Opinion ID: 2655957
Heading Depth: 2
Heading Rank: 2

Heading: Unconscionabilty

Text: The next issue we are compelled to address is the circuit court’s determination that the arbitration clause was neither procedurally or substantively unconscionable. The circuit court made this determination as part of its ruling on the Respondent’s motion to dismiss even though a review of the record plainly reveals that this issue was not developed by the parties below. The circuit court correctly stated in its order the law concerning unconscionability insofar as a contract term must be both “procedurally10 and substantively unconscionable[,]11” see Syl. Pt. 9, Brown ex rel. Brown v.Genesis 10 In syllabus point seventeen of Brown, we held: 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. 228 W. Va. at 657, 724 S.E.2d at 261, Syl. Pt. 17. 11 We held in syllabus point nineteen of Brown that: (continued...) 14 Healthcare Corp., 229 W. Va. 382, 729 S.E.2d 217 (2012) (footnote added),12 to be found unenforceable. The circuit court then determined that the arbitration clause was not unconscionable, finding that there was no procedural unconscionability “looking at the four corners of the construction agreement,” and that “the terms set forth in the arbitration provision are substantively fair.” The circuit court found that there was a lack of evidence “tending to support a foundational claim for procedural or substantive unconscionability.” 11 (...continued) 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. The factors to be weighed in assessing substantive unconscionability vary with the content of the agreement. Generally, courts should consider the commercial reasonableness of the contract terms, the purpose and effect of the terms, the allocation of the risks between the parties, and public policy concerns. 228 W. Va. at 658, 724 S.E.2d at 262, Syl. Pt. 19. 12 As this Court held in Brown, [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. 228 W. Va. at 658, 724 S.E.2d at 262, Syl. Pt. 20. 15 This Court held in syllabus points twelve and thirteen of Brown: 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. “An analysis of whether a contract term is unconscionable necessarily involves an inquiry into the circumstances surrounding the execution of the contract and the fairness of the contract as a whole.” Syllabus Point 3, Troy Mining Corp. v. Itmann Coal Co., 176 W. Va. 599, 346 S.E.2d 749 (1986). 228 W. Va. at 657, 724 S.E.2d at 261, Syl. Pts. 12 and 13 (emphasis added). A circuit court’s determination of unconscionability necessarily involves a fact-intensive analysis into a range of factors. See id.; see also supra notes 10-12. “If necessary, the trial court may consider the context of the arbitration clause within the four corners of the contract, or consider any extrinsic evidence detailing the formation and use of the contract.” Richmond Am. Homes, 228 W. Va. at 913, 717 S.E.2d at 129, Syl. Pt. 4, in part. Yet, the circuit court decided the issue of unconscionability in this case without the issue being fairly argued by the parties and without any factual development. Given this lack of any development below, both legally and factually, concerning unconscionability, we reverse 16 the circuit court’s decision on this issue and remand for further development of the record.