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Although less than a year passed between the filing of a claim and a party's request to compel arbitration of that claim, a South Carolina appellate court held that a party waived its right arbitration because extensive discovery clearly prejudiced the opposing party's case.
In Rhodes v. Benson Chrysler-Plymouth, Inc., No. 4222, 2007 WL 816811 (S.C. Ct. App. Mar. 19, 2007), Rhodes sued Benson Chrysler-Plymouth (Benson) after Benson allegedly substituted a stolen 1999 Dodge Durango for properly-titled 2001 Durango that Rhodes agreed to purchase. Benson did not move to compel arbitration for nearly ten months after Rhodes brought the claim in court. Rhodes then argued that Benson waived its right to arbitration.
Courts consider three factors in determining whether a party waived its right to arbitrate: (1) the time-lapse between the commencement of the action and the motion to compel arbitration; (2) the amount of discovery that the party requesting arbitration has engaged in; and (3) the degree of prejudice suffered by the non-moving party.
This Court held that though the time-lapse was relatively brief, the extensive amount of discovery engaged in by both parties clearly prejudiced Benson's case. Benson and Rhodes exchanged interrogatories and requests for production. In addition, Benson conducted five depositions, sought court assistance in issuing subpoenas, and filed two motions for protective orders. Finally, the trial date had been set and was imminent when Benson filed its request to arbitrate.
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