WHEN CAN “ARBITRATION” BE WAIVED?
WHEN CAN “ARBITRATION” BE WAIVED?
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WHEN CAN “ARBITRATION” BE WAIVED?

| Sep 13, 2018 | Firm News

We have been discussing “Binding Arbitration” and when an employment agreement can be unenforceable due to being unconscionable; and additionally an agreement that violates a litigant’s right to seek injunctive relief as a public policy. See Robert’s Legal Articles “When is “Binding Arbitration” Unenforceable,” September 12, 2018.

Besides many major corporation employers using Employment Agreements that implement “Binding Arbitration” as the avenue to resolve legal disputes with employees; many major corporations implement the “Binding Arbitration” procedures to resolve disputes with consumers as well.

The State of California’s legal view on “Binding Arbitration” agreements is:   “[A]lthough we have spoken of a ‘strong public policy of this state in favor of resolving disputes by arbitration’ [citation], Code of Civil Procedure section 1281 makes clear that an arbitration agreement is to be rescinded on the same ground as other contracts or contract terms. In this respect, arbitration agreements are neither favored nor disfavored, but simply placed on an equal footing with other contracts.” ( Armendariz v. Foundation Health Psychcare Services, Inc., (2000) 24 Cal.4th at pp. 126-127, 99 Cal.Rptr.2d 745, 6 P.3d 669.)

Attorney’s and their clients have their own statutory legislative scheme wherein a legal fee dispute is resolved through arbitration; called the The Mandatory Fee Arbitration Act (“MFAA”.)  This article will discuss various aspects of arbitration and how a litigant’s right to arbitration can be waived, even if statutorily mandated.

The Mandatory Fee Arbitration Act (“MFAA”)

The Mandatory Fee Arbitration Act (“MFAA”) is embodied in Sections 6200 through 6206 of the State Bar Act. The Legislature created the MFAA to be a “separate and distinct arbitration system applicable to disputes between clients and attorneys over legal fees, costs, or both.” Bernard Rosenson v. Greenberg Glusker Fields Claman & Machtinger LLP, (2012), 203 Cal.App.4th 688, 693.

A defendant may stay an attorney’s lawsuit for fees by filing a “Request for Arbitration” within 30 days of receipt of the notice of right to arbitration. A timely request stays the attorney’s lawsuit until the arbitration award issues, the arbitration is otherwise terminated, or the stay is vacated by court order that the dispute is not arbitrable under the MFAA. Bus. & Prof. Code, § 6201 (a), (b), & (c), State Bar Rule 3.511; See Law Offices of Dixon R. Howell v. Valley, (2005) 129 Cal.App.4th 1076, 1094.

After MFAA arbitration is complete, contractual binding arbitration provisions become enforceable in lieu of the statutory right to request a trial de novo following an MFAA arbitration award. Bernard Rosenson v. Greenberg Glusker Fields Claman & Machtinger LLP, supra, 203 Cal.App.4th 688.

A prerequisite to an attorney’s legal action in court is the proper service of the Notice of Client’s Right to Arbitration.  Bus. & Prof. Code, § 6201 (a).

The question here is whether a client, under appropriate circumstances, may waive MFAA arbitration rights, notwithstanding an attorney’s noncompliance with section 6201 (a). By “waive MFAA arbitration rights,” it can mean the client’s abandonment of its right to assert as a defense to an action for attorney fees or costs either that (1) the fee dispute must be submitted  initially to nonbinding arbitration, or (2) the attorney’s failure to give the client notice of the right to arbitrate under section 6201 (a) bars the action.

As our Supreme Court has explained, although often phrased in terms of “waiver,” “the critical issue ․ [in the context of loss of arbitration rights is] ‘whether a party’s filing of a lawsuit in the face of an agreement to arbitrate was conduct so inconsistent with the exercise of the right to arbitration as to constitute an abandonment of that right.’  [Citation.]”  (Saint Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1201, 8 Cal.Rptr.3d 517, 82 P.3d 727 (Saint Agnes); see also Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 315, 24 Cal.Rptr.2d 597, 862 P.2d 158 [decisions concerning loss of arbitration rights “use the word ‘waiver’ in the sense of the loss or forfeiture of a right resulting from failure to perform a required act”]. This analysis applies equally to other litigants whom are a parties to a contract with an arbitration clause.

Usually (under circumstance (1)), the waiver issue will arise in the context of a client’s belated request for arbitration under the MFAA. Less typically (under circumstance (2)), the waiver issue occurs where a client does not seek MFAA arbitration (belatedly or otherwise), but nonetheless urges dismissal of the action due to the attorney’s noncompliance with section 6201 (a).

Consideration of the MFAA and of Case Law, is Warranted.

The MFAA provides for specific circumstances under which a client who receives the required notice under section 6201 (a) may waive its arbitration rights.  (See §§ 6201 (a) [waiver by failing to request arbitration within 30 days of receipt of attorney’s notice of right to arbitrate], 6201, subd. (b) [waiver by failing to request arbitration prior to filing answer or equivalent response after receipt of section 6201(a) notice].)   The statute also identifies two instances in which the client waives arbitration, irrespective of whether the attorney gave written notice informing the client of its arbitration rights, namely, where the client commences “an action or fil[es] any pleading seeking either of the following:  [¶] (1) Judicial resolution of a fee dispute to which this article applies.  [¶] (2) Affirmative relief against the attorney for damages or otherwise based upon alleged malpractice or professional misconduct.” (§ 6201, subd. (d).)

At the heart of this issue, however, is whether the MFAA sets forth the only circumstances under which a client who does not receive written notice complying with section 6201 (a) may waive MFAA arbitration rights. It does not. There is nothing in the statute suggesting that the only way a client may waive arbitration (if the attorney does not give notice) is by filing an action or pleading seeking either resolution of a fee dispute or affirmative relief against the attorney for malpractice or professional misconduct.  (See § 6201, subd. (d).)

A holding that there are no nonstatutory grounds for waiving MFAA arbitration rights would permit a client-even one aware of its right to arbitration under the MFAA despite not receiving a section 6201 (a) notice-to use the attorney’s failure to give notice as a means of manipulating the judicial process. Courts will not allow such misuse of the system.

As the Supreme Court held in a case where plaintiffs filed suit for the express purpose of determining their adversaries’ legal theories before attempting to arbitrate the dispute:  “Such procedural gamesmanship provides ample support for the trial judge’s conclusion that plaintiffs filed their action in bad faith, and by doing so waived their right to arbitrate.  ‘The 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.’  [Citation.]”   Christensen v Dewor Developments (1983) 33 Cal.3d 778, 784, 191 Cal.Rptr. 8, 661 P.2d 1088. Defendant filed his answer in bad faith. He was represented by counsel who knew of MFAA law.

Further, the conclusion that a client may waive MFAA arbitration rights on nonstatutory grounds does no violence to the statute’s intent of encouraging arbitration of fee disputes and thereby reducing the inherent inequality between the attorney and client in such disputes. Instead, Courts should reject the view that a client may waive MFAA arbitration rights only as provided in the MFAA. Such an inflexible rule would be based on two unwarranted presumptions:  (1) that the client in all cases will be unaware of its arbitration rights simply because the attorney failed to give the section 6201(a) notice; and (2) “that in every fee dispute, no matter who the parties are and no matter what the circumstances may be, the attorney will always have the upper hand.”  Richards, Watson & Gershon v. King (1995) 39 Cal.App.4th 1176, 1180, 46 Cal.Rptr.2d 169.

Factors Concerning MFAA and Other Arbitration Waiver.

Having determined that a client theoretically may waive MFAA arbitration rights for reasons other than as provided by statute, it is important to ascertain the legal principles under which such waiver may occur. There being little authority addressing the subject in the context of the MFAA, case law considering waiver of arbitration rights where parties have agreed by contract to resolve their disputes through arbitration can be considered.

As our Supreme Court has noted, “no single test delineates the nature of the conduct that will constitute a waiver of arbitration. [Citations.]” Saint Agnes, supra, 31 Cal.4th 1187, 1195-1196, 8 Cal.Rptr.3d 517, 82 P.3d 727; see also Christensen, supra, 33 Cal.3d at p. 782, 191  Cal.Rptr. 8, 661 P.2d 1088.  Cases have found arbitration waiver “in a variety of contexts, ranging from situations in which the party seeking to compel arbitration has previously taken steps inconsistent with an intent to invoke arbitration [citations] to instances in which the petitioning party has unreasonably delayed in undertaking the procedure. [Citations.] The decisions likewise hold that the ‘bad faith’ or ‘wilful misconduct’ of a party may constitute a waiver and thus justify a refusal to compel arbitration. [Citation.]” Davis v. Blue Cross of Northern California (1979) 25 Cal.3d 418, 425-426, 158 Cal.Rptr. 828, 600 P.2d 1060.

Just as the factors determinative of arbitration waiver are not formulaic, there is no particular stage of litigation prior to judgment that is the line of demarcation between the proper assertion and waiver of arbitration. (See Knight et al., Cal. Practice Guide:  Alternative Dispute Resolution (The Rutter Group 2004) ¶ 5:180, p. 5-105.)   A party’s mere participation in a lawsuit is insufficient to preclude it from later enforcing its right to contractual arbitration.  (Saint Agnes, supra, 31 Cal.4th at p. 1203, 8 Cal.Rptr.3d 517, 82 P.3d 727; Christensen, supra, 33 Cal.3d at p. 782, 191 Cal.Rptr. 8, 661 P.2d 1088 [merely answering complaint without simultaneously seeking stay or dismissal not waiver of arbitration]; Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 185-188, 151 Cal.Rptr. 837, 588 P.2d 1261 [mere filing of suit not arbitration waiver]. At the other end of the continuum, it is not essential that the litigation be reduced to judgment in order to find that a party has waived its right to contractual arbitration. Saint Agnes, supra, at p. 1203, 8 Cal.Rptr.3d 517, 82 P.3d 727; McConnell v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1980) 105 Cal.App.3d 946, 951, 164 Cal.Rptr. 751.

The Supreme Court in Saint Agnes agreed that the six factors identified by the appellate court in Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 72 Cal.Rptr.2d 43 (Sobremonte) were “relevant and properly considered in assessing waiver claims.” Saint Agnes, supra, 31 Cal.4th at p. 1196, 8 Cal.Rptr.3d 517, 82 P.3d 727.)   Those factors are:  “ ‘(1) whether the party’s actions are inconsistent with the right to arbitrate;  (2) whether ‘the litigation machinery has been substantially invoked’’ and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate;  (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay;  (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings;  (5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”;  and (6) whether the delay “affected, misled, or prejudiced” the opposing party.  [Citations.]’  [Citation.]”  (Sobremonte, supra, at p. 992, 72 Cal.Rptr.2d 43, quoting Peterson v. Shearson/American Exp., Inc. (10th Cir.1988) 849 F.2d 464, 467-468.

While no single factor is determinative, it is nonetheless true that “[i]n California, whether or not litigation results in prejudice also is critical in waiver determinations. [Citations.]” (Saint Agnes, supra, 31 Cal.4th at p. 1203, 8 Cal.Rptr.3d 517, 82 P.3d 727; see also Christensen, supra, 33 Cal.3d at p. 782, 191 Cal.Rptr. 8, 661 P.2d 1088. The mere fact that the opposing party has incurred some litigation expense before the arbitration right is claimed is not a sufficient form of prejudice. Saint Agnes, supra, at p. 1203, 8 Cal.Rptr.3d 517, 82 P.3d 727; Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1197, 98 Cal.Rptr.2d 836.)   Prejudice, however-and a resultant finding of arbitration waiver-may be found where the party seeking arbitration has used the litigation to procure the opposing party’s defenses and strategies Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 215, 69 Cal.Rptr.2d 79;  Kaneko Ford Design v. Citipark, Inc. (1988) 202 Cal.App.3d 1220, 1228-1229, 249 Cal.Rptr. 544, or information not obtainable through arbitration. Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 558, 94 Cal.Rptr.2d 201 (Guess?).

It is acknowledged that the above principles apply to waiver of contractual arbitration rights and that there are clear differences between contractual arbitration and arbitration under the MFAA. Aguilar v. Lerner (2004) 32 Cal.4th 974, 984, 12 Cal.Rptr.3d 287, 88 P.3d 24 [MFAA arbitration differs from standard arbitration in that fee arbitration is nonbinding and is based on statutory directive giving the client the option to arbitrate].)

Whether a Litigant Waived MFAA or Other Arbitration rights.

“Generally, the determination of either waiver or estoppel is a question of fact.” Platt Pacific, Inc. v. Andelson, supra, 6 Cal.4th 307, 319, 24 Cal.Rptr.2d 597, 862 P.2d 158.)   When the facts are undisputed, however, and “ ‘only one inference may reasonably be drawn, the issue is one of law and the reviewing court is not bound by the trial court’s ruling.’ [Citation.]” Saint Agnes, supra, 31 Cal.4th at p. 1196, 8 Cal.Rptr.3d 517, 82 P.3d 727; see also id. at p. 1206, 8 Cal.Rptr.3d 517, 82 P.3d 727.

Without treating them as inflexible or formulaic, it is useful to analyze waiver by considering the six Sobremonte factors approved by the Supreme Court. Saint Agnes, supra, 31 Cal.4th at p. 1196, 8 Cal.Rptr.3d 517, 82 P.3d 727. The fourth factor-i.e., “ ‘whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings’ ” Sobremonte, supra, 61 Cal.App.4th at p. 992, 72 Cal.Rptr.2d 43-does not generally support the view that defendant waived MFAA arbitration rights.

a. Action inconsistent with arbitration (factor 1).

Applying the first Sobremonte factor, a defendant’s actions can be entirely “ ‘inconsistent with the right to arbitrate.’ ” Sobremonte, supra, 61 Cal.App.4th at p. 992, 72 Cal.Rptr.2d 43.  Indeed, not requesting MFAA arbitration in a timely manner can waive arbitration; and not only MFAA arbitration.

As far as defendant’s assertion of noncompliance with section 6201(a) is concerned, the assertion in a lawsuit of the defense that the matter is subject to arbitration is not self-executing;  the party asserting arbitration rights must generally take some affirmative steps (e.g., move to dismiss or stay or move to compel arbitration) to enforce the arbitration right. Thus, it is unpersuasive that a defendant’s claim that the allegation in the answer that the Plaintiff did not comply with section 6201 (a) immunized him from a finding that he subsequently waived MFAA arbitration rights.  See Davis v. Continental Airlines, Inc., supra, 59 Cal.App.4th 205, 215-217, 69 Cal.Rptr.2d 79.  As the Sobremonte court noted:  “[M]ere assertion of this affirmative defense, without more, does not preclude a finding that subsequent conduct may cause a waiver of that right. [Citation.]” Sobremonte, supra, 61 Cal.App.4th at p. 993, 72 Cal.Rptr.2d 43.   It is not sufficient for the client to raise MFAA arbitration (and/or the absence of notice under section 6201(a)) as an affirmative defense, and then allow extensive litigation to proceed without further assertion of the client’s MFAA rights. See ibid. [waiver found where bank asserted contractual arbitration as one of 25 affirmative defenses in answer, thereafter conducted extensive discovery, and moved to arbitrate 10 months later];  Davis v. Continental Airlines, Inc., supra, 59 Cal.App.4th 205, 69 Cal.Rptr.2d 79 [defendants sued for sexual harassment waived contractual arbitration by answering suit, alleging failure to arbitrate as affirmative defense, but waited six months to demand arbitration and conducted extensive discovery in the interim].

b. Litigation machinery substantially invoked (factor 2).

There is no doubt here that the second Sobremonte factor can point to waiver.   Clearly, “ ‘ “the litigation machinery [was] substantially invoked.” ’ ” Sobremonte, supra, 61 Cal.App.4th at p. 992, 72 Cal.Rptr.2d 43.)   Engaging in discovery, attending status conferences, and allowing a case to proceed to the brink of trial before bringing an affirmative motion to dismiss can constitute waiver.  Cf. Guess?, supra, 79 Cal.App.4th at p. 558, 94 Cal.Rptr.2d 201 [holding that defendant’s conduct in responding to discovery and sending attorneys to depositions noticed by plaintiff was inconsistent with desire to arbitrate].

The other aspect of the second Sobremonte factor is “ ‘whether ․ the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate.’ ”  Sobremonte, supra, 61 Cal.App.4th at p. 992, 72 Cal.Rptr.2d 43.

c. Lengthy delay (factor 3).

The mere existence of some delay in asserting arbitration, of itself and without resulting prejudice, will be insufficient to support a finding of waiver. See Christensen, supra, 33 Cal.3d 778, 782, 191 Cal.Rptr. 8, 661 P.2d 1088.)   It is, however, “normally desirable that [a litigant wishing to assert arbitration rights] do so promptly, if [the party] intends to do so at all.” Ibid. Thus, in some of the contractual arbitration cases discussed, ante, the court found that the asserting party had waived arbitration under circumstances much less compelling. See, e.g., Guess?, supra, 79 Cal.App.4th 553, 94 Cal.Rptr.2d 201 [defendant waived arbitration by waiting three months after filing answer to bring motion to compel arbitration]; Davis v. Continental Airlines, Inc., supra, 59 Cal.App.4th 205, 69 Cal.Rptr.2d 79 [waiver found where defendants waited over six months after answering to bring motion to stay]; Kaneko Ford Design v. Citipark, Inc., supra, 202 Cal.App.3d 1220, 249 Cal.Rptr. 544 [plaintiff waived arbitration by delay of five months].

The third Sobremonte factor can support a waiver when “‘delayed for a long period before seeking’ ” dismissal. Sobremonte, supra, 61 Cal.App.4th at p. 992, 72 Cal.Rptr.2d 43.)

Courts will consider the existence or absence of a reasonable explanation for the party’s delay in asserting its arbitration right in making a determination of waiver. See Guess?, supra, 79 Cal.App.4th at p. 557, 94 Cal.Rptr.2d 201 [defendant  “failed to offer any explanation for its decision to defer for three months its demand for arbitration”].  Defendant was well aware from the outset of the litigation that he had the right to arbitrate the dispute under the MFAA. (See Christensen, supra, 33 Cal.3d 778, 783, 191 Cal.Rptr. 8, 661 P.2d 1088 [stressing importance of early awareness of arbitration clause and its applicability by party asserting arbitration].

A defendant may assert the explanation for not moving to dismiss until the eve of trial if he believes that under Huang v. Cheng, (1998) 66 Cal.App.4th 1230, 78 Cal.Rptr.2d 550, the proper procedure for a client to assert an attorney’s noncompliance with section 6201(a) was to bring a trial motion in limine to dismiss.

Court’s have rejected this explanation as being wholly unreasonable for three reasons.

First, while the defendants in Huang brought their motion to dismiss at trial, it is apparent that they did so because they originally represented themselves in propria persona and had no knowledge of their MFAA rights until they retained an attorney before trial.  Huang v. Cheng, supra, 66 Cal.App.4th at p. 1233, 78 Cal.Rptr.2d 550. Huang did not hold that the only stage in litigation that a client may assert noncompliance with section 6201(a) is at trial.

Second, there is substantial authority under the MFAA that is contrary to a defendant’s contention that a challenge for lack of section 6201(a) notice must be made at the time of trial, or shortly before.  Indeed, in many instances, the asserting party brought the issue to a head at the early stages of litigation.   For instance, in Richards, supra, 39 Cal.App.4th 1176, 1178, 46 Cal.Rptr.2d 169, the defendant filed a motion to dismiss based on the attorney’s noncompliance with section 6201 (a) only three months after the action was filed.  See also Aguilar v. Lerner, supra, 32 Cal.4th 974, 980, 12 Cal.Rptr.3d 287, 88 P.3d 24 [petition to compel arbitration filed in response to complaint]; Alternative Systems, Inc. v. Carey (1998) 67 Cal.App.4th 1034, 1039, 79 Cal.Rptr.2d 567 [motion to stay made at case management conference].

Third, contractual arbitration waiver cases likewise do not support this position. Proper methods to enforce agreements to arbitrate include a petition or motion to compel arbitration (Code Civ. Proc., §§ 1281.2, 1292.4), or motion to stay action. Code Civ. Proc., § 1281.4. Such motion should be brought at the earliest opportunity. See Christensen, supra, 33 Cal.3d at p. 782, 191 Cal.Rptr. 8, 661 P.2d 1088.

d. Important intervening steps taken (factor 5).

It is without question that “ ‘important intervening steps’ ” Sobremonte, supra, 61 Cal.App.4th at p. 992, 72 Cal.Rptr.2d 43) can take place in an action constituting waiver.

e. Prejudice (factor 6).

The sixth Sobremonte factor, prejudice, is, of course, “critical.”  Saint Agnes, supra, 31 Cal.4th at p. 1203, 8 Cal.Rptr.3d 517, 82 P.3d 727.  It is noted that the mere fact that Plaintiff may have incurred litigation expense ibid. does not establish prejudice. However, there is significant undisputed evidence that Plaintiff was prejudiced beyond mere delay or incurring litigation expense. Indeed, under the contractual arbitration waiver cases discussed ante, there was clear prejudice.

A defendant, through discovery, may obtain extensive information about a litigant’s case.   This information is clearly not available through MFAA arbitration, since the statute does not authorize prearbitration motions or discovery.  See Rules Proc. for Fee Arbitrations and Enforcement of Awards by State Bar, rule 31.0, 23 pt. 5 West’s Ann. Ct. Rules (2005) p. 725 [voluntary prearbitration exchange of documents encouraged]. Such use by a litigant of the judicial process is both inconsistent with the assertion of MFAA rights and supports a finding of prejudice. Berman v. Health Net (2000) 80 Cal.App.4th 1359, 1366, 96 Cal.Rptr.2d 295 [prejudice found where defendant obtained substantive information in plaintiff’s discovery responses, even if responses were deficient, because defective responses might reveal case’s lack of merit];  Guess?, supra, 79 Cal.App.4th 553, 558, 94 Cal.Rptr.2d 201 [expense of pretrial discovery and motions and disclosure of trial tactics warranted finding of prejudice];  Kaneko Ford Design v. Citipark, Inc., supra, 202 Cal.App.3d 1220, 1228, 249 Cal.Rptr. 544 [prejudice found from plaintiff delaying in seeking arbitration while participating in settlement negotiations and obtaining information on defendant’s legal theories].)

The impact of the delay in assertion of arbitration rights on the policy objectives of arbitration is an important consideration in the prejudice analysis. As the Supreme Court has noted:  “[C]ourts assess prejudice with the recognition that California’s arbitration statutes reflect ‘ “a strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution” ’ and are intended ‘ “to encourage persons who wish to avoid delays incident to a civil action to obtain an adjustment of their differences by a tribunal of their own choosing.” ’ [Citation.]  Prejudice typically is found only where the petitioning party’s conduct has substantially undermined this important public policy or substantially impaired the other side’s ability to take advantage of the benefits and efficiencies of arbitration.”  Saint Agnes, supra, 31 Cal.4th at p. 1204, 8 Cal.Rptr.3d 517, 82 P.3d 727, quoting Moncharsh v. Heily & Blase, supra, 3 Cal.4th 1, 9, 10 Cal.Rptr.2d 183, 832 P.2d 899.

Since arbitration under the MFAA is similarly intended to provide clients with a speedy and inexpensive method of resolving fee disputes with their attorneys (see Liska v. Arns Law Firm (2004) 117 Cal.App.4th 275, 281-282, 12 Cal.Rptr.3d 210, this prejudice inquiry under contractual arbitration waiver cases is equally applicable here. Clearly a litigant’s substantial delay in filing a dismissal motion or petition to compel arbitration “substantially undermined [the] important public policy” (Saint Agnes, supra, 31 Cal.4th at p. 1204, 8 Cal.Rptr.3d 517, 82 P.3d 727) in favor of MFAA arbitration of providing an inexpensive and speedy method of resolving fee disputes. By delaying a litigant can deprive himself and other litigant of “whatever efficiencies that would otherwise have been available to [them] through arbitration.”  Guess?, supra, 79 Cal.App.4th 553, 558, 94 Cal.Rptr.2d 201.

f. Conclusion re:  waiver.

A court applying the six Sobremonte factors to the evidence explained here, five of the factors support strongly the conclusion that a client waived his MFAA arbitration rights. This conduct here would be plainly inconsistent with a desire to arbitrate an attorney fee dispute, and constitutes a delay of an unreasonable period of time before moving to dismiss or seek MFAA Arbitration. After viewing the cases as a whole (McConnell v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 105 Cal.App.3d 946, 952, fn. 2, 164 Cal.Rptr. 751), the only inference that can be drawn from the undisputed evidence is the existence of waiver. Guess?, supra, 79 Cal.App.4th 553, 94 Cal.Rptr.2d 201 [reversal of trial court’s order compelling arbitration because defendant waived arbitration as matter of law];  Sobremonte, supra, 61 Cal.App.4th 980, 72 Cal.Rptr.2d 43 [same].)

If you are a defendant seeking to resolve an issue by arbitration, it is critical that you do so promptly.  If you are opposing a motion to dismiss or petition to compel arbitration, there could be factors that constitute a waiver.

Robert Rodriguez, Attorney at law

Robert Rodriguez has litigated well over 100 family law cases and civil litigation matters including personal injury motor vehicle cases, dog bite and slip & fall cases, breach of contract, defamation & invasion of privacy, fraud, unfair business practice, malicious prosecution, wrongful termination, workplace and employment matters including sexual harassment, wage & hour violations, discrimination pursuant to the FEHA, Gov’t Code §§ 12940 et seq., violations of the FMLA & Pregnancy Leave, Civil Rights  discrimination pursuant to 42 U.S.C. § 1983 and Title VII of the 1964 Civil Rights Act in the State of California and California federal district courts.

* Disclaimer – Robert Rodriguez is licensed to practice only in the State of California & this analysis is applied only under State of California law.  Robert D. Rodriguez is also admitted to practice in the U.S. District Courts, Central, Northern & Eastern Districts of California.  Robert Rodriguez has practiced in the State of California Court of Appeal.

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