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Wright v. Jerry Fulks & Co.10/31/2005
It is evident that Fulks' conduct manifested a clear intent to utilize the judicial process rather than pursue arbitration. Fulks' participation in the judicial process and delay in demanding arbitration without good cause is inconsistent with the arbitration agreement and shows a ''conscious decision to continue to seek judicial judgment on the merits of {the} arbitrable claims.'' Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754, 759 (9th Cir. 1989) (quoting National Found. for Cancer Research v. A.G. Edwards & Sons, 821 F.2d 772, 777 (D.C.Cir. 1987)).
As to the third prong, prejudice to the party opposing arbitration, again there is no bright line rule.
No bright line defines this second type of prejudice--neither a particular time frame nor dollar amount automatically results in such a finding--but it is instead determined contextually, by examining the extent of the delay, the degree of litigation that has preceded the invocation of arbitration, the resulting burdens and expenses, and the other surrounding circumstances.
Wright argues that Fulks' inexcusable delay in moving to compel arbitration was prejudicial. In Steele, this court recognized that delay can amount to prejudice:
Prejudice can be substantive, such as when a party loses a motion on the merits and then attempts, in effect, to relitigate the issue by invoking arbitration, or it can be found when a party too long postpones his invocation of his contractual right to arbitration, and thereby causes his adversary to incur unnecessary delay or expense.
Relying on Fisher v. A.G. Becker Paribas, Inc., 791 F.2d 691 (9th Cir. 1986), Fulks argues that it moved to compel arbitration at the earliest time possible -- when all claims but breach of contract had been dismissed and filing a motion to compel arbitration earlier would have been futile. Fulks' argument is unpersuasive.
In Fisher, the Ninth Circuit held the defendant's delay in filing a motion to compel was not inconsistent with the agreement to arbitrate because under the previous law the defendant did not have a legal right to enforce the arbitration agreement and the motion would have been futile. Id.; see also Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217, 105 S.Ct. 1238, 1240, 84 L.Ed. 2d 158 (1985).
Before the United States Supreme Court's decision in Byrd, most federal courts applied the intertwining doctrine, which precluded courts from compelling arbitration when arbitrable and non-arbitrable claims arose from the same transaction and were sufficiently intertwined. Fisher, 791 F.2d at 695. In 1984, the Court specifically struck down the intertwining doctrine in Byrd, and held that the FAA requires courts 'to compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel, even where the result would be the possibly inefficient maintenance of separate proceedings in different forums.' Byrd, 470 U.S. at 217.
Unlike Fisher, Fulks had an existing legal right to enforce arbitration from the time the action commenced and under Byrd, the presence of non-arbitrable claims did not preclude Fulks from enforcing the arbitration clause. Fulks had a right to invoke arbitration despite the presence of multiple parties and intertwined non-arbitrable claims. Fulks could have and should have moved to compel arbitration when it first filed its answer. Filing a motion to compel arbitration earlier in the proceedings would not have been futile.
Citing Fisher and Hilti Inc. v. Oldach, Fulks also contends that Wright is precluded from claiming prejudice because she chose the improper forum and did not move to strike Fulks' affirmati
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