What is the test for a party to an arbitration agreement to waive their right to compel arbitration?

California, United States of America


The following excerpt is from Brandon v. Marcus & Millichap Real Estate Inv. Servs., Inc., B276540 (Cal. App. 2018):

"A party to an arbitration agreement may by conduct waive its right to compel arbitration. There is no single test for the type of conduct which may waive arbitration rights, but the conduct must have caused prejudice to the opposing party." (Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1194.) "[W]hile there is no 'single test' in establishing waiver, the relevant factors include whether the party seeking arbitration (1) has 'previously taken steps

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inconsistent with an intent to invoke arbitration,' (2) 'has unreasonably delayed' in seeking arbitration, (3) or has acted in 'bad faith' or with 'wilful[l] misconduct.' " (Keating v. Superior Court (1982) 31 Cal.3d 584, 605-606 ["We have stressed the significance of the presence or absence of prejudice. Waiver does not occur by mere participation in litigation; there must be 'judicial litigation of the merits of arbitrable issues'. . . ."].)

It is well settled that filing demurrers, alone, does not demonstrate waiver of the right to compel arbitration. (Groom v. Health Net, supra, 82 Cal.App.4th at p. 1195 [court's sustaining demurrer to two causes of action that were arbitrable is not litigation of the merits because the causes of action were merely alternative legal theories based on the same underlying facts, which had not been litigated].) Moreover, incurring litigation costs does not demonstrate prejudice. (Id. at p. 1197 [the mere expense of responding to preliminary court motions, by itself, does not constitute the prejudice that bars a belated petition to compel arbitration].)

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