United States District Court,

N.D. Mississippi,

Oxford Division.

Brady DOUGLAS and Roberto Ramirez, Plaintiffs

v.

Charles NORWOOD d/b/a Norwood Trucking, Norwood Trucking, Inc., NTC and Roger Shaw, Defendants.

 

Civil Action No. 3:13CV271–M.

Signed Aug. 27, 2014.

 

Jonathan Peeples Barrett, Barrett Law, PLLC, Madison, MS, for Plaintiffs.

 

Walter Alan Davis, Dunbar & Associates, PLLC, Oxford, MS, for Defendants.

 

ORDER

MICHAEL P. MILLS, District Judge.

*1 This cause comes before the court on defendants’ motion for Rule 12 dismissal or, alternatively, Rule 56 summary judgment, on the grounds that this action was not timely filed. Plaintiffs have responded in opposition to the motion, and, the court, having considered the memoranda and submissions of the parties, concludes that a Rule 56 summary judgment motion is the proper context in which to consider the limitations issues in this case but that the parties should first conduct limited discovery prior to such a motion being filed. The instant motion will therefore be dismissed without prejudice to refiling at a later date. Prior to dismissing the motion to dismiss, however, the court will provide its initial observations regarding the issues raised in it. Hopefully, these observations will assist the parties in their discovery and future briefing on these issues.

 

This is a negligence case, based on diversity jurisdiction, involving an automobile accident that occurred in Boone County, Kentucky on November 2, 2010. In their complaint, the plaintiffs, who are Texas residents, seek recovery against defendant Roger Shaw and his employer Charles Norwood d/b/a Norwood Trucking, Inc. (“Norwood”). Both Shaw and Norwood are domiciled in Mississippi, and plaintiffs allege that the negligence of both contributed to the accident which left them injured.

 

Defendants argue in the present motion, however, that Kentucky law applies in this case and that its two-year statute of limitations bars the instant action. Plaintiffs filed suit in this court on October 31, 2013, which is almost three years after the accident and thus, barring some form of legal or equitable tolling, is untimely under Kentucky law. However, the limitations issues in this case are rendered far more difficult and complex by the fact that plaintiffs initially filed suit in Texas, on August 3, 2012,FN1 which was timely even under Kentucky law. However, the Texas court granted, on June 19, 2013, defendant Charles Norwood’s motion to dismiss for lack of personal jurisdiction. The Texas court only granted this relief after Norwood had represented to it, in formal briefing in March 2013, that:

 

FN1. Somewhat confusingly, plaintiff Douglas, who was the passenger in the vehicle, was listed as the sole plaintiff in the Texas action and plaintiff Ramirez, who was driving Douglas, was listed as a defendant but was referred to by the parties in the Texas suit as a “cross-plaintiff.”

 

The dismissal and refiling of this case in Boone County, Kentucky would not work an injustice to Cross Plaintiff, as the statute of limitations has not run.FN2

 

FN2. The court notes that defendants’ present counsel did not make the representations in question to the Texas court.

 

As best this court can tell, this statement was not accurate at the time it was made, given that Kentucky’s two-year statute of limitation appears to have run, barring some tolling, on November 2, 2012. As discussed below, it appears to the court that Kentucky law provides for no such tolling of its two-year statute of limitations on the basis of claims filed outside of that state.

 

Norwood now moves this court for dismissal on the very same statute of limitations grounds which, he assured the Texas court, would not pose an obstacle to Ramirez refiling this suit. This obviously raises serious equitable and estoppel concerns, which the court discusses below. First, however, the court will address the legal issues relating to whether this action was timely filed, barring some form of estoppel. The court initially observes that, in cases involving automobile accidents, it has generally applied the law of the state where the accident occurred, even in cases where, as here, there were allegations that related acts of negligence occurred in other states. In Maggette v. BL Development Corp., No. 2:07CV181, for example, this court, following considerable research, applied Arkansas law to a case involving a bus accident resulting in multiple fatalities which occurred in that state. This court applied Arkansas law even though the bus was filled with passengers from Illinois on their way to a casino in Mississippi, and there were allegations that negligent acts in both states had contributed to the accident.

 

*2 In this case, plaintiffs allege that acts of, inter alia, negligent hiring and supervision in Mississippi by Norwood contributed to the accident in Kentucky, but the complaint’s allegations in this regard are rather vague and conclusory. For example, the complaint alleges that Shaw was an incompetent driver and that Norwood should have known such when it hired him, but it makes no specific allegations in this regard. The complaint further fails to provide specifics as to how Norwood failed to “supervise” Shaw while he was driving hundreds of miles away in Kentucky. Accordingly, while the court makes no formal ruling on the choice of law issues at this time, it is rather strongly inclined to conclude that Kentucky law will apply in this case. Indeed, the parties themselves appear to have assumed that this would be the case throughout much of this litigation, including in the complaint, where plaintiffs allege that Kentucky statutes were violated.

 

The likely applicability of Kentucky law is unfortunate for plaintiffs in this case, since that state’s law provides for a two-year statute of limitations for automobile accidents such as this one, subject to exceptions which plaintiffs appear to acknowledge are not applicable in this case. Even worse for plaintiffs, while this court’s research indicates that Kentucky law does have a savings statute applicable in cases where suit is timely filed initially but dismissed for lack of jurisdiction, that statute provides, and has been so interpreted, to only be applicable to cases filed in Kentucky. Specifically, KRS 413.270 provides that:

 

(1) If an action is commenced in due time and in good faith in any court of this state and the defendants or any of them make defense, and it is adjudged that the court has no jurisdiction of the action, the plaintiff or his representative may, within ninety (90) days from the time of that judgment, commence a new action in the proper court. The time between the commencement of the first and last action shall not be counted in applying any statute of limitation.

 

Unfortunately for plaintiffs, however, they filed their first action in Texas, not Kentucky, and a Kentucky appellate court has held that the savings statute must be strictly construed and is inapplicable where suit is filed in another state. See Blair v. Peabody Coal Co., 909 S.W.2d 337 (Ky.App.1995).

 

This court’s research further indicates that while Mississippi has its own savings statute, the Mississippi Court of Appeals has held that, like the Kentucky statute, it does not apply to suits which were filed and dismissed in other states. See S & H Grocery Inc. v. Gilbert Const. Co., Inc., 733 So.2d 851 (Miss.App.1998), interpreting Miss.Code Ann. § 15–1–69. This is significant, since it considerably weakens plaintiffs’ argument that the application of Kentucky’s statute of limitations would run counter to the public policy of this state.FN3 Defendants’ legal position in this context is rendered even stronger by the existence of another Mississippi statute which provides that where a cause of action which “accrued” in another state is time-barred in that state, a non-resident may not bring suit in this state based on that cause of action. Specifically, § 15–1–65 provides that:

 

FN3. The court’s findings in this regard are subject to change, since they merely reflect its own research, and the parties have not had an opportunity to submit arguments in this regard.

 

*3 When a cause of action has accrued outside of this state, and by the laws of the place outside this state where such cause of action accrued, an action thereon cannot be maintained by reason of lapse of time, then no action thereon shall be maintained in this state; provided, however, that where such a cause of action has accrued in favor of a resident of this state, this state’s law on the period of limitation shall apply.

The evident purpose of this statue is to prevent Mississippi courts from becoming a “haven” for actions which are time-barred in other jurisdictions, and it strikes the court as being supported by significant public policy considerations. In light of the foregoing, the court is inclined to agree with defendants that Kentucky law applies and that the law of that state would deem the present action to be time-barred.

 

While the court thus finds defendants’ legal arguments to be persuasive, it considers the plaintiffs’ equitable position in this case to be a strong one. Wherever possible, this court seeks to avoid fundamentally unjust results in its courtroom. In the court’s view, dismissing on statute of limitations grounds an action that was timely filed in Texas court and which was dismissed on jurisdictional grounds only after one of the defendants had assured the Texas court that a refiling of the lawsuit would not be time-barred would seemingly be an unjust result. The court would prefer to avoid such an unjust result if it has the equitable authority to do so. It is not clear to this court, at this juncture, whether it does, and it would like to consider additional evidence, and likely conduct a hearing, before making a formal ruling in this regard.

 

Defendants argue that the Texas court did not rely upon Mr. Norwood’s assurance in making its ruling, but it is not clear how they can know that such is the case. In this court’s experience, courts are often cognizant of the “real life” consequences of their rulings, even if those consequences are not strictly relevant to the legal analysis at hand. Based on the limited exhibits provided to this court, it appears that the Texas court simply ruled without explanation that Norwood’s “special appearance should be sustained” and that Ramirez’s claims against Norwood were “dismissed for lack of personal jurisdiction.” Given the lack of explanation in its order, it is unclear to this court whether the Texas court felt that the jurisdictional issues were completely clear or whether they might have presented a “close call” as to which plaintiff’s ability to re-file suit might have been deemed a relevant consideration.

 

This court has reviewed Norwood’s Texas motion, and it appears to be a rather bare-bones affair. In particular, the motion merely asserts that Norwood has “never maintained a place of business in Texas or a residence in Texas” with no further recitation of the extent of his contacts with that state. This strikes the court as being a very selective recitation of facts for an individual who is the principal of a trucking company which, one would presume, regularly sends its eighteen-wheel trucks over the highways of Texas .FN4 If such is not the case, then Norwood did not so indicate in his motion. The court further notes that Norwood’s motion merely argued that specific jurisdiction was inapplicable, and this seems clear enough, considering that the claims arising from the Kentucky automobile accident did not arise from any contacts Norwood may have had with Texas. See Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 241 (5th Cir.2008).

 

FN4. The court would hasten to add that it has no intention of relitigating the issue of whether personal jurisdiction existed over Norwood in Texas. Indeed, it likely lacks the authority to do so even if it wanted to. Suffice it to say, however, that the court would be more willing to grant Norwood the relief he seeks if his briefing before the Texas court more clearly established that personal jurisdiction over him was lacking.

 

*4 Norwood’s brief did not address the issue of whether general jurisdiction existed under Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984). It is well settled that where a defendant has “continuous and systematic general business contacts” with the forum state, the court may exercise “general” jurisdiction over any action brought against that defendant, even if a particular cause of action did not arise out of the defendant’s in-state activities. Luv N’ Care Ltd. v. Insta–Mix, Inc., 438 F .3d 465, 469 (5th Cir.2006) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. at 414). Establishing general jurisdiction is quite difficult, and the Texas court may well have reached the same result even if given a full picture of Norwood’s contacts with Texas. Regardless, Norwood’s brief on this issue is vague enough that this court cannot conclude, based upon the limited evidence before it, that his representation that plaintiff could refile his suit elsewhere did not play a role in the Texas court’s ruling.

 

Presumably, Norwood would not have represented that Ramirez’s action could be refiled after dismissal if it did not believe it would have an impact on the Texas court’s ruling.FN5 It is not clear to this court why he should receive the benefit of the doubt in this regard, since he is the one who made false representations to the Texas court in the first place. Still, the court is cognizant of the fact that its equitable powers under these circumstances have their limits, and it finds the proof and briefing which is presently before it to be insufficient to allow it to make a decision either way. It appears to the court that potential options for barring the raising of a statute of limitations defense in this case include the doctrines of judicial or equitable estoppel. Each of these doctrines has certain specific requirements, relating largely to whether either a court or a party relied to their detriment on a particular representation, and it is not clear to this court at this juncture whether these requirements are met. The court concludes, however, that this inquiry is (at least potentially) a fact-intensive one and that the parties should first conduct limited discovery on this issue prior to submitting revised briefing. This briefing should be a full summary judgment briefing, and it should include all relevant orders and proof from the Texas proceedings, as well as any proof relevant to the issue of reliance by the Texas court or by the plaintiffs (or their counsel) in this case.

 

FN5. Defendants note that Norwood made this representation in the portion of his brief which alternatively argued that the case should be dismissed based upon forum non conviens. It is not clear to this court why this makes a significant difference, since the Texas court was nevertheless advised of this erroneous contention.

 

In their revised briefing, the court would also like the parties to brief the issue of whether it has the inherent judicial authority to preclude a certain defense from being raised in order to protect the integrity of the judicial process. It strikes the court that, regardless of whether the Texas court, the plaintiffs or their counsel relied upon Norwood’s statement, the facts remain that 1) Norwood did, in fact, assure the Texas court that the action could be refiled if dismissed 2) the statement was false at the time Norwood made it and 3) he now seeks to assert the same statute of limitations defense which, he assured the Texas court, would not be an issue if the case were dismissed.

 

*5 The reliance interests protected by the doctrines of judicial and equitable estoppel are important ones, but so is the basic integrity of the judicial process. It is certainly arguable that allowing Norwood to raise the statute of limitations defense under the unique circumstances of this case would be an insult to the integrity of that process. It should also be noted that the “harm” that Norwood would suffer if his statute of limitations defense were disallowed would be that a case which was timely filed originally would be allowed to proceed on its merits, just as he assured the Texas court it would. Trying cases on their merits is, of course, the basic function of this court, and its natural judicial instinct is to perform this function in this case, if considerations of law and equity permit it to do so. It is not clear at this juncture whether they do.

 

After discovery, this court will likely hold a hearing in this regard so that it is able to get a full picture of the facts relevant to this issue. The court suggests that the parties also consider using the discovery period to enter into settlement negotiations. It seems clear that there is a considerable uncertainty looming over these proceedings, and, even if this court decides that considerations of equity should bar defendant from raising a statute of limitations defense, the Fifth Circuit may not agree. Accordingly, it may benefit all parties to seek to remove the uncertainty in this regard by making a candid evaluation of the strengths and weaknesses of their legal positions and trying to resolve this matter accordingly.

 

Regardless, the court finds a Rule 12 motion to dismiss to not be the proper context in which to decide these difficult equitable issues, and there is insufficient evidence in the record to allow the court to treat it as a summary judgment motion. Defendants’ motion to dismiss [8–1]will therefore be dismissed without prejudice to be refiled as a summary judgment motion following limited discovery on any issues relevant to this motion. Plaintiffs’ motion to strike defendants’ rebuttal brief, or alternatively, to file a sur-rebuttal brief is denied.FN6

 

FN6. One obstacle plaintiffs face in obtaining relief from the court are the actions of their counsel, who failed, on two occasions, to submit a sur-rebuttal brief when he had specifically represented to the court that he would. As sanction for same, the court will disallow the filing of a sur-rebuttal brief, where it would otherwise have been freely granted.

 

So ordered.

United States District Court, S.D. West Virginia.

Larry BROWN and Rosanna Brown, Plaintiffs,

v.

CMH MANUFACTURING, INC. a foreign corporation, and CMH Homes, Inc. a foreign corporation, and Vanderbilt Mortgage and Finance, Inc. a foreign corporation, Defendants.

 

Civil Action No. 2:13–31404.

Signed Aug. 29, 2014.

 

David L. Grubb, Kristina Thomas Whiteaker, The Grubb Law Group, Charleston, WV, for Plaintiffs.

 

Jason J. Stemple, Duffield Lovejoy & Stemple, Huntington, WV, for Defendants.

 

MEMORANDUM OPINION AND ORDER

JOHN T. COPENHAVER, JR., District Judge.

*1 Pending is the defendants’ collective motion to compel arbitration, filed December 9, 2013.

 

I. Background

On March 18, 2011, Larry Brown and Rosanna Brown (the “Browns”) purchased a manufactured home from defendant CMH Homes, Inc. (“CMH Homes”).FN1 The home was made by defendant CMH Manufacturing, Inc. (“CMH Manufacturing”). The purchase was financed through defendant Vanderbilt Mortgage and Finance, Inc. (“Vanderbilt”). Compl. ¶¶ 5, 7, 11, 14. The Browns signed two agreements as part of the purchase: a Sales Agreement and a Manufactured Home Retail Installment Contract and Disclosure Statement (the “Finance Agreement”). Defs.’ Mot. Compel Arbitration, Exs. 1–2.

 

FN1. The Seller’s name on both the Sales agreement and the financing agreement is “Clayton Homes Danville, WV,” and signed on behalf of that entity by Lee Smell, but the parties treat the sale as having been made by CMH Homes.

 

The Finance Agreement provides that the Browns will pay for the manufactured home in monthly installments over a period of 20 years and that the Browns grant the Seller a first priority security interest in the manufactured home, which may be enforced upon default by repossession or judicial power or both. At the end of the Finance Agreement the Seller assigns “this Contract, together with Seller’s rights, title and interests in the Collateral … to Vanderbilt ….“ Finance Agreement 10.

 

The Finance Agreement contains an arbitration provision that, among other things, states:

 

Buyer and Seller (sometimes called the ‘Parties’) agree to mandatory, binding arbitration (‘Arbitration’) of all disputes, claims [and] controversies … arising from or relating to this Contract, any product/goods, services, insurance, or real property (including improvements to the real property) sold or financed under this Contract, any events leading up to this Contract, the collection and servicing of this Contract, and the interpretation, scope, validity or enforceability of this Contract (with the exception of this agreement to arbitrate, the ‘Arbitration Agreement’). The interpretation, scope, validity or enforceability of this Arbitration Agreement or any clause or provision herein and the arbitrability of any issue shall be determined by a court of competent jurisdiction….

 

If Buyer has Claims against others (each, a ‘Third Party’) related to or arising from facts or circumstances covered by this Arbitration Agreement (including, but not limited to (i) the design, construction and manufacture of the Manufactured Home, (ii) the advertising and the sale of the Manufactured Home, (iii) the delivery or the installation of the Manufactured Home, and (iv) insurance covering the Manufactured Home or Buyer, including title insurance, where applicable (each, a ‘Related Claim’)), then the Buyer and Seller agree to consolidate the Arbitration of Buyer’s Claims against Seller, brought on an individual basis, with the Arbitration of any and all Related Claims, brought on an individual basis, into one Arbitration to be governed by this Arbitration Agreement, provided, however, that the Third Party must agree to be joined in the Arbitration of the Related Claims under this Arbitration Agreement.

 

*2 …

 

The Arbitration shall be governed by and conducted under: (a) the Federal Arbitration Act, 9 U.S.C. §§ 1_9; (b) the arbitration rules (‘Arbitration Rules’) of the American Arbitration Association (‘AAA’)(the ‘Arbitration Administrator’) in effect at the time Arbitration is requested, at the election of the Party filing for Arbitration; and (c) this Arbitration Agreement…. After the arbitrator is selected, the Arbitrator, in accordance with the Arbitration Rules, will set a reasonable schedule, in light of the nature and complexity of the Claims, for the Arbitration and discovery, including any depositions, the exchange of written documents, the final deadline for discovery prior to the Arbitration, and other discovery matters addressed in the Arbitration Rules.

 

Finance Agreement 8 (emphasis in original).

 

Although the Sales Agreement itself is silent regarding arbitration, the Finance Agreement, as above quoted, expressly covers in arbitration all disputes arising from or relating to the Finance Agreement and any product or services sold or financed under the Finance Agreement, including claims by the Browns against the manufacturer.

 

After moving in, the plaintiffs eventually discovered a “Homeowner’s Manual” inside a kitchen drawer of their new home. Larry Brown Aff. ¶ 18–19. They had not seen this manual before they purchased the home. Id. ¶ 20. In addition to information regarding general home maintenance, operation, safety, and moving, the manual contained a “Limited One Year Warranty and Arbitration Agreement.” Defs.’ Mot. Compel Arbitration, Ex. 4, at 34.

 

The Browns allege that the home they received did not conform to express and implied warranties. Compl. ¶ 2. They do not elaborate on the problems with their home other than stating that “[t]he nonconformities discovered by the Plaintiffs involved substandard, defective and/or negligent manufacture, delivery, and installation.” Compl. ¶ 17. The plaintiffs accepted the home assuming that some of the defects would be cured, but also were unable to discover some of the defects until after they began living in the home. Compl. ¶ 28, 31. The Browns state that they notified CMH Homes and CMH Manufacturing about the problems and to request repairs, but that those defendants failed to sufficiently repair the home to conform with the warranties after being given “numerous opportunities to correct the defects”. Compl. ¶¶ 19, 29. The Browns bring ten claims, all under West Virginia state law and connected to the alleged breach of warranties or the fairness of the contracts.

 

After removing this action from the Circuit Court of Boone County, the defendants moved to compel arbitration. In the defendants’ estimation, both the arbitration agreement in the Finance Agreement, and the arbitration provision in the Homeowner’s Manual compel arbitration. The defendants assert that claims against CMH Homes, treated as signatory to the Finance Agreement, should be arbitrated because of the arbitration clause in the Finance Agreement, and that claims against Vanderbilt and CMH Manufacturing should be arbitrated based on a theory of equitable estoppel.

 

*3 In response, the Browns insist that they had no knowledge of any of the arbitration agreements, were not given copies of the Sales Agreement or Finance Agreement, and that the arbitration provisions were both procedurally and substantively unconscionable. Although they often do not specify which arbitration provision they are discussing, they argue that the arbitration clauses are procedurally unconscionable because they allegedly limit discovery and because the arbitration agreements designate the American Arbitration Association (“AAA”), which in their view is biased, to conduct the arbitration. They also argue that the arbitration agreements are substantively unconscionable because, in the plaintiffs’ estimation, they do not apply equally to the buyer and seller. Additionally, the Browns respond that both arbitration clauses are not valid because the Browns did not voluntarily, knowingly, and intelligently waive their right to a jury trial. Inasmuch as the arbitration agreement in the Finance Agreement alone suffices to resolve the question of whether arbitration is required here, the court does not further address the role of the Homeowner’s Manual arbitration provision.

 

The court has jurisdiction over this case in diversity. 28 U.S.C. § 1332 (2012). There is no dispute that the plaintiffs are citizens of Logan County, West Virginia, and the defendants are all citizens of Tennessee. Compl. ¶¶ 4–8; Not. Removal ¶¶ 4–6. The purchase price of the home was $57,597 (absent the finance charges of over $65,000) and the plaintiffs seek cancellation of the contract.FN2 When a party seeks cancellation of a contract, it is the entire price of the contract that is in controversy. See, e.g., Mullins v. Harry’s Mobile Homes, Inc., 861 F.Supp. 22, 24 (S.D.W.Va.1994). The plaintiffs also allege various violations of the West Virginia Consumer Credit and Protection Act (“WVCCPA”) for which monetary relief is sought, request attorney’s fees pursuant to W. Va.Code § 46A–5–104, and seek punitive damages. Although valuations of these forms of relief are not yet particularized, the court is satisfied that the amount in controversy exceeds $75,000 after adding these three categories of relief to the contract sale price of $57,597. See, e.g., Woodrum v. Mapother and Mapother P.S.C., Inc., Civ. Action No. 2:10–0478, 2010 WL 3943732, *6 (S.D.W.Va. Oct. 5, 2010) (estimating attorney’s fees in an action asserting WVCCPA claims as $25,000). The court thus has jurisdiction.FN3

 

FN2. The complaint does not specify whether the plaintiffs seek rescission of the Finance Agreement, the Sales Agreement, or both.

 

FN3. The defendants argue in the notice of removal that federal question jurisdiction also exists. See 28 U.S.C. § 1331 (2012). Specifically, they state that this action is subject to the Carmack Amendment of the Interstate Commerce Commission Act, 49 U.S.C. § 14706 (2006), because the plaintiffs allege damage to the home during the delivery. Section 14706 permits actions in federal court against delivering carriers who damage goods and also travel between states, among other things. See 49 U.S.C. §§ 13501, 14706. Yet the plaintiffs’ complaint contains no claim under § 14706 or any other federal statute. It is fundamental that federal question jurisdiction may not be premised on federal defenses, but only on federal claims in the complaint. See, e.g., Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 830 (2002).

 

II. Analysis

The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1–16, espouses a “liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary.” Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24 (1983). In this circuit, under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1–16,

 

a litigant can compel arbitration … if he can demonstrate “(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.”

 

*4 Adkins v. Labor Ready, Inc., 303 F.3d 496, 500–01 (4th Cir.2002) (quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir.1991)). The Browns do not contest the defendants’ claims that the first, third, and fourth elements of this test are met, and the court finds that they are established. The dispute is only over the second element, that is, whether any agreement covers the disputes between the parties and includes an arbitration provision.

 

Whether a party agreed to arbitrate a particular dispute is generally a question of contract formation under state law. Adkins, 303 F.3d at 501 (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). “Although federal law governs the arbitrability of disputes, state-law principles resolve issues regarding the formation of contracts.” American Gen. Life and Accident Ins. Co. v. Wood, 429 F.3d 83, 87 (4th Cir.2005) (citing Hill v. Peoplesoft USA, Inc., 412 F.3d 540, 543 (4th Cir.2005)). “[I]n applying general state-law principles of contract interpretation to the interpretation of an arbitration agreement … due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.”   Volt Information Scis., Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 475–76 (1989).

 

The court ultimately concludes that the arbitration clause in the Finance Agreement requires the court to compel arbitration with respect to all of the Browns’ claims. As a result, the court does not address the Sales Agreement or the Homeowner’s Manual in further detail. As previously noted, throughout the Browns’ response, they refer to the “arbitration clause” without specifying if they are referring to the clause in the Finance Agreement or in the Homeowner’s Manual. The court will address all of the plaintiffs’ arguments as if made with respect to the arbitration clause in the Finance Agreement. Further references by the court to the “Arbitration Agreement” refer to the arbitration agreement contained within the Finance Agreement.

 

A. Parties Bound to Arbitration

The defendants raise the questions of what parties are bound to arbitrate and whether the Arbitration Agreement covers the disputes at issue. As noted, the Finance Agreement was originally between CMH Homes as “Seller” and the Browns as the “Buyers”, but CMH Homes immediately assigned it to Vanderbilt. CMH Manufacturing was not a party to the Finance Agreement. The Arbitration Agreement in the Finance Agreement states the “Buyer and Seller … agree to mandatory, binding arbitration of all disputes … including … contract and warranty claims … arising from or relating to this Contract [and] any products/goods … sold or financed under this contract ….“ Finance Agreement 8. The Browns’ complaint against the defendants concerns warranties in the manufacture and delivery of the home, and thus it is covered by the plain language of the arbitration agreement.

 

*5 With respect to claims against Third Parties, the Arbitration Agreement states, as quoted at length above, that “[i]f Buyer has Claims against others (each, a ‘Third Party’) related to or arising from facts or circumstances covered by this Arbitration Agreement (including, … the design, construction and manufacture of the Manufactured Home … [and] the delivery or the installation of the Manufactured Home … (each, a ‘Related Claim’)) then the Buyer and Seller agree to consolidate the Arbitration of Buyer’s Claims against Seller, with the Arbitration of any and all Related Claims … into one Arbitration to be governed by this Arbitration Agreement, provided, however, that the Third Party must agree to be joined in the Arbitration of the Related Claims under this Arbitration Agreement.” Finance Agreement 8 (emphasis in original). By the terms of the Arbitration Agreement, the plaintiffs agreed to include in arbitration third parties—for instance, CMH Manufacturing—against whom the plaintiff brings claims related to the manufacture and delivery of the home. All of the defendants against whom the plaintiffs bring a claim—CMH Homes, CMH Manufacturing, and Vanderbilt—consent to arbitration, as they have filed a motion to compel arbitration.

 

Accordingly, the court finds that by the terms of the Finance Agreement, the Browns have agreed to arbitrate all of the disputes in their complaint. The plaintiffs do not offer, and the court does not find, any reason why this provision cannot be enforced by the defendant who is a party to the agreement. Note that the court need not resolve whether it is CMH Homes, the original “Seller,” or CMH Homes’ assignee, Vanderbilt, who has the power to enforce the Finance Agreement as a party to that agreement, because there is no question that at least one of the two has the right to do so.FN4

 

FN4. The court also notes that the defendants argue that an equitable estoppel theory, which allows nonsignatories to contracts to compel arbitration, applies here. However, the court need not resort to equity because the contract language itself specifies that the third party claims may be directed to arbitration, and the contract may be enforced by a party to the contract.

 

Consequently, the court finds that the claims against all three defendants—CMH Homes, CMH Manufacturing, and Vanderbilt—are covered by the language in the arbitration agreement.

 

B. Unconscionability

While the specific claims brought by the plaintiffs are covered by the arbitration agreement, a contract is not enforceable if it is unconscionable. Contracts that show an “overall and gross imbalance,” or appear to be exceptionally one-sided, are unconscionable. Syl. pt. 12, Brown v. Genesis Healthcare Corp. (Brown I), 724 S.E.2d 250, 261, 228 W. Va. 646, 657 (2011), overruled in part on other grounds sub nom. Marmet Health Care Ctr. v. Brown, 132 S.Ct. 1201 (2012).

 

Under West Virginia law, a contract term must be both procedurally and substantively unconscionable for a court to refuse to enforce it. State Ex rel. Richmond Am. Homes of W. Va., Inc v. Sanders, 717 S.E.2d 909, 920, 228 W. Va. 125, 136 (2011). “However, both need not be present to the same degree. Courts should apply a ‘sliding scale’ in making this determination: the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the clause is unenforceable, and vice versa.” Brown v. Genesis Healthcare Corp. (Brown II), 729 S.E.2d 217, 221, 229 W. Va. 382, 386 (2012) (quoting Syl. pt. 20, Brown I, 724 S.E.2d at 262, 228 W.Va. at 658).

 

*6 “Procedural unconscionability is concerned with inequities, improprieties, or unfairness in the bargaining process and formation of the contract. Procedural unconscionability involves a variety of inadequacies that results in the lack of a real and voluntary meeting of the minds of the parties, considering all the circumstances surrounding the transaction.” Syl. Pt. 10, Brown II, 729 S.E.2d 217, 221, 229 W. Va. 382, 386 (2012). “Substantive unconscionability involves unfairness in the contract itself and whether a contract term is one-sided and will have an overly harsh effect on the disadvantaged party.” Syl. Pt. 19, Brown I, 724 S.E.2d at 262, 228 W. Va. at 658. “[T]he paramount consideration is mutuality,” where there must be “at least a ‘modicum of bilaterality’ to avoid unconscionability.” Id.

 

The Browns give three reasons as to why the Arbitration Agreement is unconscionable: (1) the discovery permitted in this arbitration is not as extensive as discovery provided for by the Federal Rules of Civil Procedure, (2) the Arbitration Agreement designates the AAA to conduct the arbitration, and (3) the Arbitration Agreement lacks mutuality because only the Browns are required to submit to arbitration. They also note, without separately identifying them as arguments of unconscionability, that the Arbitration Agreement was a contract of adhesion, that they had no knowledge of the Arbitration Agreement, that the meaning of arbitration was not explained to them, and that their first opportunity to review and sign the Finance Agreement was after the home had already been ordered and while it was being contemporaneously delivered.

 

1. Procedural Unconscionability

The court first notes that plaintiffs misidentify some of their arguments as arguments of procedural unconscionability. The plaintiffs state that the Arbitration Agreement is procedurally unconscionable because it limits discovery and because it provides that arbitration will be conducted by an arbitrator from the AAA. But, as noted, procedural unconscionability concerns not the procedure of arbitration defined by an arbitration agreement, but the process surrounding the formation of the contract. Accordingly, the court will consider these arguments when it addresses substantive unconscionability below.

 

The plaintiffs do raise, however, that they did not know about the Arbitration Agreement when they signed the Finance Agreement, that they signed a contract of adhesion, that arbitration was not explained to them, that they did not sign the Finance Agreement until the time that the home was being contemporaneously delivered, and that they were not given a copy of the Finance Agreement after signing it. These constitute arguments about procedural unconscionability.

 

Generally, procedural unconscionability turns on “the age, literacy, or lack of sophistication of a party; hidden or unduly complex contract terms; the adhesive nature of the contract; and the manner and setting in which the contract was formed, including whether each party had a reasonable opportunity to understand the terms of the contract.” Syl. pt. 10, Brown II 729 S.E.2d at 221, 229 W. Va. at 386.

 

*7 Although the Browns argue that the Finance Agreement was a contract of adhesion, more is required for a finding of procedural unconscionability.   State ex rel. Dunlap v. Berger, 567 S.E.2d 265, 274–75, 211 W. Va. 549, 557–58 (2002) (citing Am. Food Mgmt., Inc. v. Henderson, 434 N.E.2d 59, 62–63, 105 Ill.App.3d 141, 145 (Ill.App.Ct.1982) (“[f]inding that there is an adhesion contract is the beginning point for analysis, not the end”). But the Browns offer no more, as their other arguments for procedural unconscionability—which mostly concern whether they were given the opportunity to understand the Arbitration Agreement—are without merit.

 

The arbitration language appears plainly in the Finance Agreement. Finance Agreement 8–9. The Browns do not claim that, when signing the contract, anyone prohibited them from reading the terms of the contract. The Browns are thus presumed to have read the terms of the contract and will be bound by them, even if they did not actually take the time to do so. New v. Gamestop, Inc., 753 S.E .2d 62, 76, 232 W. Va. 564 (2013); State ex rel. Johnson Controls, Inc. v. Tucker, 729 S.E.2d 808, 820, 229 W. Va. 486, 498 (2012) (“we see nothing in the record to indicate that the contract was formed in a manner or setting that prevented [the plaintiff] from having a reasonable opportunity to understand the terms of the arbitration clause.”); Miller v. Equifirst Corp. of WV, Civ. Action No. 2:00–0335, 2006 WL 2571634, at *10 (S.D.W.Va. Sept. 5, 2006) (Copenhaver, J.) (“Plaintiffs have failed to identify any conduct on the part of the closing agent … that prevented them from reading and reviewing the … Arbitration Riders.”). Their claim that they were not told about the Arbitration Agreement is defeated because there is ordinarily no duty for the party with greater bargaining power to explain the terms of the contract to the party with lesser bargaining power. Adkins v. Labor Ready, 185 F.Supp.2d 628, 637–38 (S.D.W.Va.2001). Moreover, the Arbitration Agreement itself described arbitration in plain English:

 

Arbitration is a process in which a neutral arbitrator decides a dispute instead of a judge or jury. Each side has an opportunity to present evidence to the Arbitrator, both in writing and through witnesses. Arbitration proceedings are less formal than court trials. Other rights that the Parties have in court may not be available in Arbitration. The information that can be obtained in discovery from each other or from third persons in Arbitration is generally more limited than in a lawsuit. An Arbitrator will decide the case by issuing a written decision called an “award.” Once confirmed, an award may be enforced as a court judgment in accordance with federal or state law. The circumstances under which a court can review an award are more limited in Arbitration.

 

Finance Agreement 8. The Agreement also warned the Browns that:

IF BUYER DOES NOT UNDERSTAND ANY OF THE TERMS OR PROVISIONS OF THIS ARBITRATION AGREEMENT, INCLUDING ADVANTAGES OR DISADVANTAGES OF ARBITRATION, THEN BUYER SHOULD SEEK INDEPENDENT LEGAL ADVICE BEFORE SIGNING THIS CONTRACT.

 

*8 Finance Agreement 9. Similarly, their claim that they were not given a copy of the Finance Agreement after signing does not indicate that the agreement was procedurally unconscionable, inasmuch as the contract was already formed at that point. “Procedural unconscionability is concerned with inequities, improprieties, or unfairness in the bargaining process and formation of the contract.” Brown II, 729 S.E.2d at 227, 229 W.Va. at 393 (quoting Syl. pt. 17, Brown I, 724 S.E.2d. at 261, 228 W.Va. at 657). After signing, the “bargaining process and formation of the contract” were over. The Browns also argue that they did not have time to review the contract because the home was being contemporaneously delivered to their plot while they were signing the documents at a public library. The plaintiffs fail to explain how concurrent delivery of the home prevented them from reading the arbitration provision and rejecting the delivery if they chose to do so.

 

2. Substantive Unconscionability

 

a. Discovery

 

The Browns argue that the discovery limitations contained in the Arbitration Agreement make it unconscionable. The plaintiffs wish to have the formal discovery processes afforded to them by the Federal Rules of Civil Procedure rather than the discovery allowed by the Arbitration Agreement. The Agreement provides that:

 

After the Arbitrator is selected, the Arbitrator, in accordance with the Arbitration Rules [of the AAA], will set a reasonable schedule, in light of the nature and complexity of the Claims, for the Arbitration and discovery, including any depositions, the exchange of written documents, the final deadline for discovery prior to the Arbitration, and other discovery matters addressed in the Arbitration Rules [of the AAA].

 

Finance Agreement 8. The Browns claim that this is unconscionable because “[c]onsumer cases tend to be fact-intensive, requiring extensive deposition and document production in order to show, inter alia, pattern and practice to support fraud and/or unfair and deceptive practices claims.” Resp. 11.

 

The informal discovery afforded in arbitration is one of the reasons that parties seek to arbitrate in the first place. “Limited discovery rights are the hallmark of arbitration …. The fact that an arbitration may limit a party’s discovery rights is not ‘substantive unconscionability.’ If it were, every arbitration clause would be subject to an unconscionability challenge on that ground.” State ex rel. Ocwen Loan Servicing, L .L.C. v. Webster, 752 S.E.2d 372, 398, 232 W. Va. 341, 367 (2013) (quoting Coast Plaza Doctors Hosp. v. Blue Cross of Cal., 83 Cal.App. 4th 677, 689–90, 99 Cal.Rptr.2d 809, 818–19 (Cal Ct.App.2000)). The court also notes that while the plaintiffs complain that depositions will not occur in arbitration, the arbitration provision expressly provides for depositions. Finally, the discovery limitations apply equally to plaintiffs and defendants. The informal discovery in arbitration does not make the Arbitration Agreement unconscionable. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991).

 

b. Arbitration Conducted Through the AAA

*9 The Browns assert that the Arbitration Agreement is unconscionable because it designates that arbitration shall be conducted through the AAA. The Agreement specifies that: “The Arbitration shall be governed by and conducted under … the arbitration rules of the American Arbitration Association (“AAA”) … and … this Arbitration Agreement.” Finance Agreement 8. The plaintiffs contend that the AAA is biased in favor of defendants because the AAA has an incentive to compete with other arbitration providers for designation in form contracts and, in order to obtain and keep an entity’s arbitration business, AAA arbitrators are less apt to give favorable awards to consumers; the AAA’s arbitrators are allegedly predominately corporate defense attorneys, and the AAA is allegedly paid on a fee-per-case basis for each arbitration, thereby providing a further incentive to favor the entity that ensures their use and employment by writing them into the form contract of adhesion.

 

In support, the plaintiffs cite Dunlap, 567 S.E.2d at 280 n. 12, 211 W. Va. at 564 n. 12, and a summary affirmance in Toppings v. Meritech Mort. Servs., 569 S.E.2d 149, 149, 212 W. Va. 73, 73 (2002) (per curiam). In particular, the Browns cite the following dictum from a footnote of Dunlap:

 

We also observe that neutrality in the selection and composition of any forum or tribunal is essential to the legal validity of contractual provisions providing for dispute resolution mechanisms, particularly when such provisions are placed in contracts of adhesion like the one signed [here]. A functional analysis of the West Virginia cases which do not favor arbitration demonstrates that this Court would not countenance an arbitration provision by which the parties agree that all disputes will be arbitrated by a panel chosen exclusively by one of the parties. The right to appoint one’s own arbitrator is the essence of tripartite arbitration. We have held that an impermissible structural unfairness in a tribunal, be it judicial or arbitral, would be presumed where the decisionmaker is designated by one of the parties to a dispute and where the person making the decisions is compensated on a fee-per-case basis. Consideration of this neutrality principle has been recognized by courts addressing the enforceability of an arbitration requirement.

 

Dunlap, 211 W. Va. at 564 n. 12, 567 S.E.2d at 280 n. 12 (2002) (internal citations and quotation marks omitted). The plaintiffs similarly rely on Toppings, which concludes, based on the Dunlap footnote alone, that the following certified question be answered in the affirmative:

Whether a lender’s form compulsory arbitration clause or rider, which mandates that all disputes arising out of a consumer transaction be submitted to a lender-designated decision maker compensated through a case-volume fee system whereby the decision maker’s income as an arbitrator is dependent on continued referrals from the creditor, so impinges on neutrality and fundamental fairness that it is unconscionable and unenforceable under West Virginia law.

 

*10 Toppings, 569 S.E.2d at 149, 212 W. Va. at 73.

 

The plaintiffs’ argument fails because decisions by the West Virginia Supreme Court of Appeals do not abrogate the authority of the United States Supreme Court on matters of arbitration inasmuch as the FAA preempts state law in these areas. “West Virginia precedent generally barring state claims from arbitration must be necessarily circumscribed…. To the extent that Dunlap intends to fashion a broad prohibition against the arbitrability of state-law claims, such a ruling, whether dicta or otherwise, cannot contravene the FAA.” Wood, 429 F.3d at 90. See also Marmet, 132 S.Ct. at 1202; Miller, 2006 WL 2571634, at * 14. “[A] court may not ‘rely on the uniqueness of an agreement to arbitrate as a basis for a state-law holding that enforcement would be unconscionable, for this would enable the court to effect what … the state legislature cannot.’ “ AT & T Mobility, LLC v. Concepcion, 131 S.Ct. 1740, 1747 (2011) (quoting Perry v. Thomas, 482 U.S. 483, 493 n. 9 (1987)).

 

The United States Supreme Court has more than once stated “[w]e decline to indulge the presumption that the parties and arbitral body conducting a proceeding will be unable or unwilling to retain competent, conscientious, and impartial arbitrators.” Gilmer 500 U.S. at 30 (quoting Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth Inc., 473 U.S. 614, 634 (1985)). In addition, the court finds that the Consumer Arbitration Rules of the AAA, which appear to apply in this instance, allow the parties to agree to a process for appointing an arbitrator. American Arbitration Association, Consumer Arbitration Rules, R–16(a) (effective Sept. 1, 2014). If the parties cannot agree, the AAA will appoint an arbitrator from its rolls, but the rules afford the plaintiff an opportunity to object to that arbitrator and obtain review before the AAA of that arbitrator’s partiality. Id. R–19(b). And, the rules require the arbitrator to disclose possible conflicts of interest. Id. R–18. The court also notes that under these rules, if the arbitrator holds hearings—which the plaintiffs may request—the arbitrator is paid for the time spent on the case rather than a flat fee for the case. Id. at R–29, p. 34. Provisions similar to these have been ruled permissible. See Gilmer, 500 U.S. at 30 (arbitration rules that, among other things, allowed challenges of the arbitrator’s neutrality, for cause, and required disclosure of conflicts); Miller, 2006 WL 2571634, at * 14 (National Arbitration Forum Rules). While the court appreciates the healthy skepticism articulated by the plaintiffs, the court concludes that, under the binding authority cited, the Arbitration Agreement is not rendered unconscionable simply because the AAA and its arbitration rules apply in this setting.FN5

 

FN5. The plaintiffs also briefly argue that the Arbitration Agreement is unconscionable because it does not allow for the consumer to opt out of the arbitration agreement. However, the basis for the plaintiffs’ claim is that there are cases finding an arbitration agreement with an opt-out clause not unconscionable. The plaintiff does not cite any cases where an Arbitration Agreement was unconscionable because there was no opt-out provision.

 

c. Mutuality

The Browns contend that the Arbitration Agreement is not mutual, because it requires the Browns to submit their claims to arbitration, but allows the

 

*11 Seller [to] use judicial process (filing a lawsuit): (a) to enforce the security interest granted in this Contract or any related mortgage or deed of trust, and (b) to seek preliminary relief, such as a restraining order or injunctive relief, in order to preserve the existence, location, condition, or productive use of the Manufactured Home or other Collateral.

 

Finance Agreement 9. The plaintiffs cite Noohi v. Toll Brothers, 708 F.3d 599, 610 (4th Cir.2010), a case in which the court determined that the arbitration agreement bound only the plaintiffs to arbitration, and thus lacked mutuality of consideration. The court found that the arbitration provision lacked mutuality because it had the effect of only binding the buyer to submit his claims to arbitration, while the seller was able to file all its claims in court. Id. at 610–11. In contrast, the provision in this case excludes from arbitration only certain identified claims brought by the Seller that relate to recovery of the collateral. More important, as the defendants have pointed out, the West Virginia Supreme Court of Appeals has already determined that an arbitration agreement that excludes only those claims by which the holder of a security interest in property attempts to recover it does not lack mutuality.   Webster, 752 S.E.2d at 396, 232 W. Va. at 365 (quoting Miller, 2006 WL 2571634 at *11 (“The exception for proceedings related to foreclosure is one that is not only common in arbitration agreements but quite necessary in order to effectuate foreclosure and a retaking of the subject property by lawful processes, where needed, without breach of the peace.”). Accordingly, the court finds that the contract is not unconscionable for a lack of mutuality.

 

3. Jury Trial Waiver

Apart from their unconscionability arguments, the Browns contend that the Arbitration Agreement is unenforceable because they did not knowingly and intelligently waive their right to a jury trial. This argument is without merit inasmuch as “the loss of the right to a jury trial is a necessary and fairly obvious consequence of an agreement to arbitrate.” Wood, 429 F.3d at 91 n. 6 (quoting Snowden v. CheckPoing Check Cashing, 290 F.3d 631, 638 (4th Cir.2002)).FN6

 

FN6. The plaintiffs briefly argue that the contract is also unenforceable because it contains a promise by the buyers to pursue claims individually rather than as a class. It is plain that such clauses do not render Arbitration Agreements unenforceable. American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304, 2310–11 (2013); Webster, 232 W. Va. at 390.

 

IV.

The court concludes that the Arbitration Agreement contained in the Finance Agreement is enforceable.

 

It is ORDERED that the plaintiffs submit this case to arbitration in accordance with the terms of the Finance Agreement. It is further ORDERED that this action be, and hereby is, stayed and retired to the inactive docket pending the arbitral decision or abandonment of that forum and this action, whichever first occurs. Counsel are directed to file joint status reports quarterly beginning October 1, 2014, respecting progress on the matter.

 

The Clerk is requested to transmit this written opinion and order to counsel of record and any unrepresented parties.