III. Waiver (3 of 3)
Sometimes a party to a contract with an arbitration clause will waive the right to resolve legal disputes through arbitration by filing a lawsuit. In that regard, it has been noted that “not every foray into the courthouse effects a waiver of a right to arbitrate.” The Supreme Court has concluded, in a case involving litigants who prosecuted their claim in a court for six months despite the provisions of an arbitration clause, that:
we are of the opinion that the bringing of action by both parties on the subject matter of the agreement manifests a mutual change of mind and does accomplish revocation. When all parties to an agreement to arbitrate elect to prosecute their respective claims by actions at law and institute and carry forward the course that is elected, the logical indeed the necessary result of the course is an abandonment of arbitration and revocation of the agreement to pursue that form of adjudication.
In addition, an appellate panel observed that “parties waive the right to arbitrate where they commence litigation or use the litigation process improperly, such as to gain pre-trial disclosure, not generally available in arbitration.”
On other occasions, it may be argued that an arbitration clause was waived if the defendant fails to assert it as a separate defense in its responsive pleadings. Apart from the fact that this omission is rather a significant indication of its intention to waive that contractual right, its failure to plead that potential defense offend’s the court’s rules, as well as principles of due process and, as a result, there is a procedural waiver.
III. Third Parties
It cannot be gainsaid that a party cannot be compelled to submit to arbitration any dispute which he/she has not agreed to. Moreover, the responsibility to arbitrate is directed solely by the parties intentions as memorialized by the subject contract. In assessing the intention to arbitrate, it must be recognized that a clause depriving a citizen of access to the courts should clearly state its purpose, so as to ensure that the parties know that, in electing arbitration as the inclusive remedy, they are waiving their time-honored right to sue and to have these issues resolved by an arbitrator.
Finally, a court should be “warned” against re-writing the contract to broaden the scope of arbitration.
IV. Conclusion
Whenever a litigant seeks to enforce an arbitration clause in the context of a CFA claim, that litigant should engage a trial lawyer with established experiences in controversies of this nature. Otherwise, you may forfeit principles of law that were conceived to protect your best interest.
Frank T. Luciano, Esq., is a trial lawyer in Bergen County, Passaic County, Hudson County and Morris County, with over thirty years of experience, who specializes in complex civil litigation, including legal malpractice, construction claims, wrongful death actions, wills and estate contests and liquor law liability cases.