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A federal court in Louisiana held that even though a party had amended a complaint, answered a cross-claim, and conducted limited discovery, it had not substantially invoked the judicial process to such a degree that it had waived its contractual right to arbitration.
In American Equity Underwriters, Inc. v. Ameri-Force, Inc, Nos. 06-0055, C/W 06-1753, 2007 WL 128825 (E.D. La. Jan. 17, 2007), American Equity Underwriters (AEU) provided Ameri-Force (AFI) with indemnity insurance for worker's compensation claims.
AFI had filed a breach of contract claim against AEU when AEU failed to provide coverage for certain claims. When AEU asked the court to stay litigation and compel arbitration pursuant to an arbitration agreement between the parties, AFI argued that AEU had waived its right to arbitrate.
Even though the litigation process included various cross-claims and third party claims, and limited discovery had taken place, the Court ruled that this activity did not constitute a waiver of the right to arbitrate because the activities did not "substantially invoke the judicial process to the detriment or prejudice of AFI." Therefore, the Court stayed the litigation and order arbitration to resolve the dispute.
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