Opinion ID: 1158556
Heading Depth: 1
Heading Rank: 3

Heading: Applications to court.

Text: Except as otherwise provided, an application to the court under this Article shall be by motion and shall be heard in the manner and upon the notice provided by law or rule of court for the making and hearing of motions. Unless the parties have agreed otherwise, notice of an initial application for an order shall be served in the manner provided by law for the service of a summons in an action. (1927, c. 94, s. 5; 1973, c. 676, s. 1.) In the case before us, defendants filed an answer that did not include a motion showing an agreement to arbitrate. Therefore, defendants' motion to dismiss, which conspicuously omitted any reference to an arbitration agreement, was not the proper method to stay litigation and compel arbitration. Defendants next attack the Court of Appeals' holding that they waived their right to arbitration by their conduct in the case which the court says indicated a waiver on their part. Although over three years had elapsed between the filing of the complaint and the ruling on the 12(b)(6) motion, defendants submit that this delay should not be viewed as conduct on their part evidencing an implicit waiver. The Court of Appeals determined that the contract controlled the length of time in which a party could demand arbitration. Indeed, Article 8 of the contract provides that a demand for arbitration cannot be made after the date when such dispute would be barred by the applicable statute of limitations. By applying G.S. 1-52, the statute of limitations for breach of contract actions, the Court of Appeals correctly decided that defendants' failure to demand arbitration within the three-year period barred them from now asserting their right to arbitrate. We agree with the Court of Appeals' final resolution of this question. However, in analyzing this question, that court was mistaken in equating defendants' failure to demand arbitration within the time contained in the applicable statute of limitations to a waiver of such right. See, e.g., Cyclone Roofing Company v. LaFave Company, 312 N.C. 224, 321 S.E.2d 872 (1984) (for a thorough treatment of whether a party implicitly waives his right to demand arbitration after pleadings have been filed by the parties); see also, Annot., 25 A.L.R.3d 1171 (1969 & Supp.1984) (this annotation discusses the cases that address the issue of delay in asserting a contractual right to arbitration as precluding enforcement thereof in either the absence or the presence of a specific time limit within the arbitration agreement). In this case, the contract contained in Article 8 a time limitation within which a party to the contract could make a demand for arbitration. [5] Therefore, the question of whether defendant impliedly waived his right to demand arbitration is not an issue in this case. Defendant's contractual right to arbitration was barred by the applicable three-year statute of limitations. Application of Mark Cross Company, 15 Misc.2d 947, 181 N.Y.S.2d 110 (1958); see, e.g., Annot., 94 A.L.R.3d 533 (1979 & Supp.1984) (collected and analyzed within this annotation are cases that have addressed and resolved the issue of whether an agreement to arbitrate is barred by a specific statute of limitations). Although neither party specifically raises the issue, this Court perceives within the opinion below a misstatement of the law relating to waiver on the part of the plaintiff. The Court of Appeals concluded that plaintiff intended to waive his right to arbitration by pursuing an action in court. Adams, 67 N.C.App. at 287, 312 S.E.2d at 899. The question of whether a party as a matter of law implicitly waives his right to demand arbitration was recently addressed by this Court in Cyclone Roofing Company v. LaFave Company, 312 N.C. 224, 321 S.E.2d 872 (1984). We held in that case that a party impliedly waives his contractual right to arbitration if by its delay or by actions it takes which are inconsistent with arbitration, another party to the contract is prejudiced by the order compelling arbitration. Id. at 229, 321 S.E.2d at 876. Contrary to the position taken by the Court of Appeals, we recognized that the filing of a complaint or answer does not automatically result in waiver. Id. Therefore, we reject that court's conclusion that a party impliedly waives his right to arbitration when he pursues an action in court by filing a complaint. By way of dictum, the Court of Appeals endeavored to assist the trial court by describing four situations in which a defendant may be deemed to have waived a contractual right to arbitration. Whether this Court will be confronted in the future with situations similar to those included within the four categories identified by the Court of Appeals is speculative. Accordingly, we disavow the language contained within the Court of Appeals' opinion that attempts to provide guidance to the trial courts on the ground that many of the issues are premature, and we reserve resolution of these questions for future cases in which they are presented. Accordingly, we modify and affirm the decision of the Court of Appeals. MODIFIED and AFFIRMED. VAUGHN, J., did not participate in the consideration or decision of this case.