Daily Decisions: Two Kinds of Arbitration Waiver

The parties in River House Development v. Integrus Architecture (Division 3, March 15, 2012), had a contractual agreement to mediate or arbitrate their dispute.  But instead of seeking immediate mediation or arbitration, plaintiff RHD decided to serve and file a case in Superior Court.  Then, after settingto a trial schedule, exchanging discovery, and various discovery disputes, RHD filed for mediation and moved to stay the litigation and compel arbitration/mediation.  The trial court denied RHD’s motion.

The Court of Appeals decided a couple of important issues.  The first question was whether the trial court should have decided the issue of waiver, or whether that issue should have been determined by the arbitrator in the first instance.  The Court of Appeals recognized that issues of waiver by delay (i.e., missing a deadline under the relevant arbitration agreement) should be decided by the arbitrator.  However, the issue in this case was not delay, but whether RHD’s conduct by filing litigation effected a waiver of arbitration.  The Court of Appeals held that waiver by litigation conduct is an issue for the trial court, not the arbitrator.

The second question was, if the courts are to decide whether litigation-conduct waiver occurred, what standard should they employ in that inquiry?  The Court did not create a special test or set forth an enumerated list of facts.  Rather, the Court noted generally that waiver is the “voluntary and intentional relinquishment of a known right.”  In the arbitration context, waiver is caused by “conduct inconsistent with any other intention but to forego [the] right.”

Here, the trial court set forth the following facts as supportive of waiver, which the Court of Appeals listed with approval:  RHD was the plaintiff who initiated suit; RHD participated in discovery; RHD initially opposed the motion to compel discovery, rather than immediately move for a stay; RHD supplied a list of witnesses; RHD participated in the scheduling conference; and RHD “substantially delayed” in bringing its motion to compel, which prejudiced the defendant.

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