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A Missouri federal court held that prior litigation by a party does not necessarily constitute waiver of arbitration, unless the same facts and legal issues were addressed.
In Morrow v. Soeder, No. 4:06CV1243-DJS, 2006 WL 2855024 (E.D. Mo. Oct. 03, 2006), Walter Morrow and Pamela Taylor, borrowers and parties to separate loan agreements found to be in default in previous state court litigation, brought suit against attorney John H. Soeder, III and Sher & Shabsin, P.C. (Soeder and Sher & Shabsin), alleging that they violated the Fair Debt Collection Practices Act (FDCPA) by filing the claims on behalf of Title Lenders, Inc. (Title Lenders).
Soeder and Sher & Shabsin moved to compel arbitration. Morrow and Taylor’s loan agreements contained arbitration provisions which used broad language encompassing all disputes related to the agreement. Morrow and Taylor “do not dispute that when defendants filed the lawsuits upon which plaintiffs' claims here are based, defendants were acting on behalf of, and as agents for, Title Lenders/Mo. Payday Loan.” Thus, the arbitration agreements extended to all parties.
Morrow and Taylor argued that Title Lenders waived the right to arbitrate when they pursued claims in litigation instead of arbitration. The Court reasoned that even if Title Lenders had sued with full knowledge of their commitment to arbitrate, “the necessary prejudice is absent.”
The prior litigation addressed Morrow and Taylor’s defaults on their loans. No prejudice to Morrow and Taylor in the form of “inherent unfairness in terms of delay, expense, or damage to a party's legal position” occurred due to the prior suits. The FDCPA claims at issue in this case regarded “different legal and factual issues [than the prior suits, and did] not constitute a waiver of arbitration rights.” Accordingly, the Court ordered the parties to arbitration.
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