        IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA


                               January 2016 Term
                                _______________                            FILED
                                                                      April 11, 2016
                                  No. 14-1288                           released at 3:00 p.m.
                                                                      RORY L. PERRY II, CLERK
                                _______________                     SUPREME COURT OF APPEALS
                                                                         OF WEST VIRGINIA

                              RICHARD PARSONS,

                                  Petitioner,


                                       v.

                 HALLIBURTON ENERGY SERVICES, INC.,

                            Respondent.


      ____________________________________________________________

               Appeal from the Circuit Court of Kanawha County

                    The Honorable James C. Stucky, Judge

                          Civil Action No. 13-C-2241


                               AFFIRMED

      ____________________________________________________________

                         Submitted: February 24, 2016

                            Filed: April 11, 2016


Jonathan R. Marshall, Esq.                  Marla N. Presley, Esq.

Ryan McCune Donovan, Esq.                   Bethany S. Wagner, Esq.

Bailey & Glasser, LLP                       Jackson Lewis P.C.

Charleston, West Virginia                   Pittsburgh, Pennsylvania

Rodney A. Smith, Esq.                       Counsel for the Respondent

Todd S. Bailess, Esq.

Joy B. Mega, Esq.

Bailess Law, PLLC

Charleston, West Virginia

Counsel for the Petitioner



CHIEF JUSTICE KETCHUM delivered the Opinion of the Court.


JUSTICE LOUGHRY concurs, in part, and dissents, in part, and reserves the right

to file a separate opinion.


JUSTICE BENJAMIN, deeming himself disqualified, did not participate.

                             SYLLABUS BY THE COURT


              1.     “Although the doctrines of waiver and estoppel are both grounded in

equity, they differ significantly in application. To effect a waiver, there must be evidence

which demonstrates that a party has intentionally relinquished a known right. Estoppel

applies when a party is induced to act or to refrain from acting to her detriment because

of her reasonable reliance on another party’s misrepresentation or concealment of a

material fact.” Syllabus Point 2, Ara v. Erie Ins. Co., 182 W.Va. 266, 387 S.E.2d 320

(1989).

              2.     The common-law doctrine of waiver focuses on the conduct of the

party against whom waiver is sought, and requires that party to have intentionally

relinquished a known right. A waiver may be express or may be inferred from actions or

conduct, but all of the attendant facts, taken together, must amount to an intentional

relinquishment of a known right. There is no requirement of prejudice or detrimental

reliance by the party asserting waiver.

              3.     To the extent that Syllabus Point 3 of Jarvis v. Pennsylvania Cas.

Co., 129 W.Va. 291, 40 S.E.2d 308 (1946) and Syllabus Point 3 of Nat’l Mut. Ins. Co. v.

McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987) require proof of

prejudice or detrimental reliance to establish the common-law doctrine of waiver, they

are overruled.

              4.     “Under the Federal Arbitration Act, 9 U.S.C. § 2, a written provision

to settle by arbitration a controversy arising out of a contract that evidences a transaction

affecting interstate commerce is valid, irrevocable, and enforceable, unless the provision

                                              i
is found to be invalid, revocable or unenforceable upon a ground that exists at law or in

equity for the revocation of any contract.”         Syllabus Point 6, Brown v. Genesis

Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011) (reversed on other grounds by

Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)).

              5.     “Nothing in the Federal Arbitration Act, 9 U.S.C. § 2, overrides

normal rules of contract interpretation. Generally applicable contract defenses—such as

laches, estoppel, waiver, fraud, duress, or unconscionability—may be applied to

invalidate an arbitration agreement.” Syllabus Point 9, Brown v. Genesis Healthcare

Corp., 228 W. Va. 646, 657, 724 S.E.2d 250, 261 (2011) (reversed on other grounds by

Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)).

              6.     The right to arbitration, like any other contract right, can be waived.

To establish waiver of a contractual right to arbitrate, the party asserting waiver must

show that the waiving party knew of the right to arbitrate and either expressly waived the

right, or, based on the totality of the circumstances, acted inconsistently with the right to

arbitrate through acts or language. There is no requirement that the party asserting

waiver show prejudice or detrimental reliance.




                                             ii
Chief Justice Ketchum:


               In this appeal from the Circuit Court of Kanawha County, we address the

state common law doctrine of waiver as it relates to arbitration. The plaintiff asserts that

the defendant implicitly waived a contractual right to arbitration by participating in

litigation.

               The circuit court entered an order finding the defendant had not waived its

right to arbitration because it did not participate in the plaintiff’s lawsuit, and because the

defendant’s first court filing asserted the contractual right to arbitration. As set forth

below, we affirm the circuit court’s order compelling the parties to arbitrate their dispute.


                                     I.

                    FACTUAL AND PROCEDURAL BACKGROUND


               Plaintiff Richard Parsons was employed by defendant Halliburton Energy

Services, Inc. Within the plaintiff’s employment agreement was a provision that all

disputes with the defendant “shall be finally and conclusively resolved through

arbitration . . . instead of through trial before a court.”

               The plaintiff worked for the defendant from June until October 2013. On

December 3, 2013, the plaintiff filed a complaint in the Circuit Court of Kanawha County

alleging that the defendant did not timely pay him his final wages as required by the West

Virginia Wage Payment and Collection Act (“the WPCA”).1 The plaintiff’s complaint


               1
                   See W.Va. Code §§ 21-5-1 to -18.


                                                1

also sought to create a class action composed of other former employees of the defendant

who were not timely paid their final wages.

               On July 7, 2014, some seven months after the plaintiff filed his complaint,

the defendant’s first court filing was a motion seeking to compel the plaintiff to

participate in arbitration. The plaintiff responded to the motion by arguing that the

defendant had waived its contractual right to arbitration by failing to timely raise

arbitration, and by acting inconsistently with its contractual right to arbitration in the

previous seven months. The defendant never filed an answer to the plaintiff’s complaint

before moving to compel arbitration, yet the plaintiff contends the defendant still

participated in the litigation.

               As evidence of the defendant’s participation, the plaintiff asserts that

shortly after the complaint was filed, on December 16, 2013, counsel for the defendant

exchanged e-mails with plaintiff’s counsel asking for a 45-to-60 day filing extension to

plead in the lawsuit. Defense counsel stated the defendant was “in the process of tracking

down whether and to what extent” other employees were not paid in accordance with the

WPCA, and offered to produce information about other employees to “short-circuit”

discovery and litigation. Plaintiff’s counsel agreed to the delay by the defendant.

               On April 21, 2014, defense counsel contacted plaintiff’s counsel by e-mail

and asked for additional time to plead. Defense counsel asked if he was “still okay with

the responsive pleading deadline and, if we’re close, can I ask that it be pushed out

again?” In a subsequent phone conversation with plaintiff’s counsel, defense counsel

said he expected to respond to the plaintiff’s needs within two to three weeks.

                                              2

              Some five months after the complaint was filed, on May 22, 2014,

plaintiff’s counsel wrote an e-mail to defense counsel. Plaintiff’s counsel noted that

defense counsel had not produced the promised information, and said the plaintiff was

not providing “an open-ended extension for Halliburton to respond[.]” A new defense

lawyer (within the same firm) promptly responded to the e-mail from plaintiff’s counsel.

The new defense lawyer stated the prior lawyer was no longer working on the case, and

said she would need additional time to “get a handle on the status” of the case. Two new

lawyers noted their appearances as counsel for the defendant in the last week of June

2014, and the defendant’s first substantive filing in the court record – the motion to

compel arbitration – was filed on July 7, 2014.

              In an order dated November 14, 2014, the circuit court granted the

defendant’s motion, dismissed the plaintiff’s complaint and compelled the parties to

participate in arbitration. The circuit court determined that the defendant had not waived

its rights under the arbitration provision. Although the defendant admitted to a seven-

month delay before moving for arbitration, the circuit court found that the defendant had

“not actively participated in this lawsuit.” Moreover, the circuit court found the plaintiff

was required, but had failed, to prove he was prejudiced by the defendant’s actions or

delay.

              The plaintiff now appeals the circuit court’s order dismissing his complaint

and compelling him to arbitrate his claims against the defendant.




                                             3

                                        II.

                                STANDARD OF REVIEW


              “Appellate review of a circuit court’s order granting a motion to dismiss a

complaint is de novo.” Syllabus Point 2, State ex rel. McGraw v. Scott Runyan Pontiac–

Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995).



                                            III.

                                         ANALYSIS


              The facts below are not disputed, and the parties agree that the plaintiff’s

claims fall within the scope of a clear and unambiguous arbitration agreement.

Additionally, the plaintiff does not challenge the enforceability of the arbitration

agreement under West Virginia’s general contract law. The sole question on appeal is

whether the defendant’s actions, viewed under principles of state contract law, served to

waive its contractual right to arbitration.

              The plaintiff insists the defendant actively participated in the underlying

litigation by volunteering to produce class-wide discovery and by repeatedly seeking

extensions of time to file a responsive pleading. The plaintiff argues the defendant’s

actions were contrary to its contractual right to avoid the court system and demonstrated

the defendant’s intent to waive the protection afforded by the contractual arbitration

provision.

              The defendant counters that these actions did not rise to a level of

“substantial participation” in the litigation process, and on balance are not of enough

                                              4

significance to demonstrate waiver. Furthermore, the defendant asserts the plaintiff was

required to establish “actual prejudice” before a court could find waiver of a contract

right, and asserts the plaintiff failed to meet this burden.

              It is a well-established principle of contract law that contract rights can be

waived. Under West Virginia contract law (and the contract law of most other states), the

“waiver” of a contract right is “defined as the voluntary, intentional relinquishment of a

known right.” Hoffman v. Wheeling Sav. & Loan Ass’n, 133 W.Va. 694, 712, 57 S.E.2d

725, 735 (1950).2 “To effect a waiver, there must be evidence which demonstrates that a

party has intentionally relinquished a known right.” Syllabus Point 2, in part, Ara v. Erie

Ins. Co., 182 W.Va. 266, 387 S.E.2d 320 (1989). “There must be first, the existence of

the right; second, knowledge of the existence of such right; and third, voluntary intention

to relinquish.” Hoffman, 133 W.Va. at 713, 57 S.E.2d at 735. Once a right has been

waived, it is forever gone and cannot be reclaimed. “The contractual doctrine of waiver,

whether express or implied, seems . . . to rest on an idea no more complicated than that

any competent adult can abandon a legal right and if he does so then he has lost it

forever.” McElroy v. B.F. Goodrich Co., 73 F.3d 722, 724 (7th Cir. 1996).

              Waiver of a contract right may be made by an express statement or

agreement, or it may be implied from the conduct of the party who is alleged to have


              2
               See also, Nationwide Mut. Ins. Co. v. Smith, 153 W.Va. 817, 826, 172
S.E.2d 708, 713 (1970) (“Waiver as generally defined is the intentional relinquishment of
a known right.”); Dye v. Pennsylvania Cas. Co., 128 W.Va. 112, 118, 35 S.E.2d 865, 868
(1945) (“Waiver is the voluntary relinquishment of a known right.”).


                                               5

waived a right. “Waiver may be established by express conduct or impliedly, through

inconsistent actions.” Ara, 182 W.Va. at 269, 387 S.E.2d at 323. “Of course a waiver

may be express or it may be inferred from actions or conduct, but all the attendant facts,

taken together, must amount to an intentional relinquishment of a known right, in order

that a waiver may exist.” Blue v. Hazel-Atlas Glass Co., 106 W.Va. 642, 650, 147 S.E.

22, 25-26 (1929).

              To rely upon the doctrine of waiver under the common law, a party is not

required to show prejudice or detrimental reliance caused by the opposing party’s waiver

of a contract right. As Chief Justice Davis stated, “The doctrine of waiver focuses on the

conduct of the party against whom waiver is sought, and requires that party to have

intentionally relinquished a known right.         There is no requirement of prejudice or

detrimental reliance by the party asserting waiver.” Potesta v. U.S. Fid. & Guar. Co.,

202 W.Va. 308, 315-16, 504 S.E.2d 135, 142-43 (1998).

              Waiver does not require proof of prejudice or detrimental reliance because

“[w]aiver is within the control of the party who chooses to relinquish a condition [in the

contract], quite apart from whether another party relies on relinquishment.” 8 Catherine

M.A. Mc Cauliff, Corbin on Contracts § 40.1 (1999). “Waiver is essentially unilateral in

its character; it results as a legal consequence from some act or conduct of the party

against whom it operates; no act of the party in whose favor it is made is necessary to

complete it.” Equitable Life Assur. Soc’y of U.S. v. Ellis, 147 S.W. 1152, 1157 (Tex.

1912). See also Nathan Miller, Inc. v. N. Ins. Co. of New York, 39 A.2d 23, 25 (Del.

Super. 1944) (“In strictness, waiver is referable to the act or conduct of one party only. It

                                             6

depends on what one party intended to do, rather than upon what he induced his

adversary to do, as in estoppel.”); Salloum Foods & Liquor, Inc. v. Parliament Ins. Co.,

388 N.E.2d 23, 27-28 (Ill.App. 1979) (“Waiver encompasses either an express or an

implied voluntary and intentional relinquishment of a known and existing right. Waiver

is essentially unilateral in character, focusing only upon the acts and conduct of the

insurer. Prejudice to, or detrimental reliance by the insured is not required.” (Citations

omitted)).

             Under general principles of state contract law, waiver requires proof of “a

voluntary act which implies a choice by the party to dispense with something of value, or

to forego some advantage which he might at his option have demanded and insisted on.”

Hoffman, 133 W.Va. at 713, 57 S.E.2d at 735. “Waiver is the voluntary surrender of a

right; estoppel is the inhibition to assert a right which the law places on one as a

consequence of his own conduct which has resulted in injury or detriment to another. . .

Waiver depends upon what one himself intends to do; estoppel depends rather upon what

he caused his adversary to do.” Northwestern Nat. Life Ins. Co. v. Ward, 155 P. 524, 527

(Okla. 1915). Waiver arises from the voluntary actions of the contract’s obligor alone; to

create an estoppel, both the obligor and obligee must act. 8 Corbin on Contracts at §

40.1. As we said in Syllabus Point 2, in part, of Ara v. Erie Insurance Company:

                   To effect a waiver, there must be evidence which
             demonstrates that a party has intentionally relinquished a
             known right. Estoppel applies when a party is induced to act
             or to refrain from acting to her detriment because of her
             reasonable reliance on another party’s misrepresentation or
             concealment of a material fact.


                                            7

182 W.Va. at 267, 387 S.E.2d at 321.

              In summary, on the question of prejudice or detrimental reliance, the

distinction between the common law doctrines of estoppel and waiver is simple: estoppel

requires proof of prejudice or detrimental reliance; waiver does not. We therefore hold

that the common-law doctrine of waiver focuses on the conduct of the party against

whom waiver is sought, and requires that party to have intentionally relinquished a

known right. A waiver may be express or may be inferred from actions or conduct, but

all of the attendant facts, taken together, must amount to an intentional relinquishment of

a known right. There is no requirement of prejudice or detrimental reliance by the party

asserting waiver.

              Still, the doctrine of waiver is sometimes confused with the doctrine of

estoppel, particularly on the question of prejudice and detrimental reliance. The result is

that “the terms ‘waiver’ and ‘estoppel’ have often been used without careful distinction,

and thereby abused and confused.” Salloum Foods & Liquor, Inc., 388 N.E.2d at 27. See

also Evelyn v. Raven Realty, Inc., 138 A.2d 898, 900 (Md. 1958) (“There is even

confusion in the use of the terms ‘waiver’ and ‘estoppel’. Many law writers and courts

make no effort to distinguish them and use the terms interchangeably.”); Libby v. Haley,

39 A. 1004, 1005 (Me. 1898) (“[T]he cases do not all recognize this distinction, and

apply the doctrines of waiver and estoppel indiscriminately in furtherance of justice.”).

Even the treatise Williston on Contracts goes so far as to say that “true, pure, or actual

waiver” does not require prejudice while “waiver by estoppel” does.            13 Samuel

Williston, Richard Lord, A Treatise on the Law of Contracts § 39:27 (4th ed. 2013)

                                            8

(footnotes omitted). See generally, id. § 39:28 (true waiver based on intent) and § 39:29

(waiver by estoppel based on detrimental reliance).

              Cases in West Virginia have not been immune to the confusion and have

indiscriminately used the terms “waiver” and “estoppel.” In Potesta, Chief Justice Davis

recognized that the terms “are often used interchangeably with respect to insurance law.”

202 W.Va. at 315, 504 S.E.2d at 142. For instance, in Syllabus Point 3 of National Mut.

Ins. Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987), this Court

said, “Detrimental reliance is essential to the assertion of waiver or estoppel.” Similarly,

in Syllabus Point 3 of Jarvis v. Pennsylvania Cas. Co., 129 W.Va. 291, 40 S.E.2d 308

(1946), we said that an insurer’s denial of coverage under an insurance policy “does not

result in a waiver or estoppel . . . where no prejudice results to the insured from reliance

on the initial statement of the insurer.”         These cases are plainly wrong, because

considerations of prejudice and detrimental reliance are not essential to the assertion of

waiver.3 To ensure clarity in our law, we hold that, to the extent that Syllabus Point 3 of


              3
                 Even though proof of prejudice is irrelevant to establishing a waiver,
prejudice often occurs following a waiver. The subsequent prejudice or reliance gives
rise to an estoppel:

                     Generally, the promisor’s waiver of a condition is
              followed by the promisee’s substantial change of position. At
              the very least, the promisee will be induced by the waiver not
              to perform the condition, if the condition consists of some act
              or forbearance of the promisee. Thus, if a promisor’s duty to
              convey [property] is conditional on payment by a stated day,
              the promisor’s waiver of the condition may induce the
              promisee to cease efforts to raise the money and to forbear to
              pay on the day. Here we have ample reason for an estoppel,
                                                                           (continued . . .)
                                             9

Jarvis and Syllabus Point 3 of McMahon require proof of prejudice or detrimental

reliance to establish the common-law doctrine of waiver, they are overruled.4

              The contract right at issue in this case involves arbitration. Both federal

and state laws reflect a strong public policy recognizing arbitration as an expeditious and

relatively inexpensive forum for dispute resolution. See Moses H. Cone Mem’l Hosp. v.

Mercury Const. Corp., 460 U.S. 1, 24-25 (1983) (The Federal Arbitration Act, 9 U.S.C. §

2, “is a congressional declaration of a liberal federal policy favoring arbitration

agreements, notwithstanding any state substantive or procedural policies to the

contrary.”); W.Va. Code § 55-10-2 [2015] (acknowledging “a well-established federal

policy in favor of arbitral dispute resolution” because arbitration “offers in many

instances a more efficient and cost-effective alternative to court litigation.”). Arbitration

is also favored because it unburdens crowded court dockets.

              Nonetheless, federal and West Virginia courts may refuse to enforce an

arbitration agreement “upon such grounds as exist at law or in equity for the revocation


              or for the enforcement of a promise because of subsequent
              reliance.

8 Corbin on Contracts § 40.2. See also Restatement (Second) of Contracts § 84, cmt. b
(1981) (“‘Waiver’ is often inexactly defined as ‘the voluntary relinquishment of a known
right.’ When the waiver is reinforced by reliance, enforcement is often said to rest on
‘estoppel.’”).
              4
               We recognize that, in footnote 11 of Potesta, we specifically disapproved
of Syllabus Point 3 of McMahon “to the extent that it refers to both waiver and
estoppel[.]” Potesta, 202 W.Va. at 316 n.11, 504 S.E.2d at 143 n.11. However, we
choose now to specifically overrule the errant language of McMahon as well as that
found in Jarvis.


                                             10

of any contract.” 9 U.S.C. § 2; see also W.Va. Code § 55-10-8 [2015] (An arbitration

agreement “is valid, enforceable and irrevocable except upon a ground that exists at law

or in equity for the revocation of a contract.”). We summarized the law in this way:

                     Under the Federal Arbitration Act, 9 U.S.C. § 2, a
             written provision to settle by arbitration a controversy arising
             out of a contract that evidences a transaction affecting
             interstate commerce is valid, irrevocable, and enforceable,
             unless the provision is found to be invalid, revocable or
             unenforceable upon a ground that exists at law or in equity for
             the revocation of any contract.

Syllabus Point 6, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250

(2011).    Hence, a state court may assess whether an arbitration agreement is

unenforceable under general principles of state law, “such as laches, estoppel, waiver,

fraud, duress, or unconscionability.” Syllabus Point 9, Id. (emphasis added). “To be

clear, this list is not exclusive. Misrepresentation, duress, mutuality of assent, undue

influence, or lack of capacity, if the contract defense exists under general common law

principles, then it may be asserted to counter the claim that a . . . provision binds the

parties. Even lack of consideration is a defense.” Geological Assessment & Leasing v.

O’Hara, 236 W.Va. 381, 387, 780 S.E.2d 647, 653 (2015).

             Congress’s goal in enacting the Federal Arbitration Act (“the FAA”) was to

place arbitration agreements “upon the same footing as other contracts, where [they]

belong.”   Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985) (quoting

H.R.Rep. No. 96, 68th Cong., 1st Sess., 1 (1924)). The goal of the FAA “is for an

arbitration agreement to be treated by courts like any other contract, nothing more, and

nothing less. The FAA has no talismanic effect; it does not elevate arbitration clauses to

                                           11

a level of importance above all other contract terms.” Brown, 228 W.Va. at 671, 724

S.E.2d at 275.

              Stated differently, “[t]he FAA recognizes that an agreement to arbitrate is a

contract. The rights and liabilities of the parties are controlled by the state law of

contracts.” Geological Assessment & Leasing, 236 W.Va. at 386, 780 S.E.2d at 652; see

also, State ex rel. Barden & Robeson Corp. v. Hill, 208 W.Va. 163, 168, 539 S.E.2d 106,

111 (2000) (“[T]he right to arbitration is purely a matter of contract.”). “Thus, the

question of whether there has been waiver in the arbitration agreement context should be

analyzed in much the same way as in any other contractual context. The essential

question is whether, under the totality of the circumstances, the defaulting party has acted

inconsistently with the arbitration right.” Nat’l Found. for Cancer Research v. A.G.

Edwards & Sons, Inc., 821 F.2d 772, 774 (D.C. Cir. 1987).

              Hence, we apply the general state law of contracts pertaining to waiver and

reach an ineluctable conclusion: The right to arbitration, like any other contract right, can

be waived. To establish waiver of a contractual right to arbitrate, the party asserting

waiver must show that the waiving party knew of the right to arbitrate and either

expressly waived the right, or, based on the totality of the circumstances, acted

inconsistently with the right to arbitrate through acts or language.           There is no

requirement that the party asserting waiver show prejudice or detrimental reliance. See

also, Barden & Robeson Corp., 208 W.Va. at 168, 539 S.E.2d at 111 (“As with any

contract right, an arbitration requirement may be waived through the conduct of the

parties.”).

                                             12

              Most states, including West Virginia, find that constructive knowledge is

sufficient for the waiver of a contractual right, including the right to arbitration. As this

Court said in Hoffman, “The essential elements of a waiver, within the definitions already

given, are the existence, at the time of the alleged waiver, of a right, advantage, or

benefit, the knowledge, actual or constructive, of the existence thereof, and an intention

to relinquish such right, advantage, or benefit.” 133 W.Va. at 712-13, 57 S.E.2d at 735

(emphasis added).

              Under contract law . . . a finding of waiver does not require
              that the party have actual knowledge of its legal rights [to
              arbitration]. It is sufficient if the waiving party had “reason
              to know the essential facts.” Given that the impact of the
              delay [in turning to litigation before arbitration] is the same
              regardless of the intent and given that the waiver of the right
              to arbitrate does not result in the loss of any substantive right,
              it does not seem unduly onerous to charge the parties to a
              contractual dispute with constructive knowledge of the terms
              of the underlying contract.

Thomas J. Lilly, Jr., Participation in Litigation as a Waiver of the Contractual Right to

Arbitrate: Toward a Unified Theory, 92 Neb. L. Rev. 86, 122 (2013); see generally In re

Estate of Cortez, 245 P.3d 892, 896-97 (Ariz. Ct. App. 2010) (“[A] majority of courts

from other jurisdictions have followed the longstanding rule that constructive knowledge

is sufficient for the waiver of a contractual right, such as arbitration. Constructive

knowledge ‘refer[s] to knowledge that one using reasonable care or diligence should

have, and therefore that is attributed by law to a given person.’”); Bros. Jurewicz, Inc. v.

Atari, Inc., 296 N.W.2d 422, 429 (Minn. 1980) (Defendant had constructive knowledge

of arbitration agreement because, “as a matter of law, absent fraud or concealment, a


                                             13

party should be deemed to have knowledge of the terms of agreements that he has

executed.”).

               The parties in this case dispute what circumstances are required to prove a

party waived its contractual right to arbitrate by participating in litigation. To support

their analyses, the parties have cited federal and state cases with a broad spectrum of

factors and guidelines for courts to consider.5 These cases “all recognize that under some

circumstances participation in litigation can constitute a waiver of the right to arbitrate,

but they disagree as to what those circumstances are.” Lilly, 92 Neb. L. Rev. at 102.

               Unfortunately, most of the cases cited by the parties concern whether, or to

what degree, the party resisting arbitration must show prejudice in order to establish that

the other party waived its right to arbitrate by participating in litigation. Some cases cited




               5
                 The parties cite to a footnote in a recent opinion where we suggested a
party must show they were prejudiced by another party’s waiver of the contractual right
to arbitration. Citing a federal case, we said that to demonstrate waiver of the contractual
right to arbitrate, “a party must show: (1) knowledge of an existing right to compel
arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party
opposing arbitration resulting from such inconsistent acts.” Schumacher Homes of
Circleville, Inc. v. Spencer, 235 W.Va. 335, 347 n.12, 774 S.E.2d 1, 13 n.12 (2015)
(quoting U.S. v. Park Place Assocs., Ltd., 563 F.3d 907, 921 (9th Cir. 2009)). By
requiring prejudice, however, this footnote is plainly at odds with West Virginia’s general
law of contracts and we decline to follow it. We do not fault the parties for partly
building their arguments upon this footnote, but we caution that this “Court has
consistently held that ‘language in a footnote generally should be considered obiter dicta’
and that if this Court is to create a new point of law, it will do ‘so in a syllabus point and
not in a footnote.’” Valentine v. Sugar Rock, Inc., 234 W. Va. 526, 532, 766 S.E.2d 785,
791 (2014) (quoting State ex rel. Med. Assurance of W.Va., Inc. v. Recht, 213 W.Va. 457,
471, 583 S.E.2d 80, 94 (2003)).


                                             14

by the parties require no prejudice,6 while those that do vary as to what degree of

prejudice is necessary.7

              We decline to follow the panoply of approaches cited by the parties

because, under West Virginia’s long-established law of contracts, courts do not require a

showing of prejudice to establish a waiver of contract rights. As we have stated, “[t]he

doctrine of waiver focuses on the conduct of the party against whom waiver is sought,

and requires that party to have intentionally relinquished a known right. There is no

requirement of prejudice or detrimental reliance by the party asserting waiver.” Potesta,

202 W.Va. at 315-16, 504 S.E.2d at 142-43. The cases cited by the parties imply that this

Court should alter its general state law of waiver to incorporate a requirement of

prejudice when examining arbitration contracts. Federal and state arbitration statutes

require courts to assess arbitration contracts on those grounds that exist at law or in

equity for the revocation of any contract, not create special rules for the evaluation of

arbitration contracts. The general state law of contracts does not require a showing of



              6
                St. Mary’s Med. Ctr. of Evansville, Inc. v. Disco Aluminum Prods. Co.,
969 F.2d 585, 590 (7th Cir. 1992) (“waiver may be found absent a showing of
prejudice.”); Nat’l Found. for Cancer Research, 821 F.2d at 777 (“This circuit has never
included prejudice as a separate and independent element of the showing necessary to
demonstrate waiver of the right to arbitration.”).
              7
                Compare Am. Recovery Corp. v. Computerized Thermal Imaging, Inc., 96
F.3d 88, 95 (4th Cir. 1996) (imposing a “heavy burden” to prove “actual prejudice”) and
Bower v. Inter-Con Sec. Sys., Inc., 181 Cal. Rptr. 3d 729, 735 (Cal.Ct.App. 2014)
(“[p]rejudice is a determinative issue”) with Rankin v. Allstate Ins. Co., 336 F.3d 8, 12
(1st Cir. 2003) (requiring “a modicum of prejudice to the other side”).


                                           15

prejudice to establish a waiver of other contract rights, and so does not require a showing

of prejudice for arbitration contracts.

              We turn now to the instant case. The undisputed facts are that there is a

written arbitration agreement that encompasses the dispute between the parties. While

the burden was on the plaintiff to prove the defendant knew of its right to arbitrate, we

presume the defendant at least constructively knew because it was both a signatory to the

arbitration contract and asserted the arbitration contract in its first court filing. The

plaintiff filed his complaint in December 2013, and the defendant’s first filing in the

circuit court was a motion to dismiss that clearly asserted the arbitration agreement.

              There is nothing in the record to suggest the defendant expressly waived its

right to arbitrate. The defendant also did not implicitly waive its contractual right to

arbitration by answering or responding to the civil complaint without asserting its right.

              The question then becomes whether the defendant implicitly waived the

right to arbitrate, by acting inconsistently with the right between December 2013 and the

filing of the motion to dismiss in July 2014. The delay alone is meaningless; it is the

circumstances surrounding the defendant’s acts and language that determine whether the

defendant implicitly intended to waive the right to arbitrate. The record essentially shows

that the defendant asked, three times, for additional time to respond to the plaintiff’s

complaint.    The plaintiff acceded to these requests, even though he was under no

obligation to do so. The parties did not comply with Rule 6(b) of the West Virginia Rules

of Civil Procedure and file a written stipulation with the circuit court agreeing to an



                                            16

enlargement of the time to respond to the plaintiff’s complaint.8 The defendant made no

formal, substantive response to any of the plaintiff’s requests. On this record we cannot

find any error in the circuit court’s conclusion that the defendant acted consistently with

the arbitration agreement, and did not participate in the plaintiff’s lawsuit prior to July

2014. Viewing the totality of the circumstances, the defendant did not implicitly waive

its right to arbitrate through its acts and language.



                                           IV.

                                       CONCLUSION


              We find no error in the circuit court’s November 14, 2014, order dismissing

the plaintiff’s complaint and compelling the parties to arbitrate their dispute.

                                                                                   Affirmed.




              8
                Rule 6(b) of the Rules of Civil Procedure provides, in pertinent part, that,
“[w]hen by these rules . . . an act is required or allowed to be done at or within a specified
time, all the parties to the action, by written stipulation filed with the court, may agree at
any time to a different period[.]”


                                              17

