Stewart v. Covill and Basham Construction, LLC

Summary

The Montana Supreme Court affirmed an order compelling arbitration in a construction-contract dispute between Jody Stewart and Covill and Basham Construction, LLC. The court held that the contractor did not impliedly waive its arbitration right by proposing mediation, filing a construction lien, or delaying arbitration, because those actions were not inconsistent with arbitration and did not establish the required prejudice. Justice Regnier dissented, reasoning that filing the construction lien was inconsistent with arbitration and prejudiced Stewart.

Holdings

1. A party asserting implied waiver of a contractual arbitration right must prove knowledge of the right to compel arbitration, acts inconsistent with the right to arbitrate, and prejudice to the party resisting arbitration. Covill and Basham did not impliedly waive arbitration because its mediation proposal expressly preserved arbitration, its construction lien protected a statutory security interest rather than advanced litigation, and any prejudice from the lien would have occurred whether the dispute was arbitrated or litigated.

Questions Presented

1. Whether Covill and Basham impliedly waived its contractual right to compel arbitration by participating in mediation, filing a construction lien, and delaying before moving to compel arbitration.

Disposition

affirmed