Party Did Not Waive Its Right to Arbitration Where Hurricane Katrina Contributed to the Delay

Noting that “waiver of arbitration rights requires an unequivocal demonstration of intent to waive,” the District of Kansas applied a multifactor test in concluding that a party did not waive its right to arbitration by waiting several months to raise the issue.

In Consolidated Brokers Insurance Services, Inc. v. Pan-American Assurance Co., 427 F.Supp.2d 1074 (D. Kan. 2006), Pan-American moved to compel arbitration of contract claims brought by Consolidated. In opposing the motion, Consolidated argued that Pan-American waived its right to arbitration by waiting “nearly eight months” to argue that the Court lacked jurisdiction.

To determine whether Pan-American waived its right to arbitration, the Court applied a multifactor test used by courts in the Tenth Circuit. In applying the first factor, the Court found that Pan-American’s actions were not inconsistent with its right to arbitrate because any delay could be attributed to the impact of Hurricane Katrina.

In applying the second factor and asking “whether the litigation machinery had already been substantially invoked,” the Court noted that “very little litigation had occurred before” Pan-American moved to compel arbitration.”

Lastly, in asking “whether a delay affected, misled, or prejudiced the opposing party,” the Court found that Consolidated was not misled or prejudiced by any delay because neither party had expended the time and effort necessary to participate in full litigation.