Good Samaritan Coffee Co. v. LaRue Distributing

674 	275 Nebraska reports
guaranty, and as to this part of the debt, the bank may look to
Jack for payment.
CoNCLusIoN
the judgment of the district court is affirmed in part and in
part reversed, and the cause is remanded with directions to enter
judgment in favor of the bank and against Jack in the amount
of $5,636.74 plus interest from august 8, 2002.
A ffirmed in pArt , And in pArt reversed
And remAnded witH direCtions .
G ood sAmAritAn C offee C ompAny , A neBrAskA
CorporAtion , Appellee , v . lArue distriButinG,
inC., A neBrAskA CorporAtion , doinG Business
As lArue C offee , et Al ., AppellAnts .
748 N.W.2d 367
Filed May 9, 2008. 	No. s-07-300.
1. Arbitration and Award. Whether a stay of proceedings should be granted and
arbitration required is a question of law.
2. Judgments: Appeal and Error. When reviewing questions of law, an appellate
court has an obligation to resolve the questions independently of the conclusion
reached by the trial court.
3. Arbitration and Award: Waiver: Appeal and Error. the legal determination of
waiver of arbitration is reviewed de novo, and the factual findings underlying that
ruling are reviewed for clear error.
4. Federal Acts: Arbitration and Award: Contracts. the Federal arbitration act
applies to contracts evidencing a transaction involving commerce.
5. Federal Acts: Arbitration and Award: Intent: Words and Phrases. the phrase
“evidencing a transaction” in the Federal arbitration act has been construed to
include transactions involving interstate commerce even where the parties did not
contemplate an interstate commerce connection.
6. Arbitration and Award: Waiver: Presumptions: Intent. a waiver defense
raised in the context of prior litigation- related activity is presumed to be decided
by a court, rather than an arbitrator. and shifting of this issue to an arbitrator is
only proper where there is clear and unmistakable evidence of such an intent in
the parties’ arbitration agreement.
7. Arbitration and Award: Waiver. there is a liberal federal policy favoring arbitra-
tion; nevertheless, the right to arbitration may be waived.
8. ____: ____. a party seeking arbitration may be found to have waived its right to
arbitration if it (1) knew of an existing right to arbitration, (2) acted inconsistently
with that right, and (3) prejudiced the other party by these inconsistent acts.
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:54 AM CST

appeal from the District Court for Douglas County: mArlon
A. polk, Judge. affirmed.
John C. Nimmer and Michael t. Levy for appellants.
Mark a. Weber and kylie a. Wolf, of Walentine, o’toole,
McQuillan & Gordon, for appellee.
H eAviCAn, 	C.J., 	wriGHt, 	C onnolly, 	G errArd, 	stepHAn,
mCC ormACk, and miller -lermAn, JJ.
G errArd, J.
Good samaritan Coffee Company (Good samaritan) filed a
complaint against the defendants, alleging breach of contract
and tortious interference with a business relationship. the con-
tract at issue contained an arbitration clause. More than 3 years
after Good samaritan filed its original complaint, the defen-
dants filed a motion to stay the case and compel arbitration.
the district court denied the defendants’ motion, finding that
the defendants had waived their right to arbitration by actively
litigating the present case. the primary issue presented in this
appeal is whether the question of waiver based on litigation
activity should be decided by a court or an arbitrator. because
the district court correctly determined that this particular waiver
question should be decided by a court rather than an arbitrator,
we affirm.
FaCts
Good samaritan is located in omaha and Fremont, Nebraska,
and is involved in the distribution of “green” or unprocessed
coffee beans. Good samaritan entered into several “‘Green
Coffee Contracts’” with Larue Distributing, Inc., doing busi-
ness as Larue Coffee, wherein Good samaritan agreed to pro-
vide coffee beans to Larue Distributing.
the record reflects that in order for Good samaritan to meet
the requirements of these contracts, it must “purchase . . .
green, raw, unprocessed coffee beans from sources outside of
the continental united states” and have the beans shipped to
Nebraska. once Good samaritan receives the beans, the beans
are “roasted, blended[,] processed[,] and packaged and sold to
GooD saMarItaN CoFFee Co. v. LArue DIstrIbutING 	675
Cite as 275 Neb. 674

676 	275 Nebraska reports
Larue Coffee,” which in turn sells the products to various cus-
tomers in other states.
each of the “‘Green Coffee Contracts’” contained a pro-
vision incorporating the terms and conditions of a separate
contract entitled “Green Coffee association Contract terms
and Conditions.” this latter contract contains a section relat-
ing to the arbitration of disputes. the section provides in rele-
vant part:
all controversies relating to, in connection with, or
arising out of this contract . . . shall be settled by arbitra-
tion in accordance with the “rules of arbitration” of the
Green Coffee association . . . . arbitration is the sole rem-
edy hereunder, and it shall be held in accordance with the
law of New york state, and judgment of any award may
be entered in the courts of that state, or in any other court
of competent jurisdiction.
With regard to “time Limits for arbitration,” the contract pro-
vides that “[a]ll technical arbitrations must be filed within one
(1) year of the date that the controversy arose.”
In a letter dated May 28, 2002, Larue Distributing terminated
its relationship with Good samaritan. on December 16, 2003,
Good samaritan filed a complaint against Larue Distributing;
Midwest Custom roasting, Inc.; and Verlyn L’Heureux and
Mark Wunderlich, individuals who are principals in Larue
Distributing 	and 	Midwest 	Custom 	roasting 	(collectively
Larue). In its complaint, Good samaritan alleged breach of
contract and tortious interference with a business relationship.
on april 7, 2004, Good samaritan filed an amended complaint,
attaching the terms-and-conditions contract.
Larue filed an answer and counterclaim on May 10, 2004,
and filed an amended answer and counterclaim on March 6,
2006. Larue did not assert the right to compel arbitration as an
affirmative defense in either of its answers. In its counterclaim,
Larue sought a judgment against Good samaritan for $19,000
that Good samaritan allegedly owed Larue. on January 5, 2007,
nearly 3 years after Good samaritan filed its original complaint,
Larue filed a motion to stay trial and compel arbitration.
at the hearing on Larue’s motion to stay trial and compel
arbitration, counsel for Larue asked the court “to take judicial

notice of the pleadings in this matter” and of the exhibits
attached to the pleadings. In response, the judge stated that
the [c]ourt will also note that at a motion for partial sum-
mary judgment [hearing,] the [c]ourt took judicial notice
of the [c]ourt file at that time, including the pleadings; and
therefore, to the extent . . . a record is being made, the
[c]ourt will again take judicial notice of the [c]ourt file.
Following the hearing, the district court entered an order deny-
ing Larue’s motion to stay trial and compel arbitration.
In so doing, the court found that a court, rather than an arbi-
trator, had authority to determine whether a party has waived
its right to arbitration. the court then determined that under the
facts of this case, Larue had waived its right to arbitration. the
court noted that since the time Good samaritan filed its com-
plaint, Larue had exchanged pleadings, filed a counterclaim,
engaged in years of discovery, and filed and received a ruling
on its own motion for partial summary judgment. the court
explained that Larue’s conduct in this case evidenced Larue’s
“intent to litigate this matter before the [c]ourt in lieu of arbitra-
tion.” Larue appealed.
assIGNMeNt oF error
Larue’s sole assignment of error is that the district court
erred in denying its motion to stay trial and compel arbitration.
staNDarD oF reVIeW
[1,2] Whether a stay of proceedings should be granted and
arbitration required is a question of law.1 When reviewing ques-
tions of law, this court has an obligation to resolve the questions
independently of the conclusion reached by the trial court.2
1 Kelley v. Benchmark Homes, Inc., 250 Neb. 367, 550 N.W.2d 640 (1996),
disapproved on other grounds, Webb v. American Employers Group, 268
Neb. 473, 684 N.W.2d 33 (2004).
2 Reimers-Hild v. State, 274 Neb. 438, 741 N.W.2d 155 (2007).
GooD saMarItaN CoFFee Co. v. LArue DIstrIbutING 	677
Cite as 275 Neb. 674

678 	275 Nebraska reports
[3] the legal determination of waiver of arbitration is reviewed
de novo, and the factual findings underlying that ruling are
reviewed for clear error.3
aNaLysIs
Federal Arbitration Act Applies to Contracts at Issue.
[4] We must first address whether the Federal arbitration
act4 (Faa) applies to this case. the Faa created a body
of federal substantive law that applies to certain arbitration
agreements.5 the Faa applies to a contract “evidencing a
transaction involving commerce.”6 “Commerce” as defined in
the Faa includes “commerce among the several states.”7 the
u.s. supreme Court has given the Faa an expansive scope by
broadly construing the phrase “‘a contract evidencing a trans-
action involving commerce.’”8
[5] the Court has held that the phrase “‘involving com-
merce’” requires a broad interpretation in order to give effect to
the Faa’s basic purpose, which is to put arbitration provisions
on the same footing as a contract’s other terms.9 the Court has
further explained that “the word ‘involving,’ like ‘affecting,’
signals an intent to exercise Congress’ commerce power to the
full.”10 the statutory phrase “‘evidencing a transaction’” has
been construed by the Court to include transactions involving
interstate commerce even where the parties did not contemplate
an interstate commerce connection.11
3 see, Lewallen v. Green Tree Servicing, L.L.C., 487 F.3d 1085 (8th Cir.
2007); Thyssen, Inc. v. Calypso Shipping Corp., S.A., 310 F.3d 102 (2d Cir.
2002).
4 9 u.s.C. § 1 et seq. (2000).
5 see Cornhusker Internat. Trucks v. Thomas Built Buses, 263 Neb. 10, 637
N.W.2d 876 (2002).
6 9 u.s.C. § 2.
7 9 u.s.C. § 1.
8 Allied-Bruce Terminix Cos. v. Dobson, 513 u.s. 265, 277, 115 s. Ct. 834,
130 L. ed. 2d 753 (1995).
9 Id.
10 Id.
11 Id.

Given this broad interpretation of the phrase “involving com-
merce” in 9 u.s.C. § 2, it is clear that the contracts at issue in
this case come within the scope of the Faa. the undisputed
evidence in the record reflects that in order for Good samaritan
to meet its contractual obligations to Larue, Good samaritan
had to purchase coffee beans from sources outside of the conti-
nental united states. and once the coffee beans were purchased,
the beans were shipped to Good samaritan in Nebraska, where
Good samaritan processed and sold the beans to Larue. thus,
the Faa applies and questions relating to Larue’s motion to
compel arbitration implicate federal law.
Court Shall Decide Issue of Waiver Based on
Litigation-Related Conduct.
Next, we address whether a court or an arbitrator should
decide if a party has waived its right to arbitrate when the
waiver allegation is based on that party’s litigation-related
activity. the u.s. supreme Court, in Howsam v. Dean Witter
Reynolds, Inc.,12 has set forth the rules that govern the allocation
of functions between a court and an arbitrator. In that case, the
Court held that the question whether an arbitration claim was
barred by a 6-year limitations period embedded in the arbitra-
tion rules under which the parties had agreed to arbitrate was
an issue for the arbitrator and not for the court.13 the Court
acknowledged that “[t]he question whether the parties have sub-
mitted a particular dispute to arbitration, i. e., the ‘question of
arbitrability,’ is ‘an issue for judicial determination [u]nless the
parties clearly and unmistakably provide otherwise.’”14
the Court began its analysis by discussing the role of judges
in resolving issues related to arbitration. the Court stated that
“‘question[s] of arbitrability,’” which are presumptively for the
court to decide, are limited to gateway disputes that the
contracting parties would likely have expected a court to
have decided . . . , where they are not likely to have thought
12 Howsam v. Dean Witter Reynolds, Inc., 537 u.s. 79, 123 s. Ct. 588, 154 L.
ed. 2d 491 (2002).
13 Id.
14 Id. at 83.
GooD saMarItaN CoFFee Co. v. LArue DIstrIbutING 	679
Cite as 275 Neb. 674

680 	275 Nebraska reports
that they had agreed that an arbitrator would do so, and,
consequently, where reference of the gateway dispute to
the court avoids the risk of forcing parties to arbitrate a
matter that they may well not have agreed to arbitrate.15
the Court noted that at least two types of question were pre-
sumptively for a court to decide: first, “whether the parties are
bound by a given arbitration clause,” and second, “whether an
arbitration clause in a concededly binding contract applies to a
particular type of controversy.”16
on the other hand, “‘“procedural” questions which grow out
of the dispute and bear on its final disposition’ are presump-
tively not for the judge, but for an arbitrator, to decide.”17 “so,
too,” the Court continued, “the presumption is that the arbitrator
should decide ‘allegation[s] of waiver, delay, or a like defense
to arbitrability.’”18 the Court stated that these are the types
of question that “parties would likely expect that an arbitrator
would decide.”19
the Court concluded that the applicability of the 6-year
limitations rule was a matter “presumptively for the arbitrator,
not for the judge.”20 the Court noted that the time limit rule in
Howsam “closely resembles the gateway questions that th[e]
Court has found not to be ‘questions of arbitrability.’”21 the
Court explained that the arbitrators were “comparatively more
expert about the meaning of their own rule” and were “com-
paratively better able to interpret and to apply” the rule and that
therefore, it was “reasonable to infer that the parties intended
the agreement to reflect that understanding.”22 Moreover, the
15 Id. at 83-84.
16 Id. at 84.
17 Id. (emphasis in original).
18 Id.
19 Id.
20 Id. at 85.
21 Id. see, e.g., Moses H. Cone Hospital v. Mercury Constr. Corp., 460 u.s. 1,
103 s. Ct. 927, 74 L. ed. 2d 765 (1983); John Wiley & Sons v. Livingston,
376 u.s. 543, 84 s. Ct. 909, 11 L. ed. 2d 898 (1964).
22 Howsam v. Dean Witter Reynolds, Inc., supra note 12, 537 u.s. at 85.

Court reasoned that a goal of arbitration and judicial systems
alike is “to secure a fair and expeditious resolution of the under-
lying controversy.”23 and a law assuming an expectation that
aligns decisionmakers with comparative expertise will further
this goal.24
In the present case, Larue contends, relying on the Court’s
statements relating to waiver in Howsam, that Good samaritan’s
waiver defense should be resolved by an arbitrator and not a
court. Viewed in isolation, the Court’s statement in Howsam
that “the presumption is that the arbitrator should decide
‘allegation[s] of waiver, delay, or a like defense to arbitrabil-
ity’” does provide general support for Larue’s position here.25
However, since the Court’s decision in Howsam, several courts
have squarely addressed the issue now raised by Larue in the
present case. and these courts have persuasively concluded that
when this language from Howsam is properly considered within
the context of the entire opinion, it is clear that the Court was
referring only to waiver, delay, or like defenses arising from
noncompliance with contractual conditions precedent to arbitra-
tion, such as the particular time limit rule at issue in Howsam,
and not to claims of waiver based on active litigation in courts,
as is the situation in the present case.26
In finding that the question of waiver based on litigation
conduct is a decision presumptively for a judge rather than an
arbitrator, courts have noted that this type of determination has
historically been made by the courts. For example, both the
First and third Circuit Courts of appeal have explained that
questions of waiver based on litigation conduct have long been
decided by the courts. the First Circuit observed, in Marie v.
Allied Home Mortgage Corp.,27 that the “overwhelming weight
23 Id.
24 Id.
25 Id. at 84.
26 see, Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207 (3d Cir. 2007); Marie
v. Allied Home Mortgage Corp., 402 F.3d 1 (1st Cir. 2005); Parler v. KFC
Corp., 529 F. supp. 2d 1009 (D. Minn. 2008); Ocwen Loan Servicing, LLC
v. Washington, 939 so. 2d 6 (ala. 2006).
27 Marie v. Allied Home Mortgage Corp., supra note 26, 402 F.3d at 12.
GooD saMarItaN CoFFee Co. v. LArue DIstrIbutING 	681
Cite as 275 Neb. 674

682 	275 Nebraska reports
of pre-Howsam authority . . . held that waiver due to litigation
conduct was generally for the court and not for the arbitra-
tor” to decide. and in Ehleiter v. Grapetree Shores, Inc.,28 the
third Circuit similarly concluded that “the supreme Court did
not intend its pronouncements in Howsam . . . to upset the
‘traditional rule’ that courts, not arbitrators, should decide the
question of whether a party has waived its right to arbitrate by
actively litigating the case in court.”
the statutory language of the Faa provides further sup-
port for the holding that waiver based on litigation conduct
be decided by a court, rather than an arbitrator. In the present
case, Larue filed a motion to stay trial and compel arbitration
pursuant to 9 u.s.C. § 3. under 9 u.s.C. § 3, a court is only
permitted to stay a court action pending arbitration if “the appli-
cant for the stay is not in default in proceeding with such arbi-
tration.” and in this context, courts have generally interpreted
the term “default” to include waiver.29 thus, in cases where a
stay is requested, the plain language of 9 u.s.C. § 3 appears
to place a statutory command on courts to decide the issue of
waiver themselves.30
several other reasons persuade us to find that a court, as
opposed to an arbitrator, should decide waiver issues due to
litigation-related activities. as already noted, the supreme Court
in Howsam stressed the importance of considering the “com-
parative expertise” of a decisionmaker when evaluating whether
a court or arbitrator should be making the determination.31
When considering the “comparative expertise” of courts and
arbitrators, it becomes clear that a court, not an arbitrator, is
better suited to address questions of waiver based on litigation-
related activity.
28 Ehleiter v. Grapetree Shores, Inc., supra note 26, 482 F.3d at 217-18.
29 see, e.g., Marie v. Allied Home Mortgage Corp., supra note 26; Ivax Corp.
v. B. Braun of America, Inc., 286 F.3d 1309 (11th Cir. 2002); MicroStrategy,
Inc. v. Lauricia, 268 F.3d 244 (4th Cir. 2001); N&D Fashions, Inc. v. DHJ
Industries, Inc., 548 F.2d 722 (8th Cir. 1976).
30 see, Ehleiter v. Grapetree Shores, Inc., supra note 26; Marie v. Allied Home
Mortgage Corp., supra note 26.
31 Howsam v. Dean Witter Reynolds, Inc., supra note 12, 537 u.s. at 85.

at the time the question of litigation-related waiver arises,
the trial judge has already been directly involved in the course
of the legal proceedings to that point and is better posi-
tioned to determine whether such conduct amounts to a waiver
under applicable law.32 and more fundamentally, given that
“the inquiry into whether a party has waived its right to arbi-
trate by litigating the case in court ‘heavily implicates “judi-
cial procedures,”’” a “court should remain free to ‘control the
course of proceedings before it and to correct abuses of those
proceedings,’ rather than being required to defer to the findings
[of] an arbitrator with no previous involvement in the case.”33
Furthermore, because the question of litigation-related waiver
necessarily involves matters occurring in the judicial forum, it
is reasonable to believe that the contracting parties would expect
a court to decide whether one party’s actions before that court
waived the right to arbitrate.34
Finally, requiring that waiver claims due to litigation-related
activity be sent to the arbitrator would be exceptionally inef-
ficient.35 If such claims were presented to the arbitrator, and the
arbitrator determined that the defendant had waived its right
to arbitrate, then the cases would inevitably return to the court
from which they began, without any progress’ having been
made toward resolution of the underlying claims. allowing
courts to decide litigation-related waiver claims furthers a pri-
mary purpose of the Faa, which is to permit speedy resolution
of disputes.36
[6] Given the considerations of, among other things, com-
parative expertise and judicial economy, we hold that a waiver
defense raised in the context of prior litigation-related activity
is presumed to be decided by a court, rather than an arbitra-
tor. and shifting of this issue to an arbitrator is only proper
32 see Ehleiter v. Grapetree Shores, Inc., supra note 26. see, also, Marie v.
Allied Home Mortgage Corp., supra note 26.
33 Ehleiter v. Grapetree Shores, Inc., supra note 26, 482 F.3d at 218.
34 see id.
35 Marie v. Allied Home Mortgage Corp., supra note 26.
36 see, e.g., Dean Witter Reynolds Inc. v. Byrd, 470 u.s. 213, 105 s. Ct. 1238,
84 L. ed. 2d 158 (1985).
GooD saMarItaN CoFFee Co. v. LArue DIstrIbutING 	683
Cite as 275 Neb. 674

684 	275 Nebraska reports
where there is “‘clea[r] and unmistakabl[e] evidence’” of such
an intent in the parties’ arbitration agreement.37 the arbitra-
tion agreement at issue in this case fails to meet this standard.
Larue does not contend, nor does our review of the language in
the arbitration agreement reveal, a clear and unmistakable intent
to have an arbitrator decide the issue of waiver based on litiga-
tion-related conduct. accordingly, the question whether Larue
waived its right to arbitrate due to its participation in the present
litigation was properly for the district court.
LaRue Waived Its Right to Arbitrate.
Having determined that it is for a court to decide whether
Larue waived its right to arbitration based on its active par-
ticipation in the present litigation, we next address whether
the district court erred in finding that Larue waived its right
to arbitrate. the legal determination of waiver of arbitration is
reviewed de novo, and the factual findings underlying that rul-
ing are reviewed for clear error.38
[7,8] there is a liberal federal policy favoring arbitration,
grounded in the Faa, which provides that contract provisions
directing arbitration shall be enforceable in all but limited cir-
cumstances.39 Despite this strong federal policy favoring arbitra-
tion, the right to arbitration may be waived.40 a party seeking
arbitration may be found to have waived its right to arbitration
if it “‘(1) knew of an existing right to arbitration; (2) acted
inconsistently with that right; and (3) prejudiced the other party
by these inconsistent acts.’”41 each of these factors strongly
weighs in favor of a finding that Larue has waived its right to
arbitration in this case.
Larue does not contend, nor is there any evidence in the
record to suggest, that Larue was unaware of its right to
37 First Options of Chicago, Inc. v. Kaplan, 514 u.s. 938, 944, 115 s. Ct.
1920, 131 L. ed. 2d 985 (1995).
38 see, Lewallen v. Green Tree Servicing, L.L.C., supra note 3; Thyssen, Inc. v.
Calypso Shipping Corp., S.A., supra note 3.
39 see Moses H. Cone Hospital v. Mercury Constr. Corp., supra note 21.
40 Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156 (5th Cir. 1986).
41 Kelly v. Golden, 352 F.3d 344, 349 (8th Cir. 2003).

arbitrate this dispute; indeed, Larue now seeks to invoke that
right. Nor is there any evidentiary basis explaining why Larue
failed to assert its right to arbitrate when it filed its answer
in 2004 and amended answer in 2006. accordingly, absent
any evidence to the contrary, we cannot say that Larue was
unaware of its right to arbitrate. Larue argues, however, that
there is insufficient evidence in the record to indicate that it
acted inconsistently with its right to arbitrate and no evidence
that Good samaritan was prejudiced.
a party, however, acts inconsistently with its right to arbitrate
if the party “‘“[s]ubstantially invoke[s] the litigation machin-
ery” before asserting its arbitration right’ by failing to request
a stay and fully adjudicating its rights.”42 a party is considered
to have substantially invoked the litigation machinery when,
for example, “it files a lawsuit on arbitrable claims, engages in
extensive discovery, or fails to move to compel arbitration and
stay litigation in a timely manner.”43 the district court, in find-
ing that Larue acted inconsistently with its right to arbitrate,
observed that over the course of this litigation, Larue served
three sets of written discovery on Good samaritan, exchanged
pleadings, filed a counterclaim, and filed and received an unfa-
vorable ruling on a motion for partial summary judgment.
Larue does not deny that it engaged in the discovery proc-
ess as set forth in the district court’s order or that it filed and
received an unfavorable judgment on its motion for partial
summary judgment. Larue contends, however, that the record
on appeal does not contain any evidence relating to the parties’
discovery activities or certain pretrial motions and that there-
fore, the evidence is insufficient to support Good samaritan’s
allegation of waiver.
Larue is partially correct that the record on appeal does
not include evidence addressing the parties’ discovery activi-
ties. but, contrary to Larue’s assertion, the record does show
from the judge’s own comments that a motion for partial sum-
mary judgment was filed by Larue and overruled by the court.
Notwithstanding the lack of evidence relating to the parties’
42 Id.
43 Lewallen v. Green Tree Servicing, L.L.C., supra note 3, 487 F.3d at 1090.
GooD saMarItaN CoFFee Co. v. LArue DIstrIbutING 	685
Cite as 275 Neb. 674

686 	275 Nebraska reports
discovery activities, there is nonetheless sufficient evidence in
the record to find that Larue acted inconsistently with its right
to arbitrate.
over 3 years passed between the time Good samaritan filed
its initial complaint and the time Larue, at last, raised its motion
to stay trial and compel arbitration. During this 3-year period,
the record indicates that Larue actively participated in the
litigation. Larue filed a counterclaim against Good samaritan
seeking to recover funds that Good samaritan allegedly owed
Larue. Moreover, Larue acted inconsistently with its right
to arbitrate by filing a motion for partial summary judgment,
requiring Good samaritan to defend its claims on the merits and
requesting resolution of the matter in a judicial forum. and it
was not until after the court ruled against Larue on its motion
for partial summary judgment that Larue ultimately filed its
motion to compel arbitration. this conduct by Larue evidences
a clear intent to assent to the judicial resolution of the dispute
and is entirely inconsistent with its right to arbitrate.
the record also supports a finding that Good samaritan was
prejudiced by Larue’s inconsistent acts.
prejudice can be substantive, such as when a party loses a
motion on the merits and then attempts, in effect, to reliti-
gate the issue by invoking arbitration, or [prejudice] can
be found when a party too long postpones . . . invocation
of [its] contractual right to arbitration, and thereby causes
[its] adversary to incur unnecessary delay or expense.44
Here, as already noted, Larue did not file its motion to compel
arbitration until after it had received an unfavorable ruling on
its motion for partial summary judgment. Moreover, Larue’s
conduct had the inevitable effect of causing Good samaritan
to expend substantial time and resources in connection with
this case.
and to allow Larue to now invoke its right to arbitra-
tion after such an extensive delay would undercut the very
rationale—speed and efficiency—that supports the strong pre-
sumption in favor of arbitration in the first place.45 the evidence
44 Kramer v. Hammond, 943 F.2d 176, 179 (2d Cir. 1991).
45 see id.

in this record demonstrates the prejudice necessary to sup-
port the district court’s ruling that Larue has waived its right
to arbitration.
Larue claims, however, that Good samaritan was not preju-
diced in this case because Good samaritan allegedly did not
have a right to initiate litigation in the first place. Larue’s
argument is based on the language in the contract discussing
the time limits for initiating an arbitration claim. this provision
provides, in relevant part, that “[a]ll technical arbitrations
must be filed within one (1) year of the date that the controversy
arose.” Larue claims that because Good samaritan filed its
complaint more than 1 year after “the controversy arose,” Good
samaritan would not be prejudiced by referring this matter to
an arbitrator, because Good samaritan failed to comply with
this time limit and, therefore, did not have the right to initiate
litigation in the first place.
Larue’s argument, however, assumes an incorrect premise.
In order for Larue’s argument to be valid, the assumption must
be made that Larue has not waived its right to arbitration.
However, as discussed above, Larue has waived its right to
arbitrate Good samaritan’s claims. therefore, the contractual
provision requiring that technical arbitrations be filed within
1 year is irrelevant to our analysis.
We conclude that Larue has waived its right to arbitrate Good
samaritan’s claim because Larue knew of its right to arbitrate
and acted inconsistently with that right and because as a result,
Good samaritan was prejudiced.
CoNCLusIoN
the question whether a party has waived its right to arbitrate
due to litigation-related activity is an issue presumptively for
a court to decide and not an arbitrator. the district court did
not err in determining that Larue waived its right to arbitrate
by actively participating in the underlying proceedings before
the court.
A ffirmed .
GooD saMarItaN CoFFee Co. v. LArue DIstrIbutING 	687
Cite as 275 Neb. 674