Title: Jackson State Bank v. Homar

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Jackson State Bank v. Homar1992 WY 107837 P.2d 1081Case Number: 91-134Decided: 08/28/1992Supreme Court of Wyoming
JACKSON STATE BANK, a 
Wyoming Banking Corporation,

 Appellant 
(Plaintiff),

v.

Frank A. HOMAR; Sally 
Homar; Paul Homar; and Linda Martin, d/b/a Flat Creek Holdings, Appellees 
(Defendants).

Appeal from District 
Court, TetonCounty, D. Terry Rogers, 
J.

Mayo 
Sommermeyer, Timothy J. Dow, Thomas K. Higley of Anderson, Sommermeyer, Wick 
& Dow, Fort Collins, Colo., and David K. Larson of Mullikin, Larson & 
Swift, Jackson, for appellant.

Robert B. Ranck 
and William P. Schwartz of Ranck & Schwartz, Jackson, for 
appellee.

Before MACY, C.J., and THOMAS, CARDINE, 
URBIGKIT* and GOLDEN, JJ.

* Chief Justice at the 
time of oral argument.

GOLDEN, Justice.

[¶1]      Appellant Jackson 
State Bank appeals the district court's denial of its motion to stay proceedings 
and for arbitration in a dispute concerning an arbitration clause in a lease 
agreement involving appellees Frank A. Homar, Sally Homar, Paul Homar and Linda 
Martin, d/b/a Flat Creek Holdings and Chad R. Budge.

[¶2]      We reverse the 
lower court's denial and remand this case for arbitration.

ISSUES

[¶3]      Appellant 
presents the following issues on appeal:

I. Whether § 1-36-104(a) 
W.S. 1977, as amended, requires a plaintiff to allege in his complaint that the 
opposing party has refused to arbitrate.

II. Whether a plaintiff 
waives the right to arbitrate by filing a lawsuit to compel arbitration and to 
obtain a declaration with respect to the rights of the parties.

III. Whether actions 
indicating a possible intention to waive a right to arbitrate constitute an 
effective waiver absent a showing of prejudice to the party seeking to avoid 
arbitration.

IV. Whether a broadly 
worded arbitration agreement can be avoided by means of counterclaims which are 
based nominally on fraud, negligent misrepresentation or other non-contractual 
theories.

 

[¶4]      Appellees present 
the issues for review quite simply as:

I. Whether the District 
Court properly denied the Bank's motion to stay proceedings and to compel 
arbitration.

FACTS

[¶5]      On June 1, 1975, 
Flat Creek Enterprises entered into a lease agreement with Jackson Food Market, 
Inc., (Market), a grocery business operated by Brent and Kathy Morris. Flat 
Creek leased to Market certain property owned by Flat Creek in TetonCounty for a period of fifteen years with 
two options to extend the lease for two successive periods of five years each. 
Now doing business as Flat Creek Holdings, this Wyoming general partnership includes Frank A. 
Homar, Sally Homar, Linda Martin, and Paul Homar. The lease agreement was 
modified in 1976 with respect to the property description only. In 1977, the 
Market borrowed money from Jackson State Bank (Bank), secured partially by 
assignment of its leasehold interest in the Flat Creek property, through a 
pledge of lease, to which Flat Creek gave its consent. The principals of the 
grocery business, Brent and Kathy Morris, died in an airplane crash in 1979, and 
the Market ceased doing business. With the loan to the Market in default, the 
Bank looked to the lease as security on the note and became the successor in 
interest to the Market on the lease.

[¶6]      In 1980, the Bank 
subleased the Flat Creek property previously occupied by the Market to Chad R. 
and Cynthia M. Budge. An addendum was executed by Flat Creek and the Bank in 
1981 to modify the 1975 lease, adjusting the rent and changing the use of the 
premises. In 1990, at the expiration of the original fifteen-year lease term, a 
dispute arose between the Bank and Flat Creek concerning the rental amount due 
for the renewal term and negotiations ensued. The Budges continued to occupy the 
premises and, with the Bank, became holdover tenants beyond the lease expiration 
date. In the original 1975 lease, paragraphs 4(b) and 29 contain provisions 
requiring the parties to arbitrate any dispute over the amount of the renewal 
rent or rights, duties or liabilities of either party. Six letters changed hands 
between the parties from June 11 to December 4, 1990, concerning arbitration of 
the parties' disputes under the lease.

[¶7]      The Bank filed a 
complaint in district court on December 3, 1990, and an amended complaint on 
December 21, 1990, referencing the arbitration provisions in the lease and 
seeking to compel arbitration of the renewal rent amount and issues of breach or 
default of the modified June 1, 1975 lease. The complaint sought a judgment 
declaring and adjudicating the respective rights of the parties concerning the 
pledge of lease as collateral and the June 1, 1975 lease, including its 
modifications and addenda and declaring appellant entitled to continued 
possession and sublease of the premises. The complaint also sought a judgment 
against Chad R. Budge declaring the renewal rent owed to be determined by 
arbitration. Appellees presented counterclaims and crossclaims seeking 
rescission of the lease for material breaches by appellant; damages as a result 
of appellant's breach of the pledge of lease as collateral; damages including 
punitive damages for negligent misrepresentation, fraud, constructive fraud, 
breach of fiduciary duty, negligence, and bad faith; conversion and wrongful 
detainer against the Bank and Budges; declaratory relief adjudging that the Bank 
and Budges have no rights under the lease and injunctive relief ordering the 
Bank and Budges to relinquish the Flat Creek property; and costs associated with 
this suit. Appellees did not assert the right to arbitrate issues under the 
lease.

[¶8]      Appellees 
demanded a jury trial of all issues on January 2, 1991, and served upon 
appellant interrogatories and request for production of documents. On January 
18, 1991, appellant filed a reply to appellees' counterclaims which asserted 
that all claims should be arbitrated, requested the dismissal of the 
counterclaims pending arbitration, and demanded a jury trial on the issue. 
Appellant served upon appellees interrogatories and a request for production of 
documents. On February 13, 1991, appellant filed a motion for stay of 
proceedings and for arbitration. Appellant's motion for protective order 
regarding appellees' discovery requests was filed on February 15 and denied by 
the trial court. A later motion for stay of discovery and protective order was 
filed by appellant on March 29, 1991, also denied by the trial court. Upon 
stipulation by the parties the district court dismissed, with prejudice, all 
claims against Chad R. Budge. Appellant's motion for stay of proceedings and 
arbitration was denied on May 1, 1991. The district court determined appellant's 
complaint and amended complaint to be deficient under Wyo. Stat. § 1-36-104 
(June 1988) for failure to show appellees' refusal to arbitrate and surmised 
that the act of filing the complaint waived appellant's right to arbitrate its 
claim. The district court stated, in pertinent part:

     It appears to this 
Court that the Plaintiff's Complaint and Amended Complaint were deficient in 
raising the arbitration issue in that they did not allege a refusal of the 
Defendants to arbitrate.

* * * * * *

     Filing suit certainly 
evidences an intention not to rely on redress on the agreement to arbitrate. 
Even if a plaintiff does intend to rely on arbitration, filing such a complaint 
amounts to an attempt to preserve two inconsistent remedies. When a prospective 
plaintiff is aware of his arbitration rights, he should be required to choose 
between arbitration and litigation as a forum for resolving his grievances. This 
position does not take from the plaintiff either his arbitration rights or his 
opportunity to attempt to shift the dispute to a judicial forum; it merely 
requires him to do one or the other at the outset of the dispute. Southern California Law Review, Vol. 52; 1513 at Pg. 
1545.

     The Plaintiff seeks to 
avail itself of two inconsistent remedies in this matter; arbitration and 
litigation. By filing the lawsuit in this matter in the fashion it did, and 
proceeding to litigate this matter for two and one-half months, the Plaintiff 
has now waived its right to arbitration.

Considering the 
order denying motion to stay proceedings and compel arbitration appealable as a 
final order under Wyo. Stat. § 1-36-119(a)(i), appellant filed this 
appeal.

DISCUSSION

I. Failure to 
allege opposing party's refusal to arbitrate UNDER Wyo. Stat. § 
1-36-104(a)

[¶9]      The original 1975 
lease between Flat Creek and the Market contained the following 
clauses:

4(b) Extended 
Term. In the event the Tenant exercises his options to extend the term of 
this lease as hereinabove set forth, the rental for each such extended term 
shall be agreed upon by the parties, or if there is a dispute with respect to 
the fixing of such rental, then the issue with respect thereto shall be 
determined by arbitration as provided for in this lease. It is understood and 
agreed that each extended term shall be upon the same terms and covenants and 
conditions as provided herein except for the rental.

29. ARBITRATION. 
In the event the parties are unable to agree to the rental for extended terms of 
this lease as provided above, or in the event of any controversy which shall 
arise between the Landlord and the Tenant regarding the right[s], duties, or 
liabilities hereunder of either party, the same shall be submitted to 
arbitration and settled thereby pursuant to the provisions of the Uniform 
Arbitration Act of the State of Wyoming.

[¶10]   Appellant's complaint sought to 
compel arbitration of the renewal rent amount and issues of breach or default 
under the lease and also sought a declaratory judgment concerning the respective 
rights of the parties involving the pledge of lease as collateral and the 
original lease.

[¶11]   Wyoming arbitration statutes contain 
procedural provisions regarding the duty of the court when presented with 
application of a party to arbitrate. In pertinent part, one statutory provision 
provides:

(a) 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.

Wyo. Stat. § 
1-36-104(a) (emphasis added).

[¶12]   The right to submit a dispute to 
arbitration is contractual. T & M Properties v. ZVFK Architects and 
Planners, 661 P.2d 1040, 1044 (Wyo. 1983) 
(citing Panhandle Eastern Pipeline Co. v. Smith, 637 P.2d 1020 (Wyo. 1981)). No party is 
required to arbitrate a dispute unless the parties have bargained for this 
procedure as a method of resolve. Hot Springs Co. Sch. Dist. No. 1 v. Strube 
Constr. Co., 715 P.2d 540, 547 (Wyo. 1986); Am. Nat'l Bank of Denver v. Cheyenne 
Housing Authority, 562 P.2d 1017, 1020 (Wyo. 1977) (citing Oil, Chemical & 
Atomic Workers Int'l Union, Local 2-124 v. Am. Oil Co., 528 F.2d 252, 254 (10th 
Cir. 1976)). Through reference to the arbitration provisions of the lease, 
appellant's complaint and amended complaint clearly demonstrated the existence 
of an arbitration agreement between the parties. However, the district court 
interpreted Wyo. Stat. § 1-36-104(a) to mean that a party applying to the court 
must show both an arbitration agreement and the opposing party's 
refusal to arbitrate and found appellant's complaint deficient for its failure 
to include appellees' refusal to arbitrate.

[¶13]   We are asked to interpret the 
meaning of Wyo. Stat. § 1-36-104(a), a question of first impression for this 
court. We begin our analysis of the application to the court to compel 
arbitration under that statute with discussion of the scope of rules in the 
Wyoming Rules of Civil Procedure:

     These rules govern 
procedure in all courts of record in the State of Wyoming, in all actions, 
suits or proceedings of a civil nature, in all special statutory proceedings 
except as provided in Rule 81, and in all appeals in criminal cases. * * * They 
shall be construed to secure the just, speedy and inexpensive determination of 
every action.

Wyo.R.Civ.P. 
1.

[¶14]   It is clear that the Wyoming Rules 
of Civil Procedure apply to actions in arbitration. Rule 3 provides for the 
initiation of such actions through the filing of a complaint.1 Appellant's actions were consistent 
with the rules in this respect. The general rules of pleading under Wyo. 
R.Civ.P. 8 demonstrate the requirements of a claim:

     (a) Claims for 
relief. - A pleading which sets forth a claim for relief whether an original 
claim, counterclaim, cross-claim, or third-party claim, shall contain (1) a 
short and plain statement of the claim showing that the pleader is entitled to 
relief, (2) a demand for judgment for the relief to which he deems himself 
entitled.2

(e) Pleading to be 
concise and direct; consistency.

(1) Each averment of a 
pleading shall be simple, concise, and direct. No technical forms of pleading or 
motions are required.

[¶15]   Notice pleading is recognized by 
Wyo.R.Civ.P. 8(a)(1). Johnson v. Aetna Cas. 
& Sur. Co. of Hartford, Conn., 608 P.2d 1299, 1302 (Wyo. 1980). "This court 
identified as fundamental the obligation of every pleader to apprise his 
adversary of the nature of the claim against him." Glover v. Giraldo, 824 P.2d 552, 556 (Wyo. 1992) (citing Glover v. Berger, 
75 Wyo. 191, 
201, 294 P.2d 793, 796, 60 A.L.R. 2d 583, 589 (1956)). The specificity standard 
of the rule is satisfied where a complainant provides the opposing party fair 
notice of the claims against him. Lynch v. Patterson, 701 P.2d 1126, 1134 
(Wyo. 1985) (citing Guggenmos v. Tom 
Searl-Frank McCue, Inc., 481 P.2d 48, 51-52 (Wyo. 1971)). Technical forms of pleading are 
not required under the rules, therefore, pleadings must be liberally construed 
to ensure substantial justice. Harris v. Grizzle, 599 P.2d 580, 583 (Wyo. 1979) (citing Sump v. City of Sheridan, 358 P.2d 637, 641-43 (Wyo. 1961)).

[¶16]   Arbitration is strongly embedded in 
the public policy of this state and is favored by this court as a voluntary 
method to settle disputes in an inexpensive and expeditious manner without 
resort to strict rules of law and the rigid formality of a tribunal. Hot 
Springs, 715 P.2d  at 547; T & M Properties, 661 P.2d  at 1043; Am. Nat'l 
Bank, 562 P.2d  at 1020; Matter of Town of Greybull, 560 P.2d 1172, 1175 (Wyo. 
1977); Riverton Valley Elec. Ass'n v. Pacific Power & Light Co., 391 P.2d 489, 495 (Wyo. 1964).

[¶17]   The district court found waiver of 
the right to arbitration through appellant's failure to plead the opposing 
party's refusal to arbitrate under Wyo. Stat. § 1-36-104(a). In determining the 
intent of the legislature, "we give effect to every word, clause and sentence 
and construe all components of a statute in pari materia." City of Laramie v. Facer, 814 P.2d 268, 270 (Wyo. 1991). In doing so, 
we must be cognizant of the "statutory objective to be accomplished, the problem 
to be remedied, or the purpose to be served, and then place on the statute a 
reasonable construction which best achieves the purpose of the statute, rather 
than a construction defeating the statutory purpose." Facer, 814 at 270, n. 4 
(quoting State v. Burnett, 227 Neb. 351, 417 N.W.2d 355, 357 (1988)). Mindful 
of these axioms in light of the strong public policy favoring arbitration, we 
find it unnecessary to engage in extensive parsing of the clause at issue in 
Wyo. Stat. § 1-36-104(a). To read the statute to require the moving party's 
complaint to include the opposing party's refusal to arbitrate frustrates the 
legislative intent, negates the public policy favoring arbitration and is simply 
pointless. We agree with appellant that filing the complaint to compel 
arbitration is self evident of the opposing party's refusal to arbitrate and 
find that appellant's complaint was sufficient as an application to compel 
arbitration under Wyo. Stat. § 1-36-104(a).

II. Waiver of 
the right to arbitrate

a. Filing lawsuit to 
compel arbitration

[¶18]   We have recognized that a 
contractual right to arbitration may be waived either expressly or implicitly. 
Burton-Dixie Corp. v. Timothy McCarthy Constr. Co., 436 F.2d 405 (5th Cir., 
1971); Panhandle, 637 P.2d  at 1024-25 (citing Spain v. Houston 
Oilers, 593 S.W.2d 746 (Tex.Civ. App. 1979)). Courts closely scrutinize and will 
not lightly infer claims of waiver, preferring instead to "indulge every 
intendment to give effect to [arbitration] proceedings." Christensen v. Dewor 
Developments, 33 Cal. 3d 778, 661 P.2d 1088, 1090, 191 Cal. Rptr. 8, 10 (1983) 
(quoting Keating v. Superior Court of Alameda Co., 31 Cal. 3d 584, 604-05, 645 P.2d 1192, 183 Cal. Rptr. 360, (1982)).

[¶19]   The constituents of waiver are 
identified as (1) an existing right; (2) knowledge of that right; and (3) an 
intent to relinquish it. Ramirez v. Metropolitan Life Insurance Co., 580 P.2d 1136, 1138 (Wyo. 1978). This court has determined waiver 
to be "the intentional relinquishment of a known right and must be manifest in 
some unequivocal manner * * *" Baldwin v. Dube, 751 P.2d 388, 392 (Wyo. 1988).

[¶20]   Courts that have considered the 
waiver issue have not agreed on one certain test to establish the existence of 
waiver by a party. Note, Frederick Mark Gedicks, Contractual Agreements to 
Arbitrate Disputes: Waiver of the Right to Compel Arbitration, 52 S.Cal.L.Rev. 
1513, 1527 (1979). Factors included in the determination have been "whether the 
party seeking arbitration (1) has `previously taken steps inconsistent with an 
intent to invoke arbitration,' (2) `has unreasonably delayed' in seeking 
arbitration, (3) or has acted in `bad faith' or with `wilful misconduct.'" 
Christensen, 661 P.2d  at 1090-91, 191 Cal. Rptr.  at 10.

[¶21]   Another factor weighed is whether 
merely filing the suit as opposed to actually litigating the merits, results in 
waiver. Doers v. Golden Gate Bridge, Highway & Transp. Dist., 23 Cal. 3d 180, 
588 P.2d 1261, 1265, 151 Cal. Rptr. 837 (1979). And finally, the presence or 
absence of prejudice to the opposing party has been considered. Christensen, 661 P.2d  at 1091, 191 Cal. Rptr.  at 10-11.

[¶22]   The district court relied on 
Christensen to support its finding that appellant waived its right to arbitrate 
by filing the complaint. However, despite the conclusion of the district court, 
we find the facts in Christensen to be markedly different from those in the case 
at bar. In that case, plaintiffs filed a thirty-two page complaint stating seven 
causes of action including breach of contract, promissory estoppel, intentional 
and negligent misrepresentation, intentional and negligent interference with 
prospective economic advantage, and piercing of the corporate veil. Plaintiffs 
also asserted the right to arbitrate under the contract for purposes of 
discovery, only to later dismiss this complaint without prejudice. Christensen, 
661 P.2d  at 1090, 191 Cal. Rptr.  at 9-10. In contrast, here the Bank sought to 
compel arbitration under the lease and a declaratory judgment determining the 
respective rights of the parties. Flat Creek responded with a thirty-four page 
counterclaim, enumerating eleven claims for relief with no mention of the right 
to arbitrate under the lease, followed by an extensive request for discovery and 
production of documents.

[¶23]   The Bank's reply to Flat Creek's 
counterclaim asserted that all claims should be arbitrated and all counterclaims 
dismissed pending arbitration. The Bank objected to appellees' request for 
production of documents and, on February 15, 1991, filed a motion for protective 
order regarding Flat Creek's discovery requests which was denied. On March 29, 
1991, the Bank filed another motion for stay of discovery and protective order 
noting the more limited scope of discovery allowed under Wyo. Stat. § 
1-36-109(a) than that pursued by Flat Creek under Wyo.R.Civ.P. 30. That motion 
was also denied by the district court.

[¶24]   We consider first the three 
Christensen factors. Unlike Christensen, appellant did not initiate the claim in 
order to have some feel for Flat Creek's position with intentions to dismiss the 
action. Christensen, 661 P.2d  at 1090, 191 Cal. Rptr.  at 9-10. It is clear that the Bank 
has not acted inconsistently with an intent to arbitrate. As we have previously 
noted, filing the complaint was appropriate under Wyo. Stat. § 1-36-104(a) to 
initiate the arbitration claim and was not done after unreasonable delay. The 
Bank filed the claim to compel arbitration on December 3, 1990, following the 
expiration of the original lease on May 31, 1990, and following an exchange of 
six letters between the parties discussing arbitration. Once the claim was made, 
the Bank's subsequent actions, including assertion of the right to arbitration 
of claims and motions for protective orders, stay of proceedings and to compel 
arbitration, do not indicate bad faith, wilful misconduct (indeed none was found 
by the district court) or waiver, but instead show evidence of continued 
interest in preserving the right to arbitrate the issues.

[¶25]   It is equally clear from the course 
of the proceedings that actual litigation on the merits of the issues has not 
occurred. Appellant did not waive the right to arbitration of the issues by 
merely filing a complaint to compel arbitration as so entitled to do under Wyo. 
Stat. § 1-36-104(a).

b. Waiver on showing 
of prejudice to the opposing party

[¶26]   Some courts have found that waiver 
may exist absent a judgment on the merits if a demonstration of prejudice to the 
opposing party is shown:

This result is fully 
consistent with federal cases which have held that "as an abstract exercise in 
logic it may appear that it is inconsistent for a party to participate in a 
lawsuit for breach of a contract, and later to ask the court to stay that 
litigation pending arbitration. Yet the law is clear that such participation, 
standing alone, does not constitute a waiver for there is an overriding federal 
policy favoring arbitration. * * * [M]ere delay in seeking a stay of the 
proceedings without some resultant prejudice to a party cannot carry the 
day."

Keating, 31 Cal. 3d  at 605-06, 645 P.2d  at 1204, 183 Cal. Rptr.  at 372-73 (quoting Carcich v. 
Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir. 1968)) (citations omitted). See 
also, Shinto Shipping Co. v. Fibrex & Shipping Co., 572 F.2d 1328, 1330 (9th 
Cir. 1978).

[¶27]   The factor of prejudice to the 
opposing party as evidence of waiver has not been previously considered by this 
court but has been discussed by federal courts considering the issue. See Note, 
Contractual Agreements to Arbitrate Disputes: Waiver of the Right to Compel 
Arbitration, supra, 52 S.Cal.L.Rev. at 1531.

[¶28]   In order to waive the right to 
arbitrate, a party "must actively participate in a lawsuit `in a manner 
inconsistent with the right to arbitrate such that there is prejudice to the 
other party.'" Finkle and Ross v. Becker Paribas, Inc., 622 F. Supp. 1505, 1511 
(S.D.N.Y., 1985) (quoting Rush v. Oppenheimer & Co., 606 F. Supp. 300, 301 
(S.D.N.Y., 1985)). Elements supporting prejudice include

(1) a party that seeks 
arbitration engages in extensive discovery that is not available in arbitration; 
(2) when the party seeking arbitration causes extensive expense and delay by 
litigating continuously in court before seeking arbitration; and (3) when a 
party has continued so far in the litigation that a chance to arbitrate after 
sensing an adverse decision would in effect give that party another chance in a 
second forum.

Rush, 606 F. Supp.  at 301.

[¶29]   An additional factor considered in 
the evaluation of prejudice has been whether a party has taken advantage of 
discovery procedures not available in arbitration. Carcich, 389 F.2d  at 696 n. 
7.

[¶30]   We have said that a "party should 
not be required to litigate disputes which are subject to an arbitration 
agreement." Am. Nat'l Bank, 562 P.2d  at 1020. This comports with our earlier and 
often stated policy favoring arbitration where parties have bargained by 
contract for the process.

[¶31]   "A motion to compel arbitration is 
simply a request for an order compelling specific performance of a part of the 
contract." 6 C.J.S. Arbitration § 39, at 232 (1975). Appellant initiated the 
complaint as an application to compel arbitration under Wyo. Stat. § 
1-36-104(a), not with intent to litigate the issues or engage in "unilateral 
discovery" of Flat Creek's position, unlike the plaintiff in Christensen. In 
appellant's motion for stay of proceedings and protective order, note is taken 
that discovery initiated by Flat Creek under Wyo.R.Civ.P. 30, is much more 
extensive than that allowed under Wyo. Stat. § 1-36-109(a) governing discovery 
in arbitration. Any prejudice that may exist at this point appears to be the 
product of extensive discovery requests first initiated by Flat Creek and the 
district court's failure to compel arbitration or stay proceedings. Accordingly, 
Wyo. Stat. § 1-36-104(a) speaks to the duty of the court to "order parties to 
proceed with arbitration." Following Flat Creek's answer, requiring the parties 
to confer with the court to resolve the issue of right to arbitration and 
provide management for the case would have been prudent. See Wyo.R.Civ.P. 
16.

[¶32]   Where a party has actively 
participated in a lawsuit in a manner inconsistent with the right to arbitrate, 
waiver has been found if prejudice to the opposing party has resulted. Rush, 606 F. Supp.  at 301. Flat Creek complains of acquired expense to perpetuate the 
continued litigation of this issue when it could have insisted on its rights to 
arbitration under the lease. If monetary prejudice has resulted to Flat Creek as 
a consequence of its own litigious actions, blame for that result cannot be laid 
at appellant's feet.

III. Whether 
counterclaims of fraud, negligent misrepresentation and other non-contractual 
theories can avoid the arbitration agreement

[¶33]   Paragraph 29 of the original lease 
agreement states: 

29. ARBITRATION. 
In the event the parties are unable to agree to the rental for extended terms of 
this lease as provided above, or in the event of any controversy which shall 
arise between the Landlord and the Tenant regarding the right[s], duties, or 
liabilities hereunder of either party, the same shall be submitted to 
arbitration and settled thereby pursuant to the provisions of the Uniform 
Arbitration Act of the State of Wyoming.

(Emphasis 
added).

[¶34]   This clause creates a broadly 
worded arbitration agreement. In essence, the parties have agreed to arbitrate 
any dispute arising from their relationship as landlord and tenant. In 
interpreting a contract, the parties' intent becomes our main focus. True Oil 
Co. v. Sinclair Oil Corp., 771 P.2d 781, 790 (Wyo. 1989) (citing State v. Moncrief, 720 P.2d 470 
(Wyo. 1986)); 
Amoco Prod. Co., v. Stauffer Chemical Co. of Wyoming, 612 P.2d 463, 465 (Wyo. 1980.) We have said: 
"If an agreement is in writing and the language is clear and unambiguous, the 
intention is to be secured from the words of the agreement." Nelson v. Nelson, 
740 P.2d 939, 940 (Wyo. 1987). In N & D Fashions, Inc. v. DHJ 
Industries, Inc., 548 F.2d 722 (8th Cir. 1976), the parties had agreed to a very 
similar arbitration clause. The court in that case held: "While N & D's 
claim is nominally based on fraud and misrepresentation rather than breach of 
contract, it plainly arises `in relation to' the contract, and so is within the 
scope of this broad arbitration clause." N & D, 548 F.2d  at 728.

[¶35]   All of the counterclaims asserted 
by Flat Creek concern the lease and the relationship of the parties under the 
lease. We hold that the parties have said what they intend: to submit to 
arbitration any dispute relating to their relationship under the 
lease.

CONCLUSION

[¶36]   We hold that the district court 
erred in finding the Bank's complaint as an application to compel arbitration 
under Wyo. Stat. § 1-36-104(a) deficient for failure to assert appellees' 
refusal to arbitrate. Filing a complaint is an appropriate procedure to compel 
arbitration and appellant did not waive its rights to arbitration by doing so. 
We find no prejudice to Flat Creek and remand this case for arbitration of all 
disputes arising under the lease.

CARDINE, J., files a dissenting 
opinion.

CARDINE, Justice, 
dissenting.

[¶37]   I dissent.

[¶38]   When the agreement of the parties 
which is the subject of their dispute provides for arbitration, the logical and 
usual procedure is that a party wishing to arbitrate demands arbitration without 
filing suit. If the adverse party files suit, then arbitration is demanded at 
the time of answer. In this case, appellant did neither of the above. Appellant 
elected to sue without asserting a right or desire to arbitrate. I would affirm 
the decision of the district judge that waiver of the right to arbitrate 
resulted.

 FOOTNOTES

1 Wyo.R.Civ.P. 3(a) 
states: "How commenced. - A civil action is commenced by filing a complaint with 
the court."

2 Effective March 24, 
1992, Wyo.R.Civ.P. 8(a) reads:

(a) Claims for 
relief. - A pleading which sets forth a claim for relief, whether an 
original claim, counterclaim, cross-claim, or third-party claim shall contain: 
(1) a short and plain statement of the grounds upon which the court's 
jurisdiction depends, unless the court already has jurisdiction and the claim 
needs no new grounds of jurisdiction to support it; (2) a short and plain 
statement of the claim showing that the pleader is entitled to relief; and (3) a 
demand for judgment for the relief the pleader seeks. Relief in the alternative 
or of several different types may be demanded.