Horizon Ventures of West Virginia, Inc., a West Virginia Corporation v. Bituminous Power Partners, L.P. ( 2021 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2021 Term
FILED
_____________
April 1, 2021
released at 3:00 p.m.
No. 19-0171 EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
_____________ OF WEST VIRGINIA
HORIZON VENTURES OF WEST VIRGINIA, INC.,
A WEST VIRGINIA CORPORATION,
Plaintiff Below, Petitioner
V.
AMERICAN BITUMINOUS POWER PARTNERS, L.P.,
Defendant Below, Respondent
________________________________________________
Appeal from the Circuit Court of Marion County
The Honorable Patrick N. Wilson, Judge
Civil Action No. 18-C-76
REVERSED AND REMANDED
________________________________________________
Submitted: February 9, 2021
Filed: April 1, 2021
Mark A. Kepple John F. McCuskey
Bailey & Wyant, PLLC Roberta F. Green
Wheeling, West Virginia Shuman, McCuskey, & Slicer PLLC
Attorney for the Petitioner Charleston, West Virginia
Attorneys for the Respondent
CHIEF JUSTICE JENKINS delivered the Opinion of the Court.
JUSTICES HUTCHISON and WOOTON concur and reserve the right to file
concurring opinions.
SYLLABUS BY THE COURT
1. “A circuit court’s entry of summary judgment is reviewed de novo.”
Syllabus point 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
2. “‘A motion for summary judgment should be granted only when it is
clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not
desirable to clarify the application of the law.’ Syllabus Point 3, Aetna Casualty & Surety
Co. v. Federal Insurance Co. of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963).”
Syllabus point 1, Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d 247 (1992).
3. “Summary judgment is appropriate if, from the totality of the evidence
presented, the record could not lead a rational trier of fact to find for the nonmoving party,
such as where the nonmoving party has failed to make a sufficient showing on an essential
element of the case that it has the burden to prove.” Syllabus point 2, Williams v. Precision
Coil, Inc., 194 W. Va. 52, 459 S.E.2d 329 (1995).
4. “If the moving party makes a properly supported motion for summary
judgment and can show by affirmative evidence that there is no genuine issue of a material
fact, the burden of production shifts to the nonmoving party who must either (1) rehabilitate
the evidence attacked by the moving party, (2) produce additional evidence showing the
existence of a genuine issue for trial, or (3) submit an affidavit explaining why further
i
discovery is necessary as provided in Rule 56(f) of the West Virginia Rules of Civil
Procedure.” Syllabus point 3, Williams v. Precision Coil, Inc., 194 W. Va. 52, 459 S.E.2d
329 (1995).
5. “‘The doctrine of unconscionability means that, because of an overall
and gross imbalance, one-sidedness or lop-sidedness in a contract, a court may be justified
in refusing to enforce the contract as written. The concept of unconscionability must be
applied in a flexible manner, taking into consideration all of the facts and circumstances of
a particular case.’ Syllabus Point 12, Brown v. Genesis Healthcare Corp., 228 W. Va. 646,
724 S.E.2d 250 (2011).” Syllabus point 4, Brown v. Genesis Healthcare Corp., 229 W. Va.
382, 729 S.E.2d 217 (2012).
6. “‘A contract term is unenforceable if it is both procedurally and
substantively unconscionable. 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.’ Syllabus Point
20, Brown v. Genesis Healthcare Corp., 228 W. Va. 646, 724 S.E.2d 250 (2011).”
Syllabus point 9, Brown v. Genesis Healthcare Corp., 229 W. Va. 382, 729 S.E.2d 217(2012).
ii
7. “‘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. These inadequacies include, but are not limited to, 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.’ Syllabus Point 17, Brown v. Genesis Healthcare Corp., 228 W. Va. 646,
724 S.E.2d 250 (2011).” Syllabus point 10, Brown v. Genesis Healthcare Corp., 229
W. Va. 382, 729 S.E.2d 217 (2012).
8. “This State’s public policy favors freedom of contract which is the
precept that a contract shall be enforced except when it violates a principle of even greater
importance to the general public.” Syllabus point 3, Wellington Power Corp. v. CNA
Surety Corp., 217 W. Va. 33, 614 S.E.2d 680 (2005).
9. “‘The judicial power to declare a contract void as contravening sound
public policy “is a very delicate and undefined power,” and should be exercised only in
cases free from doubt. Richmond v. [Dubuque and Sioux City] Railroad Co., 26 Iowa[]
191.’ Syllabus Point 1, Barnes v. Koontz, 112 W. Va. 48, 163 S.E. 719 (1932).” Syllabus
iii
point 4, Wellington Power Corp. v. CNA Surety Corp., 217 W. Va. 33, 614 S.E.2d 680(2005).
iv
Jenkins, Chief Justice:
On June 25, 1987, Petitioner Horizon Ventures of West Virginia (“Horizon”)
and Respondent American Bituminous Power Partners (“AMBIT”) entered into a Contract
and Agreement (“consulting agreement”) whereby Horizon was to “provide expertise and
consulting services” to AMBIT in exchange for the annual sum of $50,000.00 “as long as
[the AMBIT Grant Town Power Plant] continues to produce power.” The parties operated
under this agreement from 1987 until 2018 when AMBIT refused to continue to pay
Horizon. Upon this refusal to pay, Horizon instituted a breach of contract action against
AMBIT. After a limited amount of discovery, in its order dated January 30, 2019, the
circuit court granted AMBIT’s motion for summary judgment finding that the consulting
agreement was substantively unconscionable and violative of public policy. On appeal,
Horizon asserts that the circuit court erred by finding the consulting agreement to be
unconscionable. AMBIT contends to the contrary that the circuit court correctly resolved
the matter by finding the consulting agreement substantively unconscionable and granting
it summary judgment.
Upon careful consideration of the briefs and arguments of counsel, the record
accompanying the appeal, the pertinent facts, and the relevant law, we find that the circuit
court erred in finding the consulting agreement unconscionable without finding both
procedural and substantive unconscionability. Accordingly, we reverse the summary
judgment order and remand the case for further proceedings consistent with this opinion.
1
I.
FACTUAL AND PROCEDURAL HISTORY
The parties entered into a consulting agreement on June 25, 1987. 1 The
relevant portions of the consulting agreement are as follows. AMBIT was “engaged in a
venture of establishing one or more electric power plants in the State of West Virginia[.]”
The parties “negotiated an agreement wherein [Horizon] will provide expertise and
consulting services within its field to [AMBIT] in its projects in West Virginia[.]” In
particular, it was agreed that Horizon
[w]ill perform from time to time upon the reasonable request
of [AMBIT], such public and governmental relations and
liaison functions as are necessary or incident to aiding and
assisting [AMBIT] in locating, permitting, licensing,
developing, maintaining[,] and operating power plants in the
State of West Virginia and will further aid in such other
ventures as locating coal “gob” and all like coal resources when
the same may be needed by [AMBIT].
In exchange for these services, AMBIT agreed to pay an initial sum of $50,000.00 once
AMBIT had completed the construction of its initial power plant, the Grant Town Power
Plant in Grant Town, West Virginia. AMBIT agreed to pay the same $50,000.00 sum each
succeeding year “as long as said power plant continue[d] to produce power.” The
1
Aside from this consulting agreement, in the 1980s Horizon and AMBIT
entered into a separate landlord-tenant lease agreement wherein AMBIT operates the Grant
Town Power Plant on a parcel of property owned by Horizon. See Am. Bituminous Power
Partners, L.P. v. Horizon Ventures of W. Va., Inc., No. 14-0446, 2015 WL 2261649, at *1-
2 (W. Va. May 13, 2015) (memorandum decision). The lease agreement has been amended
and restated on numerous occasions. Id. at *2. The terms of this agreement have no
relevance to the matter presently before us.
2
consulting agreement “set[] forth the entire understanding and agreement between the
parties. It may not be amended, terminated[,] or otherwise changed except by a writing
signed by both parties.” Lastly, the consulting agreement was “binding on the parties [],
their successors[,] and assigns.” 2 The president of AMBIT, Richard J. Halloran (“Mr.
Halloran”), signed the consulting agreement on behalf of AMBIT, and Horizon’s then-
president, Andrew Noshagya, Jr. (“Mr. Noshagya”), signed it on behalf of Horizon. 3
For approximately the next thirty years, the parties operated pursuant to the
consulting agreement. However, by 2017, AMBIT asserts that the parties’ relationship had
deteriorated and Horizon had filed various lawsuits against AMBIT. 4 On December 26,
2017, Horizon sent AMBIT its annual invoice for the $50,000.00, pursuant to the
consulting agreement, requesting that the money be paid no later than January 15, 2018. 5
By letter dated January 27, 2018, AMBIT’s executive director responded to Horizon noting
2
The appendix record before us includes an unexecuted amendment to the
consulting agreement. For the purposes of this appeal, the amendment is not relevant.
The consulting agreement was also signed by Peter A. McGrath, president
3
of Hydro Management Corp. However, this has no relevance to the current appeal.
4
There is a significant amount of discussion throughout the pleadings,
filings, and depositions below that address the litigation history between the parties.
Essentially, AMBIT asserts that over the years Horizon has instituted litigation against it
on several occasions. AMBIT avers that during these times of litigation, Horizon has
disparaged AMBIT and broken any trust between the two entities.
The invoice provides that the payment was due no later than January 15,
5
2017; however, this appears to be a typographical error.
3
that their relationship had become “considerably strained over the past several years due
primarily to the ongoing litigation.” Additionally, AMBIT stated that it
ha[s] been engaged before the [Public Service Commission] in
a battle for [its] very existence, and part of that process has
mandated that [it] review every invoice with an eye to value
for services rendered. With that in mind, we have taken a frank
and full look at the relationship between us and at the
Consulting Agreement. Given the realities of both, we believe
the Consulting Agreement has no value to [AMBIT] and that
it is time to disband the Agreement and simplify our
relationship to just landlord-tenant.
On May 14, 2018, as a result of AMBIT’s failure to pay the annual
$50,000.00, Horizon filed a complaint for breach of contract in the Circuit Court of Marion
County. Essentially, the complaint recounted the terms of the consulting agreement.
Furthermore, the complaint alleged the following: (1) AMBIT has paid the amount due
under the agreement to Horizon each and every year since the parties entered the agreement
in 1987; (2) Horizon “has and remains able and ready to perform under the contract[;]” and
(3) AMBIT has failed to pay Horizon for the current year in breach of the consulting
agreement.
AMBIT responded to the complaint on June 13, 2018, with a motion to
dismiss or, in the alternative, for summary judgment (“motion to dismiss”) pursuant to
Rules 12(b)(6) and 56 of the West Virginia Rules of Civil Procedure. AMBIT articulated
several arguments to support the motion to dismiss, including but not limited to that the
contract at issue was not enforceable because it was unconscionable, violated public policy,
4
and was impossible to perform given that its purpose had been frustrated and the
circumstances between the parties had changed. In reply, Horizon filed a memorandum in
opposition and an affidavit of its current president, Stanley Sears (“Mr. Sears”), stating that
he is familiar with the consulting agreement; that Horizon “stands ready[,] able[,] and
willing to perform in good faith;” and that “the goals of the parties to the [c]ontract are
similar and that . . . it is in the best interest of both parties to keep the Grant Town Power
Plant operated by [AMBIT] open, viable, and profitable.”
A hearing on the motion to dismiss was held on August 7, 2018. By order
dated August 14, 2018, the circuit court denied the motion to dismiss and deferred ruling
on the motion for summary judgment until discovery in the matter had been conducted.
Subsequently, on September 13, 2018, Mr. Sears, as president of Horizon, was deposed,
and on November 30, 2018, Horizon’s Rule 30(b)(7) deposition of Mr. Halloran, president
of AMBIT, was conducted.
AMBIT filed a renewed motion for summary judgment in November 2018, 6
based on several grounds. First, similar to the previous motion to dismiss, AMBIT asserted
that the consulting agreement was “unenforceable as written because it is unconscionable,
violative of public policy[,] and impossible to perform, given the frustration of its purpose
The renewed motion for summary judgment was filed before a scheduling
6
order was even entered in this matter, as the scheduling order was not entered until
December 4, 2018.
5
and the changed circumstances between the parties.” Relevant to this appeal, AMBIT
averred that the circuit court should “refuse to enforce the Agreement based solely on the
substantive unfairness of the agreement between the parties.” (Footnote omitted). Horizon
filed a response in opposition asserting only that the motion for summary judgment should
not be granted at this stage because discovery had just begun and additional discovery was
necessary. AMBIT filed a reply.
On December 6, 2018, the circuit court held a hearing on the renewed motion
for summary judgment. The circuit court granted the motion for summary judgment by
order entered on January 30, 2019. In its order, the circuit court observed that the renewed
motion for summary judgment was based on numerous grounds. The circuit court further
noted that while “there may or may not be issues of fact were the case to survive summary
judgment, the [c]ourt’s decision turns wholly on a determination of law and thus, is ripe
for summary judgment.” Specifically, the circuit court based its decision “on its finding
that the contract between the parties is unconscionable.” It found AMBIT’s remaining
positions to be “too weighted in factual determinations for the [c]ourt to consider for
purposes of summary judgment. The [c]ourt’s decision [wa]s made only on one narrow
issue of law.”
With regard to unconscionability, the circuit court explained that pursuant to
the law of West Virginia, the court must “analyze unconscionability of a contract term in
6
terms of two component parts: procedural unconscionability and substantive
unconscionability.” The circuit court went on to find that
[n]either party assert[ed] that the relative positions of the
parties or the adequacy of the bargaining positions by either
party in 1987 was unconscionable. There is no allegation that
sufficient experience, education, training, ability, or
knowledge was lacking by either party at the initiation of the
contract. Therefore, the focus of the Court’s analysis is one of
substantive unconscionability – specifically, a concern of the
lack of meaningful alternatives and the existence of unfair
terms in the contract.
The circuit court reasoned that the contract was substantively unconscionable
because, “[a]s written, the contract will run in perpetuity with no end in sight absent one
of two very specific occurrences.” Those occurrences are: (1) the power plant at issue in
the consulting agreement ceases to operate or (2) the contract may be terminated by the
will of the parties through mutual consent of the parties and in writing. The court further
remarked that there was “no evidence, suggestion, or allegation proffered by either party
that there is any plan for or situation which would require the power station to cease
operations.” In addition, the court found the termination provision to be
so one-sided and favorable to [Horizon] that the lack of a
unilateral escape clause, including notice and/or consequential
provisions stemming from unilateral withdrawal, and a
requirement of payment into what amounts to eternity but for
cessation of business, regardless [of] the bargaining position of
the parties, is so outrageous and oppressive that public policy
mandates that the contract be disbanded rather than enforced.
Finally, the court with scant discussion, stated that despite the consulting agreement being
unenforceable, AMBIT had waived its unconscionability argument until June 2018 when
7
AMBIT first raised the issue of unconscionability in its alternative motions in response to
Horizon’s complaint. Accordingly, the court granted judgment to Horizon as to the fees
due and owing for the 2018 year. 7 This appeal followed. 8
II.
STANDARD OF REVIEW
Horizon requests that we reverse the circuit court’s grant of summary
judgment to AMBIT. We have held that “[a] circuit court’s entry of summary judgment is
reviewed de novo.” Syl. pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
In undertaking a de novo review, we apply the same standard for granting summary
judgment that is applied by the circuit court. Syl. pt. 3, Aetna Cas. & Sur. Co. v. Federal
Ins. Co. of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963). Pursuant to that standard,
“[a] motion for summary judgment should be granted
only when it is clear that there is no genuine issue of fact to be
tried and inquiry concerning the facts is not desirable to clarify
the application of the law.” Syllabus Point 3, Aetna Casualty
& Surety Co. v. Federal Insurance Co. of New York, 148
W. Va. 160, 133 S.E.2d 770 (1963).
Syl. pt. 1, Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d 247 (1992).
7
AMBIT has not asserted a cross-assignment of error regarding this ruling.
8
We note that Horizon was originally represented by Gregory H. Schillace,
who filed the briefing on Horizon’s behalf in this matter. However, on September 21,
2020, this Court granted Mr. Schillace’s motion to withdraw as counsel. On November
10, 2020, Mark A. Kepple filed his notice of substitution of counsel on Horizon’s behalf.
Mr. Kepple appeared at oral argument in this matter.
8
Furthermore, this Court has held that
[s]ummary judgment is appropriate if, from the totality
of the evidence presented, the record could not lead a rational
trier of fact to find for the nonmoving party, such as where the
nonmoving party has failed to make a sufficient showing on an
essential element of the case that it has the burden to prove.
Syl. pt. 2, Williams v. Precision Coil, Inc., 194 W. Va. 52, 459 S.E.2d 329 (1995). Finally,
a court is to apply a burden-shifting analysis to determine if summary judgment is
warranted:
If the moving party makes a properly supported motion
for summary judgment and can show by affirmative evidence
that there is no genuine issue of a material fact, the burden of
production shifts to the nonmoving party who must either
(1) rehabilitate the evidence attacked by the moving party,
(2) produce additional evidence showing the existence of a
genuine issue for trial, or (3) submit an affidavit explaining
why further discovery is necessary as provided in Rule 56(f) of
the West Virginia Rules of Civil Procedure.
Syl. pt. 3, id. With these standards of review in mind, we will consider the parties’
arguments.
III.
DISCUSSION
Horizon raises a single assignment of error in this appeal: the circuit court
erred in its determination that the June 25, 1987 consulting agreement was unconscionable.
Horizon argues that the circuit court erred because without a finding of both procedural
9
and substantive unconscionability, a contract cannot be determined to be unconscionable. 9
On the other hand, AMBIT contends that the circuit court properly reached the right
conclusion that the consulting agreement was unconscionable pursuant to West Virginia
law and policy; Horizon did not raise the issue of procedural unconscionability below and
is now precluded from doing so; and, despite the circuit court’s failure to make an express
finding on this point, this Court can find that the consulting agreement is also procedurally
unconscionable. We agree with Horizon and find that the circuit court’s summary
judgment ruling was in error.
This Court’s law regarding the doctrine of unconscionability is well-
established. In Brown v. Genesis Healthcare Corp., 229 W. Va. 382, 729 S.E.2d 217(2012) (“Brown II”), we adopted several syllabus points regarding the doctrine of
unconscionability and how to analyze both procedural and substantive unconscionability.
In Syllabus point 4 of Brown II, we defined the doctrine of unconscionability and held that
“[t]he doctrine of unconscionability means that, because
of an overall and gross imbalance, one-sidedness or lop-
sidedness in a contract, a court may be justified in refusing to
enforce the contract as written. The concept of
unconscionability must be applied in a flexible manner, taking
into consideration all of the facts and circumstances of a
9
Horizon further asserted in this same assignment of error that the circuit
court erred by granting summary judgment five months prior to the close of discovery
“providing an insufficient record for the circuit court as well as this Court to make any
determination as to the existence of substantive unconscionability based upon the totality
of the interactions between the [parties].” Given our disposition, we need not examine this
issue.
10
particular case.” Syllabus Point 12, Brown v. Genesis
Healthcare Corp., 228 W. Va. 646, 724 S.E.2d 250 (2011).
229 W. Va. 382, 729 S.E.2d 217. We went even further by holding in Syllabus point 9 of
Brown II that
“[a] contract term is unenforceable if it is both
procedurally and substantively unconscionable. 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.”
Syllabus Point 20, Brown v. Genesis Healthcare Corp., 228
W. Va. 646, 724 S.E.2d 250 (2011).
229 W. Va. 382, 729 S.E.2d 217.
Based upon the above syllabus points in Brown II, this Court consistently has
made clear that “[u]nder West Virginia law, we analyze unconscionability in terms of two
component parts: procedural unconscionability and substantive unconscionability. To be
unenforceable, a contract term must—at least in some small measure—be both
procedurally and substantively unconscionable.” Dan Ryan Builders, Inc. v. Nelson, 230
W. Va. 281, 289, 737 S.E.2d 550, 558 (2012) (emphasis added) (internal citations and
quotations omitted). Accord Rent-A-Ctr., Inc. v. Ellis, 241 W. Va. 660, 674, 827 S.E.2d
605, 619 (2019) (“To prevail on her unconscionability argument involving the delegation
clause at issue here, Respondent must show both procedural and substantive
unconscionability, at least in some measure. Because we conclude that no procedural
unconscionability exists with respect to the delegation clause, we need not evaluate
11
whether substantive unconscionability exists.” (footnotes omitted)); Hampden Coal, LLC
v. Varney, 240 W. Va. 284, 295, 810 S.E.2d 286, 297 (2018) (“Mr. Varney must establish
both substantive and procedural unconscionability before the Agreement can be deemed
unenforceable. . . . Inasmuch as we have determined that the Agreement is not
substantively unconscionable, we need not address the issue of procedural
unconscionability.”); State ex rel. Richmond Am. Homes of W. Va., Inc. v. Sanders, 228
W. Va. 125, 136, 717 S.E.2d 909, 920 (2011) (“A contract term is unenforceable if it is
both procedurally and substantively unconscionable.” (quotations omitted)).
Consequently, we apply a sliding scale when analyzing procedural and substantive
unconscionability; but, to render a contract unenforceable this Court requires a finding that
the contract is, at least in some degree, both procedurally and substantively
unconscionable. 10
Turning to the present matter, although the circuit court ultimately found the
consulting agreement to be unconscionable, and therefore unenforceable, in analyzing the
10
AMBIT even conceded in its response brief on appeal that
West Virginia law does in the abstract require both substantive
and procedural unconscionability, but they operate on a sliding
scale. The more of one found within the contract, the less
needed of the other to find unconscionability. Judge Wilson
found overwhelming substantive unconscionability that,
combined with the public policy violations, obviated the need
for procedural unconscionability and mandated dismissal.
Brief of Respondent at 14 (footnote omitted).
12
issue of unconscionability the circuit court did not find that the consulting agreement was
both procedurally and substantively unconscionable. The circuit court’s sole discussion of
procedural unconscionability in this matter was as follows: “[n]either party asserts that the
relative positions of the parties or the adequacy of the bargaining positions by either party
in 1987 was unconscionable. There is no allegation that sufficient experience, education,
training, ability, or knowledge was lacking by either party at the initiation of the
contract.” 11 Accordingly, the circuit court did not make any finding that the consulting
agreement at issue was procedurally unconscionable. Therefore, the circuit court erred in
finding the consulting agreement unconscionable without finding even a sliver of
procedural unconscionability.
Despite the circuit court irrefutably failing to make a finding that there was
any degree of procedural unconscionability, AMBIT argues on appeal that we should not
examine the issue because Horizon failed to preserve the issue below. While we
acknowledge that Horizon did not raise the issue of procedural unconscionability in its
response to AMBIT’s motion for summary judgment, we find that a responsive argument
from Horizon was unnecessary to preserve the issue for appeal. Simply put, AMBIT’s
argument that this issue was waived misunderstands the parties’ respective burdens at the
summary judgment stage.
11
The circuit court went on to state that “the focus of the [c]ourt’s analysis
is one of substantive unconscionability – specifically a concern of the lack of meaningful
alternatives and the existence of unfair terms in the contract.”
13
As this Court consistently has held,
“[a] motion for summary judgment should be granted
only when it is clear that there is no genuine issue of fact to be
tried and inquiry concerning the facts is not desirable to clarify
the application of the law.” Syllabus Point 3, Aetna Casualty
& Surety Co. v. Federal Insurance Co. of New York, 148
W. Va. 160, 133 S.E.2d 770 (1963).
Syl. pt. 1, Andrick, 187 W. Va. 706, 421 S.E.2d 247. We further have held that a court is
to apply a burden-shifting analysis when making its determination of whether summary
judgment is warranted:
If the moving party makes a properly supported motion
for summary judgment and can show by affirmative evidence
that there is no genuine issue of a material fact, the burden of
production shifts to the nonmoving party who must either
(1) rehabilitate the evidence attacked by the moving party,
(2) produce additional evidence showing the existence of a
genuine issue for trial, or (3) submit an affidavit explaining
why further discovery is necessary as provided in Rule 56(f) of
the West Virginia Rules of Civil Procedure.
Syl. pt. 3, Williams, 194 W. Va. 52, 459 S.E.2d 329 (emphasis added). Additionally, as
this Court has found “[t]he burden of proving that a contract term is unconscionable rests
with the party attacking the contract.” Brown ex rel. Brown v. Genesis Healthcare Corp.,
228 W. Va. 646, 680, 724 S.E.2d 250, 284 (2011), overruled on other grounds by Health
Care Ctr., Inc. v. Brown, 565 U.S. 530, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)
(“Brown I”).
Here, AMBIT moved for summary judgment and challenged the validity of
the parties’ consulting agreement; thus, AMBIT bore the burden of properly supporting its
14
motion on the issue of the agreement’s unconscionability. Accordingly, as its initial step
in obtaining summary judgment, AMBIT had to “show by affirmative evidence that there
is no genuine issue of a material fact.” Syl. pt. 3, in part, Williams, 194 W. Va. 52, 459
S.E.2d 329. AMBIT failed to meet its initial burden as to unconscionability, and
consequently summary judgment, because it did not offer the circuit court any argument
that the consulting agreement was procedurally unconscionable, and, in fact, stated to the
circuit court that it could grant summary judgment based on substantive unconscionability
alone, in spite of our clear law to the contrary. 12 Therefore, a responsive argument from
Horizon was not necessary to preserve the issue for appeal because AMBIT failed to meet
its burden of properly supporting its motion in the first instance. 13
12
To the extent that AMBIT relied on Blackrock Capital Investment
Corporation v. Fish, 239 W. Va. 89, 799 S.E.2d 520 (2017) for its argument, while
Blackrock was a case decided by this Court, it applied New York contract law, not West
Virginia contract law. Significantly, New York unconscionability law is different from
West Virginia unconscionability law in one very important way: New York allows a
finding of unconscionability on substantive unconscionability, alone, to render a contract
unenforceable, while West Virginia law requires a finding of both procedural and
substantive unconscionability to invalidate a contract. See Blackrock, 239 W. Va. at 97
n. 22, 799 S.E.2d at 528 n. 22 (“Unlike West Virginia, several New York cases have found
exceptional circumstances ‘where a provision of the contract is so outrageous as to warrant
holding it unenforceable on the ground of substantive unconscionability alone.’ Gillman
[v. Chase Manhattan Bank, N.A.], [73 N.Y.2d 1,] 537 N.Y.S.2d 787, 534 N.E.2d [824,]
829.”). See also Vilella v. AT&T, 35 Misc. 3d 1224(A), Slip Op. 50853(U), (N.Y. Sup. Ct.,
N.Y. County 2012) (“Procedural and substantive unconscionability operate on a sliding
scale . . . and under certain circumstances substantive elements alone may be sufficient to
render the terms of a contract unenforceable. See Brower v. Gateway 2000, Inc., 246
A.D.2d 246 (1st Dept 1998). Such a determination requires extreme cases where the
contractual terms are ‘so outrageous and oppressive as to warrant a finding of
unconscionability irrespective of the contract formation process.’ Id. at 68.”).
See Aardema v. U.S. Dairy Sys., Inc., 215 P.3d 505, 513 (Idaho 2009)
13
(“The moving party bears the burden of establishing the absence of a genuine issue of
15
Next, AMBIT argues that even if we find that the circuit court’s order was
deficient by failing to determine that the consulting agreement was procedurally
unconscionable, this Court can uphold the circuit court’s decision on its own finding of
procedural unconscionability. In Syllabus point 10 of Brown II, we held that
“[p]rocedural 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. These inadequacies include, but are not limited
to, 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.” Syllabus
Point 17, Brown v. Genesis Healthcare Corp., 228 W. Va. 646,
724 S.E.2d 250 (2011).
229 W. Va. 382, 729 S.E.2d 217. Considering the factors outlined in Brown II, we are not
persuaded that procedural unconscionability exists in the matter sub judice. Horizon and
AMBIT are two sophisticated businesses. There is no evidence of uneven bargaining
power; any adhesion; or hidden or unduly complex contract terms. While there is some
dispute as to which party drafted the consulting agreement, there is evidence that the parties
material fact. Thus, it follows that if the moving party fails to challenge an element of the
nonmovant’s case, the initial burden placed on the moving party has not been met and
therefore does not shift to the nonmovant. . . Therefore, the burden never shifts to the non-
movant to oppose the motion if the movant fails to raise the issue in the first place.”
(internal quotations and citations omitted)).
16
had lawyers in general, and each was a party to other commercial contracts around the
same time that the consulting agreement was executed.
AMBIT further argues that “procedural unconscionability could be found in
the argument and pleadings below in the context of failure of meeting of the minds.” Brief
of Respondent at 23 (footnote omitted). In particular, AMBIT contends that the consulting
agreement was “so fraught with inequities, improprieties, unfairness, and other
inadequacies that the only explanation is that no meeting of the minds could have
occurred.” Id. (footnote omitted). We find this argument to be convoluted and misplaced.
From what we can discern, AMBIT is simply using the definition of
procedural unconscionability and arguing that the lack of a unilateral exit clause is so
extreme that no meeting of the minds occurred. In support of this argument, AMBIT relies
on testimony from Mr. Halloran, where he stated that “I did not imagine that anybody
would ever try and claim that we were stuck with this thing no matter what happened.”
AMBIT further argues that had it “known Horizon’s true nature or if AMBIT had known
that Horizon would undercut and malign it at every turn or that Horizon would flatly refuse
to exercise the termination clause, it would have never entered this relationship.”
(Respondent’s Brief at 24). However, AMBIT fails to appreciate that, at the heart of
procedural unconscionability, a lack of meeting of the minds is evidenced by “inequities,
improprieties, or unfairness in the bargaining process and formation of the contract.” Syl.
pt. 10, in part, Brown II, 229 W. Va. 382, 729 S.E.2d 217 (emphasis added). By contrast,
17
in its arguments on appeal regarding procedural unconscionability, AMBIT is muddying
the waters between general mutual assent in contract formation, 14 mutual obligation in
substantive unconscionability, 15 and inequities that lead to a lack of the meeting of the
14
This Court has described mutual assent in contract formation as follows:
West Virginia contract law requires mutual assent to form a
valid contract. See Ways v. Imation Enterprises Corp., 214
W. Va. 305, 313, 589 S.E.2d 36, 44 (2003) [(per curiam)] (“‘It
is elementary that mutuality of assent is an essential element of
all contracts.’” (internal citations omitted)). “‘In order for this
mutuality to exist, it is necessary that there be a proposal or
offer on the part of one party and an acceptance on the part of
the other. Both the offer and acceptance may be by word,
act or conduct that evince the intention of the parties to
contract. That their minds have met may be shown by direct
evidence of an actual agreement. . . .’” Id. (quoting Bailey v.
Sewell Coal Co., 190 W. Va. 138, 140-41, 437 S.E.2d 448,
450-51 (1993) (citations omitted)). Indeed, “[t]he contractual
concept of ‘meeting of the minds’ or ‘mutual assent’ relates to
the parties having the same understanding of the terms of the
agreement reached.” Messer v. Huntington Anesthesia Group,
Inc., 222 W. Va. 410, 418, 664 S.E.2d 751, 759 (2008) [(per
curiam)].
New v. GameStop, Inc., 232 W. Va. 564, 572-73, 753 S.E.2d 62, 70-71 (2013) (per curiam)
(footnote omitted).
15
As we held in Syllabus point 10 of Dan Ryan Builders,
[i]n assessing whether a contract provision is
substantively unconscionable, a court may consider whether
the provision lacks mutuality of obligation. If a provision
creates a disparity in the rights of the contracting parties such
that it is one-sided and unreasonably favorable to one party,
then a court may find the provision is substantively
unconscionable.
230 W. Va. 281, 737 S.E.2d 550 (emphasis added).
18
minds in procedural unconscionability. 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. 17, in
part, Brown I, 228 W. Va. 646, 724 S.E.2d 250 (emphasis added). Here, there are no
allegations that inequities, improprieties, or unfairness existed in the bargaining process or
formation of the contract in this particular case, nor can we discern any. 16 Therefore, we
find that the consulting agreement was not procedurally unconscionable. Because we find
the consulting agreement not to be procedurally unconscionable, we need not examine
substantive unconscionability, and the circuit court erred in granting summary judgment
based upon unconscionability.
Moreover, we acknowledge that the circuit court found the consulting
agreement to be unenforceable not only because it was substantively unconscionable, but
16
Furthermore, assuming without deciding that this evidence is appropriate
to construe this consulting agreement, and even if we found that AMBIT’s argument was
legally sound, it still was unable to meet the summary judgment standard. Specifically, in
support of its argument that the consulting agreement is so unfair and one-sided, as to be
procedurally unconscionable, AMBIT relies on deposition testimony by Horizon’s
president, Mr. Sears in which he stated that it was not in Horizon’s interest to agree to
AMBIT’s request to terminate the consulting agreement, i.e., that AMBIT foresaw the
arrangement lasting for “eternity,” as the circuit court put it. However, AMBIT’s 30(b)(7)
witness, Mr. Halloran—who was a signatory to the consulting agreement—testified that
when he signed the agreement, he expected the plant to operate for approximately thirty-
five years. Taking the inference in Horizon’s favor, as we are required to do on summary
judgment, it is reasonable to infer from that testimony that AMBIT expected the consulting
agreement to end after thirty-five years. Accordingly, there are disputed facts as to whether
the consulting agreement is even, in fact, a perpetual contract.
19
also because it violated public policy. In effect, the circuit court’s reasoning for the public
policy violation is the same as its reasoning for finding substantive unconscionability: the
consulting agreement lacked escape terms or a definite contractual term.
Regarding contracts and public policy concerns, this Court has stated “that
the freedom to contract is a substantial public policy that should not be lightly dismissed.”
Wellington Power Corp. v. CNA Sur. Corp., 217 W. Va. 33, 38, 614 S.E.2d 680, 685
(2005). In Wellington Power Corp., we further observed that:
In the case of State v. Memorial Gardens Development
Corp., 143 W. Va. 182, 101 S.E.2d 425 (1957), we quoted the
following language with which we still strongly agree:
[Y]ou are not to extend arbitrarily those rules
which say that a given contract is void as being
against public policy, because if there is one
thing which more than another public policy
requires it is that men of full age and competent
understanding shall have the utmost liberty of
contracting, and that their contracts, when
entered into freely and voluntarily, shall be held
sacred, and shall be enforced by courts of justice.
Therefore, you have this paramount public
policy to consider,—that you are not lightly to
interfere with this freedom of contract.
143 W. Va. at 191, 101 S.E.2d at 430, quoting Baltimore &
Ohio Southwestern Railway Co. v. Voigt, 176 U.S. 498, 20
S. Ct. 385, 387, 44 L. Ed. 560 (1900).
217 W. Va. at 38, 614 S.E.2d at 685. Moreover, in Wellington Power Corp., this Court
held that
3. This State’s public policy favors freedom of contract which
is the precept that a contract shall be enforced except when it
20
violates a principle of even greater importance to the general
public.
4. “The judicial power to declare a contract void as
contravening sound public policy ‘is a very delicate and
undefined power,’ and should be exercised only in cases free
from doubt. Richmond v. [Dubuque and Sioux City] Railroad
Co., 26 Iowa[] 191.” Syllabus Point 1, Barnes v. Koontz, 112
W. Va. 48, 163 S.E. 719 (1932).
Syl. pts. 3 and 4, Wellington Power Corp., 217 W. Va. 33, 614 S.E.2d 680. However, we
have opined that the “[f]reedom to contract, . . . is not unfettered. This Court has
recognized that no action can be predicated upon a contract of any kind or in any form
which is expressly forbidden by law or otherwise void.” Wellington Power Corp., 217
W. Va. at 39, 614 S.E.2d at 686 (internal citations and quotations omitted).
Turning to the present matter, the circuit court failed to acknowledge that
voiding contracts as violative of public policy should be done only when free from doubt.
Importantly, the circuit court offered no authority to support its finding that the consulting
agreement in this case, specifically the lack of a unilateral escape clause, rose to the level
of violating public policy. Similarly, on appeal and below, AMBIT failed to identify any
authority in West Virginia to support its position that this consulting agreement violates
public policy. Indeed, AMBIT relies on Blackrock Capital Investment Corporation v. Fish,
239 W. Va. 89, 799 S.E.2d 520 (2017); however, while Blackrock was a case decided by
this Court, it applied New York contract law, not West Virginia contract law. See
Blackrock Capital Inv. Corp., 239 W. Va. at 101, 799 S.E.2d at 532 (“New York courts
have said that contracts must have ‘at least a fair quantum of remedy for breach of the
21
obligations or duties outlined in the contract,’ and any contract clause modifying or limiting
remedies ‘in an unconscionable manner is subject to deletion and in that event the remedies
made available . . . as if the stricken clause had never existed.’” (citation omitted)).
Moreover, in Blackrock, relying on New York contract law, we found the provisions at
issue to be unconscionable; there was no specific discussion as to public policy concerns.
Accordingly, neither the circuit court nor AMBIT has provided us with any support that
the consulting agreement violated public policy. Consequently, we find that the circuit
court erred in granting summary judgment by finding that the consulting agreement
violated public policy. 17
17
As previously noted herein, assuming without deciding that this evidence
is appropriate to construe this consulting agreement, AMBIT failed to meet the summary
judgment standard. Even if AMBIT had been able to support its position that this
consulting agreement is a perpetual agreement and violative of public policy, it once again
relies on the same disputed deposition testimony by Mr. Sears in which he stated that it
was not in Horizon’s interest to agree to AMBIT’s request to terminate the consulting
agreement, i.e., that Horizon foresaw the arrangement lasting for “eternity.” Accordingly,
there remain disputed facts regarding the precise nature of the consulting agreement that
render summary judgment improper. See, e.g., Syl. pt. 1, in part, Andrick v. Town of
Buckhannon, 187 W. Va. 706, 421 S.E.2d 247 (holding that summary judgment should be
granted “only when it is clear that there is no genuine issue of fact to be tried and inquiry
concerning the facts is not desirable to clarify the application of the law.”).
22
IV.
CONCLUSION
For the reasons set forth above, this Court reverses the January 30, 2019 order
of the Circuit Court of Marion County, granting AMBIT’s renewed motion for summary
judgment, and remands this case for further proceedings consistent with this opinion.
Reversed and remanded.
23