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Participation in pre-litigation proceedings for four years before moving to compel arbitration constitutes waiver of the right to pursue arbitration, a state court in Kentucky held.
In Green Tree Servicing, LLC v. Phelps, No. 2005-CA-001666-MR, 2007 WL 625077 (Ky. Ct. App. Mar. 2, 2007), Green Tree Servicing brought an action to foreclose on two promissory notes secured by Phelps' property. Green Tree moved for default judgment and participated in discovery associated with the lawsuit. Four years passed before Green Tree moved to compel arbitration of its claims.
The Court denied the motion to compel arbitration, finding that Green Tree was equitably estopped from enforcing its arbitration rights. The Court distinguished Conseco v. Wilder, 47 S.W.3d 335, 345 (Ky. Ct. App. 2001), where the court disregarded a three-month delay in enforcing arbitration because "[t]he delay itself was not unduly long and . . . there was little activity in the case." Green Tree's four-year delay was significantly longer and caused Phelps to expend "considerable time and expense litigating this matter."
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