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The Respondents, Richard and Mary Long, entered into an oil and gas agreement which was ultimately assigned to SWN Production Company. A dispute existed as to the original payment of consideration for the lease agreement. Suit was filed in the Circuit Court of Marshall County. The Petitioner, SWN Production, filed a motion to compel arbitration based upon an arbitration clause included in the lease agreement. The Respondents argued, however, that there was confusion and ambiguity within the lease itself as to whether they could pursue the action in the civil court system.The Respondents argued that two separate clauses in the lease agreement made reference to “courts of competent jurisdiction” and “civil actions” in an apparent conflict with the mandatory arbitration clause. The trial court agreed that ambiguity existed as to whether the Respondents had clearly assented to arbitration and denied the motion to compel arbitration. This appeal followed directly from that ruling.
Did the trial court err in denying the motion to compel arbitration based on what it believed to be ambiguous contract language “as to the ability to proceed with disputes in the civil court system as opposed to arbitration”?
The Supreme Court largely accepted the arguments of the Petitioner that the Court improperly looked beyond the plain language of the arbitration clause. The Court found that mere references to “civil actions” and “courts of competent jurisdiction” where not sufficient to find that the lease was ambiguous regarding the mandatory nature of arbitration. The Court did not believe that the severability and/or forfeiture clauses where so intertwined with the application of the arbitration clause that the Court could look to those clauses in analyzing the meaning of the otherwise clear arbitration language. As such, the Court reversed and remanded with directions to dismiss the case below and require the parties to resolve their disputes through arbitration.
The Court concluded, without any real explanation at all, that the severability clause and the limitation of forfeiture clause did not relate directly to arbitration even though both clauses dealt directly with disputes arising under the lease agreement. The arbitration clause purported to require such disputes to be arbitrated even though the other lease clauses made reference to courts and court actions. One would have expected more of an analysis on this issue. This case serves to further demonstrate that the Supreme Court seems inclined to enforce arbitration clauses most situations unless there exists some extreme set of facts or extensively misleading contract language.