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Tuesday, June 1, 2010

Court of Appeal Affirms Decision That Party Waives Right to Compel Arbitration by Participating in Litigation for More than Six Months

In Adolph v. Coastal Auto Sales, Inc. (May 26, 2010) --- Cal.App.4th ----, 2010 WL 2089482, the Fourth District Court of Appeal affirmed a trial court order denying a defendant's motion to compel arbitration of an action under the Consumer Legal Remedies Act ("CLRA"). Cal. Civ. Code 1750 et seq. Citing the trial court, the Court of Appeal held:
[I]t is apparent to the court that defendant's conduct has been inconsistent with an intent to arbitrate. Related to this is the 6 months of delay from the filing of Plaintiff's complaint to the instant petition to compel. In that time period defendant filed two demurrers, accepted and contested discovery request [s], engaged in efforts to schedule discovery, omitted to mark or assert arbitration in its case management statement.
The effect of these inconsistent actions by defendant has resulted in more than merely participating in litigation or expending legal cost[s] but in prejudice to the plaintiff by substantially undermining plaintiff's ability at this late date to take advantage of the benefits and cost savings provided by arbitration. It is clear to the court that defendants intended by their conduct to proceed with their court action. It was only until defendant's second demurrer was overruled that it now request[s] this court that it litigate now in another forum to which all appearances it hopes that it will limit its litigation risk and expense. It will also increase plaintiff's expenses and burdens, having already required plaintiff to expend its efforts and resources in vigorously litigating this case in court. To allow defendant at this time with a trial set for May when it has known of its right to arbitrate this matter since June 2008 yet remained silent until it lost its motion to now go to arbitration would in this court's view cause an unnecessary waste of time and effort to all concerned but more importantly is unfair and prejudicial to plaintiff. Simply put as one court stated "[t]he courtroom may not be used as a convenient vestibule to the arbitration hall so as to allow a party to create his own unique structure combining litigation and arbitration."
Slip op. at 5.

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