Court Opinion

ID: 8598454
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:13:38.19463+00
Date Added: 2024-06-11T16:55:04.716170
License: Public Domain

IN THE SUPREME COURT, STATE OF WYOMING

                                            2022 WY 147

                                                                OCTOBER TERM, A.D. 2022

                                                                         November 23, 2022

  MOUNTAIN BUSINESS CENTER, LLC,
  a Wyoming limited liability company,

  Appellant
  (Applicant),

  v.                                                                 S-22-0090

  FORK ROAD, LLC, a Wyoming limited
  liability company,

  Appellee
  (Respondent).

                        Appeal from the District Court of Teton County
                           The Honorable Timothy C. Day, Judge

Representing Appellant:
      Richard R. Thomas, Smith LC, Jackson, Wyoming.

Representing Appellee:
      Mark D. Sullivan, Mark D. Sullivan, P.C., Wilson, Wyoming; Kevin P. Gregory,
      Lubing, Gregory & Rectanus, LLC, Jackson, Wyoming. Argument by Mark D.
      Sullivan.

Before FOX, C.J., and KAUTZ, BOOMGAARDEN, GRAY, and FENN, JJ.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are
requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of
any typographical or other formal errors so that correction may be made before final publication in the
permanent volume.
FOX, Chief Justice.

[¶1] This appeal stems from an arbitration award involving a breach of a lease agreement.
Mountain Business Center, LLC (MBC) won a $23,998 arbitration award against Fork
Road, LLC (Fork Road). MBC appealed the award to the district court, arguing the
arbitrator exceeded his authority by determining issues not submitted to him, and that he
committed two manifest errors of law regarding the first-to-breach rule and determining
which party prevailed for purposes of a fee award. The district court confirmed the award,
holding the arbitrator’s determinations were not manifest error and were within his
authority. We affirm.

                                                ISSUES

[¶2]            1. Did the arbitrator exceed his authority by determining
                   issues that were not presented to him?

                2. Did the arbitrator commit manifest error by determining
                   MBC was not the prevailing party and thus not entitled to
                   attorney fees?

                3. Did the arbitrator commit manifest error in refusing to
                   apply the first-to-breach rule?

                                                FACTS

[¶3] Fork Road is the owner of the top floor of a building at 690 South Highway 89,
Jackson, Wyoming, which it purchased from JAMD, LLC on April 10, 2018. At the time
of Fork Road’s purchase, MBC, a tenant of the building, was in the middle of a five-year
lease executed in 2016. MBC leased the top floor, conducting business in a portion of the
space and subleasing the remaining office space.

[¶4] Prior to Fork Road’s purchase, JAMD requested an estoppel certificate 1 from MBC
listing subtenant and sublease information so JAMD could provide the information to Fork
Road. MBC returned the certificate, but withheld portions of the requested information,
including subtenant identities and subtenant rental payment amounts. Both JAMD and Fork
Road objected to the estoppel certificate, yet Fork Road elected to purchase the property.
By April 23, 2018, Fork Road gave MBC notice of default and demanded MBC vacate the
premises for MBC’s failure to provide the requested information. It also hand-delivered

1
  An estoppel certificate assures buyers and lenders that current leases are in full force and effect and
provides basic details of the lease like the term of the lease, rent, and assurances that no laws are being
violated.

                                                    1
notice to MBC’s subtenants that Fork Road would be taking over the subleases. MBC
refused to vacate the premises.

[¶5] On May 14, 2018, Fork Road filed a forceable entry and detainer (FED) action in
circuit court to evict MBC from the building. MBC appealed the FED action to the district
court, which determined the parties were bound by the arbitration clause. On June 18, 2019,
Fork Road demanded that MBC leave the premises by June 21, 2019, for failure to pay
rent.

[¶6] Almost two years later, the parties presented their cases in a five-day arbitration
hearing. Prior to the hearing, the parties submitted a “Stipulated List of Issues to be
Determined by the Arbitrator,” in which Fork Road presented ten issues and MBC
presented sixteen. The arbitrator consolidated and summarized the claims, articulating
seven claims by Fork Road and eight by MBC:

Fork Road’s Claims Against MBC

[¶7]   MBC breached the lease by:

              1.     Failing to provide an adequate estoppel certificate that
                     did not set forth sublease information;

              2.     Failing to name Fork Road as an insured on the MBC
                     liability and property damage insurance policy; [ ]

              3.     Failing to insert a clause in the insurance policy which
                     would inform Fork Road of a notice of termination of
                     the policy[;]
                                            ....

              [4.]   Failing to comply with the abandonment terms of the
                     lease;

              [5.]   Failing to pay rent as required by the lease;

              [6.]   Damaging the office space during the move out and
                     removing Fork Road’s fixtures; and

              [7.]   Failing to maintain the office space in good repair.

                                             2
MBC’s Claims Against Fork Road

[¶8]   Fork Road breached the lease by:

              1.     Refusing to accept a proper estoppel certificate;

              2.     Insisting MBC disclose confidential trade secrets;

              3.     Breaching the landlord covenant in the lease;

              4.     Failing to account for        CAM     [Common        Area
                     Maintenance] charges;

              5.     Filing an FED action instead of proceeding to
                     arbitration; and

              6.     Unlawfully entering the office space on June 19, 2019,
                     and April 23, 2018.

MBC also alleged Fork Road breached the implied covenant of good faith and fair dealing
and interfered with its contractual relationships and business opportunities. In a forty-
seven-page decision, the arbitrator made determinations on all issues presented and found
for and against both MBC and Fork Road on certain claims and crossclaims, as follows:

Estoppel Certificate

[¶9] The arbitrator concluded that Fork Road was not entitled to disclosure of the terms
of each sublease, particularly rental payment amounts, and that the demand for such
information and the attempt to evict MBC due to its failure to provide the information was
a material breach of the lease. The arbitrator relied on expert witnesses from both parties
to understand common industry practice and interpreted the plain meaning of the words in
the lease. He held the estoppel certificate was governed by the lease agreement which had
no clear language requiring MBC to include rental terms of its subleases in the estoppel
certificate. He concluded such information was confidential and unnecessary to Fork Road.
The arbitrator determined that MBC breached the lease by withholding the identities of the
sublessees, and Fork Road materially breached the lease by rejecting MBC’s estoppel
certificate.

Insurance Coverage

[¶10] Fork Road alleged that MBC’s insurance policy lapsed, and MBC failed to include
Fork Road as a named insured, both material breaches of the lease agreement. The
arbitrator found MBC breached, but based on expert testimony, disagreed with Fork Road’s

                                             3
claim the breach was material. In both instances, the issues were timely cured, and no harm
occurred to Fork Road. If a claim had arisen during the lapse, Fork Road would still have
been insured under the policy. MBC’s breach was technical, and Fork Road was not subject
to harm or risk of harm, therefore Fork Road was not awarded damages for the insurance
claim.

Property Damage

[¶11] The arbitrator’s findings on this issue were mixed. Fork Road alleged that MBC did
not adequately maintain the premises and damaged the office space when moving out. The
arbitrator found Fork Road, which retained the ability to inspect the property even after
attempting to evict MBC, made no mention of property damages in any communications
with MBC in the months preceding the FED action. He considered the small holes in the
wall and floor scratches normal wear and tear and did not award damages. He found MBC
liable for phone and internet wire damage, concluding the cut wires caused Fork Road
damages of $5,952.

Wrongful Entry/Breach of Covenants

[¶12] The arbitrator again made mixed findings on the issues related to Fork Road’s entry
into the premises on April 23, 2018, and June 19, 2019. Fork Road first entered the property
on April 23, 2018, to give MBC’s subtenants notice of MBC’s departure and to encourage
each subtenant to remain in the space under new leases with Fork Road. The arbitrator
found this entry wrongful because MBC had not materially breached the lease at that time.
Fork Road entered the premises again on June 19, 2019, upon MBC’s failure to pay rent.
The arbitrator found MBC’s failure to pay rent was a material breach that justified Fork
Road’s entry to ensure its property was not being damaged or removed. Regarding MBC’s
claims, the arbitrator found Fork Road breached the landlord covenant that promised MBC
quiet enjoyment of the property when it wrongfully entered the property in April of 2018.
Nonetheless, the arbitrator concluded Fork Road did not breach the covenant of good faith
and fair dealing because it reasonably believed it was pursuing its contractual rights by
entering the premises. Several other minor issues were addressed with mixed outcomes and
minimal impact on MBC’s claims on appeal.

Damages

[¶13] After parsing all issues, the arbitrator concluded that MBC sustained damages of
$35,750 and Fork Road sustained damages of $11,752, entitling MBC to a $23,998 damage
award. The arbitrator determined that MBC could not assert the first-to-breach rule because
of its continued performance under the contract; therefore, Fork Road was entitled to offset
MBC’s damages with the damage it incurred.

                                             4
[¶14] MBC also asserted a claim for attorney fees as the prevailing party. The arbitrator
found that because of the mixed outcome, neither party improved its position through
litigation and therefore neither was a prevailing party entitled to attorney fees or costs.
MBC appealed the arbitration award to the district court, and the court confirmed the award
in all respects.

                                STANDARD OF REVIEW

[¶15] “[T]he determination of whether the arbitrator exceeded its authority involves a
question of law that we review de novo.” Vogt v. MBNA Am. Bank, 2008 WY 26, ¶ 12, 178
P.3d 405, 409 (Wyo. 2008) (citing Welty v. Brady, 2005 WY 157, ¶ 12, 123 P.3d 920, 925
(Wyo. 2005)). This Court reviews “de novo a district court’s decision to confirm, vacate,
or modify an arbitration award. . . . without deference to the views of the trial court. At the
same time, this Court, like the district court, shows substantial deference to the decision of
the arbitrator.” Skaf v. Wyo. Cardiopulmonary Servs., P.C., 2021 WY 105, ¶ 34, 495 P.3d
887, 897 (Wyo. 2021) (quoting Worman v. BP Am. Prod. Co., 2011 WY 54 ¶ 6, 248 P.3d
644, 646 (Wyo. 2011)). An appellant must show by “clear and convincing evidence” that
an award “was obtained by . . . a manifest mistake of fact or law appearing upon the face
of the award.” Id. at ¶ 37, 495 P.3d at 899 (quoting Matter of Town of Greybull, 560 P.2d
1172, 1175 (Wyo. 1977)).

                                       DISCUSSION

[¶16] MBC asks this Court to reverse the district court’s confirmation of the arbitration
award, vacate the award, and remand to the district court. We have held there are statutory
and non-statutory grounds to vacate an arbitration award. JBC of Wyo. Corp. v. City of
Cheyenne, 843 P.2d 1190, 1194-95 (Wyo. 1992) (quoting Tex. W. Oil & Gas Corp. v.
Fitzgerald, 726 P.2d 1056, 1062 (Wyo. 1986)). Statutory grounds allow vacatur when the
arbitrator exceeds his powers. Wyo. Stat. Ann. § 1-36-114(a)(iii) (LexisNexis 2021).

[¶17] A trial court may vacate an award based on non-statutory grounds upon “manifest
mistake of fact or law appearing upon the face of the award.” Skaf, 2021 WY 105, ¶ 36,
495 P.3d at 898 (quoting JBC, 843 P.2d at 1194-95). MBC makes three arguments: (1) the
arbitrator exceeded his authority by ruling on claims not submitted to him; (2) he
committed manifest error in failing to conclude MBC was the prevailing party entitled to
attorney fees; and (3) he committed manifest error in failing to apply the first-to-breach
rule.

I.     The arbitrator did not exceed his authority by determining all issues presented by
       the parties in their stipulated list.

[¶18] MBC alleges the arbitrator exceeded his authority by making factual and legal
determinations of issues not submitted to him. “An arbitrator exceeds his powers when he

                                              5
decides matters which were not submitted to him.” JBC, 843 P.2d at 1196 (citing Himco
Sys., Inc. v. Marquette Elecs., Inc., 407 N.E.2d 1013, 1016 (Ill. App. Ct. 1980)); see also
Matter of Longwell, 2022 WY 56, ¶ 15, 508 P.3d 727, 731 (Wyo. 2022). “An arbitrator’s
authority is limited by the bounds of the agreement, and courts may vacate awards that
extend beyond the contractual scope of arbitration.” T&M Props. v. ZVFK Architects &
Planners, 661 P.2d 1040, 1044 (Wyo. 1983) (citing Int’l Brotherhood of Elec. Workers,
Loc. 1400 v. Citizens Gas & Coke Util., 428 N.E.2d 1320, 1326 (Ind. Ct. App. 1981)).

[¶19] MBC alleges the arbitrator decided issues not submitted to him when he determined
matters it asserts were waived by Mr. Hancock, Fork Road’s sole member and manager.
Mr. Hancock was cross-examined on the exact claims Fork Road was asserting against
MBC:

              Q: Are you claiming, in this case now, that Mountain Business
              Center is in breach, and was in breach of the lease because it
              failed to get consent of the landlord to sublease, and so you
              now want remedy for that? Are you claiming that now?

              A: Yes, we are.

              Q: Then why’d you tell me earlier, no?

              A: . . . We were asking for the subleases within our Estoppel
              Certificate, because the Estoppel Certificate was the legal
              remedy for, for us to, to get the subleases. We are claiming a
              breach of the lease with respect to that, because the Estoppel
              Certificate, which is the legal remedy to get the leases, was not
              in satisfactory form, and did not include the subleases. That’s
              the breach that we’re claiming.

              Q: And nothing else?

              A: . . . [W]e were claiming that there was a breach with respect
              to the insurance.

              Q: And nothing else?

              A: I believe that’s correct.

              Q: So those two items you just told me are the only basis of the
              breach of the lease that you’re seeking.

              A: Yeah, those are the substantial acts.

                                             6
                Q: Okay. So I don’t have to worry about asking you any more
                questions about the idea that . . . Mountain Business Center
                didn’t get consent from some landlord, to sublease in the first
                place. That’s not part of your case, right?

                A: From some landlord – no.

[¶20] MBC argues this testimony waived Fork Road’s other claims and the arbitrator’s
authority was limited to determining the estoppel certificate and insurance issues. This
argument fails.

[¶21] First, the arbitrator found “[a]lthough there may be some inconsistency by Fork
Road . . . [all] issues were litigated, responded to and the Arbitrator advised they needed to
be determined.” Additionally, he found while Fork Road’s certificate and insurance claims
were the focus of the hearing, Fork Road made clear it was still pursuing its other claims.
These factual determinations are given great deference. Welty, 2005 WY 157, ¶ 21, 123
P.3d at 926.

[¶22] MBC cites no pertinent authority suggesting the stipulated list was not properly
submitted to the arbitrator or how he exceeded his authority in determining those issues. 2
Instead, it offers the legal conclusion that Mr. Hancock’s testimony waived Fork Road’s
other claims. In so arguing, MBC cites no authority that testimony by a lay witness to the
substantial acts at issue may be used by a party to limit its opponent’s claims. Waiver is an
“intentional relinquishment of a known right that must be manifested in some unequivocal
manner.” Colton v. Town of Dubois, 2022 WY 138, ¶ 12,             P.3d     ,    (Wyo. 2022)
(quoting Jensen v. Fremont Motors Cody, Inc., 2002 WY 173 ¶ 16, 58 P.3d 322, 327 (Wyo.
2002)). “The three elements of waiver are 1) an existing right; 2) knowledge of that right;
and 3) an intent to relinquish it.” Id. (quoting Jensen, 2002 WY 173, ¶ 16, 58 P.3d at 327).
Appellant fails to address any of these elements. Mr. Hancock’s testimony was far from
unequivocal and did not manifest an intent to relinquish Fork Road’s claims.

[¶23] Furthermore, prior to the alleged waiver, MBC questioned Mr. Hancock on Fork
Road’s other claims: MBC damaged the property and HVAC system, removed fixtures
from the building, and MBC’s departure and treatment of the building. The record thus
refutes MBC’s contention that it limited its scope of questioning to its detriment.

2
 MBC presents two Arkansas cases in its Reply Brief asserting “a party can verbally limit the claims it had
been pursuing.” See Avery v. Turn Key Health Clinics, LLC, Case No. 5:18-CV-05075, 2020 WL 714176,
at *8 (W.D. Ark. Feb. 12, 2020); Self v. Taylor, Case No. 5:15-CV-119 SWW/BD, 2016 WL 4392842, at
*1 (E.D. Ark. June 22, 2016). In each case, the defendant affirmatively stated that he was no longer pursuing
claims against specific individuals. These cases are distinguishable from the current case where MBC
argues Fork Road impliedly waived specific issues because its representative failed to recite each claim in
his testimony.

                                                     7
[¶24] Two cases are instructive on the issue of arbitrators determining issues not presented
to them and both are distinguishable. In JBC, the plaintiff submitted a list of stipulated
claims for the arbitrator to determine, one of which asked the arbitrator to apply a total cost
damages provision to calculate damages. JBC, 843 P.2d at 1193, 1196. The arbitrator
refused to apply the provision and instead fashioned his own remedy. Id. The district court
found the arbitrator exceeded his authority by straying from the question presented to him
and creating his own damage award, and we affirmed. Id. at 1193-94, 1196-97.

[¶25] We also held an arbitration panel exceeded its authority in Matter of Longwell. 2022
WY 56, ¶ 27, 508 P.3d at 736. The dispute was over the compensation owed to a rancher
who lost livestock to grizzly bear predation and the panel was tasked with “a simple
mathematical calculation—multiply the number of ‘confirmed’ kills by 3.5.” Id. at ¶ 17,
508 P.3d at 732. Instead of determining the single issue, the panel “sua sponte proceeded
to recalculate the number of ‘confirmed’ and compensatory kills.” Id. We held that issue
was not presented to the panel, and it exceeded its powers in addressing it. Id. at ¶ 27, 508
P.3d at 736.

[¶26] In both Longwell and JBC we recognized that party stipulations to the claims or
issues before an arbitrator may be determinative of the arbitrator’s authority and the issues
he may address. See Longwell, 2022 WY 56, ¶ 17, 508 P.3d at 732; JBC, 843 P.2d at 1196.
The arbitrator here properly relied on the stipulated list to determine the issues before him,
and Mr. Hancock’s testimony did not limit the issues. Therefore, the arbitrator did not
exceed his authority.

II.    The arbitrator’s determination that MBC was not the prevailing party and
       therefore not entitled to attorney fees was not a manifest error of law.

[¶27] MBC next argues the arbitrator’s award should be vacated for manifest error. In
reviewing for manifest error, this Court shows “substantial deference to the decision of the
arbitrator.” Skaf, 2021 WY 105, ¶ 34, 495 P.3d at 897 (quoting Worman v. BP Am. Prod.
Co., 2011 WY 54, ¶ 6, 248 P.3d 644, 646 (Wyo. 2011)). “[A]rbitrators have broad powers
to make factual determinations, and . . . the weight and sufficiency of the evidence is for
the arbitrators to determine.” Welty, 2005 WY 157, ¶ 21, 123 P.3d at 926 (deferring to an
“arbitrator’s findings on the weight and sufficiency of evidence” where “there was
evidence to support” a claim for promissory estoppel). The bar to overturn an arbitrator’s
award is high:

              [W]e are reluctant to disturb an arbitrator’s just solution to a
              controversy, even if it differs from the resolution we might
              have chosen, had we been in the arbitrator’s place. As a
              voluntary method for resolution of disputes, arbitration is

                                              8
              embedded in the public policy of Wyoming and is favored by
              this court.

Skaf, 2021 WY 105, ¶ 34, 495 P.3d at 898 (quoting Worman, 2011 WY 54, ¶ 6, 248 P.3d
at 646).

[¶28] This Court will vacate an arbitration award based on “a manifest mistake of fact or
law appearing upon the face of the award.” Id. at ¶ 36, 495 P.3d at 898 (quoting JBC, 843
P.2d at 1194-95). MBC “cannot ‘rely on mere legal error’ to vacate an arbitrator’s award
confirmed by the district court. ‘An arbitrator’s erroneous interpretations or applications of
law are not reversible.’” Id. at ¶ 37, 495 P.3d at 899 (quoting Worman, 2011 WY 54, ¶ 12,
248 P.3d at 648) (internal citations omitted).

[¶29] This Court adopted a three-element test to determine manifest error:

              1.      The error must have been obvious and capable of being
                      readily and instantly perceived by the average person
                      qualified to serve as an arbitrator.

              2.      The arbitrator appreciates the existence of a clearly
                      governing legal principle but decides to ignore or pay
                      no attention to it.

              3.      The governing law alleged to have been ignored by the
                      arbitrators must be well defined, explicit, and clearly
                      applicable.

Id. at ¶ 38, 495 P.3d at 899 (quoting Garrity v. McCaskey, 612 A.2d 742, 747 (Conn.
1992)). “Knowledge of the operative legal principle and its proper application can be
inferred only if the court finds an error that is so obvious that it would be instantly perceived
as such by the average person qualified to serve as an arbitrator.” Id. at ¶ 38, 495 P.3d at
900 (quoting SPX Corp. v. Garda USA, Inc., 94 A.3d 745, 750-51 (Del. 2014)).

[¶30] MBC argues the arbitrator committed manifest error by determining MBC was not
the prevailing party entitled to attorney fees. It argues not only did MBC prevail on the
central issues of the case, but looking to the litigation as a whole, MBC won on several
claims and improved its position through the litigation. MBC first argues that failing to
apply a central-issue analysis was a manifest error of law. Garrison v. CC Builders, Inc.,
2008 WY 34, ¶ 47, 179 P.3d 867, 879 (Wyo. 2008). It argues that in a mixed outcome case,
Garrison mandates the analysis of the central issue, and whichever party prevails on that
central issue is the prevailing party. Id.

                                               9
[¶31] The Garrisons alleged the home builder had grossly overcharged them for
construction of a new home. Id. at ¶ 9, 179 P.3d at 871. The homeowners, the Garrisons,
sued in district court for breach of contract, alleging the builder promised to build the home
for a certain cost by a certain date and failed to do so, while also alleging fraud and
negligent misrepresentation. Id. The builder counterclaimed alleging breach of contract for
failure to pay amounts due for work completed. Id. at ¶ 10, 179 P.3d at 871. The district
court held in favor of the Garrisons on the breach-of-contract claim, awarded them
$72,062.77 in damages, but also concluded the builder did not commit fraud. Id. at ¶¶ 12,
59, 179 P.3d at 871, 881. In awarding costs, the district court held the case “fundamentally
was a breach of contract case, won for the most part by the Garrisons” and the “central
issue . . . was determined in their favor” making the Garrisons the prevailing party. Id. at
¶ 47, 179 P.3d at 879. This Court articulated the relevant question on appeal regarding the
prevailing party analysis was “whether the trial court reasonably could have concluded as
it did, given the circumstances.” Id. at ¶ 42, 179 P.3d at 878. We affirmed the prevailing
party determination, holding the district court did not abuse its discretion in awarding the
Garrisons attorney fees as the prevailing party. Id. at ¶ 47, 179 P.3d at 879.

[¶32] MBC relies on Garrison to argue the central-issue analysis is mandatory, and the
arbitrator committed manifest error in not analyzing the prevailing party through that lens.
MBC argues that it won on the main issues—the breach-of-contract claims for Fork Road’s
refusal to accept the estoppel certificate and the insurance claim. The certificate and
insurance claims were what started the litigation and what Fork Road and the arbitrator
identified as the main claims at issue. MBC argues that the arbitrator was required to
analyze the central issue to determine the prevailing party and failing to do so was manifest
error.

[¶33] MBC’s reliance on Garrison is misplaced. In Garrison, this Court simply held that
the district court could have reasonably concluded as it did in awarding costs to the
Garrisons by analyzing the central issue of the case and we affirmed. Id. at ¶¶ 42, 47, 179
P.3d at 878-79. Yet Garrison does not require this result, nor does it announce a mandatory
central-issue analysis, rather it offers an additional context to view the prevailing party in
a mixed-outcome case. See id. at ¶ 47, 179 P.3d at 879. In fact, Garrison holds that
awarding costs is a discretionary function, not a mandatory one. Id. at ¶ 42, 179 P.3d at
878. It was within the district court’s discretion to analyze the central issue to determine
the prevailing party, but a court is not restricted to a central-issue analysis. See id. at ¶¶ 42,
47, 179 P.3d 878-79. Similarly, an arbitrator is not restricted to a central-issue analysis in
determining a prevailing party entitled to a fee award.

[¶34] MBC also argues that, looking to the litigation as a whole, it prevailed on several
significant issues which improved its position and therefore should have been awarded
costs as the prevailing party. The arbitrator disagreed and found that neither party improved
its position through litigation because “both parties expended far more on the case than
they recovered” and awarding fees would create an inequitable windfall. This

                                               10
determination is well within his discretion. See McGuire v. Lowery, 2 P.3d 527, 534 (Wyo.
2000); see also John R. Schleppenback, Winning the Battle but Losing the War: Towards
a More Consistent Approach to Prevailing Party Fee Shifting in the Contractual Context,
12 Fla. L. Rev. 185, 200-02 (2017).

[¶35] MBC cannot show through clear and convincing evidence that the arbitrator erred,
much less that an error was so obvious it would be instantly perceived by a qualified
arbitrator. The first element of the Skaf test fails, thus no manifest error occurred.

III.   The arbitrator’s determination MBC was not entitled to the first-to-breach rule
       was not a manifest error of law.

[¶36] MBC alleges that the arbitrator committed manifest error by failing to apply the
first-to-breach rule. The first-to-breach rule states “a party cannot claim the benefit of a
contract that it was the first to materially breach.” Maverick Benefit Advisors, LLC v.
Bostrom, 2016 WY 96, ¶ 14, 382 P.3d 753, 758 (Wyo. 2016) (citing White v. Empire
Express, Inc., 395 S.W.3d 696, 715-16 (Tenn. Ct. App. 2012)). MBC argues that Fork
Road was the first to breach the lease agreement and therefore cannot assert breach claims
against MBC nor offset any of MBC’s recovery with its own damages. By failing to apply
the rule, MBC argues, the arbitrator ignored a clearly applicable and well-defined rule of
law that a qualified arbitrator would immediately recognize as error. We review the
manifest error claim applying the Skaf test recited above. Skaf, 2021 WY 105, ¶ 38, 495
P.3d at 899.

[¶37] In Skaf, this Court found the arbitrators committed manifest error by directly
misstating well-settled law. Id. at ¶¶ 47-48, 495 P.3d at 903 (stating non-compete
agreements are highly favored under Wyoming law, when, in fact, non-competes are highly
disfavored). The arbitration panel took antithetical law and applied it to rewrite the terms
of a contract, also contrary to well-settled law. Id. at ¶¶ 47-48, 495 P.3d at 903. MBC argues
a similar error occurred here because the arbitrator failed to apply the first-to-breach rule.
We disagree.

[¶38] The arbitrator recognized the first-to-breach rule but determined that by staying in
the building and honoring the lease after the breach, thereby accepting the benefits of the
contract, MBC was not entitled to its application. In Maverick, this Court recognized a
clear exception to the first-to-breach rule; when a prior material breach by an opposing
party occurs “a [nonbreaching] party may lose its right to assert the first-to-breach rule if
it accepts the benefits of the contract with knowledge of the breach.” Maverick, 2016 WY
96, ¶ 16, 382 P.3d at 758. No manifest error is present.

[¶39] We also reject MBC’s suggestion that the arbitrator should have applied the safe
harbor rule. The safe harbor rule allows a nonbreaching party to retain the first-to-breach
protections where it continues to accept the benefits of the contract while unsuccessfully

                                             11
trying to persuade the breaching party “to reject the repudiation and proceed honorably.”
Maverick, 2016 WY 96, ¶ 23, 382 P.3d at 761 (quoting White, 395 S.W.3d at 716). The
arbitrator did not find MBC attempted to persuade Fork Road to honor the contract and the
record does not show this finding was manifest error.

                                     CONCLUSION

[¶40] The district court order confirming the arbitration award is affirmed. The arbitrator
did not exceed his authority in determining the issues presented to him and the alleged
waiver did not limit those issues. Likewise, the arbitrator did not commit manifest error in
its prevailing party and first-to-breach rule analysis.

                                            12