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Arbitration Agreement Is Broad Enough to Encompass Dispute Over Past Mortgage An agreement to arbitrate that invoked the arbitration rules of the National Arbitration Forum (“FORUM”) clause fairly included a dispute over a previous mortgage that lacked an arbitration clause, a Kentucky appellate court held. In American General Home Equity, Inc. v. Kestel, No. 2005-CA-000269-MR, 2006 WL 1652717 (Ky. App. June 16, 2006), American General filed suit against Teresa Kestel’s husband to foreclose on a mortgage. After Mr. Kestel died, American General received a default judgment by the court, but Mrs. Kestel filed a counterclaim to avoid foreclosure. American General filed a motion to compel arbitration of Mrs. Kestel’s counterclaim. Even though the mortgage in question contained no arbitration clause, Mrs. Kestel had signed a subsequent agreement in connection with another loan which stated, “all documents, actions, or omissions relating to this or any previous loan” were subject to mandatory arbitration pursuant to FORUM rules. The Court found that the term “relating to … any previous loan” was ambiguous in that it could be interpreted to apply only to loans in which Mrs. Kestel was a signatory or to loans involving third parties such as her late husband. But because of Kentucky’s policy of favoring arbitration, the Court resolved the ambiguity in favor of compelling the arbitration. But even though a valid agreement to arbitrate existed, the Court did not compel arbitration because American General waived its right to arbitration by waiting nine months to bring its motion to compel arbitration. This delay, the Court found, was unreasonable, and so the lower court’s refusal to compel arbitration was upheld.
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