American Nat. Bank of Denver v. Cheyenne Housing Authority, 4643

• Decision Date: 14 April 1977
• Docket Number: No. 4643,4643
• Citation: 562 P.2d 1017
• Parties: The AMERICAN NATIONAL BANK OF DENVER, Trustee, Appellant (Plaintiff below), v. CHEYENNE HOUSING AUTHORITY, Appellee (Defendant below).
• Court: Wyoming Supreme Court

Page 1017

562 P.2d 1017

The AMERICAN NATIONAL BANK OF DENVER, Trustee, Appellant (Plaintiff below), v. CHEYENNE HOUSING AUTHORITY, Appellee (Defendant below).

No. 4643.

Supreme Court of Wyoming.

April 14, 1977.

Ted Simola, Cheyenne, for appellant.

Charles E. Graves, Graves & Hacker, Cheyenne, for appellee.

Before McCLINTOCK, RAPER, THOMAS, and ROSE, JJ., and ARMSTRONG, D. J., retired.

THOMAS, Justice.

The American National Bank of Denver (Hereinafter the Bank) brought this action to recover additional rentals claimed to be due under a lease. The additional rentals claimed were alleged to be the result of adjustments in the real estate taxes on the leased property which, according to the Complaint, Cheyenne Housing Authority (hereinafter the Housing Authority) had agreed to pay to the extent of 95.80 per cent. The lease covered a combination hotel and motel property in Cheyenne, Wyoming, which the Housing Authority planned to utilize as subsidized housing for elderly persons. The lease was attached to the Bank's complaint, and it includes an arbitration clause which provides:

'18. Arbitration of disputes: In the event that any dispute arises between the parties hereto over any of the provisions of this Lease or its effect, the same shall be determined by arbitrators to be selected as hereinafter provided, the determination of a majority of such arbitrators to be final and binding upon the parties hereto. The Lessor shall choose one of such arbitrators; the Lessee, another; and the two so chosen shall together choose a third. Each party shall pay costs of their arbitrator and shall divide equally the costs of the third arbitrator.'

The Housing Authority, by a Motion to Dismiss, asserted the failure of the Complaint to state a claim upon which relief can be granted. ¹

Additional matter in the record discloses that the Housing Authority's theory was that having presented the lease to the district court, it became the pleading obligation of the Bank to avoid this arbitration clause in order to proceed with its action. The district court dismissed the action because the Complaint failed to state a claim, specifically quoting the arbitration clause.

In appealing from this Order for Dismissal, the Bank contends:

1. Arbitration is an affirmative defense under Rule 8(c), W.R.C.P., and is not properly raised by a Motion to Dismiss.

2. Neither the lease nor the Uniform Arbitration Act, §§ 1-1048.1-1- 1048.21, W.S., justify relief in the form of dismissal.

3. Regardless of the procedural matters the district court committed substantive error in holding that the provisions of the lease foreclosed an action for specific performance of its provisions because the Bank is not compelled to arbitrate any question that it did not intend to submit to arbitration by the agreement.

4. No arbitrable dispute exists between the parties under the terms of the lease agreement or under the Uniform Arbitration Act because where the position of the parties seeking arbitration is clearly contrary to the provisions of the agreement an arbitrable dispute is not present.

5. Procedural deficiencies with respect to the scheduling of hearings under the district court rule should have resulted in an automatic denial of the Housing Authority's motion.

The proper procedure is spelled out in the provisions of the Uniform Arbitration Act, §§ 1-1048.1 through 1-1048.21, W.S. It is interesting to note that a colloquy between the Court and counsel for the Housing Authority demonstrates that this procedure was considered:

'(Counsel): Well, in order to perhaps eliminate the problem, I would, under the Act, I could at this point, Your Honor, inasmuch you have said what you have done, I have a motion here for an order to proceed with arbitration, maybe that's the best way to handle it, which I would file now rather than having the issue appealed on the motion to dismiss. Perhaps the answer is to proceed with the motion which I have here ready to file--

'The Court: Talk about prepared.

'(Counsel): -ordering the motion.'

'The Court: I think maybe the better procedure to handle this thing would be that, * * *.'

Prophetic as this colloquy was, the procedure was not pursued. It also is interesting to note that in one of the primary authorities relied upon by the Bank in its appeal the following language appears:

'* * * It should be noted preliminarily that the procedure provided in both the Pennsylvania Arbitration Act, 1927, P.L. 381, 5 P.S. § 1 et seq. and the United States Arbitration Act, 9 U.S.C.A. § 1 et seq. in cases where suits are instituted upon matters referable to arbitration under a written and enforceable arbitration agreement, is an application for a stay of the trial of the action until the arbitration has been had in accordance with the terms of the agreement. 5 P.S. § 162; 9 U.S.C.A. § 3. Neither the state nor the federal statute provides for dismissal of the actions commenced in violation of such arbitration agreements.' Karno-Smith Co. v. School Dist. of City of Scranton, Lackawanna County, D.C., 44 F.Supp. 860, 862 (1942).

We note that Colorado (see Guthrie v. Barda, Colo., 533 P.2d 487 (1975)) has adopted a theory which supports the disposition made by the district court, but that approach is not in accord with the statutory procedure which Wyoming has adopted. The Bank earnestly asserts that arbitration must be pleaded as an affirmative defense and the answer under Rule 8(c), W.R.C.P. It is only when the arbitration has been pursued to award that the 'arbitration and award' referred to as an affirmative defense in Rule 8(c), W.R.C.P. is available as a defense in bar, however, and a right to arbitration is not an affirmative defense under the rule. Demsey & Associates, Inc. v. S.S. Sea Star, 461 F.2d 1009 (2nd Cir. 972).

Section 1-1048.4 W.S. states the procedural methods in which a party asserting an arbitration agreement may seek enforcement. In an instance such as this the application provided for in that statute is to be filed in the court where the action is pending. The circumstances of ...