|Howell’s Well Service v. Focus Group Advisors, 2021 OK 25
|Civil Procedure; Arbitration
|May 18, 2021
|Route to this Court:
|Certiorari from Court of Civil Appeals (Division III)
|Plaintiffs/Appellees filed suit alleging various claims stemming from the parties’ investment relationships. Nearly 17 months after filing their answer, Defendants/Appellants moved to compel arbitration based on an arbitration clause in the parties’ agreements. The trial court held that (1) the Defendants/Appellants had waived the right to seek arbitration by not raising it as an affirmative defense in their answer; and (2) that the late assertion of the right would be prejudicial to the Plaintiffs/Appellees. The Court of Civil Appeals affirmed.
|Standard of Review:
|De novo review of the trial court’s denial of a motion to compel arbitration. Waiver is a mixed question of law and fact and review of the court’s application of the correct legal standards is de novo while the review of the trial court’s factual determination supporting waiver is deferential in nature.
|Arbitration is statutorily permitted under Oklahoma’s version of the Uniform Arbitration Act (OUAA) and public policy favors resolving doubts about the application of arbitration provisions in favor of enforcement. Waiver of a contractual right to compel arbitration is not easily inferred and the party asserting waiver has a heavy burden to overcome the strong presumption in favor of arbitration.
The requirement to plead the affirmative defense of “arbitration and award” found in Title 12 O.S.Supp.2014 §2008(C)(2) applies to an affirmative defense that a claim has already been resolved by an award in arbitration. It does not mean that a party must raise as an affirmative defense that claims should be resolved through arbitration. “Any other interpretation would contradict both the OUAA, which specifically provides for arbitration rights to be raised by motion (without mention of responsive pleadings) as well as Oklahoma’s strong public policy favoring arbitration of disputes.
Having found that Defendants/Appellants did not waive their right to arbitration by failing to plead it as an affirmative defense, the Court next examines whether the right to arbitration was waived due to Defendants/Appellants delay in moving for arbitration. After applying the balancing test set forth in Northland Ins. Co. v. Kellogg, 1995 OK CIV APP 84, the Court found that Plaintiffs/Appellees failed to satisfy the heaven burden to prove waiver of the right to arbitration..
|Opinion of Court of the Civil Appeals Withdrawn; Judgement of the Trial Court Reversed.
|7-2. Opinion by Winchester, J. Concur: Darby, C.J., Edmonson, Gurich and Rowe, JJ., Reif, S.J., and Wiseman, S.J. Dissent: Kauger and Combs, J.J. Disqualified: Kane, V.C.J.