Right to Arbitrate May be Waived by Proceeding With a Lawsuit

The California Court of Appeal recently found that a plaintiff’s election to proceed far into their lawsuit waived their contractual right to arbitrate the dispute.

In Burton v. Cruise (Dec. 8, 2010, No. G041835) 190 Cal. App. 4th 939, opn. mod. Jan 4, 2011, a petition to compel arbitration was filed by an ex-patient in a medical malpractice lawsuit. The arbitration agreement at issue had been signed by both parties. Rather than seek arbitration, the patient filed suit against the doctor alleging he negligently performed an operation. The patient did not seek an order compelling arbitration or otherwise mention her right to arbitration after months into the lawsuit. Eventually, the patient requested a trial date and the parties engaged in discovery as well as the hiring of expert witnesses. Weeks before the trial date and after discovery had been completed, the patient demanded arbitration. Defense counsel filed a declaration stating that the doctor selected the experts for the defense based on the expectation of a jury trial and would have made different choices in an arbitration forum. The trial court found for the doctor, denying the patient’s late election for arbitration.

Riverside’s District Court of Appeal affirmed the decision of the trial court by finding that the patient had waived her right to arbitrate. The appellate court cited case law that has set forth a multifactor test to assess claims in which the right to arbitrate has been waived. The factors are: 1) Did the party seeking arbitration act inconsistently with the right to arbitrate or otherwise invoke the litigation process?; 2) Are the parties well into the preparation of the lawsuit?; 3) Is there an imminent trial date?; and 4) Has the delay affected, misled or prejudiced the opposing party? Finding the all four factors had been met, the court of appeal denied the plaintiff’s attempted election to arbitrate.

The choice of arbitration versus litigation is an important one, and doctors and other personal injury defendants are best advised to seek competent counsel that can assist in assessing the best course of action. In doing so, a prejudicial misstep by a plaintiff can be met with effective advocacy to uphold the interests of the defendant.