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Court Rules Right to Arbitrate Waived by Delay

Saturday, January, 17, 2015


Finding that the plaintiff was attempting to use arbitration as a ‘parachute’ in order to escape litigation that was not going their way, the First Circuit Court ruled in Joca-Roca Real Estate, LLC v.  Brennan that the plaintiff’s move for arbitration after actively engaging in litigation for nine months was not a sincere effort to seek a resolution but rather an attempt to ‘reset’ the pieces on the board when that litigation was seen as going against them.

 

Courts can declare a right to arbitration waived for a variety of reasons, but simply filing and pursuing litigation is not sufficient in most cases for the court to find thus.  However, in this case the court cited that in this breach of contract and fraud lawsuit the fact that both parties pursued in-depth discovery and that after nine months of legal wrangling it was unreasonable for the plaintiff to suddenly see the light of arbitration.

 

The court also cited the proximity of the trial date and the sudden request for arbitration as evidence that the arbitration was not sincere but rather a tactic to pressure the other party into settling.  The court also cited the delay that would result from the sudden shift of venue from the court to the arbitrator’s panel, declaring that this delay actually negates the chief benefit of arbitration: Speed.

 

The trial date is scheduled for December 16th, and will proceed as scheduled unless both sides come to an agreement privately.