ASC v. Wolf Mountain Resorts

2010 UT 65
245 P.3d 184
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
ASC Utah, Inc. dba The Canyons, 	No. 20090599
Plaintiff, Counterclaim
Defendant and Appellee,
v.
Wolf Mountain Resorts, L.C.,
Defendant, Counterclaim
Plaintiff and Appellant.
__________________________________
Wolf Mountain Resorts, L.C.,
Plaintiff,
v.
ASC Utah, Inc. dba The Canyons,
Defendant.
__________________________________
Stephen A. Osguthorpe, et al.,
Plaintiffs,
v.
Wolf Mountain Resorts, L.C.,
Defendant.
Enoch Richard Smith, as the
Personal Representative of the
Estate of Enoch Smith, Jr.,
Intervenor.
__________________________________
Stephen A. Osguthorpe, et al.,
Plaintiffs,
v. F I L E D
ASC Utah, Inc. dba The Canyons,
Defendant. 	November 19, 2010
---
Third District, Silver Summit
The Honorable Bruce C. Lubeck
Nos. 060500297, 060500494,
070500018, 070500520

1 The legislature has since enacted the Utah Uniform
Arbitration Act, Utah Code Ann. §§ 78B-11-101 to -131 (2008).
Section 78B-11-104, however, notes that the new Act “applies to
any agreement to arbitrate made on or after May 6, 2002,”
covering earlier agreements only if all parties so agree. 	Thus
we cite to provisions of the earlier Utah Arbitration Act
throughout this opinion.
No. 20090599 	2
Attorneys: 	John P. Ashton, Clark K. Taylor, John R. Lund,
Kara Pettit, Salt Lake City, for plaintiffs
David M. Wahlquist, Ryan B. Frazier, Salt Lake
City, Bruce C. Moore, Scott Mahady, Eugene, OR,
for defendants
---
DURHAM, Chief Justice:
INTRODUCTION
¶1 	This case presents two issues: (1) whether the district
court has jurisdiction to find that a party waived its
contractual right of arbitration under Utah Code section 78-31a-4
(1996), 1 and (2) whether the district court erred in holding that
Wolf Mountain waived any potential contractual right to
arbitration. 	We hold that the district court has such
jurisdiction, and that it was correct in holding that Wolf
Mountain waived any potential contractual right to arbitration.
BACKGROUND
¶2 	On July 3, 1997, Wolf Mountain Resorts, L.C. (Wolf
Mountain) and ASC Utah, Inc., dba The Canyons (ASCU) entered into
a Ground Lease agreement (Ground Lease) concerning the property
now known as “The Canyons Ski Resort” (The Canyons). 	In the
Ground Lease, Wolf Mountain agreed to lease The Canyons to ASCU
for up to 200 years. 	The Ground Lease requires ASCU to make
annual rent payments to Wolf Mountain, develop the property, and
pay Wolf Mountain a percentage of the costs of development. 	As
ASCU develops the property, the Ground Lease provides that ASCU
may exercise an exclusive option to transfer title of the
property from Wolf Mountain to ASCU.
¶3 	In 1999, pursuant to the Ground Lease, ASCU, Wolf
Mountain, Summit County, and various other landowners not
participating in this litigation entered into an Amended and
Restated Development Agreement for the Canyons Specially Planned
Area (SPA Agreement). 	The SPA Agreement outlines how The Canyons
will be developed. 	Since 1997, in accordance with the Ground
Lease and SPA Agreement, ASCU has invested a significant amount
of money in developing The Canyons, greatly increasing the number
of skier visits each year. 	Wolf Mountain and ASCU, however, have
had disputes about these agreements that have hindered the

3 	No. 20090599
development of The Canyons, including impeding the construction
of a golf course that had been contemplated in the SPA Agreement.
¶4 	In March 2006, Wolf Mountain issued a Default Notice to
ASCU, alleging that ASCU had breached terms of the Ground Lease
and threatening to terminate the Ground Lease. 	In response, ASCU
filed a Complaint seeking declaratory relief related to the
Default Notice and successfully moved for a preliminary
injunction. 	Soon after, ASCU filed its First Amended Complaint,
claiming that Wolf Mountain had breached the Ground Lease,
including its duties to assist in land development pursuant to
the SPA Agreement, which the Ground Lease incorporates. 	Wolf
Mountain responded by filing an Answer and Counterclaim, and a
First Amended Complaint against ASCU in a separate action. 	That
action and others were consolidated into this case. 	Since the
fall of 2006, Wolf Mountain and ASCU have been actively engaged
in litigation, including extensive discovery and pretrial
motions.
¶5 	This discovery included the exchange of copious
quantities of written discovery, the issuance of subpoenas duces
tecum, and the taking of over 32 depositions. 	Specifically, Wolf
Mountain served ASCU with four sets of Requests for Production of
Documents, containing more than 400 separate requests; two sets
of Interrogatories, containing 48 separate queries; and two sets
of Requests for Admission, containing 45 separate requests. 	As
of May 2009, ASCU had produced over 150,000 pages of documents.
In addition, Wolf Mountain responded to multiple rounds of
written discovery, amended and supplemented its discovery
responses, and subpoenaed documents from numerous third parties.
The district court even appointed a special master to assist with
this extensive discovery because of ongoing disputes between the
parties.
¶6 	In addition to discovery matters, the district court
has heard and ruled upon numerous motions, including several
motions filed by Wolf Mountain. 	For instance, Wolf Mountain
filed a motion to dismiss, a stipulated motion for case
management order, a motion to compel responses to witness
discovery requests, a motion for an order increasing the bond
posted by ASCU for preliminary injunction, motions relating to
various scheduling issues, a motion to amend the case management
order, motions to compel depositions, and motions to compel
responses to subpoenas.
¶7 	On March 12, 2009, nearly three years after this suit
began, Wolf Mountain filed a Motion for Leave to add several new
parties to the litigation. 	The district court denied Wolf
Mountain’s motion, citing to “the delay and lack of viable
explanation for the delay and prejudice to all parties in
allowing this late amendment.”
¶8 	Following the district court’s denial of its Motion for
Leave to add additional parties, Wolf Mountain filed a Demand for
Arbitration against several parties to the SPA Agreement,

No. 20090599 	4
including both third parties and ASCU, based on an arbitration
provision contained in the SPA Agreement (Arbitration Provision).
It also filed a Motion to Compel Arbitration. 	Until this point,
three years into the litigation and after extensive discovery and
numerous pretrial motions, Wolf Mountain had never asserted the
right to arbitration in any of its pleadings, and had not
previously made the court or ASCU aware of its desire to seek
arbitration. 	In fact, while fully aware of the Arbitration
Provision from the outset of the litigation, Wolf Mountain admits
that it had chosen to interpret the provision as not allowing it
to initiate arbitration, and that it had specifically argued that
it was not required to arbitrate disagreements relating to the
SPA Agreement.
¶9 	Wolf Mountain explains that it sought to pursue
arbitration at this point in the proceedings in response to the
district court’s ruling rejecting its motion to add new parties
to the suit. 	However, in that opinion, the district court
specifically noted that its decision was not based on the
Arbitration Provision: “While the court need not and does not
base its decision on this argument, the court agrees with third
party defendants that the SPA Agreement does require
arbitration.” 	The district court further explained its position
in a later order when it stated:
This court did not rule . . . that Wolf
[Mountain] MUST or COULD or SHOULD arbitrate
. . . . 	This Court specifically stated it
was NOT basing its decision to disallow third
parties to be joined on the arbitration
provision of the SPA agreement, but on Rule
14 and for other reasons . . . . 	This court
did NOT rule that Wolf [Mountain] had a right
to arbitrate.
The district court denied Wolf Mountain’s Motion to Compel
Arbitration on the grounds that Wolf Mountain had waived any
potential right to arbitration by participating in litigation to
a point inconsistent with an intent to arbitrate and causing
prejudice to ASCU as a result. 	Wolf Mountain responded by filing
a notice of appeal of the district court’s denial of Wolf
Mountain’s Motion to Compel Arbitration pursuant to the Utah
Arbitration Act, Utah Code Ann. § 78-31a-19 (1999).
¶10 	This court has jurisdiction to hear the claim under
Utah Code sections 78-31a-19(1) (1999) and 78A-3-102(3)(j) (Supp.
2010).
STANDARD OF REVIEW
¶11 	“The interpretation of a statute is a question of law
that we review for correctness . . . .” 	Jaques v. Midway Auto
Plaza, Inc., 2010 UT 54, ¶ 11, 240 P.3d 769. 	On the other hand,

2 Although Wolf Mountain argues that a mandatory designation
renders a statute jurisdictional, even if section 78-31a-4 were
mandatory, it is not necessarily jurisdictional. 	As the court of
appeals explained in Pearson v. Lamb, “Utah courts have held that
certain procedures required by statute are inconsequential to a
court’s jurisdiction.” 	2005 UT App 383, ¶ 11, 121 P.3d 717.
3 Wolf Mountain contends that mandatory statutes cannot be
waived, even by parties themselves. 	Even if section 78-31a-4
(continued...)
5 	No. 20090599
determining “whether a contractual right of arbitration has been
waived presents mixed questions of law and fact.” 	Pledger v.
Gillespie, 1999 UT 54, ¶ 16, 982 P.2d 572. 	However, when a
district court denies a motion to compel arbitration based on
documentary evidence alone, it is a legal conclusion that is
reviewed for correctness. 	See McCoy v. Blue Cross & Blue Shield
of Utah, 1999 UT App 199, ¶ 10, 980 P.2d 694.
ANALYSIS
¶12 	We first address whether the district court had
jurisdiction to find that a party waived a contractual right of
arbitration under section 78-31a-4, and then examine whether the
district court erred in holding that Wolf Mountain had waived any
potential right to arbitration.
I. 	THE DISTRICT COURT HAD JURISDICTION TO FIND THAT
WOLF MOUNTAIN WAIVED A CONTRACTUAL RIGHT OF ARBITRATION
UNDER SECTION 78-31a-4
¶13 	Wolf Mountain argues that section 78-31a-4 of the Utah
Arbitration Act creates a mandatory statutory right that cannot
be waived, and therefore the district court did not have
jurisdiction to find that Wolf Mountain had waived any potential
contractual right of arbitration. 	Based on this argument, Wolf
Mountain urges this court to overrule Chandler v. Blue Cross Blue
Shield of Utah, 833 P.2d 356 (Utah 1992), and its progeny. 	We
hold that section 78-31a-4 is not mandatory or jurisdictional,
and that the Utah Arbitration Act does not bar courts from
applying equitable contract principles to arbitration agreements.
As a result, Wolf Mountain has not met its burden of persuading
us to overrule our precedent. 	Therefore, under section 78-31a-4,
courts may find that a party has waived its right to arbitration
in accordance with the framework set forth in Chandler and its
progeny.
A. 	Section 78-31a-4 Is Not Mandatory or Jurisdictional
¶14 	Wolf Mountain contends that section 78-31a-4 of the
Utah Arbitration Act is mandatory and jurisdictional, 2 leaving
the district court without authority to find that a party has
waived the right to arbitration. 3 	However, “[i]n determining

3 (...continued)
were mandatory, this court has nonetheless previously held that
“[w]aiver or estoppel may be found in the face of a mandatory
statute.” 	Rice v. Granite Sch. Dist., 456 P.2d 159, 162 (Utah
1969) (quoting Hurley v. Town of Bingham, 228 P. 213, 214 (Utah
1924)). 	For example, “‘statutes of limitation ordinarily are
mandatory both in form and effect. 	Nevertheless, they may be
waived or the party may be estopped from relying upon them.’”
Id. (quoting Hurley, 228 P. at 214). 	In such circumstances, it
may be equitable to allow waiver or estoppel in the face of a
mandatory statute because “‘[o]ne cannot justly or equitably lull
an adversary into a false sense of security thereby subjecting
his claim to the bar of limitations, and then be heard to plead
that very delay as a defense to the action when brought.’” 	Id.
at 163 (quoting North v. Culmer, 193 So. 2d 701, 705 (Fla. Ct.
App. 1967)). 	This reasoning is applicable here; even if section
78-31a-4 were mandatory, it would still be equitable to find
waiver of the right to arbitrate when a party has relinquished
its right to arbitration through substantial participation in
litigation that caused prejudice to the opposing party.
No. 20090599 	6
whether a statutory provision is jurisdictional, we begin with
the presumption that “‘district courts retain their grant of
constitutional jurisdiction in the absence of clearly expressed
statutory intention to limit jurisdiction.’” 	Sill v. Hart, 2007
UT 45, ¶ 19, 162 P.3d 1099 (quoting Labelle v. McKay Dee Hosp.
Ctr., 2004 UT 15, ¶ 8, 89 P.3d 113). 	For a statute to deprive
the district court of jurisdiction, the intention to limit the
jurisdiction of the court must be clearly expressed in the
statute. 	Neither the language of section 78-31a-4 nor the
purpose of the statute clearly supports an intent to limit the
jurisdiction of the court.
¶15 	Section 78-31a-4(1) contains the following language:
“The court, upon motion of any party showing the existence of an
arbitration agreement, shall order the parties to arbitrate.”
Wolf Mountain contends that this provision is mandatory and
jurisdictional, requiring the court to order arbitration when a
party requests an order and can point to a contractual
arbitration agreement, and affording the court no discretion to
find that a party has waived the right to arbitration. 	However,
such a reading does not account for other language contained in
section 78-31a-4.
¶16 	Specifically, section 78-31a-4(4) states that
“[r]efusal to issue an order to arbitrate may not be grounded on
a claim that an issue subject to arbitration lacks merit, or that
fault or grounds for the claim have not been shown.” 	It would
not have been necessary to specify these two prohibited grounds
for refusing arbitration if the legislature intended to prohibit
the court from refusing to issue an order to arbitrate under any
circumstances. 	Had the legislature intended section 78-31a-4 to

4 See also Kennecott Copper Corp. v. Salt Lake Cnty., 575
P.2d 705, 706 (Utah 1978) (“There is no universal rule by which
directory provisions may, under all circumstances, be
distinguished from those which are mandatory. 	The intention of
the legislature, however, should be controlling and no
formalistic rule of grammar or word form should stand in the way
of carrying out the legislative intent.” (internal quotation
marks omitted)).
7 	No. 20090599
be a mandatory and jurisdictional provision, it could have
specified that courts must issue orders to arbitrate under all
circumstances, or that courts may not refuse to issue orders to
arbitrate under any circumstances. 	Instead, by providing
specific guidance on the two narrow grounds upon which a refusal
to issue an order to arbitrate should not be based, the text of
the statute makes it clear that the legislature did not intend to
limit the court’s jurisdiction to refuse to issue orders to
arbitrate on other grounds, such as when a party has waived its
right to arbitrate.
¶17 	In addition to the text of the statute itself, the
purpose of the Act weighs against interpreting section 78-31a-4
as mandatory and jurisdictional. 	When determining whether a
statutory provision is mandatory and jurisdictional, “[t]he most
fundamental [guideline] is that the court should give effect to
the intention of the legislature.” 	Sjostrom v. Bishop, 393 P.2d
472, 474 (Utah 1964). 4 	Determining the intention of the
legislature “requires us to consider what the figurative
‘legislative mind’ would have intended had it adverted to the
particular circumstances we are confronted with for
adjudication.” 	Id. 	In doing this, we take into account the
purpose of the statute and “what interpretation and application
will best serve that purpose in practical operation.” 	Id.
¶18 	In this case, construing the statute as preventing
courts from refusing to issue orders to arbitrate because of
waiver would run contrary to the purpose of the Utah Arbitration
Act. 	The legislature enacted the Act in accordance with a public
policy that favors arbitration agreements as contractual
agreements between parties not to litigate, Cent. Fla. Invs.,
Inc. v. Parkwest Assocs., 2002 UT 3, ¶ 16, 40 P.3d 599, only
insofar as they serve as “speedy and inexpensive methods of
adjudicating disputes,” Allred v. Educators Mut. Ins. Ass’n of
Utah, 909 P.2d 1263, 1265 (Utah 1996), and help reduce strain on
judicial resources, see Chandler, 833 P.2d at 358. 	There is no
public policy supporting arbitration when it would undermine
these goals. 	“The policies favoring arbitration are largely
defeated when the right of arbitration is not raised until an
opposing party has undertaken much of the expense necessary to
prepare a case for trial.” 	Id. at 361. 	As ASCU argues in its
brief, if courts were unable to refuse to issue orders to
arbitrate when a party has waived its right to arbitration,

No. 20090599 	8
there would be nothing to stop a party from
litigating a case all the way to the close of
evidence at trial and, if it then senses an
unfavorable outcome, filing a motion to
compel arbitration before the jury returns
the verdict, which the court would “have” to
grant so long as an arbitration agreement
existed.
Such an outcome would clearly undermine the purpose of the Act.
¶19 	In addition, provisions are generally not considered
mandatory, “which are not of the essence of the thing to be done,
but which are given with a view merely to the proper, orderly and
prompt conduct of . . . business, and by the failure to obey no
prejudice will occur to those whose rights are protected by the
statute.” 	Kennecott Copper Corp. v. Salt Lake Cnty., 575 P.2d
705, 706 (Utah 1978) (internal quotation marks omitted). 	We have
stated in the past that the Utah Arbitration Act is a procedural,
rather than a substantive, statute because it does not “‘enlarge,
eliminate, or destroy vested or contractual rights.’” 	Powell v.
Cannon, 2008 UT 19, ¶ 3 n.1, 179 P.3d 799 (quoting Dep’t of Soc.
Servs. v. Higgs, 656 P.2d 998, 1000 (Utah 1982)). 	A procedural
statute “provides a remedy for already existing rights or merely
adds to or provides a substitute for already existing remedies.”
Docutel Olivetti Corp. v. Dick Brady Sys., Inc., 731 P.2d 475,
478 (Utah 1986). 	Because the Utah Arbitration Act is meant to
provide guidance on the process of enforcing a contractual right,
rather than to provide any new statutory right, it was therefore
“given with a view merely to the proper, orderly and prompt
conduct of . . . business.” 	Kennecott Copper, 575 P.2d at 706
(internal quotation marks omitted).
¶20 	Furthermore, allowing courts to refuse to issue orders
to arbitrate when parties have waived their contractual right to
arbitration does not cause prejudice to “occur to those whose
rights are protected by the statute.” 	Id. (internal quotation
marks omitted). 	If a party manifests its intent to waive its
right to arbitrate, its rights are not prejudiced if the court
refuses to issue an order to arbitrate. 	See Chandler, 833 P.2d
at 360 (stating that “there is an affirmative duty to enforce
contractual rights”). 	On the other hand, if the court could not
refuse to issue orders to arbitrate when one party waives its
contractual right of arbitration, the other party’s rights would
be prejudiced. 	See id. (“[I]t is not the policy of this court to
allow a party to suffer prejudice because an opposing party has
failed to timely assert a contractual right.”).
¶21 	In considering the text of the statute, as well as the
purpose of the Utah Arbitration Act, we hold that section 78-31a-
4 is not mandatory and jurisdictional, leaving the district court

5 Other courts have followed similar reasoning when faced
with the argument that an arbitration statute divests the court
of jurisdiction to find that a party has waived its right to
arbitrate. 	For instance, in Lamell Lumber Corp. v. Newstress
International Inc., the defendant argued that Vermont courts were
divested of jurisdiction to find waiver of an agreement to
arbitrate because the Vermont Arbitration Act stated that the
court shall order the parties to proceed with arbitration. 	938
A.2d 1215, 1218-21 (Vt. 2007). 	The Vermont Supreme Court
rejected this argument, stating that “[a]n arbitration agreement
. . . remains a creature of contract reflecting a voluntary
agreement between the parties and as such may be waived by the
parties.” 	Id. at 1220.
9 	No. 20090599
with authority to consider whether a party has waived its right
to arbitrate. 5
B. 	The Utah Arbitration Act Does Not Abrogate
Equitable Contract Principles
¶22 	The right to arbitration is a contractual right. 	See
Chandler, 833 P.2d at 360; Cent. Fla. Invs., 2002 UT 3, ¶ 22. 	In
prior cases, we have held that equitable contract principles are
not abrogated by the Utah Arbitration Act. 	In Chandler, we held
that a party could waive a contractual right of arbitration
through substantial participation in litigation that caused
prejudice to the other party. 	833 P.2d at 360. 	This is
consistent with other cases that have applied equitable contract
principles to arbitration agreements. 	For instance, in Jenkins
v. Percival, we held that the equitable contract principle of
part performance could be employed to enforce an oral arbitration
agreement, even though the Utah Arbitration Act required an
arbitration agreement to be in writing to be enforceable. 	962
P.2d 796, 801 (Utah 1998). 	Similarly, in Sosa v. Paulos, we held
that the equitable doctrine of unconscionability could be used to
bar enforcement of an agreement to arbitrate. 	924 P.2d 357, 361-
65 (Utah 1996). 	Thus, under section 78-31a-4, the district court
may apply equitable contract principles to determine that a party
has waived its right to arbitrate.
C. 	Wolf Mountain Does Not Meet Its Burden Regarding
the Overruling of Precedent
¶23 	Wolf Mountain argues that we should overrule Chandler
and its progeny. 	However, long-standing precedent “should not be
overruled except for the most compelling reasons.” 	Wilson v.
Manning, 657 P.2d 251, 254 (Utah 1982). 	Any party asking a court
“to overturn prior precedent ha[s] a substantial burden of
persuasion. 	This burden is mandated by the doctrine of stare
decisis.” 	State v. Menzies, 889 P.2d 393, 398 (Utah 1994)
(citation omitted). 	A court “‘will follow the rule of law which
it has established in earlier cases, unless clearly convinced

No. 20090599 	10
that the rule was originally erroneous or is no longer sound
because of changing conditions and that more good than harm will
come by departing from precedent.’” 	Id. at 399 (quoting John
Hanna, The Role of Precedent in Judicial Decision, 2 Vill. L.
Rev. 367, 367 (1957)).
¶24 	Wolf Mountain does not allege that Chandler is no
longer sound because of changing conditions, as Chandler was
decided in 1992, which was after the Utah Arbitration Act was
originally adopted in 1985. 	Wolf Mountain appears to allege
simply that the rule was originally wrong and should be
abandoned. 	We are unpersuaded and continue to view Chandler’s
holding as correct and consistent with our conclusions that
section 78-31a-4 is not mandatory and jurisdictional, and
therefore can be waived in accordance with equitable contract
principles. 	Wolf Mountain has not met its burden of persuasion.
II. 	THE DISTRICT COURT WAS CORRECT IN HOLDING THAT WOLF MOUNTAIN
WAIVED ANY POTENTIAL CONTRACTUAL RIGHT OF ARBITRATION
A. 	Wolf Mountain Was Not Required to Marshal the Evidence
¶25 	ASCU contends that Wolf Mountain “must marshal all the
evidence in support of the trial court’s findings and then
demonstrate that even viewing it in the light most favorable to
the court below, the evidence is insufficient to support the
findings.” 	Scharf v. BMG Corp., 700 P.2d 1068, 1070 (Utah 1985).
ASCU claims that because Wolf Mountain has not attempted to
marshal the evidence in support of the district court’s decision,
we should assume that the district court’s decision is adequately
supported by the evidence. 	However, this argument misunderstands
Wolf Mountain’s position. 	Because Wolf Mountain is challenging
the legal conclusions of the district court based on the
undisputed factual record, rather than the sufficiency of the
evidence, Wolf Mountain is not required to marshal the evidence.
Peirce v. Peirce, 2000 UT 7, ¶ 17 n.4, 994 P.2d 193 (“[T]he
marshaling requirement applies only to challenges of factual
findings, not to conclusions of law.”); Birch Creek Irrigation v.
Prothero, 858 P.2d 990, 993 n.3 (Utah 1993) (“[Since defendants]
are not attacking the sufficiency of the evidence . . . [but
rather] arguing that the trial court did not comply with the
requirements of the applicable rules as a matter of law . . . .
[they are] not required to marshal the evidence . . . .”).
B. 	Wolf Mountain Is Charged with a Knowledge
of the Terms of the SPA Agreement
¶26 	“‘A waiver is the intentional relinquishment of a known
right. 	To constitute a waiver, there must be an existing right,
benefit or advantage, a knowledge of its existence, and an
intention to relinquish it.’” 	Soter’s, Inc. v. Deseret Fed. Sav.
& Loan Ass’n, 857 P.2d 935, 938 (Utah 1993) (quoting Phoenix Ins.
Co. v. Heath, 61 P.2d 308, 311-12 (Utah 1936)). 	Wolf Mountain
argues that it could not relinquish a “known” right because it

11 	No. 20090599
originally believed that it did not have the right to pursue
arbitration. 	In other words, Wolf Mountain argues that it could
not waive the right to arbitration because it did not know it had
the right until the district court’s April 29, 2009 order denying
Wolf Mountain’s request to add new parties to the case.
¶27 	Wolf Mountain was clearly aware of the arbitration
provision in the SPA Agreement from the outset of this
litigation; it simply chose to interpret the provision as not
providing it with the right to arbitrate. 	Wolf Mountain
acknowledges that, from the beginning of this proceeding, it has
“asserted that the SPA Agreement’s arbitration provision does not
apply to the current litigation.” 	As the district court stated
in its August 11, 2009 ruling:
Whatever the SPA Agreement says, Wolf was
aware of it fully long before April 29, 2009.
If Wolf did not believe it could arbitrate
under that agreement, it evidently acted on
that basis. 	If Wolf believed that it could
arbitrate under that agreement, it should
have moved to compel arbitration long ago.
¶28 	Furthermore, sophisticated business parties are charged
with knowledge of the terms of the contracts that they enter
into. 	Thus, when a party like Wolf Mountain enters into a
contract, it “is not permitted to show that [it] did not know its
terms, and in the absence of fraud or mistake [it] will be bound
by all its provisions, even though [it] has not read the
agreement and does not know its contents.” 	Semenov v. Hill, 1999
UT 58, ¶ 12, 982 P.2d 578 (emphasis omitted) (quoting 17 C.J.S.
Contracts § 41(f) (1963)). 	Under Utah law, “each party has the
burden to read and understand the terms of a contract before he
or she affixes his or her signature to it. 	A party may not sign
a contract and thereafter assert ignorance or failure to read the
contract as a defense.” 	John Call Eng’g, Inc. v. Manti City
Corp., 743 P.2d 1205, 1208 (Utah 1987). 	Wolf Mountain had the
responsibility to understand all the provisions of the contract
when it signed the SPA Agreement. 	As a sophisticated business
party, Wolf Mountain is charged with a knowledge of any potential
right of arbitration when determining whether Wolf Mountain
waived the right to arbitration.
C. 	The District Court Properly Applied Chandler’s Two-Part
Test in Finding that Wolf Mountain Waived Any Potential
Contractual Right of Arbitration
¶29 	“‘Waiver of a contractual right occurs when a party to
a contract intentionally acts in a manner inconsistent with its
contractual rights, and, as a result, prejudice accrues to the
opposing party or parties to the contract.’” 	Flake v. Flake (In
re Estate of Flake), 2003 UT 17, ¶ 31, 71 P.3d 589 (quoting
Interwest Constr. v. Palmer, 886 P.2d 92, 98 (Utah Ct. App.
1994)). 	In the context of arbitration, this amounts to a two-

No. 20090599 	12
part test to determine if a party has waived its contractual
right: (1) whether the party seeking to assert the right has
“participat[ed] in litigation to a point inconsistent with the
intent to arbitrate,” and (2) whether the opposing party has been
prejudiced as a result. 	Chandler v. Blue Cross Blue Shield of
Utah, 833 P.2d 356, 360 (Utah 1992).
1. 	Wolf Mountain Substantially Participated in Litigation
¶30 	This prong of the Chandler test requires the court to
consider “the actions of the party seeking arbitration, and
whether those actions evidence an intent to submit to the
jurisdiction of the court and pursue redress through litigation.”
Cent. Fla. Invs., Inc. v. Parkwest Assocs., 2002 UT 3, ¶ 26, 40
P.3d 599. 	Wolf Mountain clearly had the intent to pursue matters
through litigation rather than to seek arbitration. 	Indeed, in
its brief, Wolf Mountain conceded that “Wolf Mountain’s ‘intent’
need not be inferred, since it expressly stated its intent on the
record.” 	According to its brief, Wolf Mountain intended to
pursue litigation because it believed that it did not have the
right to pursue arbitration under the SPA Agreement. 	Wolf
Mountain further acknowledges that it developed an intent to
pursue arbitration only as a result of the district court’s
ruling on April 29, 2009, which was three years after the
litigation had commenced. 	Thus, Wolf Mountain’s own admissions
show that it had a clear intent to pursue litigation rather than
arbitration.
¶31 	In addition to its explicitly stated intent to pursue
litigation, Wolf Mountain’s actions also clearly manifest an
intent to pursue litigation rather than arbitration. 	A variety
of conduct can show a party’s intent to pursue litigation. 	In
Central Florida Investments, the court explained:
Participation in discovery and other aspects
of litigation that do not necessarily involve
the court are factors we consider in trying
to ascertain a party’s intent or attitude
toward its participation in litigation.
Requests made of the court by the parties,
however, have even greater weight. 	We
consider especially important whether the
parties’ requests of the court demonstrate an
intent to pursue litigation or whether they
demonstrate an intent to avoid litigation and
a desire to be sent to arbitrate.
Accordingly, parties seeking to enforce
arbitration should ensure that the court, not

13 	No. 20090599
just the opposing party, is informed that
arbitration is desired. 	In doing so,
judicial resources will be appropriately
conserved.
Id.
¶32 	For instance, in Chandler, the court found that Blue
Cross “clearly manifest[ed] an intent to proceed to trial” by
filing an answer and a cross-claim, participating in discovery
for five months, and reviewing discovery that had already taken
place. 	833 P.2d at 360. 	Similarly, in Smile Inc. Asia Pte. Ltd.
v. BriteSmile Management, Inc., the court of appeals found that
BriteSmile had participated in litigation to an extent
inconsistent with a desire to arbitrate by filing various motions
and memoranda, a counterclaim, scheduling orders, various motions
involving discovery, serving various requests for discovery,
responding to discovery requests, and communicating with the
court and opposing counsel about issues related to litigation.
2005 UT App 381, ¶ 26, 122 P.3d 654.
¶33 	On the other hand, the court will not find that a party
has waived its right to arbitrate when it participates in
litigation “reluctantly, demonstrating a sufficient intent to
arbitrate” along the way. 	Cent. Fla. Invs., 2002 UT 3, ¶ 34. 	In
Central Florida Investments, three days after the plaintiff filed
its complaint, the defendant sent plaintiff a letter explaining
that the dispute was subject to arbitration. 	Id. ¶ 3. 	The
defendant filed an answer to comply with the Utah Rules of Civil
Procedure, but at the same time, it filed a counterclaim and a
motion to dismiss both raising the issue of arbitration. 	Id.
¶¶ 5-6. 	When the district court denied, in part, the defendant’s
motion to dismiss, the defendant filed a motion to compel
arbitration four days later, which was also denied. 	Id. ¶¶ 8-9.
On appeal, we ruled that the defendant had not waived its right
to arbitrate because it “did not participate in litigation to a
point inconsistent with the intent to arbitrate.” 	Id. ¶ 36.
Instead, from the beginning and throughout the proceedings, the
defendant expressed a desire to arbitrate and indicated that it
was unwilling to participate in litigation. 	Id. ¶ 34.
¶34 	Unlike the defendant in Central Florida Investments,
Wolf Mountain did not express a desire to arbitrate at the
commencement or during the proceedings in this case. 	Instead, it
actively participated in litigation for nearly three years before
requesting arbitration for the first time in May 2009. 	Like the
parties in Chandler and Smile Inc. Asia, Wolf Mountain’s actions
manifested an intent to proceed to trial. 	Wolf Mountain filed a
motion to dismiss, an answer and a counterclaim, and participated

No. 20090599 	14
in discovery and filed many motions over the course of three
years. 	Wolf Mountain even filed a separate lawsuit that was
later consolidated with this litigation. 	In light of these
actions, Wolf Mountain’s extensive participation in litigation
clearly shows that it “intended to disregard its right to
arbitrate.” 	Id. ¶ 24.
2. 	Wolf Mountain’s Participation in Litigation Has Prejudiced
ASCU
¶35 	If the party seeking arbitration has participated in
litigation to a point inconsistent with arbitration, “the
determination of whether waiver has occurred rests solely on a
finding of prejudice . . . . result[ing] from the delay in the
assertion of the right to arbitrate.” 	Chandler, 833 P.2d at 359.
“[A]ny real detriment is sufficient to support a finding of
prejudice.” 	Id. at 360. 	Prejudice includes the other party
incurring “the types of expenses that arbitration is designed to
alleviate” or expenses that the other party would not have
incurred if the moving party had restricted its efforts to
arbitration. 	Id. at 359. 	Prejudice can also arise “if a party
gains an advantage in arbitration through participation in
pretrial procedures,” such as obtaining discovery or other
advantages that would not have been available in arbitration.
Id. 	In addition, prejudice can occur “when the party seeking
arbitration is attempting to forum-shop after ‘the judicial
waters [have] . . . been tested.’” 	Id. (alterations in original)
(quoting Wood v. Millers Nat’l Ins. Co., 632 P.2d 1163, 1165
(N.M. 1981)).
¶36 	In this case, ASCU has been prejudiced by Wolf
Mountain’s participation in litigation. 	In responding to Wolf
Mountain’s numerous requests for discovery and other pretrial
procedures, ASCU has undergone “the types of expenses that
arbitration is designed to alleviate.” 	Id. 	Furthermore, Wolf
Mountain’s extensive discovery has allowed it to obtain
information that would not have been available in arbitration.
This would give Wolf Mountain “an advantage in arbitration
through [its] participation in pretrial procedures.” 	Id. 	In
addition, Wolf Mountain’s attempt to compel arbitration at this
late point in the proceedings is indicative of a desire to
“forum-shop after ‘the judicial waters [have] . . . been
tested.’” 	Id. (alterations in original) (quoting Wood, 632 P.2d
at 1165). 	The prejudice that ASCU would suffer in arbitration as
a result of Wolf Mountain’s extensive participation in litigation
is sufficient to support the conclusion that Wolf Mountain has
waived any potential right to arbitration.

6 Other courts have also held that a no-waiver provision is
just one factor to consider in determining the question of
waiver. 	See, e.g., Riverside Dev. Co. v. Ritchie, 650 P.2d 657,
663-64 (Idaho 1982); M.J.G. 	Props., Inc. v. Hurley, 537 N.E.2d
165, 166-67 (Mass. App. Ct. 1989).
7 See, e.g., Republic Ins. Co. v. PAICO Receivables LLC, 383
F.3d 341, 348-49 (5th Cir. 2004) (finding that a contractual no-
waiver provision does not prevent a court from ruling that a
party has waived its right to arbitration); S & R Co. of Kingston
v. Latona Trucking, Inc., 159 F.3d 80, 86 (2d Cir. 1998)
(determining “that the presence of [a] ‘no waiver’ clause does
not alter the ordinary analysis undertaken to determine if a
party has waived its right to arbitration”); Seidman & Seidman v.
Wolfson, 123 Cal. Rptr. 873, 878 (Ct. App. 1975) (stating that a
no-waiver provision should not permit a party to seek judicial
relief “and later to switch course and demand arbitration”); Home
Gas Corp. of Mass. v. Walter’s of Hadley, Inc., 532 N.E.2d 681,
684-85 (Mass. 1989) (holding that a no-waiver provision did not
prevent the court from finding waiver by conduct through
involvement in litigation).
15 	No. 20090599
D. 	Wolf Mountain Waived Any Contractual Right of Arbitration
Despite the No Waiver Provision of the SPA Agreement
¶37 	In its reply brief, Wolf Mountain argues, apparently
for the first time, that under section 6.14 of the SPA Agreement
(No Waiver Provision), ASCU agreed that “failure of a party
hereto to exercise any right hereunder shall not be deemed a
waiver of any such right and shall not affect the right of such
party to exercise at some future time said right or any other
right it may have hereunder.” 	While a no-waiver provision is one
element to be considered in analyzing whether waiver has
occurred, it is not determinative. 	In Living Scriptures, Inc. v.
Kudlik, the court noted that rather than viewing a no-waiver
provision in an agreement as a complete bar to a finding of
waiver, “the best approach is to view the existence of an
antiwaiver provision as merely one factor to consider in
determining whether a party has waived its rights under the
agreement.” 6 	890 P.2d 7, 10 n.5 (Utah Ct. App. 1995). 	Under
this approach, when dealing with arbitration agreements that
incorporate or explicitly contain no-waiver provisions, other
courts have found that such no-waiver provisions do not prevent a
court from finding that a party has waived its right to
arbitration. 7
¶38 	Moreover, “‘parties to written contracts may modify,
waive or make new terms regardless of provisions in the contracts
to the contrary.’” 	Dillman v. Massey Ferguson, Inc., 369 P.2d

8 “The general view is that a party to a written contract
can waive a provision of that contract by conduct expressly or
surrounding performance, despite the existence of a so-called
anti-waiver or ‘failure to enforce’ clause in the contract.” 	13
Williston on Contracts § 39:36 (4th ed. 2000). 	This is “based on
the view that the nonwaiver clause itself, like any other term of
the contract is subject to waiver by agreement or conduct during
performance.” 	Id.; see also Porterco, Inc. v. Igloo Prods.
Corp., 955 F.2d 1164, 1172 n.9 (8th Cir. 1992) (“[I]t is within
the jury’s power to find that such a provision was itself waived
or modified by the parties’ agreement or conduct.”); Transpower
Constructors v. Grand River Dam Auth., 905 F.2d 1413, 1419 (10th
Cir. 1990) (noting that it would be unfair for the court to
enforce a no-waiver provision after the party had essentially
waived the benefits of the provision’s protection); Westinghouse
Credit Corp. v. Shelton, 645 F.2d 869, 873-74 (10th Cir. 1981)
(“[T]he weight of authority, and the view we think Oklahoma state
courts would follow, is that an ‘anti-waiver’ clause, like any
other term in the contract, is itself subject to waiver or
modification by course of performance . . . .”); Hosp. Prods.,
Inc. v. Sterile Design, Inc., 734 F. Supp. 896, 904 (E.D. Mo.
1990) (“[D]efendant may waive a term of a contract through its
actions notwithstanding a ‘failure to enforce’ provision in the
contract.”); Travellers Int’l AG v. Trans World Airlines, Inc.,
722 F. Supp. 1087, 1098 (S.D.N.Y. 1989) (“New York law allows the
parties to waive . . . a no-waiver provision by a subsequent
course of conduct.”); Quality Prods. & Concepts Co. v. Nagel
Precision, Inc., 666 N.W.2d 251, 257 (Mich. 2003) (“[C]ontracts
with written modification or anti-waiver clauses can be modified
or waived notwithstanding their restrictive amendment clauses.”);
Lee v. Wright, 485 N.Y.S.2d 543, 544 (App. Div. 1985) (“[I]t has
long been the rule that parties may waive a ‘no-waiver’
clause.”).
No. 20090599 	16
296, 298 (Utah 1962) (quoting Davis v. Payne & Day, Inc., 348
P.2d 337, 340 (Utah 1960)); see also Lone Mountain Prod. Co. v.
Natural Gas Pipeline Co. of Am., 984 F.2d 1551, 1557 (10th Cir.
1992) (“[U]nder Utah law, parties may modify or waive the terms
of a contract, despite contractual provisions to the contrary.”
(citing Dillman, 369 P.2d at 298)). 	Thus, under some
circumstances, a no-waiver provision can itself be waived. 8
¶39 	In this case, Wolf Mountain did not mention the No
Waiver Provision to the district court in its Memorandum in
Support of Motion to Compel Arbitration or in its Reply
Memorandum, and did not refer to the provision on appeal in its
opening brief. 	Wolf Mountain did not reference the provision
until its reply brief. 	In light of Wolf Mountain’s failure to
act on the No Waiver Provision prior to this point, combined with

9 Furthermore, even if the No Waiver Provision otherwise
supported a finding that Wolf Mountain had not waived any right
to arbitration, “[a]s a general rule, claims not raised before
the trial court may not be raised on appeal.” 	State v. Holgate,
2000 UT 74, ¶ 11, 10 P.3d 346. There are only narrow exceptions
to this preservation rule, such as when “a defendant can
demonstrate that ‘exceptional circumstances’ exist or ‘plain
error’ occurred.” 	Id. 	Wolf Mountain demonstrates neither
exceptional circumstances nor plain error.
17 	No. 20090599
Wolf Mountain’s substantial participation in litigation and the
prejudice caused to ASCU, we hold that Wolf Mountain waived any
potential contractual right to arbitrate in spite of the No
Waiver Provision of the SPA Agreement. 9
CONCLUSION
¶40 	Utah public policy favors arbitration agreements only
insofar as they provide a speedy and inexpensive means of
adjudicating disputes, and reduce strain on judicial resources.
In this case, enforcing the arbitration agreement would undercut
both policy rationales: arbitration at this point would be
neither a speedy and inexpensive way to adjudicate this dispute,
nor a means of reducing strain on judicial resources. 	Public
policy is better served by finding waiver where a party has
participated in litigation to a point inconsistent with an intent
to arbitrate, when such participation causes prejudice to the
other party. 	We hold that the district court had jurisdiction to
consider whether Wolf Mountain had waived its contractual right
of arbitration under Utah Code section 78-31a-4, and that the
district court was correct in holding that Wolf Mountain waived
any such right.
---
¶41 	Associate Chief Justice Durrant, Justice Parrish,
Justice Nehring, and Judge West concur in Chief Justice Durham’s
opinion.
¶42 	District Judge W. Brent West sat.