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Waiver of an arbitration agreement is not favored, and the facts of each case must be viewed in light of the strong policy favoring arbitration. Once a party has given notice insisting on arbitration, the burden is heavy on the party seeking to prove waiver. The basis of a finding of waiver of an arbitration provision is the showing of conduct inconsistent with utilization of the arbitration remedy, which is conduct showing an intent not to arbitrate.
The fish farmer received a license agreement from the insurance company granting his farm the exclusive right to raise fish in a five-mile portion of a canal for five years. The insurance company later notified the fish farmer that it was terminating the licensing agreement for cause because the fish farmer's demand for a continuous flow of water interfered with the ranching operations in violation of the license agreement. The fish farmer filed a complaint for damages, and the trial court entered a judgment notwithstanding the verdict in favor of the insurance company. The fish farmer appealed, and the insurance company cross-appealed, alleging that it was unfairly denied its right to arbitrate. The fish farmer claimed that the letter terminating the licensing agreement constituted a repudiation of the license agreement and therefore amounted to a waiver of the insurance company's right to arbitration.
Was the insurance company unfairly denied its right to arbitrate?
The court affirmed the judgment of the lower court, holding that the insurance company's failure to perfect an interlocutory appeal constituted a waiver of its right to arbitrate. According to the court, if it would rule otherwise, there would never be a reason for a party desiring arbitration to make certain that the order denying its request was formalized by the trial judge. Instead, the party would simply take his chances at trial and, if not satisfied, thereafter appeal the order denying arbitration. This would allow the party an unfair second bite at the apple. This has never been one of the purposes behind arbitration or the Rules of Appellate Procedure and the court will not now condone such action.