Cabot Oil & Gas Corporation and Cranberry Pipeline Corporation v. Beaver Coal Company, Limited; Beaver Coal Company, Limited v. Cabot Oil & Gas Corporation and Cranberry Pipeline Corporation

Summary

The West Virginia Supreme Court of Appeals reviewed consolidated appeals concerning a circuit court order referring disputes between Beaver Coal Company and Cabot Oil & Gas Corporation and Cranberry Pipeline Corporation to arbitration. The court affirmed in part and reversed in part, rejecting the circuit court’s application of an intervening-law exception to res judicata and its instructions concerning the law and rulings to be applied by the arbitrators. The decision also held that the Cabot defendants had not waived their contractual right to arbitration.

Holdings

1. The Cabot defendants did not waive their contractual right to arbitration because, under the totality of the circumstances, they repeatedly asserted and sought to enforce the arbitration provision and did not intentionally relinquish that right.
2. West Virginia has not recognized an intervening-change-in-law exception to res judicata; the circuit court therefore erred by refusing to give binding effect to the 2004 arbitration award on that basis.
3. Claims arising solely under the 1977 Agreement could not be compelled to arbitration because that agreement contained no applicable arbitration provision and did not incorporate the 1929 Lease. Claims arising under the 1929 Lease were properly referred to arbitration.
4. A trial court compelling arbitration under the Federal Arbitration Act is limited to deciding whether a valid arbitration agreement exists and whether the claims fall within its substantive scope; it may not decide the merits or direct the arbitrator regarding the governing law or rulings to follow.

Questions Presented

1. Whether the Cabot defendants waived their contractual right to arbitrate.
2. Whether the 2004 arbitration award and res judicata barred Beaver's royalty-related claims and whether West Virginia recognizes an intervening-change-in-law exception to res judicata.
3. Whether claims arising solely under the 1977 Agreement could be referred to arbitration when that agreement contained no applicable arbitration provision and did not incorporate the 1929 lease.
4. Whether the circuit court exceeded its authority by directing arbitrators regarding the law to apply and the circuit court's rulings to follow.

Disposition

reversed_and_remanded