Court Opinion

ID: 3192359
Source: CourtListenerOpinion
Date Created: 2016-04-07 19:11:30.194072+00
Date Added: 2024-06-11T14:08:40.600954
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                January 2016 Term                       FILED
                                   __________                        April 7, 2016
                                                                      released at 3:00 p.m.
                                                                    RORY L. PERRY, II CLERK
                                    No. 15-0128                   SUPREME COURT OF APPEALS
                                                                       OF WEST VIRGINIA
                                    __________

                          NATIONSTAR MORTGAGE, LLC

                    f/k/a CENTEX HOME EQUITY COMPANY,

                             Defendant Below, Petitioner

                                         v.

                     ADAM WEST and BETHANY WEST,

                         Plaintiffs Below, Respondents

          ______________________________________________________

                  Appeal from the Circuit Court of Putnam County

                            Honorable Joseph K. Reeder

                            Civil Action No. 13-C-131

                       REVERSED AND REMANDED

        ________________________________________________________

                             Submitted: March 2, 2016

                                Filed: April 7, 2016

D. Kyle Deak, Esq.                            Colten Lewis Fleu, Esq.
Troutman Sanders LLP                          Jennifer S. Wagner, Esq.
Raleigh, North Carolina                       Mountain State Justice, Inc.
                                              Clarksburg, West Virginia
Jason E. Manning, Esq.                        Counsel for Respondents
Jonathan M. Kenney, Esq.
Troutman Sanders LLP
Virginia Beach, Virginia
Counsel for Petitioner

JUSTICE LOUGHRY delivered the Opinion of the Court.

JUSTICE WORKMAN dissents and reserves the right to file a dissenting opinion.

                                          SYLLABUS

              1. “An order denying a motion to compel arbitration is an interlocutory ruling

which is subject to immediate appeal under the collateral order doctrine.” Syl. Pt. 1, Credit

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

              2. The omission of an “opt out” provision in an agreement that permits the

signatories to reject arbitration is just one of multiple factors to consider in evaluating a

claim of procedural unconscionability. As a result, the omission of an “opt out” provision

is not in itself sufficient evidence that an arbitration agreement is grossly unfair and thus

unenforceable on grounds of procedural unconscionability.

              3. “‘A party to a contract has a duty to read the instrument.’ Syllabus point

5, Soliva v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 (1986).” Syl. Pt.

4, American States Ins. Co. v. Surbaugh, 231 W.Va. 288, 745 S.E.2d 179 (2013).
LOUGHRY, Justice:

              The petitioner, Nationstar Mortgage, LLC (“Nationstar”), seeks to reverse the

January 13, 2015, order of the Circuit Court of Putnam County, denying its motion to

compel arbitration. The underlying case involves allegations of predatory lending practices

and abusive and unlawful debt collection in connection with a mortgage loan Nationstar

issued to the respondents, Adam and Bethany West (the “Wests”). Ruling on the petitioner’s

motion to compel arbitration, the circuit court concluded that the arbitration provision is

both procedurally and substantively unconscionable. Upon our review of this matter, we

find that the circuit court erred in deciding that the arbitration agreement is unenforceable.

Accordingly, we reverse and remand this matter for referral to arbitration.

                        I. Factual and Procedural Background

              On July 25, 2003, the Wests entered into a loan agreement with Nationstar for

the principal amount of $76,500. As part of the mortgage loan transaction, the Wests both

signed a contractual rider entitled “Arbitration Agreement.” Pursuant to the agreement,

either party could choose to have a dispute resolved by binding arbitration, administered by

the American Arbitration Association (“AAA”) under the commercial arbitration rules then

in effect. In all capital letters, located immediately above the signatory lines on the one-

page rider was the following disclaimer:

                                              1

              BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU
              HAVE READ THIS ARBITRATION AGREEMENT. YOU
              UNDERSTAND AND AGREE THAT YOU ARE GIVING UP THE
              RIGHTS TO SEEK REMEDIES IN COURT INCLUDING THE
              RIGHT TO A JURY TRIAL; YOUR ABILITY TO COMPEL
              OTHER PARTIES TO PRODUCE DOCUMENTS OR TO BE
              EXAMINED IS MORE LIMITED IN ARBITRATION THAN IN A
              LAWSUIT; AND, YOUR RIGHTS TO APPEAL OR CHANGE AN
              ARBITRATION AWARD ARE VERY LIMITED.

              On May 2, 2013, the Wests filed a complaint in the Circuit Court of Putnam

County against the petitioner and Mark Greenlee1 arising from the origination and servicing

of the mortgage loan issued by Nationstar.2 Nationstar removed the civil action to the

United States District Court for the Southern District of West Virginia based on diversity

jurisdiction. Purportedly to destroy diversity, the Wests filed an amended complaint in

which they replaced the allegations previously asserted against Mark Greenlee with similar

averments against Jeffrey Moore.3 The Wests filed a motion, which was granted by order

entered on October 21, 2013, to remand the case to state court.

       1
        Mr. Greenlee, a West Virginia resident, was named as a defendant because he was
the alleged appraiser for the subject mortgage loan.
       2
        In their complaint, the Wests alleged predatory lending, unconscionable contract, and
fraud as to Nationstar. Regarding Mr. Greenlee, they asserted dishonesty, misrepresentation,
and breach of professional standards.
       3
        Mr. Moore, a licensed real estate appraiser and a West Virginia resident, was named
as a defendant based on his alleged appraisal of the property for which the Wests obtained
a mortgage loan from Nationstar. Because the filings related to removal are not included in
the appendix record, this Court has no basis upon which to address Nationstar’s contention
with regard to diversity jurisdiction.

                                             2

              On August 1, 2014, Nationstar filed a Motion to Compel Arbitration. The

Wests filed a second amended complaint on October 13, 2014, asserting two additional

counts predicated on the alleged unconscionability of the arbitration rider.4 At a hearing on

the petitioner’s Motion to Compel Arbitration on November 21, 2014, the Wests submitted

a self-executed affidavit stating that they could not afford “substantial arbitration costs.”5

During the hearing, the Wests informed the circuit court of their willingness to submit to

arbitration provided that Nationstar would agree to the use of the AAA consumer rules of

arbitration. The petitioner declined to agree to altered rules because the AAA consumer

rules provide they are not designed for disputes involving real estate transactions and the

subject arbitration rider expressly calls for use of the AAA commercial rules.6

              By final order entered on January 13, 2015, the circuit court denied

Nationstar’s motion to compel arbitration. Citing the Wests’ lack of sophistication in

financial matters and the absence of an “opt out” provision7 by which the borrowers could

       4
       One count set forth allegations of an “Unconscionable Delegation Provision Within
the Arbitration Clause” and the other asserted an “Unconscionable Arbitration Clause.”
       5
       No advance notice had been provided to Nationstar regarding the affidavit or its
contents.
       6
       The AAA consumer rules were purportedly not in effect at the time the arbitration
rider was executed by the Wests.
       7
        See State ex rel. Ocwen Loan Servicing, LLC v. Webster, 232 W.Va. 341, 752 S.E.2d
372 (2013) (recognizing existence of “opt out” provision as factor which supported finding
that arbitration contract was not unconscionable).

                                              3

reject the arbitration clause and still obtain the loan funds, the circuit court found that the

arbitration agreement was procedurally unconscionable. Secondarily, the circuit court ruled

that the agreement was substantively unconscionable, looking to the one-sided nature of the

promises exchanged8 as well as the “oppressive costs associated with arbitration.” It is from

this ruling that Nationstar seeks relief.

                                  II. Standard of Review

              As this Court recently held in syllabus point one of Credit Acceptance

Corporation v. Front, 231 W.Va. 518, 745 S.E.2d 556 (2013), “[a]n order denying a motion

to compel arbitration is an interlocutory ruling which is subject to immediate appeal under

the collateral order doctrine.” We review a trial court’s denial of a motion to compel

arbitration for an abuse of discretion and to determine whether the trial court’s findings are

supported by substantial evidence. In cases, such as this, where the challenge to the

arbitration clause is based on unconscionability, the issue presented is a question of law

controlled by contract principles. As with all questions of law, our review of the trial court’s

conclusion is plenary. See Brown ex rel. Brown v. Genesis Healthcare Corp. (“Brown I”),

228 W.Va. 646, 680, 724 S.E.2d 250, 284 (2011), rev’d on other grounds sub nom. Marmet

Health Care Center, Inc. v. Brown, __ U.S. __, 132 S. Ct. 1201 (2012); Syl. Pt. 1, Chrystal

       8
        Under the arbitration agreement, Nationstar had the right to proceed in court with
respect to foreclosure, to obtain prejudgment injunctive relief, appointment of a receiver,
and claims related to damages arising from the Wests default of the loan terms.

                                               4

R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995). We proceed to determine

whether the circuit court committed error in refusing to refer the underlying matter to

arbitration.9

                                       III. Discussion

                Maintaining that the arbitration agreement is enforceable, Nationstar argues

that the arbitration rider is neither procedurally nor substantively unconscionable. As further

evidence of the trial court’s error, Nationstar cites to the circuit court’s failure to recognize

the presumptive validity of the enforceability of the arbitration agreement.10 Nationstar

contends the circuit court wrongly imposed a burden on it to demonstrate the agreement was

specifically bargained for and that the Wests had the ability to reject arbitration.

       9
         The trial court claimed its authority to consider whether the arbitration provision was
enforceable arose from the specific challenge to the delegation provision as unconscionable.
While the Wests did aver unconscionability of the delegation clause in their second amended
complaint, there is no specific delegation clause in the contract at issue. Thus, the trial
court’s authority to address the enforceability of the arbitration clause arose not from the
challenge to the delegation clause but from the additional allegation raised by the Wests in
the second amended complaint that the arbitration clause itself was unconscionable. See
generally Brown I, 228 W.Va. at 675, 724 S.E.2d at 279; see also State ex rel.TD
Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 254, 692 S.E.2d 293, 297 (2010) (discussing
authority of court, under severability doctrine, to address contractual-based challenges to
arbitration clause such as fraud, duress, or unconscionability).
       10
         As the Wests observe, Nationstar misapprehends the nature of the presumption.
While there has long been a presumption that the parties intended to resolve matters through
arbitration where an arbitration clause is included in an agreement, that presumption is
subject to challenge based on fraud, duress, unconscionability, or other valid contractual
defenses. See Syl. Pt. 3, Board of Educ. v. W. Harley Miller, Inc., 160 W.Va. 473, 236
S.E.2d 439 (1979); Syl. Pt. 9, Brown I, 228 W.Va. 646, 724 S.E.2d 250.

                                               5

             We examine the issue of unconscionability pursuant to the approach set forth

in Brown I. “Under West Virginia law, we analyze unconscionability in terms of two

components parts: procedural unconscionability and substantive unconscionability.” 228

W.Va. at 681, 724 S.E.2d at 285. To conclude that a contractual term is unenforceable on

grounds of unconscionability requires a finding that the provision in issue “is both

procedurally and substantively unconscionable.” Id. at 658, 724 S.E.2d at 262, syl. pt. 20,

in part. And, as we observed in Brown I, “[t]he burden of proving that a contract term is

unconscionable rests with the party attacking the contract.” Id. at 680, 724 S.E.2d at 284.

                           A. Procedural Unconscionability

              Addressing the elements of what constitutes procedural unconscionability, we

stated in syllabus seventeen of Brown I:

                     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.

                                             6

              In ruling on the issue of procedural unconscionability, the trial court focused

on the lack of “evidence in the record that the arbitration provision was specifically

bargained for or that Plaintiffs [Wests] had the ability to opt-out of resolving potential

disputes through arbitration.” Viewing Nationstar as more experienced in financial matters,

the trial court concluded that the “Plaintiffs were simply not in a position to fully understand

the fact that they were relinquishing the right to utilize the court system in signing the

arbitration agreement.”

              Upon distillation, the Wests’ challenge to the arbitration rider is grounded in

the adhesive nature of the contract. While quick to acknowledge that “a contract of adhesion

is not, in-and-of-itself, unconscionable,” the Wests assert that an “imbalance in bargaining

power, unfair surprise, and absence of meaningful choice” all combined to render this

particular mortgage contract unconscionable. Unfairly reducing Nationstar’s response to

this issue as an agreement that deserves enforcement based solely on its endorsement,11 the

Wests contend that “Nationstar has presented no meaningful basis to reverse the circuit

court’s Order.” We disagree.

       11
         In actuality, Nationstar merely framed the issue in this case as “whether a duly
signed arbitration agreement . . . [could] be avoided by inferences of illegitimacy that are
devoid of factual support and seek to undermine and reverse the presumptive legitimacy of
arbitration agreements themselves.”

                                               7

              In full recognition of the realities of consummating standardized business

transactions12 and the attendant unworkability of individualized bargaining13 this Court has

stated: “[T]here are adhesion contracts that deserve to be enforced and others that do not[.]”

State ex rel. AT&T Mobility v. Wilson, 226 W.Va. 572, 578, 703 S.E.2d 543, 549 (2010).

In rejecting a procedural unconscionability challenge predicated on the “take-it-or leave-it”

basis of an adhesion contract, a federal district court recently remarked:

              Courts around the country have recognized that the need for
              pre-printed form contracts is a stark reality of today’s mass-
              production/consumer culture. Despite even severe disparities in
              bargaining power, these agreements are most often enforced, at
              least as long as they comport with the reasonable expectations
              of the parties. A contrary rule would slow commerce to a crawl.

In re Managed Care Litig., No. 00-1334-MD, 2009 WL 855963, at *5 (S.D. Fla. 2009)

(internal citations omitted).

              As we discussed in State ex rel. Dunlop v. Berger, 211 W.Va. 549, 567 S.E.2d
265 (2002), contracts of adhesion are routinely executed without the signatory’s full reading

       12
         As we observed in Brown I, “‘[t]here is nothing inherently wrong with a contract
of adhesion. Most of the transactions of daily life involve such contracts that are drafted by
one party and presented on a take it or leave it basis. They simplify standard
transactions[.]’” 228 W.Va. at 682, 724 S.E.2d at 286 (quoting John D. Calamari, Joseph
M. Perillo, Hornbook on Contracts, § 9.43 (6th ed. 2009)); see also State ex rel. Dunlop v.
Berger, 211 W.Va. 549, 557, 567 S.E.2d 265, 273 (2002) (stating that “‘a rule automatically
invalidating adhesion contracts would be completely unworkable’”) (citation omitted).
       13
        See Brown I, 228 W.Va. at 682, 724 S.E.2d at 286 (“‘One of the purposes of
standardization is to eliminate bargaining over details of individual transactions. . . .’”)
(quoting Restatement (Second) of Contracts § 211 cmt. b [1981]).

                                              8

or comprehension of the specified terms:

              Customers do not in fact ordinarily understand or even read the
              standard terms. They trust to the good faith of the party using
              the form and to the tacit representation that like terms are being
              accepted regularly by others similarly situated. But they
              understand that they are assenting to the terms not read or not
              understood, subject to such limitations as the law may impose.

Id. at 558, 567 S.E.2d at 274 (quoting Restatement (Second) of Contracts § 221 cmt. b

[1981]). In reviewing an adhesion contract to determine whether principles of fairness

compel us to decide against the contract’s enforcement, we examine whether “‘it imposes

terms beyond the reasonable expectations of an ordinary person, or oppressive or

unconscionable terms.’” Brown I, 228 W.Va. at 683, 724 S.E.2d at 287 (citation omitted);

see also State ex rel. Richmond American Homes v. Sanders, 228 W.Va. 125, 135, 717
S.E.2d 909, 918-19 (2011) (explaining that unconscionability analysis requires inquiry into

fairness of contract as whole based on facts and circumstances of particular case, observing

that “contractual provisions may be unconscionable in some situations but not in others”).

              The grounds upon which the Wests rely to assert procedural unconscionability

are an alleged imbalance in bargaining power, unfair surprise, and absence of meaningful

choice. Because contracts of adhesion are by definition typically prepared by a party with

more power, we do not view that factor as persuasive in itself. See Williams v. Jo-Carroll

Energy, Inc., 890 N.E.2d 566, 571 (Ill. App. 2008) (“[J]ust because a contract is prepared

by a party in a superior bargaining position, without allowing the other party to negotiate any

                                              9

terms, does not mean that an included arbitration clause is unconscionable.”). On the issue

of the Wests’ lack of financial sophistication, we have only the trial court’s conclusory

finding to that effect. See State ex rel. Ocwen Loan Servicing, LLC v. Webster, 232 W.Va.

341, 358, 752 S.E.2d 372, 389 (2013) (rejecting procedural unconscionability challenge to

an arbitration agreement based, in part, on failure of record to support trial court’s finding

that mortgage loan borrowers “lacked sophistication and financial knowledge to a degree

that rendered the contract unenforceable”). And, given the placement of the arbitration

language–immediately above their signature lines and in all capital letters, we find the

averment of unfair surprise to be similarly unpersuasive. See id. (considering location of

terms “conspicuously above the signature line in all caps” advising mortgage loan borrowers

of right to reject arbitration agreement in finding no procedural unconscionability); accord

In re Managed Care Litig., 2009 WL 855963 at *5 (rejecting procedural unconscionability

challenge that arbitration provision was hidden where its inclusion “just above the signature

line in bold and all caps” “was placed in one of the most conspicuous spots on the

Agreement”); see also Purcell Tire & Rubber Co. v. Exec. Beechcraft, Inc., 59 S.W.3d 505,

509 (Mo. 2001) (“The liability limitation here does not violate public policy, because it is

clear, unambiguous, unmistakable, and conspicuously located directly above the

signature.”).

                In ruling on this issue of procedural unconscionability, the trial court found

                                              10

significant that the arbitration rider lacked an “opt out” provision that would have permitted

the Wests to reject arbitration and still obtain the housing loan. In support of its ruling, the

trial court looked to this Court’s decision in Ocwen Loan Servicing. See 232 W.Va. at 358,
752 S.E.2d at 389. While this Court considered the “opt out” provision in Ocwen Loan

Servicing as one fact that weighed against procedural unconscionability in that case, we did

not suggest that the absence of such a provision is determinative. See id. To the extent the

circuit court placed improper weight on Nationstar’s failure to include an “opt out”

provisions in the subject arbitration rider, the lower court’s analysis was misguided. To

clarify, the omission of an “opt out” provision in an agreement that permits the signatories

to reject arbitration is just one of multiple factors to consider in evaluating a claim of

procedural unconscionability. As a result, the omission of an “opt out” provision is not in

itself sufficient evidence that an arbitration agreement is grossly unfair and thus

unenforceable on grounds of procedural unconscionability. See Sanders, 228 W.Va. at 138,
717 S.E.2d at 922 (identifying lack of “opt out” provision as one factor trial court considered

in affirming finding that adhesion contract was unconscionable); Syl. Pt. 9, Dan Ryan

Builders, Inc. v. Nelson, 230 W.Va. 281, 737 S.E.2d 550 (2012) (“A court in its equity

powers is charged with the discretion to determine, on a case-by-case basis, whether a

contract provision is so harsh and overly unfair that it should not be enforced under the

doctrine of unconscionability.”); AT&T Mobility, 226 W.Va. at 578, 703 S.E.2d at 549

(“[E]very case in which the issue of an unconscionable adhesion contract is raised must be

                                              11

examined on the basis of the language of that particular contract in conjunction with the

specific facts surrounding the dispute.”).

              Nationstar argues that the trial court wrongly imposed a burden on it to prove

that the parties had specifically bargained for the inclusion of the arbitration clause. As this

Court held in Dan Ryan, the enforceability of an arbitration clause does not require separate

consideration when the contract as a whole is supported by adequate consideration. See 230

W.Va. at 283, 737 S.E.2d at 552, syl. pt. 6. Subsequently, in Kirby v. Lion Enterprises, Inc.,

233 W.Va. 159, 756 S.E.2d 493 (2014), we stated: “Applying the law enunciated in Dan

Ryan, so long as the construction contract in its entirety is well supported by an offer,

acceptance and sufficient consideration, there is no requirement that the arbitration clause

be independently ‘bargained for’ in order for a contract to be formed.” Id. at 165, 756

S.E.2d at 499. Under established law, Nationstar’s inability to produce evidence that the

arbitration rider was separately and specifically bargained should not have been utilized by

the trial court as a basis for concluding that the agreement was procedurally unconscionable.

              The trial court placed significance on its conclusion that the Wests did not

fully appreciate their relinquishment of the right to utilize the court system. While they aver

that “[t]he closing of our loan was conducted in a hurried manner, with the entire process

lasting approximately fifteen to twenty minutes,” the Wests do not complain that they were

                                              12

denied the right to read the agreement or that they lacked the capacity to understand the

arbitration clause. They do not assert they were coerced into signing the document. Neither

do they contend they requested, and were denied, the opportunity to take further time to read

and review the loan documents or to have a third party review them on their behalf. It has

long been the rule that “‘[a] party to a contract has a duty to read the instrument.’ Syllabus

point 5, Soliva v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 (1986).” Syl.

Pt. 4, American States Ins. Co. v. Surbaugh, 231 W.Va. 288, 745 S.E.2d 179 (2013); see

also Grayiel v. Appalachian Energy Partners, 230 W.Va. 91, 101, 736 S.E.2d 91, 101

(2012) (rejecting claim of grossly inadequate bargaining power where signatory “had ample

time to seek counsel’s advice before signing, there is no allegation that he was pressured into

signing, and he signed on his own free will”). The fact that the Wests may have signed a

document without reading it first does not excuse them from the binding effect of the

agreements contained in the executed document. See G&R Tire Distributors, Inc. v. Allstate

Ins. Co., 411 A.2d 31, 34 (Conn. 1979) (recognizing that when “a person of mature years

who can read and write signs or accepts a formal written contract affecting his pecuniary

interests, it is his duty to read it, and notice of its contents will be imputed to him if he

negligently fails to do so”).

              Upon this Court’s review of the record in this case, the grounds relied upon

by the trial court to find this particular adhesion contract procedurally unconscionable are

                                              13

not sustainable. While the bargaining power between the parties may have been unequal,

it was not grossly unequal. See Grayiel, 230 W.Va. at 101, 736 S.E.2d at 101. Furthermore,

the inclusion of an arbitration provision within a mortgage loan agreement does not strike

this Court as “‘beyond the reasonable expectations of an ordinary person, or [as an]

oppressive or unconscionable term[].’”14 Brown I, 228 W.Va. at 683, 724 S.E.2d at 287

(citation omitted). Nothing about the circumstances of the closing, which frankly comports

with the quotidianus reality of real estate closings–hurried document execution with minimal

comprehension by the signatories–suggests that the agreement is unenforceable based on

principles of unfairness. Accordingly, we conclude that the Wests did not meet their burden

of proving that the subject contract is procedurally unconscionable. See Brown I, 228 W.Va.

at 680, 724 S.E.2d at 284.

                          B. Substantive Unconscionability

              As grounds for finding the arbitration clause substantively unconscionable, the

trial court determined that the agreement lacked “mutual, reciprocal obligations among the

parties” and further relied upon “the oppressive costs associated with arbitration.” As this

Court explained in Brown I, the focus of substantive unconscionability is on the nature of

       14
         With the enactment of the Dodd-Frank Act on July 22, 2010, mandatory arbitration
clauses can no longer be included in residential home loans. Because that legislation is not
retroactive, it has no effect on the matter before us. See Ocwen Loan Servicing, 232 W.Va.
at 355, 752 S.E.2d at 386.

                                            14

the contractual provisions rather than on the circumstances surrounding the contract’s

formation:

                     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.

              In deciding that the arbitration agreement lacked sufficient mutuality to be

enforceable, the trial court cited Nationstar’s right to use the courts to effect a foreclosure,

to obtain possession of the property subject to its credit interest, to seek injunctive relief or

appointment of a receiver, and to pursue any claim based upon default. These exceptions,

in the trial court’s opinion, rendered the agreement “unduly favorable to Nationstar.” In

viewing mutuality as a sine qua non to enforcement of the arbitration agreement, the circuit

court overlooked this Court’s admonition in Dan Ryan “that a one-sided contract provision

may not be unconscionable under the facts of all cases.” 230 W.Va. at 290, 737 S.E.2d at

559. With clear emphasis, we stated: “‘The concept of unconscionability must be applied

in a flexible manner, taking into consideration all of the facts and circumstances of a

particular case.’” Id. (quoting Brown I, 228 W.Va. at 657, 724 S.E.2d at 261, syl. pt. 12,

in part).

                                               15

              Contracts such as the mortgage loan at issue are uniquely recognized to allow

lenders to carve out unilateral exceptions to arbitration. As we discussed in Ocwen Loan

Servicing, numerous courts have found that a financial institution’s right to protect its

security interest combined with the need for compliance with statutory foreclosure

procedures explains a lack of mutuality in certain loan agreements. See 232 W.Va. at 365,
752 S.E.2d at 396. We cited with approval the reasoning employed in Miller v. Equifirst

Corp., No. 2:00-0335, 2006 WL 2571634 (S.D. W.Va. Sept. 5, 2006): “‘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.’” 232 W.Va. at 365, 752
S.E.2d at 396 (quoting Miller at *11). Further authority upon which we relied in Ocwen

Loan Servicing included Torrance v. Aames Funding Corp., 242 F. Supp. 2d 862 (D. Or.

2002). Noting that the excepted claims authorized for judicial resolution related to the

lender’s security interest, the court observed in Torrance that such claims “are heavily

regulated by statute, allowing for streamlined procedures and effective protections for both

sides.” Id. at 872. Accordingly, the appellate court opined: “It does not strike this court as

unreasonable, much less oppressive, to forego arbitration of such claims.” Id.; see also

Lackey v. Green Tree Fin. Corp., 498 S.E.2d 898, 905 (S.C. App. 1998) (upholding

arbitration clause that permitted lender to use judicial relief to enforce security agreement

pertaining to manufactured home and observing that “[s]ecured transactions allow lenders

                                             16

to take greater risks because their ability to protect a loan is enhanced by the legal right to

recover and sell the collateral in the event of default”).

              Given a financial lender’s need to utilize statutory procedures for purposes of

effecting foreclosure and receivership, the fact that Nationstar is not required to arbitrate all

of its claims that may arise under the credit transaction does not render the arbitration

agreement unconscionable. This Court has made it clear that, rather than full bilaterality,

only a modicum of bilaterality is required to avoid a determination of unconscionability. See

Sanders, 228 W.Va. at 137, 717 S.E.2d at 921; see generally Dan Ryan, 230 W.Va. at 288­

89, 737 S.E.2d at 557-58 (discussing lack of mutuality requirement under modern contract

law). Without question, agreements related to mortgage loans that involve a lender’s right

to protect its security interest may require the use of the court system to enforce that security

interest. Consistent with the rationale cogently articulated in Ocwen Loan Servicing, the

provision of an exception to arbitration for disputes rooted in the need to effect a foreclosure

or to protect a security interest does not ipso facto create an overly one-sided contract that

is unreasonable or unfair.

              The other basis relied upon by the circuit court in finding the arbitration clause

substantively unconscionable was its reference to “the oppressive costs associated with

arbitration.” Nationstar correctly observes that the Wests have never stated that they are

                                               17

unable to afford to pay any arbitration fees or costs. Instead, they state that they “cannot

afford substantial arbitration costs.” Similarly, the circuit court has provided this Court with

no factual basis for its conclusion that the costs of arbitration are “oppressive.”

               At this point, the costs to be borne by the Wests as a result of arbitration are

wholly speculative. See Dunlop, 211 W.Va. at 551, 567 S.E.2d at 267, syl. pt. 4, in part

(holding that party challenging costs as unreasonably burdensome has burden to prove “costs

likely to be imposed”); Heller v. TriEnergy, Inc., No. 5:12-CV-45, 2012 WL 2740870, at

*13 (N.D. W.Va. July 9, 2012) (finding that conclusory allegation of unreasonable costs of

arbitration absent evidence of such costs “is inadequate to show the costs likely to be

imposed”); Millas v. Morgan Stanley & Co., No. 08-CV-0573, 2008 WL 5095917, at *5

(S.D. Ill. Dec. 1, 2008) (rejecting “generic allegation of unfairness in the costs involved in

arbitration” and recognizing that “‘party must provide some individualized evidence to show

that she is likely to face prohibitive costs . . . and that she is financially incapable of meeting

those costs’”) (citation omitted). Under the agreement, Nationstar is responsible for the first

$250 of arbitration and the arbitrator is charged with deciding who is ultimately responsible

for paying the fees associated with the arbitration.15 The Wests maintain that the filing fees

       15
         Nationstar submits that it is possible that the Wests might not be responsible for any
arbitration fees. Nationstar has agreed to arbitrate outside the AAA and submits that this
would signficantly reduce any costs or fees associated with arbitration. To date, the Wests
have refused to proceed in a non-AAA forum, stating they will only submit to arbitration if
Nationstar agrees to use the consumer rules of arbitration. Under the consumer rules, the

                                                18

under AAA are determined by the amount of recovery that is being sought and submit they

could have to pay an initial filing fee of between $3,250 to $7,000.16

              Upon our review of the record in this case, the basis for the trial court’s

decision that the arbitration agreement is substantively unconscionable is both legally and

factually improper. The circuit court relied on a non-existent requirement of complete

mutuality of obligations in finding the agreement unenforceable on grounds of substantive

unconscionability. In determining that the costs of arbitration were necessarily oppressive,

the circuit court relied upon a record devoid of evidence that the Wests could not pay the

costs of arbitration. An unadorned averment, couched hypothetically, that they could not

“afford substantial arbitration costs” is not sufficient to meet their burden of demonstrating

that such costs would be unreasonably burdensome. See Dunlop, 211 W.Va. at 551, 567
S.E.2d at 267, syl. pt. 4. Accordingly, we determine that the Wests did not demonstrate that

the arbitration agreement is substantively unconscionable.

Wests assert they would only be required to pay a $200 filing fee and the remaining costs
of arbitration would be borne by Nationstar.
       16
        The Wests claim that the circuit court made its determination of oppressive costs
based “on a record replete with evidence of the high costs of commercial arbitration.” Our
review of the record submitted in this case revealed only one statement regarding costs and
that was a reference by counsel to a filing fee of $4,350.

                                             19

                                        IV. Conclusion

                  Based on the foregoing, the decision of the Circuit Court of Putnam County

is reversed, and this matter is remanded for entry of an order referring the underlying case

to arbitration.

                                                                   Reversed and remanded.

                                               20