Opinion ID: 2566053
Heading Depth: 1
Heading Rank: 5

Heading: Enforceability of Arbitration Clause

Text: [¶ 14] The district court granted summary judgment in favor of Schuler Custom Homes, ruling that the alternative dispute resolution provision was applicable and should be enforced. Mr. Scherer presents two arguments in support of his position that the alternative dispute resolution provision is not enforceable: 1) Schuler Custom Homes repudiated the contract; and 2) Schuler Custom Homes waived its right to alternative dispute resolution. Our decision on the waiver issue is dispositive; consequently, we will not address Mr. Scherer's argument that Schuler Custom Homes repudiated the contract. [¶ 15] Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Owsley v. Robinson, 2003 WY 33, ¶ 7, 65 P.3d 374, ¶ 7 (Wyo.2003). See also, W.R.C.P. 56(c). The material facts relating to Mr. Scherer's argument that Schuler Custom Homes waived its right to alternative dispute resolution are not in dispute. Consequently, our inquiry focuses on applying the law of waiver to those undisputed facts. Accord, Ryel v. Anderies, 4 P.3d 193, 195 (Wyo.2000). We review questions of law de novo without giving any deference to the district court's determinations. Hasvold v. Park County School Dist. No. 6, 2002 WY 65, ¶ 11, 45 P.3d 635, ¶ 11 (Wyo.2002). [¶ 16] This Court favors arbitration or other forms of alternative dispute resolution. Stewart Title Guaranty Co. v. Tilden, 2003 WY 31, ¶ 7, 64 P.3d 739, ¶ 7 (Wyo.2003); Simon v. Teton Board of Realtors, 4 P.3d 197, 201 (Wyo.2000). Alternative dispute resolution allows parties to resolve their differences in a less expensive and more timely manner than traditional litigation does. Stewart Title Guaranty Company, ¶ 7. In deference to our policy of encouraging arbitration, we will not lightly infer a claim that alternative dispute resolution was waived. Jackson State Bank, 837 P.2d at 1086. Nevertheless, we have recognized that a contractual right to arbitration may be waived either expressly or implicitly. Id.; See also, Garaman, Inc. v. Williams, 912 P.2d 1121, 1126-27 (Wyo.1996). The traditional elements of waiver are: (1) an existing right; (2) knowledge of that right; and (3) an intent to relinquish it. Jackson State Bank, 837 P.2d at 1086. We also look to factors which are specific to waiver of a contractual right to arbitration, including whether the party seeking arbitration has: (1) previously taken action inconsistent with the intent to participate in arbitration; (2) unreasonably delayed in seeking arbitration; or (3) has acted in bad faith or with willful misconduct. Id. at 1086-87, citing, Christensen v. Dewor Developments, 33 Cal.3d 778, 191 Cal.Rptr. 8, 661 P.2d 1088, 1091 (1983). [¶ 17] In this case, Schuler Custom Homes was obviously aware of its right to invoke alternative dispute resolution. The agreement clearly provided for resolving disagreements through mediation and/or arbitration. The plain language of the agreement stated that the parties should try to mediate their differences and, if that failed, then they would submit their differences to binding arbitration. The alternative dispute resolution was to take place within a short period of time after the dispute developed. [¶ 18] Mr. Scherer's decision to file his complaint within days after the dispute developed was, obviously, premature. We cannot, however, ignore the fact that, after Schuler Custom Homes filed its motion to dismiss the litigation claiming that the matter should be submitted to alternative dispute resolution under the terms of the contract, Mr. Scherer offered to stay the litigation pending arbitration. On March 17, 2003, Mr. Scherer reiterated his offer to stay the litigation while arbitration was pending and even nominated an arbitrator. When Schuler Custom Homes finally responded to Mr. Scherer's arbitration proposals on March 24, 2003, it stated that it was unwilling to stay the litigation and made some vague remarks about mediation. Schuler Custom Homes did not, however, suggest a mediator or an arbitrator or present any concrete options for alternative dispute resolution. Notably, the contractual deadline for mediation, which required that disputes be mediated within forty-five days after they arose, had already expired when Schuler Custom Homes proposed mediation. On May 1, 2003, Schuler Custom Homes renewed its motion to dismiss the litigation without taking any steps to further alternative dispute resolution or asking the district court to intervene and compel alternative dispute resolution. On May 15, 2003, more than three months after the dispute arose, Mr. Scherer withdrew his offer to arbitrate. [¶ 19] In light of these facts, we are led to the inescapable conclusion that Schuler Custom Homes' strategy was to delay resolution of this matter and not to exercise its rights under the contract for alternative dispute resolution. When faced with a direct request for alternative dispute resolution, it chose to ignore that request. Although Schuler Custom Homes stated that the parties should resolve their dispute through mediation, it made its suggestion after the forty-five day deadline had already expired and it took no affirmative action to advance mediation or any other form of alternative dispute resolution. [¶ 20] Under Wyoming's version of the Uniform Arbitration Act, Schuler Custom Homes could have requested that the district court order the parties to proceed with arbitration. Wyo. Stat. Ann. § 1-36-104 (LexisNexis 2003). Schuler Custom Homes did not take advantage of that option and, in fact, resisted Mr. Scherer's efforts to move forward with alternative dispute resolution. When faced with a similar situation in the Garaman case, we concluded that Garaman waived his right to have the parties' disputes arbitrated by failing to request that the district court order the parties to arbitrate their differences under § 1-36-104. Garaman, 912 P.2d at 1126-27. [¶ 21] It is clear, therefore, that Schuler Custom Homes' only goal was to have the litigation dismissed. Schuler Custom Homes' conduct did not comport with the spirit of the alternative dispute resolution provision of the agreement, which created a mechanism for a prompt resolution of the parties' differences. We conclude, therefore, that Schuler Custom Homes waived its right to alternative dispute resolution. This case is reversed and remanded to the district court for further proceedings in the district court, including a determination of Mr. Scherer's motion for leave to amend his complaint, as that motion is no longer moot. [¶ 22] Reversed and remanded.