EFC Development Corp. v. F. F. Baugh Plumbing & Heating Inc.

540 P.2d 185, 24 Ariz. App. 566, 1975 Ariz. App. LEXIS 774
CourtCourt of Appeals of Arizona
DecidedSeptember 11, 1975
Docket1 CA-CIV 2806
StatusPublished
Cited by27 cases

This text of 540 P.2d 185 (EFC Development Corp. v. F. F. Baugh Plumbing & Heating Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
EFC Development Corp. v. F. F. Baugh Plumbing & Heating Inc., 540 P.2d 185, 24 Ariz. App. 566, 1975 Ariz. App. LEXIS 774 (Ark. Ct. App. 1975).

Opinion

OPINION

HAIRE, Chief Judge.

On this appeal we are presented with numerous issues relating to proceedings which led to the trial court’s confirmation of an arbitration award. We will consider the questions raised by appellant and the arguments relating thereto in the order presented in appellant’s opening brief, giving such facts as are pertinent to the question being discussed.

1.

MAY A PARTY TO A CONTRACT DEMAND THE ARBITRATION RIGHTS THEREUNDER WHEN THAT PARTY ITSELF HAS BREACHED, ABANDONED, OR REPUDIATED THE CONTRACT WITHOUT ITSELF FIRST ASKING FOR ARBITRATION OF ITS GRIEVANCES?

Unquestionably a party may lose his contractual right to arbitrate “. . . upon such grounds as exist at law or in equity for the revocation of any contract.” A.R. S. § 12-1501. A discussion of this statutory provision and the possible loss of the fight to arbitrate through abandonment, repudiation or waiver is set forth in Bolo Corporation v. Homes & Son Construe *568 tion Co., 105 Ariz. 343, 464 P.2d 788 (1970). However, appellant’s argument concerning this question is not directed to any claimed conduct on appellee’s part specifically indicating a breach, abandonment or repudiation of the arbitration provision of the contract. Rather, appellant argues that if appellee has breached any provision relating to performance of the contract without first asking for arbitration concerning the parties’ rights and duties under that provision, such breach constitutes an implied abandonment of the right to arbitration.

Here, the pertinent arbitration provision applies to controversies “arising out of the construction of the structure . or regarding interpretation of the [two subcontracts involved.]” A controversy arose concerning the refusal of appellant to pay sums allegedly due appellee. After the passage of some time, appellee reduced its work force on the jobs, and when appellant demanded that appellee continue work with an increased work force, appellee requested arbitration concerning “the duties of the parties in the circumstances,” and specifically offering to submit to arbitration the question of whether appellee had the duty to continue performance in view of the claimed large arrearage in pay. Appellant contends that appellee’s action in reducing its work force prior to demanding arbitration, constituted an implied abandonment and repudiation of the arbitration right. We find nothing in the parties’ agreement, the arbitration statutes, or case law which would justify this conclusion. We do not doubt that under most arbitration provisions (obviously depending upon the contractual language used), upon proper demand there can be arbitration proceedings concerning prospective problems similar to the declaratory judgment legal proceeding. However, the very purpose of arbitration provisions would be defeated and their effectiveness severely limited if a party were held to have abandoned his arbitration rights merely because his actions might be construed to constitute a breach of the contract prior to the time he seeks a clarification of those rights through arbitration. In effect, appellant would require a predetermination by the court of the parties’ rights, i. e., whether or not one of them had actually breached the contract as a precondition to arbitration proceedings, notwithstanding the fact that the parties by their contract have established arbitration proceedings as the proper forum for the determination of such questions.

By its very nature the arbitration clause in the contract is distinct from other clauses. It is not to be considered as a clause in favor of one party or the other, the performance of which might be excused by the breach of other provisions of the contract. Rather, the arbitration clause constitutes the consent of the parties to the establishment of extra-legal machinery for the settlement of their disputes. Even if we assume that appellee’s action in reducing its work force constituted a breach of its obligations under the contracts, we find no merit in appellant’s contention that such breach constituted an abandonment or repudiation so as to render the arbitration provisions of the contract unavailable to the appellee.

2.

MAY A PARTY DEMAND ARBITRATION AND YET ADDITIONALLY AND SIMULTANEOUSLY ALSO PROCEED TO:

(a) Avail itself of remedies before administrative bodies?
(b) File mechanics’ and materialmen’s liens after arbitration has been had?
(c) Proceed with litigation that involves discovery and use of legal process to preclude payments of funds to its adversary from other parties ?

Separate and apart from the argument raised in Question 1 relating to appellee’s alleged breach in performance of the contract, appellant contends that appellee’s *569 specific conduct as outlined in subsections (a) (b) and (c) of Question 2 resulted in a waiver of appellee’s contractual arbitration rights. Subsection (a) concerns a claimed waiver allegedly resulting from the fact that after the trial court’s initial order compelling arbitration, but before the actual commencement of the arbitration hearing, appellee filed a complaint against the appellant before the Registrar of Contractors. In support of this waiver contention, appellant cites In re Aller's Petition, 47 Cal.2d 189, 302 P.2d 294 (1956). In that case, a labor union initially refused to comply with a request for arbitration under the contract’s arbitration provisions, but instead brought proceedings before the State Labor Commissioner seeking to collect dismissal pay for its members. In a later civil action wherein the labor union attempted to compel arbitration, the court held that the union had waived its right to arbitrate, and stated that the union’s conduct in pursuing the proceedings before the State Labor Commissioner was some evidence that it did not intend to arbitrate.

The actions of the party seeking arbitration in In re Alter’s Petition, supra, are readily distinguishable from appellee’s actions here. Appellee never refused arbitration, but rather, from the inception, actively and aggressively pressed its attempts to bring the matter to arbitration. The basis of the finding of waiver of an arbitration provision is the showing of conduct inconsistent with utilization of the arbitration remedy — conduct showing an intent not to arbitrate. Bolo Corporation, supra. Inconsistency is usually found from such conduct as preventing arbitration, making arbitration impossible, proceeding at all times in disregard of the arbitration clause, expressly agreeing to waive arbitration, or unreasonable delay. See Annots., 117 A.L.R. 301 (1938), 161 A.L.R. 1426 (1946). In view of appellee’s prior and subsequent conduct in continually pressing for arbitration, no waiver can be implied from the fact that it filed a complaint with the State Registrar of Contractors, seeking the revocation of appellant’s contractor’s license.

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Bluebook (online)
540 P.2d 185, 24 Ariz. App. 566, 1975 Ariz. App. LEXIS 774, Counsel Stack Legal Research, https://law.counselstack.com/opinion/efc-development-corp-v-f-f-baugh-plumbing-heating-inc-arizctapp-1975.