- 502 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

Kingery Construction Co., appellee, 

v. 6135 O Street Car Wash, LLC, 

a Nebraska limited liability 

company, appellant.

___ N.W.2d ___

Filed September 23, 2022. No. S-21-797.

1. Arbitration and Award. Whether a stay of proceedings should be 

granted and arbitration required is a question of law.

2. Judgments: Appeal and Error. When reviewing questions of law, an 

appellate court has an obligation to resolve the questions independently 

of the conclusion reached by the trial court.

3. Jurisdiction: Appeal and Error. Before reaching the legal issues 

presented for review, it is the duty of an appellate court to determine 

whether it has jurisdiction over the matter before it, and this is so even 

where neither party has raised the issue.

4. Arbitration and Award: Final Orders: Appeal and Error. A court 

order staying an action pending arbitration is a final, appealable 

order because it affects a substantial right and is made in a special 

proceeding.

5. Federal Acts: Arbitration and Award: Contracts. If arbitration arises 

from a contract involving interstate commerce, it is governed by the 

Federal Arbitration Act.

6. ____: ____: ____. The Federal Arbitration Act, 9 U.S.C. § 2 (2018), 

preempts inconsistent state laws that apply solely to the enforceability 

of arbitration provisions in contracts evidencing a transaction involving 

interstate commerce.

7. ____: ____: ____. Under the Federal Arbitration Act, 9 U.S.C. § 3 

(2018), the court in which a suit or proceeding is pending, upon being 

satisfied that the issue involved in the suit or proceeding is referable to arbitration under an agreement in writing for arbitration, shall 

on application of one of the parties stay the trial of the action until 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

10/21/2022 08:05 AM CDT
- 503 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

arbitration has been had in accordance with the terms of the agreement, provided the applicant for the stay is not in default in proceeding 

with arbitration.

8. Arbitration and Award. Under the Federal Arbitration Act, 9 U.S.C. 

§ 4 (2018), the court shall hear the parties and, upon being satisfied 

that the making of the agreement for arbitration or the failure to comply 

therewith is not in issue, shall make an order directing the parties to 

proceed to arbitration in accordance with the terms of the agreement.

9. Judgments: Intent: Words and Phrases. While the doctrine of stare 

decisis is entitled to great weight, it was never intended to indefinitely 

perpetuate erroneous decisions.

10. Waiver: Words and Phrases. “Waiver” of a right is voluntary and 

intentional relinquishment of a known right, privilege, or claim, and 

may be demonstrated by or inferred from a person’s conduct.

Appeal from the District Court for Lancaster County: 

Lori A. Maret, Judge. Reversed and remanded for further 

proceedings.

Jordan W. Adam, of Fraser Stryker, P.C., L.L.O., for 

appellant.

Brian S. Koerwitz, of Endacott, Peetz, Timmer & Koerwitz, 

P.C., L.L.O., for appellee.

Miller-Lerman, Cassel, Stacy, Funke, Papik, and 

Freudenberg, JJ., and Hall, District Judge.

Funke, J.

INTRODUCTION

Kingery Construction Co. (Kingery) sued 6135 O Street Car 

Wash, LLC (OSCW), for breach of contract and later moved 

to stay the case for arbitration under 9 U.S.C. § 3 (2018) of 

the Federal Arbitration Act (FAA). OSCW opposed Kingery’s 

motion, arguing that Kingery waived its right to arbitration by 

its litigation-related conduct. The district court found that there 

was no waiver because OSCW was not prejudiced by Kingery’s 

conduct. In so finding, the district court relied on our decision 
- 504 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

in Good Samaritan Coffee Co. v. LaRue Distributing,

 1 which 

adopted a three-part test of waiver based on litigation-related 

conduct used by the U.S. Court of Appeals for the Eighth 

Circuit. OSCW appealed. While the appeal was pending, the 

U.S. Supreme Court ruled in Morgan v. Sundance, Inc., 2 that 

the Eighth Circuit erred in conditioning a waiver of the right to 

arbitration on a showing of prejudice. In light of Morgan, we 

reverse, and remand for further proceedings.

BACKGROUND

OSCW and Kingery entered a $2,087,092 agreement for the 

construction of a carwash in Lincoln, Nebraska, on March 30, 

2020. They based their agreement on the 2017 version of the 

American Institute of Architects’ “Standard Abbreviated Form 

of Agreement Between Owner and Contractor.”

Section 5.1 of the agreement provides, “Arbitration pursuant to Section 21.6 of this Agreement” shall be the method of 

binding dispute resolution “[f]or any claim subject to, but not 

resolved by, mediation pursuant to Section 21.5.”

Section 21.6, in turn, requires that arbitration be administered by the American Arbitration Association (AAA) in 

accordance with the “Construction Industry Arbitration Rules” 

in effect on the date of the agreement, unless the parties agree 

otherwise. Section 19.2 further prescribes that the FAA “shall 

govern Section 21.6” if the parties select arbitration as their 

method of binding dispute resolution.

In addition, § 21.3, captioned “Time Limits on Claims,” 

requires that the parties commence all claims and causes of 

action against each other arising out of or related to the agreement “in accordance with the requirements of the final dispute 

resolution method selected in this Agreement . . . within the 

1 Good Samaritan Coffee Co. v. LaRue Distributing, 275 Neb. 674, 748 

N.W.2d 367 (2008).

2 Morgan v. Sundance, Inc., ___ U.S.___, 142 S. Ct. 1708, 212 L. Ed. 2d 

753 (2022).
- 505 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

period specified by applicable law, but in any case not more 

than 10 years after the date of Substantial Completion of the 

Work.” Section 21.3 also provides that the parties “waive all 

claims and causes of action not commenced in accordance with 

[the agreement’s] Section 21.3.”

Kingery sued OSCW for breach of contract on April 16, 

2021, seeking recovery of $41,698.57 allegedly owed to 

Kingery for work performed under the agreement, as well as 

attorney fees and interest under the Nebraska Construction 

Prompt Payment Act, codified at Neb. Rev. Stat. § 45-1201 et 

seq. (Reissue 2021).

OSCW moved to dismiss Kingery’s complaint with prejudice on May 19, 2021, arguing that Kingery waived its breach 

of contract claim under § 21.3 of the agreement by filing suit 

on the claim, rather than commencing it in arbitration. Kingery 

responded by filing a demand for arbitration with the AAA on 

June 8 and a motion to stay the case for arbitration with the 

district court on June 9.

The AAA contacted OSCW and Kingery on June 23, 2021, 

to inform them that the matter was being administered under 

the “Fast Track Procedures” of the Construction Industry 

Arbitration Rules and that OSCW had until June 30 to make 

any answer or counterclaim.

The district court held a hearing on June 29, 2021, to consider Kingery’s motion to stay and motion to compel arbitration, as well as OSCW’s motion to dismiss. At the hearing, 

OSCW reiterated its argument that Kingery waived its breach 

of contract claim under § 21.3 of the parties’ agreement. 

OSCW also argued that Kingery waived its right to stay the 

case for arbitration under § 3 of the FAA by its litigationrelated conduct based on the three-part test of waiver set 

forth in LaRue Distributing.

 3 Specifically, OSCW asserted 

that Kingery’s knowledge of its right to arbitration cannot be 

disputed, given that “it’s now trying to initiate an arbitration 

3 See Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.
- 506 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

action”; that Kingery acted inconsistently with this right by 

filing suit; and that Kingery’s litigation-related conduct prejudiced OSCW because there have been “hearing[s] on . . . a 

couple motions, travel time, time, and [the] expense of briefing this and so forth.” OSCW further maintained that the 

motion to arbitrate was “prejudicial in and of itself” because 

Kingery filed it to avoid a court ruling “here, now at this 

time” dismissing its claim with prejudice. OSCW also asked 

the district court to stay the AAA arbitration case pending the 

court’s decision.

Kingery disputed OSCW’s interpretation of § 21.3 of the 

parties’ agreement, arguing that it provides for waiver only 

of claims not brought within the prescribed time, rather than 

claims not commenced in arbitration. As to waiver under the 

FAA, Kingery did not dispute its awareness of its right to 

arbitration, but asserted “[n]o Court has ever held” that filing 

a lawsuit is inconsistent with the right to arbitration. Kingery 

also disputed OSCW’s claim of prejudice because less than 2 

months passed between when Kingery filed suit and when it 

moved for a stay and because OSCW had not yet briefed the 

issue. Kingery asserted this fell short of the litigation-related 

conduct seen in LaRue Distributing.

On June 30, 2021, 1 day after the hearing and the day 

OSCW’s answer and counterclaim were due to the AAA, the 

district court granted OSCW’s motion to stay the arbitration case.

Subsequently, on September 1, 2001, the district court 

reversed that order and granted Kingery’s motion to stay 

the district court case under § 3 of the FAA. In so doing, 

the court adopted OSCW’s arguments regarding Kingery’s 

knowledge of its right to arbitration and action inconsistent 

with that right. However, the court agreed with Kingery that 

OSCW suffered no prejudice because of Kingery’s litigationrelated conduct. In so finding, it noted that it had not decided 

any substantive issue, that “less than 2 months” had passed 

between the lawsuit’s filing and the motion for a stay, and 
- 507 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

that “minimal litigation . . . ha[d] occurred to this point.” The 

district court also noted that it did not reach the merits of 

OSCW’s motion to dismiss with prejudice due to Kingery’s 

alleged waiver of its claim under § 21.3 of the parties’ 

agreement.

OSCW appealed to the Nebraska Court of Appeals, and 

we moved the matter to our docket. After oral argument in 

this court, we requested supplemental briefing by the parties 

addressing what constitutes default in proceeding with arbitration under § 3 of the FAA after the U.S. Supreme Court’s decision in Morgan.

 4 The parties promptly submitted supplemental 

briefs, which we have considered.

ASSIGNMENTS OF ERROR

OSCW assigns, restated, that the district court erred in (1) 

requiring a showing of prejudice to prove a party waived its 

right to arbitration under the FAA, given that § 2 of the FAA 

calls for state law to be applied when determining whether 

agreements to arbitrate are valid and enforceable and that prejudice is not otherwise required to show waiver under Nebraska 

contract law, and, alternatively, (2) concluding OSCW was 

not prejudiced under the three-part test of waiver set forth in 

LaRue Distributing.

 5

STANDARD OF REVIEW

[1,2] Whether a stay of proceedings should be granted and 

arbitration required is a question of law. 6 When reviewing 

questions of law, this court has an obligation to resolve the 

questions independently of the conclusion reached by the trial 

court. 7

4 See Morgan v. Sundance, Inc., supra note 2.

5 See Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.

6 Noah’s Ark Processors v. UniFirst Corp., 310 Neb. 896, 970 N.W.2d 72 

(2022).

7 Id.
- 508 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

ANALYSIS

The district court granted Kingery’s motion to stay its 

breach of contract case against OSCW based on the threepart test of waiver that we adopted in LaRue Distributing.

 8

Under this test, a party seeking arbitration may be found to 

have waived its right to arbitration if it (1) knew of an existing right to arbitration; (2) acted inconsistently with that right; 

and (3) prejudiced the other party by these inconsistent acts. 9

As relevant here, OSCW was required to show it was prejudiced by Kingery’s litigation-related conduct. OSCW argued 

before the district court that it suffered such prejudice because 

of “hearing[s] on . . . a couple motions, travel time, time, 

and [the] expense of briefing this and so forth.” However, on 

appeal, it also argued that prejudice should not be required 

when determining whether a party has waived its right to stay 

a case for arbitration.

It is generally true that when a party raises an issue for 

the first time in an appellate court, the court will disregard 

it because a lower court cannot commit error in resolving an 

issue never presented and submitted to it for disposition. 10

However, we have previously found that this rationale does not 

apply in cases, like this one, where the party would have had 

to ask a lower court not to follow a controlling decision from 

this court in order to preserve for appeal an issue that the party 

claims we incorrectly decided. 11

As such, in light of the U.S. Supreme Court’s decision 

in Morgan,

 12 we agree and overrule our decision in LaRue 

8 See Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.

9 Id.

10 Eletech, Inc. v. Conveyance Consulting Group, 308 Neb. 733, 956 N.W.2d 

692 (2021).

11 See, e.g., State v. Vann, 306 Neb. 91, 944 N.W.2d 503 (2020); Bassinger v. 

Nebraska Heart Hosp., 282 Neb. 835, 806 N.W.2d 395 (2011).

12 Morgan v. Sundance, Inc., supra note 2.
- 509 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

Distributing 13 and cases relying on it to the extent they can be 

read to hold that prejudice is necessary for a waiver based on 

litigation-related conduct.

Jurisdiction

[3] Before reaching the legal issues presented for review, 

it is the duty of an appellate court to determine whether it 

has jurisdiction over the matter before it. 14 This is so even 

where, as here, neither party has raised the issue. 15 Under Neb. 

Rev. Stat. § 25-1911 (Reissue 2016), for an appellate court to 

acquire jurisdiction of an appeal, there must be a final judgment or final order entered by the tribunal from which the 

appeal is taken. 16

[4] We have previously found that a court order staying an 

action pending arbitration is a final, appealable order under 

Neb. Rev. Stat. § 25-1902 (Cum. Supp. 2020) because it affects 

a substantial right and is made in a special proceeding. 17 In 

this context, a stay has the same effect as a dismissal, because 

the “‘parties cannot litigate their dispute in state courts.’” 18

Accordingly, this court has jurisdiction to consider this appeal 

of the district court’s order granting Kingery’s motion to stay 

the pending case in district court.

Prejudice as Requirement for Waiver

[5,6] Congress enacted the FAA 19 nearly a century ago, in 

1925, with the stated goal of placing arbitration agreements 

13 Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.

14 Cullinane v. Beverly Enters. - Neb., 300 Neb. 210, 912 N.W.2d 774 

(2018).

15 Id.

16 In re Estate of Anderson, 311 Neb. 758, 974 N.W.2d 847 (2022).

17 Citizens of Humanity v. Applied Underwriters, 299 Neb. 545, 909 N.W.2d 

614 (2018).

18 Id. at 555, 909 N.W.2d at 624.

19 9 U.S.C. §§ 1 through 16 (2018).
- 510 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

“‘upon the same footing as other contracts, where [they] 

belong[],’” and overcoming courts’ “longstanding refusal” 

to enforce such agreements. 20 Section 2 of the FAA, sometimes described as its “key provision,” provides that written 

arbitration agreements in contracts involving interstate commerce are “‘valid, irrevocable, and enforceable, save upon such 

grounds as exist at law or in equity for the revocation of any 

contract.’” 21 The U.S. Supreme Court has held that state law 

applies when determining whether an arbitration agreement is 

valid and enforceable under § 2, 22 and we have found that the 

FAA preempts inconsistent state laws that apply solely to the 

enforceability of arbitration provisions in contracts involving 

interstate commerce. 23

[7,8] Sections 3 and 4 of the FAA, in turn, “establish[] procedures” by which the “substantive rule” of § 2 may be implemented. 24 Specifically, they prescribe that “any . . . court[] of 

the United States” in which a suit or proceeding is brought on 

an issue that may be referred to arbitration shall stay the case 

for arbitration upon a party’s application so long as the “applicant . . . is not in default in proceeding with . . . arbitration.” 25

20 Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 219, 105 S. Ct. 1238, 

84 L. Ed. 2d 158 (1985), quoting H.R. Rep. No. 96, 68th Cong., 1st Sess. 

(1924).

21 Prima Paint v. Flood & Conklin, 388 U.S. 395, 400, 87 S. Ct. 1801, 18 L. 

Ed. 2d 1270 (1967), quoting 9 U.S.C. § 2.

22 See, e.g., Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31, 125 S. 

Ct. 2129, 161 L. Ed. 2d 1008 (2009) (“‘[s]tate law’ . . . is applicable to 

determine which contracts are binding under § 2 . . . ‘if that law arose to 

govern issues concerning the validity, revocability, and enforceability of 

contracts generally’”).

23 See, e.g., Aramark Uniform & Career Apparel v. Hunan, Inc., 276 Neb. 

700, 757 N.W.2d 205 (2008); Dowd v. First Omaha Sec. Corp., 242 Neb. 

347, 495 N.W.2d 36 (1993).

24 Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68, 130 S. Ct. 2772, 177 

L. Ed. 2d 403 (2010).

25 9 U.S.C. § 3.
- 511 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

They similarly provide for a party aggrieved by another’s 

“alleged failure, neglect, or refusal . . . to arbitrate” to ask the 

court for an order compelling arbitration. 26 We have noted that 

the U.S. Supreme Court has never held that these “procedural 

sections” of the FAA apply to state courts. 27 However, we have 

previously taken the view that § 3 applies to state court proceedings 28 and have ruled on motions to stay and compel made 

under §§ 3 and 4. 29

In our 2008 decision in LaRue Distributing, we relied 

upon a test of waiver used by the Eighth Circuit that included 

prejudice when considering whether the district court erred 

in denying the defendants’ motion to stay trial and compel 

arbitration under §§ 3 and 4 of the FAA. 30 Their agreement 

with the complainant required that “‘[a]ll controversies relating to, in connection with, or arising out of this contract’” 

be settled by arbitration. 31 However, when the complainant 

sued for breach of contract and tortious interference with a 

business relationship, the defendants did not initially seek 

arbitration. 32 Instead, over a 3-year period, they served several sets of written discovery requests on the complainant, 

26 9 U.S.C. § 4.

27 See, e.g., Kremer v. Rural Community Ins. Co., 280 Neb. 591, 599, 788 

N.W.2d 538, 547 (2010).

28 Dowd v. First Omaha Sec. Corp., supra note 23, 242 Neb. at 350, 495 

N.W.2d at 39 (“[t]he U.S. Supreme Court has held that the FAA requires 

state courts, as well as federal courts, to grant stays pending arbitration”), 

citing Moses H. Cone Hospital v. Mercury Constr. Corp., 460 U.S. 1, 26, 

103 S. Ct. 927, 74 L. Ed. 2d 765 (1983) (“state courts, as much as federal 

courts, are obliged to grant stays . . . under § 3 of the [FAA]”).

29 See, e.g., Cullinane v. Beverly Enters. - Neb., supra note 14; Good 

Samaritan Coffee Co. v. LaRue Distributing, supra note 1; Dowd v. First 

Omaha Sec. Corp., supra note 23.

30 See Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.

31 Id. at 676, 748 N.W.2d at 370.

32 Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.
- 512 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

exchanged pleadings, filed a counterclaim, and filed and 

received a ruling on a motion for summary judgment. 33 Only 

then did they move to stay the case and compel arbitration. 34

The district court denied the motion, the defendants appealed, 

and we affirmed. 35

In so doing, we first noted that § 3 of the FAA requires a 

court case to be stayed for arbitration only if the party seeking 

the stay “‘is not in default in proceeding with . . . arbitration’” 

and that “‘default’” has been interpreted to “include” waiver. 36

We next applied the Eighth Circuit’s test for waiver, without 

expressly holding that this test is required to be used. 37 In 

doing so, we found that all three factors “weigh[ed] in favor” 

of waiver in the LaRue Distributing defendants’ case 38: There 

was no contention or evidence that they were unaware of their 

right to arbitration, that they acted inconsistently with this right 

with their litigation-related conduct over 3 years, and that their 

conduct “had the inevitable effect of causing [the complainant] 

to expend substantial time and resources in connection with 

this case.” 39

The same Eighth Circuit test that we adopted in LaRue 

Distributing—and that the district court relied upon when 

granting Kingery’s motion to stay this case—was at issue in the 

U.S. Supreme Court’s decision on May 23, 2022, in Morgan.

 40

Robyn Morgan had sued her former employer, Sundance, 

Inc., for alleged violations of federal labor law. As part of her 

job application, Morgan agreed to “‘use confidential binding 

33 Id.

34 Id.

35 Id.

36 Id. at 682, 748 N.W.2d at 374.

37 Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.

38 Id. at 684, 748 N.W.2d at 375.

39 Id. at 686, 748 N.W.2d at 377.

40 Morgan v. Sundance, Inc., supra note 2.
- 513 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

arbitration, instead of going to court.’” 41 However, when 

Morgan sued, Sundance did not initially move to stay the case 

and compel arbitration. Instead, over a period of 8 months, it 

filed a motion to dismiss and an answer and engaged in mediation, before invoking arbitration.

The district court found that Sundance had waived its right 

to arbitration with its litigation-related conduct, but the Eighth 

Circuit disagreed on the grounds that Morgan suffered no prejudice because 4 of the 8 months were spent waiting for a decision from the court on a “quasi-jurisdictional” issue, no discovery was conducted, and Morgan would not need to “duplicate 

her efforts during arbitration.” 42 Morgan sought review from 

the U.S. Supreme Court, which agreed to hear the case because 

the federal courts of appeals took different views as to whether 

prejudice is required to show a waiver of the right to arbitration 

under the FAA. 43 Morgan argued, like OSCW did on appeal 

before this court, that prejudice should not be required, because 

§ 2 of the FAA calls for state law to be used in determining 

whether an agreement to arbitrate is enforceable and because 

state contract law generally does not require prejudice for a 

waiver. Sundance countered that waiver involves § 3, not § 2, 

and that thus, federal rules govern and impose no deadline for 

seeking arbitration.

The U.S. Supreme Court ruled in favor of Morgan, but 

based its decision on § 6 of the FAA, which, it observed, 

provides that “any application [to the court thereunder] ‘shall 

be made and heard in the manner provided by law for the 

making and hearing of motions,’” except as otherwise therein 

expressly provided. 44 Specifically, the Supreme Court found 

that the phrase “any application” in § 6 of the FAA includes 

41 Id., 142 S. Ct. at 1711.

42 Morgan v. Sundance, Inc., 992 F.3d 711, 715 (8th Cir. 2021), vacated and 

remanded, Morgan v. Sundance, Inc., supra note 2.

43 Morgan v. Sundance, Inc., supra note 2.

44 Id., 142 S. Ct. at 1714, quoting 9 U.S.C. § 6.
- 514 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

applications to stay a court case and compel arbitration under 

§§ 3 and 4 of the FAA and noted that “a federal court assessing waiver does not generally ask about prejudice.” 45 As such, 

the Morgan Court concluded that the Eighth Circuit erred in 

imposing an arbitration-specific requirement of prejudice. It 

noted that the Eighth Circuit and other federal courts which 

required prejudice did so based on the federal “‘policy favoring arbitration,’” but found that that policy “does not authorize 

federal courts to invent special, arbitration-preferring procedural rules.” 46

[9] In light of the U.S. Supreme Court’s decision in Morgan, 

we overrule our earlier decision in LaRue Distributing and 

cases relying on it to the extent they can be read to hold that 

prejudice is required for a waiver based on litigation-related 

conduct. 47 While the doctrine of stare decisis is entitled to 

great weight, it was never intended to indefinitely perpetuate 

erroneous decisions, 48 and LaRue Distributing is erroneous 

insofar as it appears to condition a waiver of the right to stay 

a case for arbitration under § 3 of the FAA upon a showing of prejudice. LaRue Distributing applied a three-part test 

of waiver used by the Eighth Circuit that the U.S. Supreme 

Court has held is erroneous. As such, continued application 

of the Eighth Circuit’s test by this court would be erroneous. 

However, our decision leaves untouched the central holding 

of LaRue Distributing that the court, rather than the arbitrator, 

should generally determine whether a party waived its right to 

arbitration under the FAA based on litigation-related conduct. 49

Only the language adopting the Eighth Circuit’s prejudice 

requirement is disapproved.

45 Id., 142 S. Ct. at 1713.

46 Id.

47 See, Morgan v. Sundance, Inc., supra note 2; Good Samaritan Coffee Co. 

v. LaRue Distributing, supra note 1.

48 See Heckman v. Marchio, 296 Neb. 458, 894 N.W.2d 296 (2017).

49 Good Samaritan Coffee Co. v. LaRue Distributing, supra note 1.
- 515 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

In overruling this aspect of LaRue Distributing, we are 

aware that Morgan was directed to the federal courts and that 

questions have been raised about the application of the FAA 

generally and § 3 specifically to state court proceedings. 50

However, OSCW and Kingery both acknowledge that the FAA 

applies here under § 19.2 of the agreement, which calls for 

the FAA to govern arbitration proceedings if the parties select 

arbitration as their method of binding dispute resolution, as 

they did. Moreover, even if the parties were not of this view, 

we find nothing in Morgan to suggest that modifications must 

be made to our earlier decisions which, directly or inferentially, 

apply §§ 3 and 4 of the FAA to Nebraska state court proceedings at this time in light of the facts and circumstances of this 

case. OSCW asserts that the U.S. Supreme Court has “held 

that Section 3 is inapplicable to state court lawsuits,” but the 

cases cited in support of this proposition state only that the 

U.S. Supreme Court has never held that § 3 applies to State 

court proceedings. 51

Morgan also “assume[d] without deciding” that the federal 

courts are correct to “resolve[] cases like this one as a matter of federal law, using the terminology of waiver,” 52 and 

expressly gave the Eighth Circuit the option to determine 

whether Sundance knowingly relinquished the right to arbitration by acting inconsistently with that right or “determine 

50 See, e.g., Badgerow v. Walters, ___ U.S. ___, 142 S. Ct. 1310, 1326, 212 

L. Ed. 2d 355 (2022) (Breyer, J., dissenting) (“we cannot be sure that state 

courts have the same powers under the FAA that federal courts have”);

DirectTV, Inc. v. Imburgia, 557 U.S. 47, 136 S. Ct. 463, 193 L. Ed. 2d 365 

(2015) (Thomas, J., dissenting) (FAA as whole inapplicable to state court 

proceedings); Southland Corp. v. Keating, 465 U.S. 1, 104 S. Ct. 852, 79 

L. Ed. 2d 1 (1984) (O’Connor, J., dissenting; Rehnquist, J., joins) (§§ 3 

and 4 of FAA inapplicable to state court proceedings).

51 Supplemental brief for appellant at 14. See, Volt Info. Sciences v. Leland 

Stanford Jr. U., 489 U.S. 468, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989);

Southland Corp. v. Keating, supra note 50.

52 Morgan v. Sundance, Inc., supra note 2, 142 S. Ct. at 1712.
- 516 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

that a different procedural framework (such as forfeiture) is 

appropriate.” 53 Nonetheless, we find that waiver remains a suitable term and focus for analysis for now. OSCW and Kingery 

agree that the standards for default, waiver, and forfeiture are 

much the same under Nebraska law, although they disagree 

about the conclusions to be drawn based upon the application 

of these standards in this case, and Nebraska law as to waiver 

is generally consistent with federal law.

[10] Under federal and Nebraska law, “waiver” of a right 

is voluntary and intentional relinquishment of a known right, 

privilege, or claim, and may be demonstrated by or inferred 

from person’s conduct. 54 We have noted that an agreement 

to arbitrate can be waived by the parties. 55 We have further 

held that state law governs the formation of contracts, as well 

as the validity, revocability, and enforceability of contracts 

generally, 56 and the U.S. Supreme Court has declared that state 

contract law applies to contracts with arbitration agreements 

governed by the FAA. 57

Since the district court here decided the matter upon a 

legal framework which has since been found erroneous and 

because waiver is a question of fact, 58 the matter must be 

remanded back to the trial court for further proceedings. 

Upon remand, the district court should apply our ordinary 

53 Id., 142 S. Ct. at 1714.

54 Compare U.S. Pipeline v. Northern Natural Gas Co., 303 Neb. 444, 930 

N.W.2d 460 (2019) (waiver of right under contract) with State v. Figures, 

308 Neb. 801, 957 N.W.2d 161 (2021) (waiver of defendant’s right to be 

present at trial) and Morgan v. Sundance, Inc., supra note 2 (similar as to 

contract and other cases).

55 Boyd v. Cook, 298 Neb. 819, 906 N.W.2d 31 (2018).

56 Cullinane v. Beverly Enters. - Neb., supra note 14.

57 Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681, 116 S. Ct. 1652, 134 

L. Ed. 2d 902 (1996).

58 See Siouxland Ethanol v. Sebade Bros., 290 Neb. 230, 859 N.W.2d 586 

(2015).
- 517 -

Nebraska Supreme Court Advance Sheets

312 Nebraska Reports

KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH

Cite as 312 Neb. 502

waiver standards to determine whether Kingery has waived 

its right to arbitrate.

Because the order is reversed and the cause remanded to 

the district court for further proceedings, we need not consider 

OSCW’s other assignments of error. An appellate court is not 

obligated to engage in an analysis that is not necessary to adjudicate the case and controversy before it. 59

CONCLUSION

Because we find prejudice is not required to prove a party 

waived its right to stay a court case pending arbitration under 

§ 3 of the FAA after the U.S. Supreme Court’s decision in 

Morgan,

 60 we reverse the order of the district court and remand 

the cause for further proceedings consistent with this opinion.

Reversed and remanded for 

further proceedings.

Heavican, C.J., not participating.

59 State v. Huston, 298 Neb. 323, 903 N.W.2d 907 (2017).

60 Morgan v. Sundance, Inc., supra note 2.