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A party waived its right to arbitrate by acting inconsistently with the intent to arbitrate, creating an unreasonable and unexplained delay and causing prejudice to the opposing party, a California appellate court held.
In Dalby v. 21st Century Ins. Co., Nos. B188064, B189161, 2007 WL 137685 (Cal. Ct. App.2d Jan. 22, 2007), Mary Ann Dalby was in a car accident and Donald Dalby served as the executor of her estate. After difficulties reaching resolution with 21st Century, Mary Ann filed suit in court. 21st Century filed for demurrer, alleging that Mary Ann had failed to request arbitration made mandatory by the Insurance Code and the contract between the parties.
The motion for demurrer was denied, and 21st Century subsequently filed a motion to compel arbitration. The motion to compel was denied on the basis that 21st Century had waived its right to arbitrate.
On appeal, the Court agreed that 21st Century had waived its right to arbitrate and rejected 21st Century's argument that it had not waived arbitration because it did not show express intent to relinquish its right. "Even in the absence of expressed intent to relinquish the right to arbitration, there are circumstances in which waiver may be found." See Engalla v. Permanente Medical Group, Inc. 15 Cal.4th 951, 983 (Cal. 1997).
21st Century did not explain the unreasonable three year delay in seeking arbitration. 21st Century acted inconsistently with the intent to pursue arbitration by continuously refusing to discuss arbitration when diligently pursued by Mary Ann, who was in poor health. Finally, Mary Ann experienced prejudice as a result of the delay, as she died before the claim could be resolved.
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