Second District, Division 1 Finds Waiver, in a 2-1 Decision.
The next one is an interesting case which demonstrates that an appellate court may strike down an arbitration award where one side litigated in court for a long period of time and engaged in non-arbitration types of discovery. Waiver was the issue for consideration, with the Second District, Division 1 so finding in a 2-1 decision.
Tip for gameplaying.
Knight v. Toe Brights, Inc., Case No. B220648 (2d Dist., Div. 1 Nov. 12, 2010) (unpublished) involved a situation where plaintiff and defendant litigated in civil court for over 7 months, with the defense sending out lots of discovery and actually receiving responses from plaintiff–who indicated that she spent $58,000 in fees during the civil litigation. Then, with about 3 months remaining before the trial date, the defense successfully moved to compel arbitration. The matter proceeded to arbitration, where plaintiff won a little over $45,000 on some claims, but also lost some claims. The arbitrator denied her requests for fees and costs, but awarded the defense fees of $60,000 and costs of $1,160 as the prevailing parties on some of plaintiff’s lost claims.
Plaintiff challenged the subsequent judgment confirming the arbitration award.
Plaintiff did well to appeal.
The Second District, Division 1, in a 2-1 opinion authored by Justice Chaney (concurred in by Presiding Justice Mallano), agreed with the waiver challenge. The seven months of litigation, replete with propounding discovery not allowable under private arbitration rules, convinced the two justices that plaintiff was prejudiced and the award should be overturned. “[Defendants] have incurred the expense of an arbitration hearing, and now possibly will incur the additional expense of a trial, as a result of their gamesmanship” was the ultimate conclusion of the majority.
Justice Rothschild dissented, finding no prejudice from the fact that plaintiff just incurred court costs and legal expenses as well as determining the record did not show what undue advantage defendants obtained through the information that was garnered during discovery. She would have affirmed the judgment confirming the arbitration award.