbitrator, any question about the enforceability of the arbitration clause. A delegation

provision is a written agreement, usually nestled within the arbitration clause, to vest the

arbitrator with sole authority to resolve any dispute over the validity, revocability or

enforceability of the arbitration clause under state contract law.           The provision in

Schumacher’s form contract that it alleges is a delegation provision states:

              The arbitrator(s) shall determine all issues regarding the
              arbitrability of the dispute.

              In July 2013, the plaintiffs brought suit against Schumacher in the circuit

court claiming that there were defects in the newly-built house.              In August 2013,

Schumacher filed a motion asking the circuit court to dismiss the plaintiffs’ suit and to

compel the plaintiffs to participate in arbitration. Neither Schumacher’s motion nor its

legal memorandum supporting the motion made any mention of the delegation provision.

The plaintiffs responded to the motion by asserting that the court should find that the

entire arbitration clause was unconscionable and unenforceable under state contract law.

                                               3
              Six months later, at a hearing in February 2014, Schumacher asserted for

the first time that the arbitration clause contained a delegation provision. Orally (and not

in writing), Schumacher argued to the circuit court that, because of the delegation

provision, the court had no power to weigh the unconscionability of the arbitration

clause. Schumacher stated that upon invocation of a delegation provision, “that’s really

the end of the inquiry” and “[i]t’s for the arbitrator to decide whether [the arbitration

clause is] unconscionable.” The plaintiffs, apparently caught off guard, did not mention

the delegation provision in their oral argument to the circuit court.       The plaintiffs’

argument centered solely upon the unconscionable aspects of the arbitration clause.

              In an order dated March 6, 2014, the circuit court denied Schumacher’s

motion to dismiss and compel arbitration. The circuit court found that, as a whole, the

arbitration clause was procedurally and substantively unconscionable. The circuit court’s

order did not address the delegation provision.

              Schumacher now appeals the circuit court’s order.



                                       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.” Syllabus Point

1, Credit Acceptance Corp. v. Front, 231 W.Va. 518, 745 S.E.2d 556 (2013). Because

the circuit court’s ruling denied Schumacher’s motion to dismiss, we review the circuit

court’s order de novo. See Syllabus Point 4, Ewing v. Bd. of Educ. of Cnty. of Summers,


                                             4
202 W.Va. 228, 503 S.E.2d 541 (1998) (“When a party, as part of an appeal from a final

judgment, assigns as error a circuit court’s denial of a motion to dismiss, the circuit

court’s disposition of the motion to dismiss will be reviewed de novo.”).



                                            III.

                                         ANALYSIS


              The issue we focus upon concerns the effect of a “delegation provision”

buried within an arbitration clause in a larger contract. Our discussion of the issue is

controlled by the Federal Arbitration Act (“the FAA”) because the parties’ contract

reflects a transaction affecting interstate commerce.

              Schumacher argues that the arbitration clause in its form contract contains a

delegation provision. The provision says that “[t]he arbitrator(s) shall determine all

issues regarding the arbitrability of the dispute.” Schumacher argues that the trial court

erred in finding the arbitration clause unconscionable, and should have enforced the

delegation provision and referred all of the parties’ claims about “arbitrability” to

arbitration. As we discuss below, we disagree.

              The primary substantive provision of the FAA is Section 2,3 which we have

interpreted as follows:


              3
                  9 U.S.C. § 2 [1947] states:

                     A written provision in any maritime transaction or a
              contract evidencing a transaction involving commerce to
              settle by arbitration a controversy thereafter arising out of
              such contract or transaction, or the refusal to perform the
                                                                          (continued . . .)
                                                5
                      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.

Syllabus Point 6, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250

(2011) (“Brown I”) (overruled on other grounds by Marmet Health Care Center, Inc. v.

Brown, 132 S.Ct. 1201 (2012)).

              The FAA recognizes that an agreement to arbitrate is a contract. The rights

and liabilities of the parties are controlled by the state law of contracts. But if the parties

have entered into a contract (which is valid under state law) to arbitrate a dispute, then

the FAA requires courts to honor parties’ expectations and compel arbitration.4

Conversely, a party cannot be forced to submit to arbitration any dispute which he or she

has not agreed to submit. A court may submit to arbitration “those disputes – but only


              whole or any part thereof, or an agreement in writing to
              submit to arbitration an existing controversy arising out of
              such a contract, transaction, or refusal, shall be valid,
              irrevocable, and enforceable, save upon such grounds as exist
              at law or in equity for the revocation of any contract.
              4
                 Syllabus Point 7 of Brown I, 228 W.Va. at 656-57, 724 S.E.2d at 260-61,
states this principle:

                      The purpose of the Federal Arbitration Act, 9 U.S.C. §
              2, is for courts to treat arbitration agreements like any other
              contract. The Act does not favor or elevate arbitration
              agreements to a level of importance above all other contracts;
              it simply ensures that private agreements to arbitrate are
              enforced according to their terms.


                                              6
those disputes – that the parties have agreed to submit to arbitration.” First Options of

Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 1924 (1995). See also State

ex rel. Richmond American Homes of West Virginia v. Sanders, 228 W.Va. 125, 129, 717

S.E.2d 909, 913 (2011) (same).



                                  A. Doctrine of Severability

              When a lawsuit is filed implicating an arbitration agreement, and a party to

the agreement seeks to compel arbitration, the Supreme Court has interpreted the FAA to

require application of the doctrine of “severability” or “separability.” The gist of the

doctrine is that an arbitration clause in a larger contract must be carved out, severed from

the larger contract, and examined separately. The doctrine “treats the arbitration clause

as if it is a separate contract from the contract containing the arbitration clause, that is, the

‘container contract.’” Stephen J. Ware, Arbitration Law’s Separability Doctrine After

Buckeye Check Cashing, Inc. v. Cardegna, 8 Nevada L.J. 107, 109 (2007). Under the

doctrine, arbitration clauses must be severed from the remainder of a contract, and must

be tested separately under state contract law for validity and enforceability. In Syllabus

Point 4 of State ex rel. Richmond American Homes v. Sanders, 228 W.Va. at 129, 717

S.E.2d at 913, we said in part:

                     Under the Federal Arbitration Act, 9 U.S.C. § 2, and
              the doctrine of severability, only if a party to a contract
              explicitly challenges the enforceability of an arbitration
              clause within the contract, as opposed to generally
              challenging the contract as a whole, is a trial court permitted
              to consider the challenge to the arbitration clause.


                                               7
              However, we went on to hold that the FAA requires a severed arbitration

clause to be evaluated under precepts of contract law applicable to any contract (not just

arbitration agreements).5     Hence, we concluded in Syllabus Point 4 of Richmond

American Homes that:

              [T]he trial court may rely on general principles of state
              contract law in determining the enforceability of the
              arbitration clause. If necessary, the trial court may consider
              the context of the arbitration clause within the four corners of
              the contract, or consider any extrinsic evidence detailing the
              formation and use of the contract.

228 W.Va. at 129, 717 S.E.2d at 913. In other words, in determining if the severed

arbitration clause is enforceable under generic principles of contract law, the trial court

can look at other parts of the contract that relate to, support, or are otherwise entangled

with the operation of the arbitration clause.

              The United States Supreme Court has repeatedly interpreted the FAA to

require questions about the validity of an arbitration provision to be severed and

adjudicated separately from any other contractual question.6 “‘This doctrine is essentially


              5
                  Syllabus Point 8 of Brown I, 228 W.Va. at 657, 724 S.E.2d at 261, states
this rule:

                     A state statute, rule, or common-law doctrine, which
              targets arbitration provisions for disfavored treatment and
              which is not usually applied to other types of contract
              provisions, stands as an obstacle to the accomplishment and
              execution of the purposes and objectives of the Federal
              Arbitration Act, 9 U.S.C. § 2, and is preempted.
              6
             The doctrine has its beginnings in Prima Paint Corp. v. Flood & Conklin
Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801 (1967). In Prima Paint, the plaintiff and
                                                                       (continued . . .)
                                                8
a pleading standard’ that holds that ‘only if a party explicitly challenges the

enforceability of an arbitration clause within a contract is a court then permitted to

consider challenges to the arbitration clause.’” Richmond American Homes, 228 W.Va.

at 134, 717 S.E.2d at 918 (quoting Brown I, 228 W.Va. at 675, 724 S.E.2d at 279).

              The doctrine of severability means this: If a party challenges
              the enforceability of the entire contract (including the
              arbitration clause)—that is, the party does not sever the
              arbitration clause from the rest of the contract and make a


defendant entered into a consulting agreement that contained an arbitration clause. The
plaintiff later sued the defendant, claiming the entire agreement was procured by fraud.
The Supreme Court ruled that, under the FAA, the arbitration clause was presumed valid
and enforceable unless the plaintiff proved that, separately from the rest of the consulting
agreement, the clause had also been procured by fraud. Because the plaintiff did not
sever the arbitration clause from the overall contract and challenge it exclusively, the
Supreme Court ordered that the case be sent to arbitration. 388 U.S. at 401-404, 87 S.Ct.
at 1804-1806.

              The three dissenting justices in Prima Paint summarized the majority’s
interpretation of the FAA as creating a procedure that “compels a party to a contract
containing a written arbitration provision to carry out his ‘arbitration agreement’ even
though a court might, after a fair trial, hold the entire contract—including the arbitration
agreement—void because of fraud in the inducement.” 388 U.S. at 407, 87 S.Ct. at 1808
(Black, J., dissenting). They therefore labeled the Prima Paint decision “fantastic”
because “Congress did not impose any such procedures in the Arbitration Act.” Id.

               The Prima Paint severability doctrine, which was a procedural rule that
initially applied only to federal courts, became a mainstay of the Supreme Court’s
arbitration jurisprudence in 2006 when it was interpreted to be a substantive rule
applicable in state courts. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,
445-46, 126 S.Ct. 1204, 1209 (2006) (“First, as a matter of substantive federal arbitration
law, an arbitration provision is severable from the remainder of the contract. . . . Second,
unless the challenge is to the arbitration clause itself, the issue of the contract’s validity is
considered by the arbitrator in the first instance.”). See also, Preston v. Ferrer, 552 U.S.
346, 353, 128 S.Ct. 978, 984 (2008) (“attacks on the validity of an entire contract, as
distinct from attacks aimed at the arbitration clause alone, are within the arbitrator’s
ken.”)


                                               9
              discrete challenge to the validity of the arbitration clause—
              then the court is completely deprived of authority and only an
              arbitrator can assess the validity of the contract, including the
              validity of the arbitration clause.

Brown I, 228 W.Va. at 675, 724 S.E.2d at 279 (2011) (quotations and footnotes omitted).

              Once the arbitration clause has been severed out for scrutiny, the FAA

limits the trial court to considering only two threshold questions: (1) Under state contract

law, is there a valid, irrevocable, and enforceable arbitration agreement between the

parties?   And, (2) Does the parties’ dispute fall within the scope of the arbitration

agreement?    This second question must be weighed in view of the FAA being a

“congressional declaration of a liberal federal policy favoring arbitration agreements,”

and establishing that “any doubts concerning the scope of arbitrable7 issues should be

resolved in favor of arbitration.” Moses H. Cone Memorial Hosp. v. Mercury Const.

Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941 (1983) (footnote added). As we said 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.



              7
                  We discuss the ambiguous meaning of the word “arbitrable” later in this
opinion.


                                             10
              With the concept of severance of arbitration clauses in mind, we now turn

to the United States Supreme Court’s jurisprudence concerning delegation provisions.



                        B. Delegation Provisions and Severability

              A “delegation provision” is a clause, within an agreement to arbitrate,

which explicitly states that the parties to the agreement give the arbitrator the sole power

to decide the validity, revocability or enforceability of the arbitration agreement under

general state contract law. For example, in Rent-A-Center, West, Inc. v. Jackson, 561

U.S. 63, 66, 130 S.Ct. 2772, 2775 (2010) (“Rent-A-Center”) the Supreme Court

examined a delegation provision in an arbitration agreement that provided:

              The Arbitrator, and not any federal, state, or local court or
              agency, shall have exclusive authority to resolve any dispute
              relating to the interpretation, applicability, enforceability or
              formation of this Agreement including, but not limited to any
              claim that all or any part of this Agreement is void or
              voidable.

              A delegation provision within an arbitration agreement reflects the

principle that arbitration is purely a matter of contract. In their contract, the parties may

agree that questions about the validity, revocability or enforceability of an arbitration

agreement under state contract law will be delegated from a court to an arbitrator.

“Because the parties are the masters of their collective fate, they can agree to arbitrate

almost any dispute—even a dispute over whether the underlying dispute is subject to




                                             11
arbitration.” Bruni v. Didion, 160 Cal.App.4th 1272, 1286, 73 Cal.Rptr.3d 395, 407

(2008).8

              The United States Supreme Court extended the severability doctrine to a

delegation provision within an arbitration agreement in Rent-A-Center. The Supreme

Court decided that a properly-drafted delegation provision is nothing more than a narrow

“written provision” to “settle by arbitration” any question about the validity and

enforceability of the arbitration agreement. 561 U.S. at 70, 130 S.Ct. at 2777-78 (quoting

9 U.S.C. § 2). Succinctly, a delegation clause is “a distinct mini-arbitration agreement

divisible from the contract in which it resides – which just so happens also to be an

arbitration agreement.” 561 U.S. at 85, 130 S.Ct. at 2787 (Stevens, J., dissenting).

Hence, “the FAA operates on this additional arbitration agreement just as it does on any

other,” and a delegation provision is valid under the FAA “save upon such grounds as

exist at law or in equity for the revocation of any contract.” 561 U.S. at 70, 130 S.Ct. at

2777-78 (quoting 9 U.S.C. § 2).

              8
                Effective July 1, 2015, in Senate Bill 37, the Legislature adopted the
Revised Uniform Arbitration Act, W.Va. Code §§ 55-10-1 to -33. In W.Va. Code § 55-
10-8(c), the Act provides 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. We note that, as to contracts affecting interstate
commerce, Section 8(c) conflicts 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. See Syllabus Point 8, Brown I, 228
W.Va. at 657, 724 S.E.2d at 261; Southland Corp. v. Keating, 465 U.S. 1, 16, 104 S.Ct.
852, 861 (1984) (the FAA “foreclose[s] state legislative attempts to undercut the
enforceability of arbitration agreements.”). Under the holdings of the United States
Supreme Court, this provision in Senate Bill 37 is preempted by the FAA if the
arbitration agreement contains a valid and enforceable delegation clause.


                                            12
              Rent-A-Center stands for the proposition that a delegation provision is a

mini-arbitration agreement divisible from both the broader arbitration clause and the even

broader contract in which the delegation provision and arbitration clause are found.

Therefore, a party must specifically object to the delegation provision in order for a court

to consider the challenge. A party resisting delegation to an arbitrator of any question

about the enforceability of an arbitration agreement must challenge the delegation

provision exclusively.

              The take-away rule from Rent-A-Center is this: under the FAA 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 state contract law challenge to the arbitration

agreement. When an arbitration agreement contains a delegation provision, the trial court

may only consider a challenge that is directed at the validity, revocability or

enforceability of the delegation provision itself.

              We recognize that this rule seems absurd, “something akin to Russian

nesting dolls,” and suggests “an infinite severability rule” that is “difficult for any lawyer

– or any person – to accept, but this is the law[.]” 561 U.S. at 85-87, 130 S.Ct. at 2787

(Stevens, J., dissenting).9 It is an ivory-tower interpretation of the FAA “that is as


              9
               A leading arbitration scholar called the rule “intricate and recondite to a
degree that seems wholly unnecessary,” such that it will “place too great of a strain on
minds not prepared to deal with it;” “a tad oversubtle for sensible application;” and
                                                                           (continued . . .)
                                             13
dubious in principle as it is senseless in practice.” Young v. United Parcel Service, Inc.,

135 S.Ct. 1338, 1361 (2015) (Scalia, J., dissenting). But unless or until the United States

Supreme Court alters its interpretation of the FAA, we are constrained by that Court’s

rulings.

              The facts in Rent-A-Center demonstrate the application of this delegation

provision rubric. An employee, Jackson, filed an employment discrimination suit against

his employer, Rent-A-Center. The employer filed a motion to compel arbitration under

an arbitration agreement. Furthermore, the employer asserted that the agreement had a

provision delegating to the arbitrator “exclusive authority to resolve any dispute relating

to the . . . enforceability” of the arbitration agreement. Rent-A-Center, 561 U.S. at 66,

130 S.Ct. at 2775. The employee did not apply the doctrine of severability, and opposed

the motion to compel on the ground that the entire employment contract, including the

arbitration agreement, was unconscionable and unenforceable. The employee did not

challenge the arbitration agreement separate from the overall contract, and did not

challenge the delegation provision separate from the arbitration agreement.

              The Supreme Court determined that “unless Jackson challenged the

delegation provision specifically, we must treat it as valid [under the FAA] . . . and must

enforce it . . . leaving any challenge to the validity of the [Arbitration] Agreement as a

whole for the arbitrator.” 561 U.S. at 72, 130 S.Ct. at 2779. Jackson addressed the

“carving up the available universe pretty fine, and requires line drawing that may seem
artificial to the vanishing point.” Alan Scott Rau, Arbitral Power and the Limits of
Contract: The New Trilogy, 22 Am. Rev. Int’l Arb. at 517-19.


                                            14
“validity of the contract as a whole,” but failed to “even mention the delegation

provision” in his arguments to the trial court. Id. On these facts, the Supreme Court

concluded that the delegation provision was enforceable, and that the trial court should

have referred Jackson’s arguments about the unconscionability of the arbitration

agreement to an arbitrator.



                           C. Challenging a Delegation Provision

               To be clear, it is still possible to oppose enforcement of a delegation

provision. The FAA does not require all claims to be sent to arbitration merely because

there is a delegation provision. As the Supreme Court stated, merely because delegation

clauses and “agreements to arbitrate are severable does not mean that they are

unassailable.” 561 U.S. at 71, 130 S.Ct. at 2778. Severance is merely a speedbump on

the road to deliberating the enforceability of the provision.

               A party seeking to enforce an arbitration clause, or a party resisting

arbitration, must begin any argument with the recognition that arbitration is purely a

matter of contract. If a party seeks to establish the validity and enforceability of a

delegation provision in an arbitration clause, then there must first be “clear and

unmistakable evidence” that the parties agreed to send questions about the enforceability

of the arbitration clause to the arbitrator.

               In the context of whether the parties have agreed to arbitrate the merits of a

dispute – that is, the “arbitrability” of a question – the United States Supreme Court said,

“Courts should not assume that the parties agreed to arbitrate arbitrability unless there is

                                               15
‘clea[r] and unmistakabl[e]’ evidence that they did so.” First Options of Chicago, Inc. v.

Kaplan, 514 U.S. at 944, 115 S.Ct. at 1924. Likewise, this Court has found that “parties

are only bound to arbitrate those issues that by clear and unmistakable writing they have

agreed to arbitrate,” and that an “agreement to arbitrate will not be extended by

construction or implication.” Syllabus Point 10, Brown I, 228 W.Va. at 657, 724 S.E.2d

at 261. The “clear and unmistakable” test reflects a “heightened standard” of proof of the

parties’ “manifestation of intent.” Rent-A-Center, 561 U.S. at 70 n.1, 130 S.Ct. at 2778

n.1.	 The heightened standard was adopted

              because the question of who would decide the
              unconscionability of an arbitration provision is not one that
              the parties would likely focus upon in contracting, and the
              default expectancy is that the court would decide the matter.
              Thus, the Supreme Court has decreed, a contract’s silence or
              ambiguity about the arbitrator’s power in this regard cannot
              satisfy the clear and unmistakable evidence standard.

Ajamian v. CantorCO2e, L.P., 203 Cal.App.4th 771, 782, 137 Cal.Rptr.3d 773, 782

(2012) (citations omitted).

              Questions about the validity, revocability, and enforceability of a provision

delegating a problem with the enforceability or scope of an arbitration clause are resolved

by looking to state contract law. “When deciding whether the parties agreed to arbitrate a

certain matter (including arbitrability), courts generally . . . should apply ordinary state-

law principles that govern the formation of contracts.” First Options, 514 U.S. at 944,

115 S.Ct. at 1924. “Nothing in the Federal Arbitration Act, 9 U.S.C. § 2, overrides

normal rules of contract interpretation. Generally applicable contract defenses—such as

laches, estoppel, waiver, fraud, duress, or unconscionability—may be applied to

                                             16
invalidate an arbitration agreement.” Syllabus Point 9, Brown I, 228 W.Va. at 657, 724

S.E.2d at 261. State contract law requires a trial court examining the enforceability of a

contract provision to weigh the challenged provision in context, and consider other parts

of the contract that relate to, support, or are otherwise intertwined with the operation of

the challenged provision. Richmond American Homes, 228 W.Va. at 135, 717 S.E.2d at

919. Those same state-law contract defenses principles may be employed to invalidate a

severed delegation provision within an arbitration agreement.

              To summarize, when a party seeks to enforce a delegation provision in an

arbitration agreement against an opposing party, under the FAA there are two

prerequisites for the 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

not be invalid, revocable or unenforceable under state contract law. Typical contract

defenses such as laches, estoppel, waiver, fraud, duress, or unconscionability may be

asserted.10 Under general principles of state contract law, the trial court may consider the


              10
                  To be clear, this list is not exclusive. Misrepresentation, duress,
mutuality of assent, undue influence, or lack of capacity, if the contract defense exists
under general common law principles, then it may be asserted to counter the claim that a
delegation provision binds the parties. Even lack of consideration is a defense. But see
Kirby v. Lion Enterprises, Inc., 233 W.Va. 159, 164-65, 756 S.E.2d 493, 498-99 (2014)
(clarifying that the focus should not be on whether the arbitration clause was supported
by separate consideration, but whether the entire contract was supported by
consideration); Syllabus Point 6, Dan Ryan Builders, Inc. v. Nelson, 230 W.Va. 281, 737
S.E.2d 550 (2012) (“So long as the overall contract is supported by sufficient
                                                                          (continued . . .)
                                            17
context of the delegation provision within the four corners of the contract. In other

words, in determining if the delegation provision is enforceable under generic principles

of contract law, the trial court can look at other parts of the contract that relate to,

support, or are otherwise entangled with the operation of the delegation provision.



                                  D. Applying the Rules

               We now turn to the arbitration clause in the parties’ contract, and examine

the clause that Schumacher asserts is a delegation provision. Our standard of review in

this case is de novo. Syllabus Point 4, Ewing v. Bd. of Educ. of Cnty. of Summers, 202

W.Va. 228, 503 S.E.2d 541 (1998). We therefore give the arbitration clause and the

delegation provision a plenary review, and apply the same legal standards to that review

as the circuit court.

               Schumacher’s arbitration clause contained a provision assigning to an

arbitrator “all issues regarding the arbitrability of the dispute.”            “Regrettably,

‘arbitrability’ is an ambiguous term that can encompass multiple distinct concepts.”

Bruni v. Didion, 160 Cal.App.4th at 1286, 73 Cal.Rptr.3d at 407. See also GGIS Ins.

Servs., Inc. v. Lincoln Gen. Ins. Co., 773 F.Supp.2d 490, 504 (M.D. Pa. 2011) (“The term

“arbitrability” is, by[] itself, ambiguous.”). The term “arbitrability” is generally seen “in



consideration, there is no requirement of consideration for each promise within the
contract . . . in order for a contract to be formed.”). The nutshell rule is that, whatever
defense is asserted, the defense must be aimed at showing why the delegation provision is
unenforceable.


                                             18
the sense of the scope of the arbitration provisions,” Bruni, 160 Cal.App.4th at 1286, 73

Cal.Rptr.3d at 407, and asks whether a particular dispute is subject to the parties’

arbitration agreement. In Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct.

588 (2002), the Supreme Court grappled with the vagueness of the word “arbitrability,”

and resolved that legally it has a narrow meaning:

                     Linguistically speaking, one might call any potentially
              dispositive gateway question a “question of arbitrability,” for
              its answer will determine whether the underlying controversy
              will proceed to arbitration on the merits. The Court’s case
              law, however, makes clear that . . . the phrase “question of
              arbitrability” has a far more limited scope. . . .

                     Thus, a gateway dispute about whether the parties are
              bound by a given arbitration clause raises a “question of
              arbitrability” for a court to decide.

537 U.S. at 83-84, 123 S.Ct. at 591-92.11

              After carefully examining Schumacher’s delegation provision and applying

our holdings above, we find it does not “clearly and unmistakably” confer authority to the

arbitrator to decide the gateway questions regarding the validity, revocability, and

enforceability of the arbitration clause.     The provision refers to the arbitrator only

questions about “arbitrability,” a nebulous term that has legally been limited to mean

questions about whether a particular dispute is within the scope of an arbitration


              11
                  See also Douglas H. Yarn, Gregory Todd Jones, Georgia Alternative
Dispute Resolution, § 9:11 (2014) (“‘Arbitrability’ is an ambiguous term referring
generally to the jurisdiction of the arbitrator. In keeping with the voluntary, contractual
nature of arbitration, matters parties agreed to arbitrate are within the arbitral jurisdiction
(arbitrable) while matters they did not agree to arbitrate are without (nonarbitrable).”).


                                              19
agreement. “Arbitrability” in this case would mean the ultimate issue in dispute –

namely, whether the house built by Schumacher for the plaintiffs was defective. We see

nothing in the arbitration clause that restricts to the arbitrator questions concerning its

own validity, revocability, or enforceability; the arbitration clause is silent as to these

threshold inquiries. Because the delegation provision does not meet the first prerequisite

of our test, it cannot and should not be enforced.

               Two final issues trouble us about the delegation provision.

               First, we are troubled by the way Schumacher raised the delegation

provision to the circuit court. Neither Schumacher’s motion to compel arbitration nor its

memorandum of law in support of the motion mentioned the delegation provision, let

alone sought its enforcement. The delegation provision was not raised as an issue until

the motion was orally argued to the circuit court seven months after the plaintiffs filed

suit. The plaintiffs were never put on notice that, in their opposition to the motion to

compel, they might need to address the enforceability of the delegation provision. By its

actions, Schumacher both ambushed the plaintiffs and failed to meet the heightened

“clear and unmistakeable” test.”12


               12
                  In somewhat similar cases, parties have been found to have waived,
abandoned, or failed to establish a right to enforcement of an arbitration clause. See, e.g.,
In re Checking Account Overdraft Litig., 754 F.3d 1290, 1298 (11th Cir. 2014) (party
seeking to compel arbitration “waived its delegation clause argument when it waited to
raise the issue until after it had asked the district court to decide arbitrability—and lost”);
Mercadante v. Xe Servs., LLC, 864 F. Supp. 2d 54 (D.D.C. 2012) (defendant could not
raise for first time in their reply brief claim that arbitrator had exclusive authority to
determine validity of contract); In re Toyota Motor Corp. Unintended Acceleration
Mktg., Sales Practices, & Products Liab. Litig., 838 F. Supp. 2d 967 (C.D. Cal. 2012)
                                                                                 (continued . . .)
                                               20
              Second, we are troubled that the plaintiff-homeowners violated the Rules of

Appellate Procedure in their brief to this Court. Rule 10(d) of the Rules of Appellate

Procedure [2010] required the plaintiffs (as respondents) to specifically address each of

Schumacher’s assignments of error. Rule 10(d) states, in pertinent part:

              Unless otherwise provided by the Court, the argument section
              of the respondent’s brief must specifically respond to each
              assignment of error, to the fullest extent possible. If the
              respondent’s brief fails to respond to an assignment of error,
              the Court will assume that the respondent agrees with the
              petitioner’s view of the issue.

The petitioner’s brief by Schumacher clearly delineated and argued seven assignments of

error. The plaintiffs’ brief in response is nothing more than a generic rehash of the

plaintiffs’ brief to the circuit court. The plaintiffs’ appellate brief failed to specifically



(because Toyota litigated case for 11 months before seeking enforcement of delegation
provision, it waived right to arbitration); Hartley v. Superior Court, 196 Cal.App.4th
1249, 1260, 127 Cal.Rptr.3d 174, 182-83 (2011) (moving party seeking arbitration did
not raise delegation provision until its reply brief, failing to put non-moving party on
notice and thereby failing its “burden to meet the heightened ‘clear and unmistakable’
test”); Katz v. Anheuser-Busch, Inc., 347 S.W.3d 533, 540 (Mo. Ct. App. 2011) (party
seeking to compel arbitration failed to raise delegation provision until after trial court
denied motion to compel arbitration, thereby waiving issue for appeal); Doe v. Princess
Cruise Lines, Ltd., 657 F.3d 1204, 1213 (11th Cir. 2011) (it is invited error for a party to
not raise a delegation provision until after a trial court has ruled on the arbitrability of a
suit); M. Homes, LLC v. Southern Structural, Inc., 281 Ga. App. 380, 383, 636 S.E.2d 99,
101 (2006) (a party that fails to assert a delegation provision “may waive an agreement to
arbitrate by taking actions that are ‘inconsistent with the right of arbitration.’”).

               The right to arbitration, like any other contract right, can be waived. “To
demonstrate waiver of the right to arbitrate, a party must show: (1) knowledge of an
existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3)
prejudice to the party opposing arbitration resulting from such inconsistent acts.” U.S. v.
Park Place Associates, Ltd., 563 F.3d 907, 921 (9th Cir. 2009) (citation omitted).


                                             21
respond to any of Schumacher’s seven assignments of error; importantly, the brief makes

no mention of Schumacher’s assertion of the delegation provision. A respondent who

files a brief that fails to respond to each of the petitioner’s assignments of error does so at

their peril.   On these briefs, this Court would be within its bounds to assume the

plaintiffs’ brief conceded the correctness of Schumacher’s arguments. In the exercise of

our discretion, we decline to do so in this case.

               In summary, we find that the circuit court did not err in its failure to enforce

Schumacher’s so-called delegation provision. Even assuming it was properly raised to

the circuit court, the delegation provision does not reflect a clear and unmistakable intent

by the parties to delegate state contract law questions about the validity, revocability, or

enforceability of the arbitration clause to an arbitrator.13 Therefore, the circuit court was


               13
                  Schumacher raises six other issues on appeal that we find have little
merit, and therefore decline to address. First, Schumacher asserts the circuit court erred
in relying on West Virginia law when the contract stated it was to be construed under
Ohio law. However, Schumacher concedes in its brief that “defenses to contracts are
similar in Ohio as in West Virginia.” Our research confirms this, and we find no error in
applying West Virginia’s substantive contract law to find the arbitration clause
unconscionable. Second, Schumacher incorrectly claims the circuit court failed to apply
the severability doctrine – an argument belied by the court’s conclusion that only the
arbitration clause (read in the context of the overall contract) was unconscionable. The
third, fourth, fifth and sixth arguments by Schumacher pertain to the circuit court’s
findings of unconscionability, based partly on the finding that the arbitration clause
requires the plaintiffs to arbitrate all claims but allows the contractor to pursue
mechanic’s liens in state court. This provision of the contract is of no small moment: the
only reason a contractor is likely to go to court against a homeowner is to get paid for
his/her work. But this provision simultaneously prevents the homeowner from going to
court to dispute paying the contractor for that same work. Whether the contractor
charged too much, charged for disputed add-ons, or shouldn’t be paid for poor or
incomplete workmanship, the homeowner must seek arbitration. On this record, we
cannot say the circuit court erred. See Kirby v. Lion Enterprises, Inc., 233 W.Va. 159,
                                                                            (continued . . .)
                                              22
correct in deciding that the arbitration provision was unenforceable under West Virginia

contract law.



                                         IV.

                                     CONCLUSION


                We find no reversible error in the circuit court’s determination that the

arbitration clause in Schumacher’s contract was unenforceable against the plaintiffs. We

therefore affirm the circuit court’s March 6, 2014, order refusing to compel arbitration.

                                                                                 Affirmed.




168, 756 S.E.2d 493, 502 (2014) (Ketchum, J., concurring) (construction contract
allowed contractor to pursue some claims in court, while requiring home owner to
arbitrate all claims; the arbitration “provision lacks any modicum of bilaterality or
mutuality of obligation. A contract that lacks mutual reciprocal obligations (for instance,
a contract which requires the weaker party to arbitrate any claims he or she may have, but
permits the stronger party to seek redress through the courts) may be so one-sided and
unreasonably unfair to one party that it is unconscionable.”; Dan Ryan Builders, Inc. v.
Nelson, 230 W.Va. 281, 290, 737 S.E.2d 550, 559 (2012) (“[I]t is well-settled that a
contract which requires the weaker party to arbitrate any claims he or she may have, but
permits the stronger party to seek redress through the courts, may be found to be
substantively unconscionable.”).


                                            23
