Tuesday, August 12, 2014

Waiving the right to arbitrate.

Practice point:  A party may waive its right to arbitrate by participating in litigation. The mere act of pursuing litigation does not waive the right, but, rather, the party must engage in protracted litigation that results in prejudice to the opposing party.  The prejudice may either be substantive,  or it may involve excessive delay or costs caused by the moving party's pursuit of litigation prior to seeking arbitration.  A party may be substantively prejudiced when the other party is attempting to relitigate an issue through arbitration, has participated in substantial motion practice, or seeks arbitration after engaging in discovery that is unavailable in arbitration.

Student note:  In determining what constitutes protracted litigation for the purposes of waiver, the court should consider three factors: (1) the amount of time between the commencement of the action and the request for arbitration; (2) the amount of litigation thus far; and (3) proof of prejudice to the opposing party.

Case:  Cusimano v. Schnurr, NY Slip Op 05702 (1st Dept. 2014)

Here is the decision.

Tomorrow's issue:  A motion to vacate based on defective service.