Commercial Division Blog
Party Waived Right to Arbitrate By Litigating for Eleven Months With Substantial Motion Practice
On December 16, 2015, the Court of Appeals issued a decision in Cusimano v. Schnurr, 2015 NY Slip Op. 09232, holding that a party waived its right to arbitrate by litigating an action, explaining:
[P]laintiffs have waived their right to arbitrate this dispute. Like contract rights generally, a right to arbitration may be modified, waived or abandoned. Accordingly, a litigant may not compel arbitration when its use of the courts is clearly inconsistent with its later claim that the parties were obligated to settle their differences by arbitration. While it is true that not every foray into the courthouse effects a waiver of the right to arbitrate, we are satisfied that the totality of plaintiffs' conduct here establishes waiver.
. . .
After vigorously pursuing their litigation strategy for approximately one year, plaintiffs moved to compel arbitration. Even more telling, the desire for arbitration only arose after Supreme Court made plain its view that plaintiffs' claims were vexatious and largely time-barred. Indeed, plaintiffs had expressly represented to Supreme Court that they did not want to go to arbitration. Plaintiffs' behavior is indicative of blatant forum-shopping and, under these circumstances, prejudice has clearly been established. Therefore, plaintiffs have waived the right to arbitration and the issue of timeliness should be determined by the court.
(Internal quotations and citations omitted).