Opinion ID: 2552191
Heading Depth: 3
Heading Rank: 4

Heading: One-Year Contractual Limitation Period

Text: ¶ 30 Fourth, Softsolutions contends the district court erred in refusing to vacate or modify the award because the arbitrator essentially modified, subtracted from, and added to the terms of the Agreement by finding that the parties waived paragraph 12.5 of the Agreement, which terminated all of BYU's claims not brought within one year after discovery of the cause of action. Specifically, Softsolutions argues that because BYU brought the arbitration action on February 4, 1994, all royalties accruing before February 1993 should be barred by the one-year limitation period, as mandated by paragraph 12.5 of the Agreement, and that in finding that the parties waived the one-year provision, the arbitrator improperly disregarded paragraph 20.6 of the Agreement, which explicitly requires all modifications or waivers of the Agreement to be in writing. ¶ 31 The Agreement provided: No action, regardless of form, arising out of the transaction subject of this Agreement may be brought by either party more than one year after the cause of action is discovered. The Agreement further said: No modification or claimed waiver of any of the provisions of this Agreement shall be valid unless in writing and signed by authorized representatives of the party against whom such modification or waiver was sought to be enforced. Moreover, paragraph 15.1 of the Agreement provides that the arbitrator shall have no power to add to, subtract from or modify any of the terms or conditions of this Agreement. ¶ 32 The parties' Submission Agreement charged the arbitrator with determining whether BYU's claims for royalties due [were] barred by a contractual limitation period[.] If so, what is the period and when does it begin to run? In answering this question and in determining the amount of earned royalties, the arbitrator found that the parties, by their own conduct, had waived the one-year contractual limitation period. The arbitrator stated: [T]he contractual limitation period was waived by BYU and Softsolutions because of their ongoing negotiations to resolve the written complaints raised by Softsolutions. It was evident to the arbitrator from the evidence, exhibits, testimony and the conduct of the witnesses that the contractual limitation period should not bar BYU from collecting royalty payments that are found to be due and owing. The arbitrator did not address the written waiver requirement of paragraph 20.6. ¶ 33 In determining whether to vacate the award based on this alleged error, the district court applied the two-pronged test in Buzas. The court determined that the first prong in Buzas was met because the parties submitted the contractual limitation issue to the arbitrator. We agree that the court did not exceed its authority on this basis. In considering the second prong of Buzas, whether the arbitrator's actions were without foundation in reason or fact, the district court said: The court recognizes the standard set forth in Buzas is that the arbitrator cannot add to, subtract from or modify any terms of the License Agreement. In this case, however, the arbitrator found that the parties (BYU and Softsolutions) themselves by their own conduct modified/waved [sic] the License Agreement, and this court may not substitute its own judgment for that of the arbitrator. The court does not read Buzas to hold that if the parties themselves modify the License Agreement by their conduct, the arbitrator must ignore such conduct in favor of express contractual language. Additionally, by the language of Buzas it would not be irrational or inconsistent with the wording of the License Agreement for the arbitrator to conclude/interpret that paragraph 20.6 is capable of being modified by the parties themselves. The arbitrator is charged with interpreting the contract, and it was not irrational or inconsistent with the License Agreement as modified by the conduct of the parties to find that the limitation period had been waived by BYU and Softsolutions. ¶ 34 Hence, the issue we must determine is whether the court's finding of waiver, in light of the provision requiring waivers to be in writing, is irrational as a matter of law, and thus requires us to vacate the award because the arbitrator exceeded his authority. We conclude that the district court correctly concluded that the arbitrator acted rationally. Here, the arbitrator did not subtract from, add to, or modify the Agreement, which would certainly be improper. Rather, the arbitrator interpreted the contract as permitting the parties themselves to modify/waive the contractual limitation period, despite the express contractual language to the contrary. We do not find this interpretation of the Agreement to be irrational or inconsistent with the law in this state. See Provo City Corp. v. Nielson Scott Co., 603 P.2d 803, 806 (Utah 1979) (It is true that parties to a written contract may modify, waive, or make new contractual terms, even if the contract itself contains a provision to the contrary.); see also Ted R. Brown & Assocs. v. Carnes Corp., 753 P.2d 964, 968 (Utah Ct.App.1988) (parties to a contract may, by mutual consent, modify any or all of the contract, even if the contract contains provision to the contrary). As such, the district court did not err in refusing to vacate the award. Moreover, because this matter was submitted by both parties for decision as reflected by the Submission Agreement, the district court properly denied Softsolutions' modification request.