Title: Pioneer Water and Sewer Dist. v. Civil Engineering Professionals, Inc.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Pioneer Water and Sewer Dist. v. Civil Engineering Professionals, Inc.1995 WY 186905 P.2d 1245Case Number: 94-311Decided: 11/15/1995Supreme Court of Wyoming
PIONEER WATER AND SEWER DISTRICT, a Water and

Sewer District formed 
under the laws of the State of Wyoming, 

Appellant 
(Defendant),

v.

CIVIL ENGINEERING 
PROFESSIONALS, INC., a Wyoming Corporation, 

Appellee 
(Plaintiff).

Appeal from the District 
Court, Natrona County, Harry E. Leimback, J.

J. Scott 
Burnworth, Casper, for appellant.

J. Nicholas 
Murdock of Reeves, Murdock & Gifford; and Timothy W. Miller, Casper, for 
appellee.

Before 
GOLDEN, C.J., and THOMAS, MACY, TAYLOR and LEHMAN, JJ.

GOLDEN, Chief 
Justice.

[¶1]      In this appeal we 
determine whether a question as to the application of a statute of limitations 
to a contractually based arbitration demand is a question to be decided by the 
district court or by the arbitrators, where the contract provides arbitration is 
barred by the applicable statute(s) of limitations. In response to appellee 
Civil Engineering Professionals, Inc.'s (CEP) declaratory judgment action which 
sought to restrain a demand for arbitration, appellant Pioneer Water and Sewer 
District (Pioneer) sought an order compelling arbitration. The district court 
determined Pioneer's demand for arbitration should be denied.

[¶2]      We 
affirm.

[¶3]      Pioneer states 
this issue: 

Did the district court 
err in determining that a cause of action to compel arbitration under W.S. § 
1-36-104 begins to accrue as of the date of the formation of the contract which 
provides for arbitration?

CEP 
asks:

1.         
Whether the district court correctly ruled that appellant's right to 
arbitration is barred by the statute of limitations.

2.         
Whether it is for the courts to determine the arbitrability of 
appellant's claim.

3.         
Whether the parties' agreement precludes appellant from demanding 
arbitration because its claim is barred by the statute of 
limitations.

[¶4]      The facts which 
underlie this issue are not disputed. On March 24, 1980, CEP entered into a 
contract with Pioneer for installation of a water distribution system. The work 
associated with that contract was substantially completed before June 1, 1983. 
On July 25, 1994, Pioneer filed a demand for arbitration with the American 
Arbitration Association, asserting that due to fault on the part of CEP a 
portion of a pipeline was installed outside the easement Pioneer had obtained 
from a landowner. As relief, Pioneer asked that CEP obtain a corrective easement 
or pay damages in the range of $3,500 to $8,500. On August 12, 1994, CEP filed a 
complaint, seeking a declaratory judgment to the effect that Pioneer's demand 
for arbitration1 should be restrained because any 
legal or equitable action by Pioneer was barred by WYO. STAT. § 1-3-105(a)(i)2 and WYO. STAT. § 1-3-111(a).3 On November 10, 1994, the district 
court issued its final order denying arbitration on the basis that the 
applicable statute of limitations, WYO. STAT. § 1-3-105(a)(i), had run.4

[¶5]      The contract 
between the parties included these provisions regarding arbitration:

7.5.1. All claims, 
counterclaims, disputes and other matters in question between the parties hereto 
arising out of or relating to this Agreement or the breach thereof will be 
decided by arbitration in accordance with the Construction Industry Arbitration 
Rules of the American Arbitration Association then obtaining, subject to the 
limitations and restrictions stated in paragraph 7.5.3 and 7.5.4 below. This 
Agreement so to arbitrate and any other agreement or consent to arbitrate 
entered into in accordance herewith as provided in this paragraph 7.5 will be 
specifically enforceable under the prevailing arbitration law of any court 
having jurisdiction.

7.5.2. Notice of demand 
for arbitration must be filed in writing with the other parties to this 
Agreement and with the American Arbitration Association. The demand must be made 
within a reasonable time after the claim, dispute or other matter in question 
has arisen. In no event may the demand for arbitration be made after institution 
of legal or equitable proceedings based on such claim, dispute or other matter 
in question would be barred by the applicable statute of 
limitations.

[¶6]      Pioneer's 
principal assertion is that the statute of limitations on its right to compel 
arbitration did not begin to run until its demand for arbitration was refused. 
Pioneer contends the district court's role in the arbitration process is limited 
to an ascertainment of whether an agreement to arbitrate exists. WYO. STAT. § 
1-36-104(a)(1988);5 Jackson State Bank v. Homar, 837 P.2d 1081, 1086, 1089 (Wyo. 1992). Pioneer hinges its contention that the 
district court lacked authority or jurisdiction to consider the question of the 
statute of limitations on Reconstruction Finance Corp. v. Harrisons & 
Crosfield, 204 F.2d 366 (2nd Cir. 1953), cert. denied, 346 U.S. 854, 74 S. Ct. 69, 98 L. Ed. 368 (1953), and other related cases which follow that decision or 
which rely on similar reasoning. In that case, the appeals court held that, 
under the circumstances there presented, whether the statute of limitations 
would bar proceedings in arbitration was a question to be decided by the 
arbitrators. However, the court went on to state, in response to the fear that 
parties will not agree to arbitrate if there is no temporal limit on the 
obligation to arbitrate, "the parties to a contract embodying an arbitration 
clause can, of course, easily put in it an `express time limitation.'" 
Reconstruction, 204 F.2d  at 370; and see generally Joel E. Smith, Annotation, 
Statute of Limitations as Bar to Arbitration under Agreement, 94 A.L.R.3d 533 
(1979); Boyd J. Peterson, Annotation, Which Statute of Limitations Applies to 
Efforts to Compel Arbitration of a Dispute, 77 A.L.R.4th 1071 
(1990).

[¶7]      We conclude the 
district court is obligated to determine the question of arbitrability in the 
light of all the contract terms which form the agreement to arbitrate. Here the 
parties detailed that the agreement to arbitrate would not extend beyond any 
applicable statute(s) of limitations and the district court, therefore, was 
compelled to ascertain that issue as a part of its determination whether an 
agreement to arbitrate existed. 200 Levee Drive Assoc. v. Bor-Son Bldg., 441 N.W.2d 560, 563 (Minn.App. 1989); and see Gonzales v. United Southwest Nat'l 
Bank, 93 N.M. 522, 602 P.2d 619, 620 (1979). The agreement in question is just 
the sort of "express time limitation" which was contemplated in the 
Reconstruction case.

[¶8]      In this instance, 
there is no question but that the statute of limitations has expired whether we 
apply the general statute of limitations which applies to written contracts or 
the statute of limitations which applies to improvements to real property. The 
judgment of the district court is affirmed.

FOOTNOTES

1 On August 17, 1994, 
Pioneer filed a pleading seeking an order of the district court to compel 
arbitration.

2 Limiting actions on a 
written contract to within 10 years after the action accrues.

3 Limiting actions on 
improvements to real property to within 10 years of substantial 
completion.

4 Pioneer contends it can 
assert its claims would not be barred by WYO. STAT. § 1-3-107(a)(i) (1988) on 
the theory that a claim for professional negligence may be brought within two 
years of discovery. The record does not reflect that this issue was posed to the 
district court, in any meaningful sense, and we will not consider it 
here.

5 WYO. STAT. § 1-36-104(a) 
(1988) reads:

On application of a party 
showing an arbitration agreement and the opposing party's refusal to arbitrate, 
the court shall order the parties to proceed with arbitration. If the opposing 
party denies the existence of the agreement to arbitrate, the court shall 
proceed summarily to determine the issue raised and shall order or deny 
arbitration accordingly.