Failure to Plead Right to Arbitration is Synonomous With Waiving Arbitration Agreement

Civil Procedure--Waiver of Arbitration Agreement

Cortez v. Avalon Care Center, 598 Ariz. Adv. Rep. 30 (App. Div. II, December 22, 2010) (J. Ekerstrom)

FAILURE TO PLEAD RIGHT TO ARBITRATION IN ANSWER OR TO RAISE ISSUE UNTIL AFTER A YEAR OF LITIGATION CONSTITUTES WAIVER OF THE DEFENSE

Plaintiffs' decedent died in the care of defendant nursing home. Plaintiffs sued for negligence abuse or neglect of a vulnerable adult and wrongful death. When plaintiffs' decedent entered the nursing home her husband signed a contract with the home requiring that any claims that could be made by plaintiffs had to be presented in an arbitration and not in a civil action. However, defendant did not plead the right to arbitration in its Answer or move to dismiss on that basis. Nearly a year later, for the first time it brought such a motion which the trial court granted. Plaintiff appealed.

The Arizona Court of Appeals reversed finding that while the burden is high, where the plaintiff, as here shows "an express and intentional relinquishment or by conduct that warrants an inference of such an intentional relinquishment" waiver will be found. Knowledge of the existence of an arbitration agreement to support an "intentional relinquishment" can be constructive. Such constructive knowledge existed here where the admissions coordinator at the nursing home testified that this arbitration agreement is presented to every patient admitted and the majority agree to sign it. Defendant could have discovered and timely enforced the arbitration agreement here if reasonable care and diligence had been used in reviewing its own records. Finally, actual prejudice to enforce waiver is only required where the waiver is based solely on the ground of unreasonable delay. Here defendant waived the right by its substantial participation in the litigation.