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Be Careful Not To Waive Your Right to Arbitration Because Once It Is Waived, Its Waived

Does your contract have a requirement to arbitrate all disputes? If so, it is vital that you contact legal counsel before taking any legal action that may be inconsistent with, and thereby result in a waiver of your right to arbitrate. Once your right to arbitration is waived, it cannot be revived.

For example, in the recent case of Mirro v. Freedom Boat Club, LLC, the Second District Court of Appeal held that the defendant waived its right to arbitration due to the defendant’s actions taken in an entirely separate lawsuit that involved the same subject matter. In Mirro, the plaintiff filed a lawsuit in state court against the defendant for personal injuries allegedly sustained in an accident on a boat rented from the defendant. The defendant moved to compel arbitration under the arbitration provision in the boating club rental agreement between the plaintiff and defendant. The Second District found that defendant acted inconsistently with and thereby waived its right to arbitrate. Specifically, the court found that the defendant waived its right to arbitrate the state court dispute by filing a prior, separate lawsuit in federal court seeking an exoneration from or limitation of liability under the Limitation of Shipowners’ Liability Act, which addressed the plaintiff’s claim brought in the state court lawsuit.

The Second District in Mirro reiterated the strict rules of waiver when it comes to arbitration:

  • Initiating a lawsuit without first seeking arbitration is a waiver of the right to arbitration.
  • A waiver of the right to arbitration occurs when a party actively participates in the lawsuit by either prosecuting or defending issues subject to arbitration (even if in an entirely different case).

It is crucial to obtain legal counsel to preserve your contractual right to compel arbitration. Rosenthal Law Group handles all types of litigation, including arbitration. Contact Rosenthal Law Group to help you protect your contractual rights and determine the best course of action in all contractual disputes.