Kingery Constr. Co. v. 6135 O St. Car Wash , 312 Neb. 502 ( 2022 )


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    www.nebraska.gov/apps-courts-epub/
    12/16/2022 08:05 AM CST
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    Nebraska Supreme Court Advance Sheets
    312 Nebraska Reports
    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
    Cite as 
    312 Neb. 502
    Kingery Construction Co., appellee,
    v. 6135 O Street Car Wash, LLC,
    a Nebraska limited liability
    company, appellant.
    ___ N.W.2d ___
    Filed September 23, 2022.   No. S-21-797.
    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. Jurisdiction: Appeal and Error. Before reaching the legal issues
    presented for review, it is the duty of an appellate court to determine
    whether it has jurisdiction over the matter before it, and this is so even
    where neither party has raised the issue.
    4. Arbitration and Award: Final Orders: Appeal and Error. A court
    order staying an action pending arbitration is a final, appealable
    order because it affects a substantial right and is made in a special
    proceeding.
    5. Federal Acts: Arbitration and Award: Contracts. If arbitration arises
    from a contract involving interstate commerce, it is governed by the
    Federal Arbitration Act.
    6. ____: ____: ____. The Federal Arbitration Act, 
    9 U.S.C. § 2
     (2018),
    preempts inconsistent state laws that apply solely to the enforceability
    of arbitration provisions in contracts evidencing a transaction involving
    interstate commerce.
    7. ____: ____: ____. Under the Federal Arbitration Act, 
    9 U.S.C. § 3
    (2018), the court in which a suit or proceeding is pending, upon being
    satisfied that the issue involved in the suit or proceeding is refer-
    able to arbitration under an agreement in writing for arbitration, shall
    on application of one of the parties stay the trial of the action until
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    Nebraska Supreme Court Advance Sheets
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    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
    Cite as 
    312 Neb. 502
    arbitration has been had in accordance with the terms of the agree-
    ment, provided the applicant for the stay is not in default in proceeding
    with arbitration.
    8. Arbitration and Award. Under the Federal Arbitration Act, 
    9 U.S.C. § 4
     (2018), the court shall hear the parties and, upon being satisfied
    that the making of the agreement for arbitration or the failure to comply
    therewith is not in issue, shall make an order directing the parties to
    proceed to arbitration in accordance with the terms of the agreement.
    9. Judgments: Intent: Words and Phrases. While the doctrine of stare
    decisis is entitled to great weight, it was never intended to indefinitely
    perpetuate erroneous decisions.
    10. Waiver: Words and Phrases. “Waiver” of a right is voluntary and
    intentional relinquishment of a known right, privilege, or claim, and
    may be demonstrated by or inferred from a person’s conduct.
    Appeal from the District Court for Lancaster County:
    Lori A. Maret, Judge. Reversed and remanded for further
    proceedings.
    Jordan W. Adam, of Fraser Stryker, P.C., L.L.O., for
    appellant.
    Brian S. Koerwitz, of Endacott, Peetz, Timmer & Koerwitz,
    P.C., L.L.O., for appellee.
    Miller-Lerman, Cassel, Stacy, Funke, Papik, and
    Freudenberg, JJ., and Hall, District Judge.
    Funke, J.
    INTRODUCTION
    Kingery Construction Co. (Kingery) sued 6135 O Street Car
    Wash, LLC (OSCW), for breach of contract and later moved
    to stay the case for arbitration under 
    9 U.S.C. § 3
     (2018) of
    the Federal Arbitration Act (FAA). OSCW opposed Kingery’s
    motion, arguing that Kingery waived its right to arbitration by
    its litigation-related conduct. The district court found that there
    was no waiver because OSCW was not prejudiced by Kingery’s
    conduct. In so finding, the district court relied on our decision
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    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
    Cite as 
    312 Neb. 502
    in Good Samaritan Coffee Co. v. LaRue Distributing, 1 which
    adopted a three-part test of waiver based on litigation-related
    conduct used by the U.S. Court of Appeals for the Eighth
    Circuit. OSCW appealed. While the appeal was pending, the
    U.S. Supreme Court ruled in Morgan v. Sundance, Inc., 2 that
    the Eighth Circuit erred in conditioning a waiver of the right to
    arbitration on a showing of prejudice. In light of Morgan, we
    reverse, and remand for further proceedings.
    BACKGROUND
    OSCW and Kingery entered a $2,087,092 agreement for the
    construction of a carwash in Lincoln, Nebraska, on March 30,
    2020. They based their agreement on the 2017 version of the
    American Institute of Architects’ “Standard Abbreviated Form
    of Agreement Between Owner and Contractor.”
    Section 5.1 of the agreement provides, “Arbitration pursu-
    ant to Section 21.6 of this Agreement” shall be the method of
    binding dispute resolution “[f]or any claim subject to, but not
    resolved by, mediation pursuant to Section 21.5.”
    Section 21.6, in turn, requires that arbitration be admin-
    istered by the American Arbitration Association (AAA) in
    accordance with the “Construction Industry Arbitration Rules”
    in effect on the date of the agreement, unless the parties agree
    otherwise. Section 19.2 further prescribes that the FAA “shall
    govern Section 21.6” if the parties select arbitration as their
    method of binding dispute resolution.
    In addition, § 21.3, captioned “Time Limits on Claims,”
    requires that the parties commence all claims and causes of
    action against each other arising out of or related to the agree-
    ment “in accordance with the requirements of the final dispute
    resolution method selected in this Agreement . . . within the
    1
    Good Samaritan Coffee Co. v. LaRue Distributing, 
    275 Neb. 674
    , 
    748 N.W.2d 367
     (2008).
    2
    Morgan v. Sundance, Inc., ___ U.S.___, 
    142 S. Ct. 1708
    , 
    212 L. Ed. 2d 753
     (2022).
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    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
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    period specified by applicable law, but in any case not more
    than 10 years after the date of Substantial Completion of the
    Work.” Section 21.3 also provides that the parties “waive all
    claims and causes of action not commenced in accordance with
    [the agreement’s] Section 21.3.”
    Kingery sued OSCW for breach of contract on April 16,
    2021, seeking recovery of $41,698.57 allegedly owed to
    Kingery for work performed under the agreement, as well as
    attorney fees and interest under the Nebraska Construction
    Prompt Payment Act, codified at 
    Neb. Rev. Stat. § 45-1201
     et
    seq. (Reissue 2021).
    OSCW moved to dismiss Kingery’s complaint with preju-
    dice on May 19, 2021, arguing that Kingery waived its breach
    of contract claim under § 21.3 of the agreement by filing suit
    on the claim, rather than commencing it in arbitration. Kingery
    responded by filing a demand for arbitration with the AAA on
    June 8 and a motion to stay the case for arbitration with the
    district court on June 9.
    The AAA contacted OSCW and Kingery on June 23, 2021,
    to inform them that the matter was being administered under
    the “Fast Track Procedures” of the Construction Industry
    Arbitration Rules and that OSCW had until June 30 to make
    any answer or counterclaim.
    The district court held a hearing on June 29, 2021, to con-
    sider Kingery’s motion to stay and motion to compel arbitra-
    tion, as well as OSCW’s motion to dismiss. At the hearing,
    OSCW reiterated its argument that Kingery waived its breach
    of contract claim under § 21.3 of the parties’ agreement.
    OSCW also argued that Kingery waived its right to stay the
    case for arbitration under § 3 of the FAA by its litigation-
    related conduct based on the three-part test of waiver set
    forth in LaRue Distributing. 3 Specifically, OSCW asserted
    that Kingery’s knowledge of its right to arbitration cannot be
    disputed, given that “it’s now trying to initiate an arbitration
    3
    See Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
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    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
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    312 Neb. 502
    action”; that Kingery acted inconsistently with this right by
    filing suit; and that Kingery’s litigation-related conduct preju-
    diced OSCW because there have been “hearing[s] on . . . a
    couple motions, travel time, time, and [the] expense of brief-
    ing this and so forth.” OSCW further maintained that the
    motion to arbitrate was “prejudicial in and of itself” because
    Kingery filed it to avoid a court ruling “here, now at this
    time” dismissing its claim with prejudice. OSCW also asked
    the district court to stay the AAA arbitration case pending the
    court’s decision.
    Kingery disputed OSCW’s interpretation of § 21.3 of the
    parties’ agreement, arguing that it provides for waiver only
    of claims not brought within the prescribed time, rather than
    claims not commenced in arbitration. As to waiver under the
    FAA, Kingery did not dispute its awareness of its right to
    arbitration, but asserted “[n]o Court has ever held” that filing
    a lawsuit is inconsistent with the right to arbitration. Kingery
    also disputed OSCW’s claim of prejudice because less than 2
    months passed between when Kingery filed suit and when it
    moved for a stay and because OSCW had not yet briefed the
    issue. Kingery asserted this fell short of the litigation-related
    conduct seen in LaRue Distributing.
    On June 30, 2021, 1 day after the hearing and the day
    OSCW’s answer and counterclaim were due to the AAA, the
    district court granted OSCW’s motion to stay the arbitra-
    tion case.
    Subsequently, on September 1, 2001, the district court
    reversed that order and granted Kingery’s motion to stay
    the district court case under § 3 of the FAA. In so doing,
    the court adopted OSCW’s arguments regarding Kingery’s
    knowledge of its right to arbitration and action inconsistent
    with that right. However, the court agreed with Kingery that
    OSCW suffered no prejudice because of Kingery’s litigation-
    related conduct. In so finding, it noted that it had not decided
    any substantive issue, that “less than 2 months” had passed
    between the lawsuit’s filing and the motion for a stay, and
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    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
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    that “minimal litigation . . . ha[d] occurred to this point.” The
    district court also noted that it did not reach the merits of
    OSCW’s motion to dismiss with prejudice due to Kingery’s
    alleged waiver of its claim under § 21.3 of the parties’
    agreement.
    OSCW appealed to the Nebraska Court of Appeals, and
    we moved the matter to our docket. After oral argument in
    this court, we requested supplemental briefing by the parties
    addressing what constitutes default in proceeding with arbitra-
    tion under § 3 of the FAA after the U.S. Supreme Court’s deci-
    sion in Morgan. 4 The parties promptly submitted supplemental
    briefs, which we have considered.
    ASSIGNMENTS OF ERROR
    OSCW assigns, restated, that the district court erred in (1)
    requiring a showing of prejudice to prove a party waived its
    right to arbitration under the FAA, given that § 2 of the FAA
    calls for state law to be applied when determining whether
    agreements to arbitrate are valid and enforceable and that prej-
    udice is not otherwise required to show waiver under Nebraska
    contract law, and, alternatively, (2) concluding OSCW was
    not prejudiced under the three-part test of waiver set forth in
    LaRue Distributing. 5
    STANDARD OF REVIEW
    [1,2] Whether a stay of proceedings should be granted and
    arbitration required is a question of law. 6 When reviewing
    questions of law, this court has an obligation to resolve the
    questions independently of the conclusion reached by the trial
    court. 7
    4
    See Morgan v. Sundance, Inc., supra note 2.
    5
    See Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
    6
    Noah’s Ark Processors v. UniFirst Corp., 
    310 Neb. 896
    , 
    970 N.W.2d 72
    (2022).
    7
    
    Id.
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    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
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    312 Neb. 502
    ANALYSIS
    The district court granted Kingery’s motion to stay its
    breach of contract case against OSCW based on the three-
    part test of waiver that we adopted in LaRue Distributing. 8
    Under this test, a party seeking arbitration may be found to
    have waived its right to arbitration if it (1) knew of an exist-
    ing right to arbitration; (2) acted inconsistently with that right;
    and (3) prejudiced the other party by these inconsistent acts. 9
    As relevant here, OSCW was required to show it was preju-
    diced by Kingery’s litigation-related conduct. OSCW argued
    before the district court that it suffered such prejudice because
    of “hearing[s] on . . . a couple motions, travel time, time,
    and [the] expense of briefing this and so forth.” However, on
    appeal, it also argued that prejudice should not be required
    when determining whether a party has waived its right to stay
    a case for arbitration.
    It is generally true that when a party raises an issue for
    the first time in an appellate court, the court will disregard
    it because a lower court cannot commit error in resolving an
    issue never presented and submitted to it for disposition. 10
    However, we have previously found that this rationale does not
    apply in cases, like this one, where the party would have had
    to ask a lower court not to follow a controlling decision from
    this court in order to preserve for appeal an issue that the party
    claims we incorrectly decided. 11
    As such, in light of the U.S. Supreme Court’s decision
    in Morgan, 12 we agree and overrule our decision in LaRue
    8
    See Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
    9
    
    Id.
    10
    Eletech, Inc. v. Conveyance Consulting Group, 
    308 Neb. 733
    , 
    956 N.W.2d 692
     (2021).
    11
    See, e.g., State v. Vann, 
    306 Neb. 91
    , 
    944 N.W.2d 503
     (2020); Bassinger v.
    Nebraska Heart Hosp., 
    282 Neb. 835
    , 
    806 N.W.2d 395
     (2011).
    12
    Morgan v. Sundance, Inc., 
    supra note 2
    .
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    KINGERY CONSTR. CO. V. 6135 O ST. CAR WASH
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    Distributing 13 and cases relying on it to the extent they can be
    read to hold that prejudice is necessary for a waiver based on
    litigation-related conduct.
    Jurisdiction
    [3] Before reaching the legal issues presented for review,
    it is the duty of an appellate court to determine whether it
    has jurisdiction over the matter before it. 14 This is so even
    where, as here, neither party has raised the issue. 15 Under 
    Neb. Rev. Stat. § 25-1911
     (Reissue 2016), for an appellate court to
    acquire jurisdiction of an appeal, there must be a final judg-
    ment or final order entered by the tribunal from which the
    appeal is taken. 16
    [4] We have previously found that a court order staying an
    action pending arbitration is a final, appealable order under
    
    Neb. Rev. Stat. § 25-1902
     (Cum. Supp. 2020) because it affects
    a substantial right and is made in a special proceeding. 17 In
    this context, a stay has the same effect as a dismissal, because
    the “‘parties cannot litigate their dispute in state courts.’” 18
    Accordingly, this court has jurisdiction to consider this appeal
    of the district court’s order granting Kingery’s motion to stay
    the pending case in district court.
    Prejudice as Requirement for Waiver
    [5,6] Congress enacted the FAA 19 nearly a century ago, in
    1925, with the stated goal of placing arbitration agreements
    13
    Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
    14
    Cullinane v. Beverly Enters. - Neb., 
    300 Neb. 210
    , 
    912 N.W.2d 774
    (2018).
    15
    
    Id.
    16
    In re Estate of Anderson, 
    311 Neb. 758
    , 
    974 N.W.2d 847
     (2022).
    17
    Citizens of Humanity v. Applied Underwriters, 
    299 Neb. 545
    , 
    909 N.W.2d 614
     (2018).
    18
    
    Id. at 555
    , 909 N.W.2d at 624.
    19
    
    9 U.S.C. §§ 1
     through 16 (2018).
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    “‘upon the same footing as other contracts, where [they]
    belong[],’” and overcoming courts’ “longstanding refusal”
    to enforce such agreements. 20 Section 2 of the FAA, some-
    times described as its “key provision,” provides that written
    arbitration agreements in contracts involving interstate com-
    merce are “‘valid, irrevocable, and enforceable, save upon such
    grounds as exist at law or in equity for the revocation of any
    contract.’” 21 The U.S. Supreme Court has held that state law
    applies when determining whether an arbitration agreement is
    valid and enforceable under § 2, 22 and we have found that the
    FAA preempts inconsistent state laws that apply solely to the
    enforceability of arbitration provisions in contracts involving
    interstate commerce. 23
    [7,8] Sections 3 and 4 of the FAA, in turn, “establish[] pro-
    cedures” by which the “substantive rule” of § 2 may be imple-
    mented. 24 Specifically, they prescribe that “any . . . court[] of
    the United States” in which a suit or proceeding is brought on
    an issue that may be referred to arbitration shall stay the case
    for arbitration upon a party’s application so long as the “appli-
    cant . . . is not in default in proceeding with . . . arbitration.” 25
    20
    Dean Witter Reynolds Inc. v. Byrd, 
    470 U.S. 213
    , 219, 
    105 S. Ct. 1238
    ,
    
    84 L. Ed. 2d 158
     (1985), quoting H.R. Rep. No. 96, 68th Cong., 1st Sess.
    (1924).
    21
    Prima Paint v. Flood & Conklin, 
    388 U.S. 395
    , 400, 
    87 S. Ct. 1801
    , 
    18 L. Ed. 2d 1270
     (1967), quoting 
    9 U.S.C. § 2
    .
    22
    See, e.g., Arthur Andersen LLP v. Carlisle, 
    556 U.S. 624
    , 630-31, 
    125 S. Ct. 2129
    , 
    161 L. Ed. 2d 1008
     (2009) (“‘[s]tate law’ . . . is applicable to
    determine which contracts are binding under § 2 . . . ‘if that law arose to
    govern issues concerning the validity, revocability, and enforceability of
    contracts generally’”).
    23
    See, e.g., Aramark Uniform & Career Apparel v. Hunan, Inc., 
    276 Neb. 700
    , 
    757 N.W.2d 205
     (2008); Dowd v. First Omaha Sec. Corp., 
    242 Neb. 347
    , 
    495 N.W.2d 36
     (1993).
    24
    Rent-A-Center, West, Inc. v. Jackson, 
    561 U.S. 63
    , 68, 
    130 S. Ct. 2772
    , 
    177 L. Ed. 2d 403
     (2010).
    25
    
    9 U.S.C. § 3
    .
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    They similarly provide for a party aggrieved by another’s
    “alleged failure, neglect, or refusal . . . to arbitrate” to ask the
    court for an order compelling arbitration. 26 We have noted that
    the U.S. Supreme Court has never held that these “procedural
    sections” of the FAA apply to state courts. 27 However, we have
    previously taken the view that § 3 applies to state court pro-
    ceedings 28 and have ruled on motions to stay and compel made
    under §§ 3 and 4. 29
    In our 2008 decision in LaRue Distributing, we relied
    upon a test of waiver used by the Eighth Circuit that included
    prejudice when considering whether the district court erred
    in denying the defendants’ motion to stay trial and compel
    arbitration under §§ 3 and 4 of the FAA. 30 Their agreement
    with the complainant required that “‘[a]ll controversies relat-
    ing to, in connection with, or arising out of this contract’”
    be settled by arbitration. 31 However, when the complainant
    sued for breach of contract and tortious interference with a
    business relationship, the defendants did not initially seek
    arbitration. 32 Instead, over a 3-year period, they served sev-
    eral sets of written discovery requests on the complainant,
    26
    
    9 U.S.C. § 4
    .
    27
    See, e.g., Kremer v. Rural Community Ins. Co., 
    280 Neb. 591
    , 599, 
    788 N.W.2d 538
    , 547 (2010).
    28
    Dowd v. First Omaha Sec. Corp., supra note 23, 
    242 Neb. at 350
    , 
    495 N.W.2d at 39
     (“[t]he U.S. Supreme Court has held that the FAA requires
    state courts, as well as federal courts, to grant stays pending arbitration”),
    citing Moses H. Cone Hospital v. Mercury Constr. Corp., 
    460 U.S. 1
    , 26,
    
    103 S. Ct. 927
    , 
    74 L. Ed. 2d 765
     (1983) (“state courts, as much as federal
    courts, are obliged to grant stays . . . under § 3 of the [FAA]”).
    29
    See, e.g., Cullinane v. Beverly Enters. - Neb., 
    supra note 14
    ; Good
    Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    ; Dowd v. First
    Omaha Sec. Corp., supra note 23.
    30
    See Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
    31
    
    Id. at 676
    , 
    748 N.W.2d at 370
    .
    32
    Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
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    exchanged pleadings, filed a counterclaim, and filed and
    received a ruling on a motion for summary judgment. 33 Only
    then did they move to stay the case and compel arbitration. 34
    The district court denied the motion, the defendants appealed,
    and we affirmed. 35
    In so doing, we first noted that § 3 of the FAA requires a
    court case to be stayed for arbitration only if the party seeking
    the stay “‘is not in default in proceeding with . . . arbitration’”
    and that “‘default’” has been interpreted to “include” waiver. 36
    We next applied the Eighth Circuit’s test for waiver, without
    expressly holding that this test is required to be used. 37 In
    doing so, we found that all three factors “weigh[ed] in favor”
    of waiver in the LaRue Distributing defendants’ case 38: There
    was no contention or evidence that they were unaware of their
    right to arbitration, that they acted inconsistently with this right
    with their litigation-related conduct over 3 years, and that their
    conduct “had the inevitable effect of causing [the complainant]
    to expend substantial time and resources in connection with
    this case.” 39
    The same Eighth Circuit test that we adopted in LaRue
    Distributing—and that the district court relied upon when
    granting Kingery’s motion to stay this case—was at issue in the
    U.S. Supreme Court’s decision on May 23, 2022, in Morgan. 40
    Robyn Morgan had sued her former employer, Sundance,
    Inc., for alleged violations of federal labor law. As part of her
    job application, Morgan agreed to “‘use confidential binding
    33
    Id.
    34
    Id.
    35
    Id.
    36
    Id. at 682, 
    748 N.W.2d at 374
    .
    37
    Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
    38
    
    Id. at 684
    , 
    748 N.W.2d at 375
    .
    39
    
    Id. at 686
    , 
    748 N.W.2d at 377
    .
    40
    Morgan v. Sundance, Inc., supra note 2.
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    arbitration, instead of going to court.’” 41 However, when
    Morgan sued, Sundance did not initially move to stay the case
    and compel arbitration. Instead, over a period of 8 months, it
    filed a motion to dismiss and an answer and engaged in media-
    tion, before invoking arbitration.
    The district court found that Sundance had waived its right
    to arbitration with its litigation-related conduct, but the Eighth
    Circuit disagreed on the grounds that Morgan suffered no prej-
    udice because 4 of the 8 months were spent waiting for a deci-
    sion from the court on a “quasi-jurisdictional” issue, no discov-
    ery was conducted, and Morgan would not need to “duplicate
    her efforts during arbitration.” 42 Morgan sought review from
    the U.S. Supreme Court, which agreed to hear the case because
    the federal courts of appeals took different views as to whether
    prejudice is required to show a waiver of the right to arbitration
    under the FAA. 43 Morgan argued, like OSCW did on appeal
    before this court, that prejudice should not be required, because
    § 2 of the FAA calls for state law to be used in determining
    whether an agreement to arbitrate is enforceable and because
    state contract law generally does not require prejudice for a
    waiver. Sundance countered that waiver involves § 3, not § 2,
    and that thus, federal rules govern and impose no deadline for
    seeking arbitration.
    The U.S. Supreme Court ruled in favor of Morgan, but
    based its decision on § 6 of the FAA, which, it observed,
    provides that “any application [to the court thereunder] ‘shall
    be made and heard in the manner provided by law for the
    making and hearing of motions,’” except as otherwise therein
    expressly provided. 44 Specifically, the Supreme Court found
    that the phrase “any application” in § 6 of the FAA includes
    41
    Id., 142 S. Ct. at 1711.
    42
    Morgan v. Sundance, Inc., 
    992 F.3d 711
    , 715 (8th Cir. 2021), vacated and
    remanded, Morgan v. Sundance, Inc., supra note 2.
    43
    Morgan v. Sundance, Inc., supra note 2.
    44
    Id., 142 S. Ct. at 1714, quoting 
    9 U.S.C. § 6
    .
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    applications to stay a court case and compel arbitration under
    §§ 3 and 4 of the FAA and noted that “a federal court assess-
    ing waiver does not generally ask about prejudice.” 45 As such,
    the Morgan Court concluded that the Eighth Circuit erred in
    imposing an arbitration-specific requirement of prejudice. It
    noted that the Eighth Circuit and other federal courts which
    required prejudice did so based on the federal “‘policy favor-
    ing arbitration,’” but found that that policy “does not authorize
    federal courts to invent special, arbitration-preferring proce-
    dural rules.” 46
    [9] In light of the U.S. Supreme Court’s decision in Morgan,
    we overrule our earlier decision in LaRue Distributing and
    cases relying on it to the extent they can be read to hold that
    prejudice is required for a waiver based on litigation-related
    conduct. 47 While the doctrine of stare decisis is entitled to
    great weight, it was never intended to indefinitely perpetuate
    erroneous decisions, 48 and LaRue Distributing is erroneous
    insofar as it appears to condition a waiver of the right to stay
    a case for arbitration under § 3 of the FAA upon a show-
    ing of prejudice. LaRue Distributing applied a three-part test
    of waiver used by the Eighth Circuit that the U.S. Supreme
    Court has held is erroneous. As such, continued application
    of the Eighth Circuit’s test by this court would be erroneous.
    However, our decision leaves untouched the central holding
    of LaRue Distributing that the court, rather than the arbitrator,
    should generally determine whether a party waived its right to
    arbitration under the FAA based on litigation-related conduct. 49
    Only the language adopting the Eighth Circuit’s prejudice
    requirement is disapproved.
    45
    Id., 142 S. Ct. at 1713.
    46
    Id.
    47
    See, Morgan v. Sundance, Inc., supra note 2; Good Samaritan Coffee Co.
    v. LaRue Distributing, 
    supra note 1
    .
    48
    See Heckman v. Marchio, 
    296 Neb. 458
    , 
    894 N.W.2d 296
     (2017).
    49
    Good Samaritan Coffee Co. v. LaRue Distributing, 
    supra note 1
    .
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    In overruling this aspect of LaRue Distributing, we are
    aware that Morgan was directed to the federal courts and that
    questions have been raised about the application of the FAA
    generally and § 3 specifically to state court proceedings. 50
    However, OSCW and Kingery both acknowledge that the FAA
    applies here under § 19.2 of the agreement, which calls for
    the FAA to govern arbitration proceedings if the parties select
    arbitration as their method of binding dispute resolution, as
    they did. Moreover, even if the parties were not of this view,
    we find nothing in Morgan to suggest that modifications must
    be made to our earlier decisions which, directly or inferentially,
    apply §§ 3 and 4 of the FAA to Nebraska state court proceed-
    ings at this time in light of the facts and circumstances of this
    case. OSCW asserts that the U.S. Supreme Court has “held
    that Section 3 is inapplicable to state court lawsuits,” but the
    cases cited in support of this proposition state only that the
    U.S. Supreme Court has never held that § 3 applies to State
    court proceedings. 51
    Morgan also “assume[d] without deciding” that the federal
    courts are correct to “resolve[] cases like this one as a mat-
    ter of federal law, using the terminology of waiver,” 52 and
    expressly gave the Eighth Circuit the option to determine
    whether Sundance knowingly relinquished the right to arbi-
    tration by acting inconsistently with that right or “determine
    50
    See, e.g., Badgerow v. Walters, ___ U.S. ___, 
    142 S. Ct. 1310
    , 1326, 
    212 L. Ed. 2d 355
     (2022) (Breyer, J., dissenting) (“we cannot be sure that state
    courts have the same powers under the FAA that federal courts have”);
    DirectTV, Inc. v. Imburgia, 
    557 U.S. 47
    , 
    136 S. Ct. 463
    , 
    193 L. Ed. 2d 365
    (2015) (Thomas, J., dissenting) (FAA as whole inapplicable to state court
    proceedings); Southland Corp. v. Keating, 
    465 U.S. 1
    , 
    104 S. Ct. 852
    , 
    79 L. Ed. 2d 1
     (1984) (O’Connor, J., dissenting; Rehnquist, J., joins) (§§ 3
    and 4 of FAA inapplicable to state court proceedings).
    51
    Supplemental brief for appellant at 14. See, Volt Info. Sciences v. Leland
    Stanford Jr. U., 
    489 U.S. 468
    , 
    109 S. Ct. 1248
    , 
    103 L. Ed. 2d 488
     (1989);
    Southland Corp. v. Keating, 
    supra note 50
    .
    52
    Morgan v. Sundance, Inc., supra note 2, 142 S. Ct. at 1712.
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    that a different procedural framework (such as forfeiture) is
    appropriate.” 53 Nonetheless, we find that waiver remains a suit-
    able term and focus for analysis for now. OSCW and Kingery
    agree that the standards for default, waiver, and forfeiture are
    much the same under Nebraska law, although they disagree
    about the conclusions to be drawn based upon the application
    of these standards in this case, and Nebraska law as to waiver
    is generally consistent with federal law.
    [10] Under federal and Nebraska law, “waiver” of a right
    is voluntary and intentional relinquishment of a known right,
    privilege, or claim, and may be demonstrated by or inferred
    from person’s conduct. 54 We have noted that an agreement
    to arbitrate can be waived by the parties. 55 We have further
    held that state law governs the formation of contracts, as well
    as the validity, revocability, and enforceability of contracts
    generally, 56 and the U.S. Supreme Court has declared that state
    contract law applies to contracts with arbitration agreements
    governed by the FAA. 57
    Since the district court here decided the matter upon a
    legal framework which has since been found erroneous and
    because waiver is a question of fact, 58 the matter must be
    remanded back to the trial court for further proceedings.
    Upon remand, the district court should apply our ordinary
    53
    
    Id.,
     142 S. Ct. at 1714.
    54
    Compare U.S. Pipeline v. Northern Natural Gas Co., 
    303 Neb. 444
    , 
    930 N.W.2d 460
     (2019) (waiver of right under contract) with State v. Figures,
    
    308 Neb. 801
    , 
    957 N.W.2d 161
     (2021) (waiver of defendant’s right to be
    present at trial) and Morgan v. Sundance, Inc., supra note 2 (similar as to
    contract and other cases).
    55
    Boyd v. Cook, 
    298 Neb. 819
    , 
    906 N.W.2d 31
     (2018).
    56
    Cullinane v. Beverly Enters. - Neb., 
    supra note 14
    .
    57
    Doctor’s Associates, Inc. v. Casarotto, 
    517 U.S. 681
    , 
    116 S. Ct. 1652
    , 
    134 L. Ed. 2d 902
     (1996).
    58
    See Siouxland Ethanol v. Sebade Bros., 
    290 Neb. 230
    , 
    859 N.W.2d 586
    (2015).
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    waiver standards to determine whether Kingery has waived
    its right to arbitrate.
    Because the order is reversed and the cause remanded to
    the district court for further proceedings, we need not consider
    OSCW’s other assignments of error. An appellate court is not
    obligated to engage in an analysis that is not necessary to adju-
    dicate the case and controversy before it. 59
    CONCLUSION
    Because we find prejudice is not required to prove a party
    waived its right to stay a court case pending arbitration under
    § 3 of the FAA after the U.S. Supreme Court’s decision in
    Morgan, 60 we reverse the order of the district court and remand
    the cause for further proceedings consistent with this opinion.
    Reversed and remanded for
    further proceedings.
    Heavican, C.J., not participating.
    59
    State v. Huston, 
    298 Neb. 323
    , 
    903 N.W.2d 907
     (2017).
    60
    Morgan v. Sundance, Inc., supra note 2.