Ritzel Communications, Inc. v. Mid-American Cellular Telephone Co.

989 F.2d 966, 1993 WL 88344
CourtCourt of Appeals for the Eighth Circuit
DecidedMarch 30, 1993
DocketNo. 91-3212
StatusPublished
Cited by38 cases

This text of 989 F.2d 966 (Ritzel Communications, Inc. v. Mid-American Cellular Telephone Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ritzel Communications, Inc. v. Mid-American Cellular Telephone Co., 989 F.2d 966, 1993 WL 88344 (8th Cir. 1993).

Opinion

JOHN R. GIBSON, Circuit Judge.

Barclay Robert Goodwin, Jr. and several associates 1 appeal from the district court’s denial of their motion to stay litigation and compel arbitration. While this appeal was pending, the Goodwin group proceeded to try the case in the district court. We now determine that by continuing to litigate in the district court and by failing to seek a stay of the district court proceedings from this court or to otherwise expedite the appeal, the Goodwin group waived any right to arbitrate the purchase and sale agreement.

In March 1990, Mid-American Cellular Telephone Company sold one of its wholly-owned subsidiaries, Alton Cellular, Inc., to the Goodwin group of investors. The terms of the sale are contained in the “Stock Purchase Agreement” dated March 20, 1990.

On October 11, 1990, Ritzel Communications, Inc., the broker involved in the sale, sued Mid-American for recovery of a broker’s fee. Mid-American’s defense was that the sale to the Goodwin group had never been completed. On November 20, 1990, Mid-American moved to add members of the Goodwin group as additional parties needed for adjudication of the claims, and this motion was granted March 12, 1991. Mid-American named members of the Goodwin group as additional parties and, on March 27,1991, Mid American filed a cross claim against the group. The district court later termed these filings a third-party complaint. On May 10, 1991, [968]*968the Goodwin group filed a motion to dismiss the cross-claim of Mid-American and an alternative motion for a separate trial.

On June 28, 1991, the Goodwin group filed a motion to stay litigation and to compel arbitration based on cross indemnification agreements contained in the Stock Purchase Agreement. The district court, denied the motion, concluding that arbitration under the Agreement was elective, not mandatory.2 The Goodwin group appealed.

While this appeal was pending, the group continued to litigate in the district court. On November 5, 1991, it filed an answer to Mid-American’s cross-claim and its own amended counterclaim. It responded to interrogatories and requests for production, participated in the deposition of A. Lawrence Summers, and actively opposed the deposition of Barclay Robert Goodwin. The group participated in pre-trial-confer-ences (including a settlement conference at which Ritzel and Mid-American settled) and filed numerous motions and documents in preparation for trial.3 Eventually, the parties tried the case in a six-day bench trial which ended on June 3, 1992.

In this court, the Goodwin group twice requested and received extensions of time to file briefs. Under the original schedule, the briefing would have been completed by January 6, 1992. The group, however, obtained an extension of time to file its brief (originally due November 22), and filed its twelve-page brief on December 24. Mid-American obtained two extensions, total-ling thirty days, to file its brief. The Goodwin group then obtained an extension to file a reply brief and filed its seven-page brief on March 17, 1992.

Until oral argument, the Goodwin group made no request to this court to expedite the appeal or to stay the proceedings in the district court. We heard argument on June 12, 1992, shortly. after the completion of the trial in the district court, but before the district court had entered judgment and issued its findings of fact and conclusions of law. We then held the appeal in abeyance until the district court issued its final order.

On July 29, 1992, the Goodwin group filed a motion in this court requesting that proceedings in the district court be stayed pending our decision. The Goodwin group argued that because a decision by this court in its favor (i.e., upholding Goodwin’s right to arbitrate) would vacate any order of the district court, concern for judicial economy justified the stay. We denied this motion.

In late November, we received a certified copy Of the district court’s order entering judgment against the Goodwin group, and requested additional briefing on the question of whether the Goodwin group had waived its right to arbitrate by continuing to litigate in the district court. For purposes of this appeal, we assume, without deciding, that the Goodwin group had a right to demand arbitration.

The issue before us then is whether the Goodwin group has waived its right of arbitration by proceeding to trial in the district court, by failing to raise the arbitration issue before this court in a motion either to expedite the appeal or to stay proceedings in the district court, and by delaying its filings in this court. We conclude that the group has waived its arbitration rights.

In light of the strong federal policy in favor of arbitration, any doubts concerning waiver of arbitrability should be [969]*969resolved in favor of arbitration. Nesslage v. York Sec., Inc., 823 F.2d 231, 234 (8th Cir.1987). Nevertheless, we will find waiver where the party claiming the right to arbitrate: (1) knew of an existing right to arbitration; (2) acted inconsistently with that right; and (3) prejudiced the other party by these inconsistent acts. Stifel, Nicolaus & Co. v. Freeman, 924 F.2d 157, 158 (8th Cir.1991).

The Goodwin group drafted the Stock Purchase agreement that contains the arbitration provisions, and thus knew of the existing right of arbitration. We must determine whether the Goodwin group acted inconsistently with its right to arbitrate and so prejudiced Mid-American.4

We have considered similar “inconsistent action” questions in three previous cases. In N & D Fashions, Inc. v. DHJ Industries, 548 F.2d 722, 728 (8th Cir.1976), we concluded that there had been no waiver when a party responded to the filing of a suit by immediately demanding arbitration and by requesting a stay of proceedings in the district court. In Nesslage v. York Securities, we affirmed a district court finding of no waiver when a party did not assert its arbitration rights until after the filing of a relevant Supreme Court decision, and when discovery was limited to issues the Supreme Court held to be arbitrable. 823 F.2d at 234. Finally, in Stifel, we reviewed a waiver question de novo5 and concluded that the party requesting arbitration had acted inconsistently with its right to arbitrate by initiating litigation and participating in discovery. 924 F.2d at 158. We found no waiver, however, because these inconsistent acts did not prejudice the other parties: “No issues were litigated and the limited discovery conducted will be usable in arbitration.” Id. at 159.

The facts before us, distinguishable from those of the cases just cited, convince us that the Goodwin group acted inconsistently with its right to arbitrate. First, the group “[substantially invoke[d] the litigation machinery” before asserting its arbitration right. E.C. Ernst, Inc. v. Manhattan Const. Co., 559 F.2d 268, 269 (5th Cir.1977), cert. denied, 434 U.S. 1067, 98 S.Ct. 1246, 55 L.Ed.2d 769 (1978).

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