Tuesday, June 19, 2007, 7:52 AM

COA Finds Waiver Of Arbitration Right

Today in Capps v. Virrey, the Court of Appeals (COA) held that the plaintiff waived his right to compel arbitration against in insurance company (Nationwide) by participating in discovery not available in arbitration.

The COA reiterated that courts scrutinize allegations of waiver; that doubts should be resolved against a finding of waiver; and that the party claiming waiver must show prejudice. But the COA found waiver, because Plaintiff had served on the insurer a set of interrogatories, a request for admissions, and three document requests. The COA stressed that "[a]pplying the Rules of Civil Procedure and Evidence to arbitration negates the very purpose for agreeing to arbitrate," and that therefore the "procedural and evidentiary rules governing judicial proceedings do not apply to arbitrations absent plain and unambiguous language in the arbitration agreement that those rules apply." In this case, the arbitration agreement's language wasn't plain and unambiguous, the COA held. Although the agreement said "Arbitration will be subject to the usual rules of procedure and evidence in such county and state," the COA held that this language "clearly" refers to the rules and procedures set forth in the Uniform Arbitration Act (which contains its own rules regarding discovery), not the "usual rules" of civil procedure and evidence.

The COA did reject one finding by the trial court: that plaintiff had waived his right to arbitration by appearing at a deposition noticed by Nationwide. The COA found that plaintiff was required to appear at the deposition, so that couldn't be a basis for waiver.

Today's decision is consistent with other state and federal decisions on waiver. It drives home the point that if you're going to contend that a case belongs in arbitration, you need to move for arbitration at the outset.

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