Opinion ID: 1403743
Heading Depth: 2
Heading Rank: 2

Heading: Whether Claim is subject to arbitration.

Text: Halliburton next argues that the arbitration provision of the work order does not include the question of indemnification in a wrongful death action involving multiple parties. [4] Halliburton maintains that the arbitration clause, which required arbitration for all disputes arising out of performance of the contract, is not applicable to Halliburton's claim for contractual indemnification. According to Halliburton, there is no dispute related to the performance of the contract. Consequently, Halliburton argues that its claim for indemnification did not arise from any act, error, or omission sounding in contract, but rather from a tort claim instituted to by a third party after the performance of the contract. Conversely, Texas Keystone argues that the indemnity claim arises out of Halliburton's performance of the contract. Texas Keystone contends that the Plaintiffs' wrongful death claim alleges negligence, which occurred while Halliburton was performing its duties under the work order. Thus, the performance of the contract included Halliburton's allegedly negligent work at the Wiley #8 well site. Texas Keystone asserts that it is largely undisputed that the ignition source for the fire that claimed the decedent's life was a Halliburton truck. Halliburton was the sole defendant performing work with the well head at the time of the fire. Texas Keystone, therefore, argues that the question of Halliburton's claim for indemnity for its alleged negligence is a question for arbitration. As this court previously held in Board of Education v. W. Harley Miller, Inc., 159 W.Va. 120, 221 S.E.2d 882 (1975), [a] contract providing a procedure for arbitration of disputes, and providing that: (1) all claims, disputes or other matters in question arising out of, or relating to the contract shall be decided by arbitration, unless the parties mutually agree otherwise; (2) the arbitration agreement shall be specifically enforceable under the prevailing arbitration law; (3) the arbitration award shall be final; and (4) the judgment may be entered upon the award in accordance with applicable law in any court having jurisdiction thereof, creates a condition precedent to any right of action arising under the contract. Id., Syl. Pt. 2. This Court has never precisely addressed the issue of whether the arbitrator or the circuit court resolves the issue of whether a particular claim is arbitrable outside the context of the Federal Arbitration Act, 9 U.S.C. §§ 1-307 (2006). In this case, the circuit court ultimately found that the claim of indemnification was subject to arbitration; but, this determination was devoid of any discussion of the circuit court's resolution of this particular issue. This Court has recently held in syllabus point two of State ex rel. TD Ameritrade, Inc., v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293 (2010), that under the Federal Arbitration Act, 9 U.S.C. §§ 1-307 (2006), [w]hen a trial court is required to rule upon a motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-307 (2006), the authority of the trial court is limited to determining the threshold issues of (1) whether a valid arbitration agreement exists between the parties; and (2) whether the claims averred by the plaintiff fall within the substantive scope of that arbitration agreement. ___ W.Va. at ___, 692 S.E.2d at 294, Syl. Pt. 2 (emphasis added). This holding is in accord with well-established federal law principles. See AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986); A.T. Massey Coal Co., Inc. v. Int'l Union, United Mine Workers of Am., 799 F.2d 142, 146 (4th Cir.1986), cert. denied, 481 U.S. 1033, 107 S.Ct. 1964, 95 L.Ed.2d 536 (1987). In an effort to bring uniformity to our arbitration law, the Court extends the application of the concepts set forth in our recent holding in Ameritrade to apply to all actions involving arbitration agreements. See Ameritrade, ___ W.Va. at ___, 692 S.E.2d at 294, Syl. Pt. 2. To this end, the Court holds that when a circuit court is presented with the issue of whether an arbitration agreement is applicable, the court must determine the threshold issues of (1) whether a valid arbitration agreement exists between the parties; and (2) whether the claims averred fall within the substantive scope of that arbitration agreement. In the instant case, given the circuit court's failure to definitively resolve the initial issue of whether a valid contract exists between Halliburton and Texas Keystone, the issue of the arbitrability of the indemnification claim is called into question. Thus, on remand, the circuit court must not only resolve the issue of whether the a valid contract exists between the parties, but also assuming, arguendo, that a valid contract is found to exist, the circuit must also determine the issue of whether Halliburton's claim for indemnification is subject to the arbitration provision of the contract.