Opinion ID: 1387535
Heading Depth: 1
Heading Rank: 1

Heading: was there an agreement to arbitrate?

Text: The primary argument advanced by the School District throughout the various stages of its dispute with Strube is that Strube failed to file its demand for arbitration within 30 days from the date the architect/engineer rendered his decision denying Strube's claim for additional compensation as required by the Wyoming Public Works Standard Specifications. The School District argues that its contract with Strube incorporated these specifications as part of its terms. The district court found that the agreement between the parties did not incorporate the specifications relied upon by the School District. We agree. The contract between the parties was signed on or about May 10, 1982. The only reference to the Wyoming Public Works Standard Specifications in the contract documents provides: All material and methods shall conform to the applicable portion of the Standard Specifications for Public Works, latest edition, (referred to as Standard Specifications hereinafter) unless otherwise specified or directed. (Emphasis added.) This language does not purport to adopt the standard specifications in toto; rather, only the applicable portion dealing with material and methods is referenced. An examination of the specifications reveals that they are divided into 26 sections, ranging from General Conditions to Portland Cement Concrete Pavement. The majority of these sections describe the composition of materials and the manner of installation of such materials. By the language of the contract, the parties recite that they intended that [a]ll material and methods shall conform to the applicable portion of the specifications. This phrase is descriptive of the quality and manner of installation of materials, not the general conditions which contain the provision relied upon by the School District. [3] The parties to an agreement are free to incorporate by reference other documents as part of their contract, the terms of which are equally binding upon the parties. Busch Development, Inc. v. City of Cheyenne, Wyo., 645 P.2d 65 (1982). In the present case, the contract between the parties did not incorporate the provision of the specifications the School District relies on. For this reason the School District's argument that Strube's demand for arbitration was untimely is not well taken. See also Annot., 25 A.L.R.3d 1171 (1969).
As a secondary argument, it is urged by the School District that, if we agree that the contract documents did not include the arbitration provisions of the Wyoming Public Works Standard Specifications, then there is no arbitration provision in any of the contract documents and the arbitrators exceeded their powers by proceeding with arbitration. In its decision letter filed on July 23, 1984, the district court observed: Clearly the parties were not required by any written contract to submit their disputes to arbitration, nor did any Wyoming law require arbitration. No party, under Wyoming law is required to arbitrate disputes unless it has agreed to arbitrate that dispute, American National Bank of Denver v. Cheyenne Housing Authority, 562 P.2d 1017 (Wyo. 1977), Oil, Chemical, Atomic Workers v. American Oil, 528 F.2d 252 ([10th Cir.1976]). There is no statutory authority in Wyoming requiring arbitration. Wyoming law does specify that in order for an arbitration provision to be enforcible [sic], it must be in writing, W.S. sec. 1-36-103. Inasmuch as there was no contractual or statutory provisory requiring arbitration between these two parties the question becomes one of whether Appellant and Appellee agreed to submit their dispute to arbitration. For the answer, an examination of the factual matters must be considered. Appellant, in a letter to Appellee demanded arbitration, early on however there was no request to the American Arbitration Association. Appellee did, however, file a written request for arbitration with the American Arbitration Association on October 21, 1982. Appellant filed its Motion to Dismiss, citing as grounds that Appellee was 97 days late in said request. The Arbitrators heard the argument of counsel and denied the motion. After the denial, the parties then commenced the arbitration proceedings which lasted four days. At no time during the arbitration hearing did Appellant raise the issue or suggest that no arbitration agreement existed between the parties. A Motion to Dismiss for failure to timely request arbitration cannot be convoluted to mean that there was no agreement to arbitration. Appellant, in preparation for the arbitration hearing, corresponded with the American Arbitration Association, requested that certain persons be issued subpoenas and paid a filing fee, (letter dated August 4, 1983 from John Sundahl to American Arbitration Association). This Court finds there was an agreement to arbitrate the dispute and the agreement to arbitrate was outside the provisions of the Wyoming Public Works Standard Specifications. For that reason the arbitrators correctly heard the dispute and did not exceed their powers. An agreement to arbitrate need not be written and can arise as the result of the conduct of parties to an existing dispute regardless of whether or not they have previously contracted for arbitration. 5 Am.Jur.2d, Arbitration and Award § 12, pp. 528-529 (1962); and 6 C.J.S., Arbitration § 8, p. 172 and § 17, p. 187 (1975). Other courts have recognized that a party, by participating in arbitration proceedings, can be deemed to have waived its objections to the arbitrability of the dispute. O'Malley v. Petroleum Maintenance Company, 48 Cal.2d 107, 308 P.2d 9 (1957); American Motorists Insurance Company v. Llanes, 396 Mich. 113, 240 N.W.2d 203 (1976); New Jersey Manufacturers Insurance Company v. Franklin, 160 N.J. Super. 292, 389 A.2d 980 (1978); National Cash Register Company v. Wilson, 8 N.Y.2d 377, 208 N.Y.S.2d 951, 171 N.E.2d 302 (1960); Coventry Teachers' Alliance v. Coventry School Committee, R.I., 417 A.2d 886 (1980); and Annot., 33 A.L.R.3d 1242 (1970). The comments of the Colorado Supreme Court in People v. Crystal River Corporation, 131 Colo. 163, 280 P.2d 429, 432 (1955), are typical: We think it is fundamental law that an individual or an agency of the state may not freely participate in the selection of arbitrators, in accordance with statute, attend the hearing, submit his evidence, hope for a favorable award, and in the event of an adverse finding, seek a review merely because the award is unfavorable to him.    The School District argues that it did not waive its right to object to arbitrability, because it moved to dismiss the arbitration at the commencement of the hearing. In this respect we agree with the district court; a motion to dismiss for untimely filing cannot be reshaped into an objection to jurisdiction on the grounds there is no agreement to arbitrate. In reaching this decision, we are mindful of the provisions of § 1-36-104(a), W.S. 1977: 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. In the present case, the School District, throughout the arbitration proceedings, was aware of Strube's position that the agreement between the parties did not require arbitration, but that Strube was submitting to arbitration voluntarily to attempt to reach an expeditious resolution to its dispute with the School District. In submitting its counterclaim for consideration by the arbitrators, the School District's request for relief sought a resolution of all the disputes between the parties, including issues not raised by Strube. The School District was afforded a full and fair opportunity to test the proof advanced by Strube and to offer evidence in its own behalf on all the issues raised by the various claims and counterclaims. If the School District truly believed that there was no agreement to arbitrate, § 1-36-104(a) provided a speedy and conclusive method to have that question resolved. Under the circumstances present in this case, we have no difficulty in finding the School District by its participation waived its right to raise the issue of whether or not the dispute with Strube was subject to decision in the arbitration proceeding. The School District raises the specter of the effect its refusal to participate in the arbitration proceedings might have had in the event a reviewing court found there was, in fact, an enforceable agreement to arbitrate. In such instance, it is asserted that the opportunity to defend or be heard upon the merits of the case would be lost forever. While we believe that § 1-36-104(a) is designed to avoid this possibility, we find that a party who proceeds with arbitration over his explicit objections as to arbitrability is not foreclosed from raising the issue on a motion to confirm or vacate the award in the district court. Arrow Overall Supply Company v. Peloquin Enterprises, 414 Mich. 95, 323 N.W.2d 1 (1982); New Jersey Manufacturers Insurance Company v. Franklin, supra; Ben Gutman Truck Service, Incorporated v. Teamsters Local No. 600, 484 F. Supp. 893 (E.D.Mo. 1980). As we have found, however, the School District did not object to arbitrability of the dispute but chose instead to participate in hopes of a favorable result.
The last argument of the School District on the existence of an arbitration agreement is that any award by the arbitrators is not final and binding. In making this argument, the School District relies upon part of our decision in State Highway Commission of Wyoming v. Brasel & Sims Construction Co., Inc., Wyo., 688 P.2d 871, 876 (1984), wherein it is stated:    The intention of the parties to submit their disputes to conclusive determination by a contractually designated agent should be made manifest by plain language.    In that case, we were confronted with the contention that Brasel & Sims Construction Co., Inc., in its contract with the state highway commission, agreed to submit any disputes to the state highway commission for final and conclusive determination. During our discussion, we noted: Our holding in Brasel & Sims Construction Co., Inc. v. State Highway Commission of Wyoming, supra, does not prevent parties from agreeing to submit disputes to one of the parties to the contract and further agreeing to be bound by that party's decision. Such provisions are fairly common in construction contracts and are enforceable in court. United States v. Moorman, 338 U.S. 457, 70 S.Ct. 288, 94 L.Ed. 256 (1950). These provisions are valid because the court, not the agency, performs the judicial function of interpreting the terms of the contract and their legal effect in accordance with the familiar requirements of good faith and absence of collusion, fraud or mistake. United States v. Moorman, supra; 3A Corbin on Contracts, § 652, pp. 121-131. We recognized the validity of self-imposed prerequisites to the initiation of a suit in Brasel & Sims Construction Co., Inc. v. State Highway Commission of Wyoming, supra, [Wyo.], 655 P.2d [265] at 268 [1982]: `   Parties to a contract can create valid conditions precedent to the right to bring an action and the claim will not accrue until the condition has been performed.' To the same effect, see United States v. Joseph A. Holpuch Company, 328 U.S. 234, 66 S.Ct. 1000, 90 L.Ed. 1192 (1946); United States v. Blair, 321 U.S. 730, 64 S.Ct. 820, 88 L.Ed. 1039, reh. denied 322 U.S. 768, 64 S.Ct. 1052, 88 L.Ed. 1594 (1944). 688 P.2d at 875. In the present case, we are not concerned with a provision wherein the parties agreed that the decision of one of the parties or its agent would be the final and conclusive resolution of a dispute between them. Instead, the parties in this case submitted their dispute for resolution by an impartial third party, the arbitration board which they mutually selected. The School District and Strube chose to submit a number of issues for determination by voluntary arbitration. Little purpose would be served by such submission if the arbitrators' decision is without any binding effect. We will not assume that the parties intended a futile act when they submitted their dispute for arbitration.