Case Title: Wild West Trading Co. v. gbs&h Architects, Landscape Architects, Planners, Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1994-09-23T00:00:00Z

Document:
Wild West Trading Co. v. gbs&h Architects, Landscape Architects, Planners, Inc.1994 WY 87881 P.2d 1070Case Number: 93-230Decided: 09/23/1994Supreme Court of Wyoming
WILD 
WEST TRADING COMPANY, a Wyoming Corporation,

Appellant 
(Defendant),

v.

gbs 
& h ARCHITECTS, LANDSCAPE ARCHITECTS, PLANNERS, INC., a Florida 
Corporation,

Appellee 
(Plaintiff).

 

Appeal 
from District Court, Teton County, D. Terry Rogers, J.

 

Representing 
Appellant:

Joseph 
F. Moore and Glenn W. Myers of Moore & Myers, Jackson.

Representing 
Appellee:

James 
K. Lubing, Jackson.

 

Before 
GOLDEN, C.J., THOMAS, MACY and TAYLOR, JJ., and CARDINE, J. 
(Retired).

MACY, 
Justice.

[¶1]      Appellant Wild 
West Trading Company appeals from an order which denied its motion to vacate or 
modify an arbitration award and from an order which confirmed the arbitration 
award and entered a judgment against Wild West.

[¶2]      We affirm in part 
and reverse in part.

ISSUES

[¶3]      Wild West 
presents five issues:

I. 
The Trial Court erred in holding that the Arbitration Award of all damages 
sought by gbs&h Architects in the civil suit was within the authority of the 
Arbitrators.

II. 
The Trial Court erred in holding that the unsigned Phase II Contract was 
properly submitted to Arbitration.

III. 
The Trial Court erred in holding that the award to gbs&h Architects on 
behalf of Jorgensen Engineering did not exceed the authority of the 
Arbitrators.

IV. 
The Trial Court erred in holding that the parties submitted all matters between 
them to arbitration.

V. 
The Trial Court erred in failing to recognize Respondent's 
Counterclaim.

FACTS

[¶4]      On July 15, 1989, 
Wild West and Appellee gbs&h Architects, Landscape Architects, Planners, 
Inc. executed a "Standard Form of Agreement Between Owner and Architect" (the 
Phase I agreement) wherein gbs&h Architects agreed to perform architectural 
services for Wild West on the Trails End Ranch project, a dude ranch which Wild 
West was building in Teton County, Wyoming. Pursuant to the Phase I agreement, 
gbs&h Architects agreed to provide "[m]aster planning, design schematics, 
construction documents and construction contract administration for Phase I[1] development of [the] Trails End 
Ranch." The Phase I agreement contained an arbitration provision which stated in 
pertinent part:

7.1 
Claims, disputes or other matters in question between the parties to this 
Agreement arising out of or relating to this Agreement or breach thereof shall 
be subject to and decided by arbitration in accordance with the Construction 
Industry Arbitration Rules of the American Arbitration Association currently in 
effect unless the parties mutually agree otherwise.

. 
. . .

7.3 
No arbitration arising out of or relating to this Agreement shall include, by 
consolidation, joinder or in any other manner, an additional person or entity 
not a party to this Agreement, except by written consent containing a specific 
reference to this Agreement signed by the Owner, Architect, and any other person 
or entity sought to be joined.

[¶5]      gbs&h 
Architects recommended to Wild West that Jorgensen Engineering be the 
engineering firm for the Trails End Ranch project. In August 1989, gbs&h 
Architects sent a letter to Jorgensen Engineering which requested that Jorgensen 
Engineering perform a list of engineering tasks at the Trails End Ranch. Even 
though Jorgensen Engineering did not have a written agreement which had been 
signed by either Wild West or gbs&h Architects, it, nonetheless, performed 
engineering services for the Trails End Ranch project between the summer of 1989 
and the summer of 1990.

[¶6]      In October 1989, 
gbs&h Architects and Wild West signed a letter agreement (the 1989 letter 
agreement) in which gbs&h Architects agreed to provide additional services2 at the Trails End Ranch. The 1989 
letter agreement stated: "These services are in addition to the signed contract 
for basic services for Phase I. All terms and conditions of the existing 
contract shall apply to this agreement."

[¶7]      gbs&h 
Architects later prepared another "Standard Form of Agreement Between Owner and 
Architect" (the proposed Phase II agreement) dated May 17, 1990, under which 
gbs&h Architects proposed to provide "[c]onstruction documents for Phase 
II[3] at [the] Trails End Ranch." The 
proposed Phase II agreement contained arbitration provisions identical with 
those which were contained in the Phase I agreement. Wild West did not sign the 
proposed Phase II agreement. In June 1990, gbs&h Architects sent Wild West a 
letter (the revised first phase proposal) which contained a "proposal for a 
revised first phase[4] for [the] Trails End Ranch." The 
revised first phase proposal did not contain any reference to arbitration or to 
the Phase I agreement. Wild West did not sign this revised first phase 
proposal.

[¶8]      Although Wild 
West had not signed either the proposed Phase II agreement or the revised first 
phase proposal, gbs&h Architects began to perform services which were beyond 
the scope of the signed Phase I agreement. Wild West gave gbs&h Architects 
"verbal authorization" to perform some of the services which had been described 
in the proposed Phase II agreement and in the revised first phase 
proposal.

[¶9]      Wild West 
experienced financial problems in the spring of 1990 and sought additional 
capital. Wild West ultimately ran out of funds and stopped fulfilling the pay 
requests which had been submitted by gbs&h Architects and by Jorgensen 
Engineering. Wild West paid gbs&h Architects for some of, but not all of, 
the services which were beyond the scope of the Phase I agreement but which Wild 
West had verbally authorized. The parties agree that Wild West owed gbs&h 
Architects $54,308.39 for work which gbs&h Architects had performed pursuant 
to the signed Phase I agreement and the signed 1989 letter 
agreement.

[¶10]   On April 12, 1991, gbs&h 
Architects filed a mechanic's and materialman's lien on the Trails End Ranch 
property. On June 7, 1991, gbs&h Architects filed a complaint in the 
district court, seeking to foreclose the mechanic's and materialman's lien and 
seeking damages for a breach of contract on the basis that Wild West failed to 
pay gbs&h Architects for some of the services and labor which it had 
provided on the Trails End Ranch project. On July 1, 1991, the parties filed a 
joint stipulation in the district court to arbitrate and to stay the court 
proceedings. The stipulation stated:

[The 
parties] stipulate pursuant to paragraph 7.1 of the parties['] contract 
that

"Claims, 
disputes or other matters in question between the parties to this Agreement 
arising out of or relating to this Agreement or breach thereof shall be subject 
to and decided by arbitration in accordance with the Construction Industry 
Arbitration Rules of the American Arbitration Association currently in effect 
unless the parties mutually agree otherwise."

And 
further the parties . . . stipulate in accordance with Section 1-36-104(c) of 
the W.S., 1977, as amended that the above-entitled Civil Action shall be stayed 
as to claims arbitra[]ble under the parties' contract until the American 
Arbitration Association panel has issued its findings and the same are submitted 
to this Court for its confirmation pursuant to Section 1-36-113 of the W.S., 
1977, as amended.

The 
district court ordered the parties to "submit all appropriate claims" against 
each other to arbitration.

[¶11]   Before the arbitration began, Wild 
West filed an answer and counterclaim against gbs&h Architects. Wild West 
claimed that gbs&h Architects had breached the Phase I agreement and that 
gbs&h Architects had been negligent in administering the Phase I agreement. 
In its answer to the counterclaim, gbs&h Architects argued that Wild West's 
claims were subject to arbitration.

[¶12]   At the beginning of the arbitration 
hearing, Wild West contended that the arbitrators did not have authority to 
consider gbs&h Architects's claims which had been made on the basis of the 
unsigned proposed Phase II agreement. Wild West also argued that Jorgensen 
Engineering's claims were not subject to arbitration because Jorgensen 
Engineering was not a party to the arbitration.

[¶13]   After the hearing, the arbitrators 
entered an award which stated:

WE, 
THE UNDERSIGNED ARBITRATORS, . . . FIND and AWARD as 
follows:

1. 
To [gbs&h Architects] and against [Wild West], the sum of 
$176,321.24.

2. 
To [gbs&h Architects] for the benefit of Jorgensen Engineering, [gbs&h 
Architects's] subcontractor, and against [Wild West], the sum of 
$99,532.72.

The 
administrative fees and expenses of the American Arbitration Association shall 
be borne by [Wild West] and paid as directed by the American Arbitration 
Association. Therefore, [Wild West] shall pay to [gbs&h Architects] 
$2,270.00 for fees paid to the Association.

The 
fees and expenses of the arbitrators shall be borne by [Wild West] and paid as 
directed by the American Arbitration Association. Therefore, [Wild West] shall 
pay to [gbs&h Architects] $7,880.00 for costs advanced to the 
Association.

This 
Award is in full settlement of all claims and counterclaims submitted to this 
arbitration.

Wild 
West filed a motion in the district court to vacate or modify the arbitration 
award. The district court denied Wild West's motion, confirmed the award, and 
entered a judgment against Wild West.

ARBITRATORS' 
AUTHORITY

A. 
Standard of Review

[¶14]   "[T]he issue of whether the 
arbitrator exceeded his authority is primarily a question of law. We owe no 
deference to the trial court's determination of questions of law." JBC of 
Wyoming Corp. v. City of Cheyenne, 843 P.2d 1190, 1194 (Wyo. 
1992).

The 
broad freedom an arbitrator has to resolve disputes and fashion remedies is 
limited by the contractual nature of the arbitration agreement from which he 
draws his powers.

"The 
right to have a dispute submitted to arbitration is contractual. An arbitrator's 
authority is limited by the bounds of the agreement, and courts may vacate 
awards that extend beyond the contractual scope of arbitration. An arbitrator 
exceeds his powers when he decides matters which were not submitted to 
him."

843 P.2d  at 1196 (quoting T & M Properties v. ZVFK Architects and 
Planners, 661 P.2d 1040, 1044 (Wyo. 1983) (citations 
omitted)).

B. 
Signed Agreements and Unsigned Proposals

[¶15]   Wild West asserts that the district 
court erred when it held that the arbitrators had authority to consider all 
gbs&h Architects' claims. Wild West contends that the scope of the 
arbitration proceedings was limited to the Phase I 
agreement.

[¶16]   gbs&h Architects's claims for 
services which it performed under the Phase I agreement were subject to 
arbitration because the Phase I agreement contained a clear arbitration clause. 
843 P.2d  at 1192. gbs&h Architects's claims for services which it performed 
pursuant to the 1989 letter agreement were also subject to arbitration because 
the 1989 letter agreement clearly incorporated "[a]ll terms and conditions of 
the existing [Phase I] contract," including the arbitration clause. The 
arbitrators, therefore, did not exceed their authority when they considered the 
claims for services which gbs&h Architects had performed under the Phase I 
agreement and the 1989 letter agreement.

[¶17]   gbs&h Architects based its 
remaining claims upon unsigned proposed agreements. The proposed Phase II 
agreement contained an arbitration clause which was identical with the 
arbitration clause which was contained in the Phase I agreement, but it was not 
signed by Wild West. gbs&h Architects's revised first phase proposal did not 
contain an arbitration clause, and it also was not signed by Wild West. Neither 
proposal expressly incorporated the signed Phase I agreement or its arbitration 
clause.

[¶18]   gbs&h Architects argues that 
the reference to the "parties['] contract" in the joint stipulation to arbitrate 
should be interpreted to include the proposals as being modifications to the 
written Phase I agreement. In support of its argument, gbs&h Architects 
cites S.A. Mineracao da Trindade-Samitri v. Utah International, Inc., 745 F.2d 190 (2d Cir. 1984). The reasoning of that case does not apply here. In that 
case, either the original agreements which contained the arbitration clauses 
"expressly contemplated and provided for" the subsequent agreements or the 
subsequent agreements "expressly refer[red] to" the original agreements. 745 F.2d  at 196. Here, the Phase I agreement expressly contemplated only Phase I of 
the project. Neither of the proposals referred to the Phase I 
agreement.

[¶19]   The unsigned proposed agreements 
did not "aris[e] out of or relat[e] to" the signed Phase I agreement, as was 
required by paragraph 7.1, and were not subject to the arbitration provisions of 
the Phase I agreement.

C. 
Subcontractor's Award

[¶20]   Wild West claims that the district 
court erred when it held that the arbitrators did not exceed their authority by 
awarding gbs&h Architects $99,532.72 on behalf of Jorgensen Engineering. We 
agree.

[¶21]   Jorgensen Engineering performed 
engineering services without having a written contract. The letter which 
gbs&h Architects sent to Jorgensen Engineering in August 1989 did not 
contain an arbitration clause and was not signed by either Jorgensen Engineering 
or Wild West. No "written consent," as was required by paragraph 7.3 of the 
Phase I agreement, included Jorgensen Engineering in the arbitration. The record 
does not contain any evidence which indicates that Jorgensen Engineering and 
Wild West had a separate oral agreement to submit their disputes to arbitration. 
Because Jorgensen Engineering and Wild West did not have a clear agreement to 
arbitrate their disputes, the arbitrators exceeded their authority by making an 
award to gbs&h Architects on behalf of Jorgensen Engineering. See, e.g., 
Century Ready-Mix Company v. Campbell County School District, 816 P.2d 795 
(Wyo. 1991) (architect had no duty under a similar clause to arbitrate the 
subcontractor's dispute).

WILD 
WEST'S COUNTERCLAIM

[¶22]   Wild West contends that, because 
the arbitrators failed to award damages on its counterclaim, the district court 
erred when it confirmed the arbitration award. Wild West's counterclaim alleged 
that gbs&h Architects had breached the Phase I agreement and had been 
negligent in administering the Phase I agreement.

[B]efore 
we will upset a district court's decision upholding an arbitration award, 
appellant must have discharged its proof burden by showing with clear and 
convincing evidence that the award

". 
. . was obtained by fraud, corruption, behavior beyond the bounds of natural 
justice, . . . or a manifest mistake of fact or law appearing upon the face of 
the award. . . ."

Northern 
Supply Company v. Town of Greybull, 
560 P.2d 1172, 1175 (Wyo. 1977) (quoting Riverton Valley Electric Association 
v. Pacific Power and Light Company, 391 P.2d 489, 500 (Wyo. 1964)). See 
also WYO. STAT. §§ 1-36-114(a), -115(a) (1988) (when court shall vacate or 
modify an award).

[¶23]   When the arbitrators denied Wild 
West's counterclaim, they necessarily resolved questions of fact. Wild West 
failed to present clear and convincing evidence to demonstrate that the 
arbitrators based their denial on a manifest mistake of fact or on some other 
improper reason. Northern Supply Company, 560 P.2d  at 
1175.

CONCLUSION

[¶24]   We affirm that portion of the 
district court's order which entered a judgment in favor of gbs&h Architects 
to the extent that it related to the amount5 owed under the signed agreements. 
We also affirm that portion of the district court's order which awarded fees and 
expenses to the American Arbitration Association and the 
arbitrators.

[¶25]   We reverse that portion of the 
district court's order which entered a judgment in favor of gbs&h Architects 
to the extent that it related to the amount claimed on the basis of the unsigned 
proposals. We also reverse that portion of the district court's order which 
awarded $99,532.72 to gbs&h Architects on behalf of Jorgensen 
Engineering.

[¶26]   Affirmed in part and reversed in 
part.

CARDINE, 
J. (Retired), files a dissenting opinion.

CARDINE, 
Justice, Retired, dissenting.

[¶27]   I dissent.

[¶28]   I would affirm the arbitrator's 
award. The parties signed one contract and by agreement continued to add new 
projects based on the terms of the "Phase I" contract. All the oral agreements 
subsequent to the "Phase I" contract were subject to the arbitration clause. The 
arbitrators did not exceed the scope of their authority because the arbitration 
provision in the "Phase I" contract was broad and because all of the oral and 
written agreements, entered into after the "Phase I" contract was executed, 
appear to "relate back" to the "Phase I" contract.

Footnotes

1 The Phase I agreement described the Phase I project as consisting of the 
following:

overall master plan, 1360 s.f. Dining Room, (3) 1135 s.f. employee 
housing units, (1) 1495 housing unit, 8608 s.f. Bunkhouse/stables facility, 2217 
s.f. Manager's residence, (2) 936 s.f. relocated, renovated guest cabins, (1) 
650 s.f. relocated, re[n]ovated guest cabin and (3) 1450 s.f. new guest 
cabins.

2 The 1989 letter agreement described the additional services as 
follows:

In response to your request, gbs&h [A]rchitects, [L]andscape 
[A]rchitects, [P]lanners, [I]nc. will provide interior services outlined below 
for Phase One construction at Trails End Ranch. These services shall include but 
not be limited to design and/or selection, coordination and arrangement of 
furniture and furnishings, antiques, antique photographs, photographs, artwork, 
frames, linens, curtains, rugs, artifacts, quilts, hardware, mirrors, 
appliances, lighting fixtures and wood stoves.

3 The proposed Phase II agreement described the Phase II project as 
consisting of the following buildings:

a two-story, 22,420 s.f. Inn/Lodge, a two-story, 7,245 s.f. 
Cookhouse/Dining/Ski and Fly-Guide Facility, 2 new single story cabins at 800 
s.f. each, a model house at 4,000 s.f. to be located on lot 16 at Trails End 
Ranch and various other facilities as required for Phase II to be billed on an 
hourly basis.

4 The revised first phase proposal stated in 
part:

In addition to the structures currently underway, we propose the new 
cookhouse cabins 8 and 9, the two additional employee apartments, the covered 
bridge and the garage addition to the manager's residence be constructed and 
cabin 4 relocated and remodeled.

5 The parties agree that, of the $176,321.24 total award, the amount owed 
under the signed agreements is $54,308.39.