California Waiver of Right to Compel Arbitration

"In California's comprehensive arbitration statutes, the Legislature has explicitly provided that although voluntary arbitration agreements comply with public policy and enjoy specific enforcement under state law, a party to an arbitration agreement may by its conduct 'waive' its right to compel arbitration. (Code Civ. Proc., 1281.2.) As the Court of Appeal explained in Gunderson v. Superior Court (1975) 46 Cal.App.3d 138, 143 120 Cal.Rptr. 35: 'Arbitration is a recognized and favored means by which parties expeditiously and efficiently may settle disputes which might otherwise take years to resolve. But this right may be lost, as any contractual right which exists in favor of a party may be lost, through a failure properly and timely to assert this right. . . . If a party wishes to compel arbitration, he must take active and decided steps to secure that right. . . .' "In the past, California courts have found a waiver of the right to demand arbitration in a variety of contexts, ranging from situations in which the party seeking to compel arbitration has previously taken steps inconsistent with an intent to invoke arbitration to instances in which the petitioning party has unreasonably delayed in undertaking the procedure. . . . "Although a number of authorities properly caution that a waiver of arbitration is not to be lightly inferred, state Supreme Court cases establish that no single test delineates the nature of the conduct of a party that will constitute such a waiver. As the high court stated in Sawday v. Vista Irrigation Dist. 1966 64 Cal.2d 833, 836 : 'Whether there has been a waiver of a right to arbitrate is ordinarily a question of fact, and a finding of waiver, if supported by sufficient evidence, is binding on an appellate court. " Davis v. Blue Cross of Northern California (1979) 25 Cal.3d 418, 425-426 (Davis); see also Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 982-983; Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 315. While in general arbitration is a highly favored means of settling disputes (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal. 3d 180, 189 (Doers) 151 Cal. Rptr. 837, 588 P.2d 1261), it is beyond dispute a trial court may deny a petition to compel arbitration if it finds the moving party has waived that right. (Code Civ. Proc., 1281.2, subd. (a); Davis, supra, 59 Cal. App. 4th 205, 211.) "The question of waiver is one of fact, and an appellate court's function is to review a trial court's findings regarding waiver to determine whether these are supported by substantial evidence." (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal. 4th 951, 983 64 Cal. Rptr. 2d 843, 938 P.2d 903.) "The appellate court may not reverse the trial court's finding of waiver unless the record as a matter of law compels finding nonwaiver." ( Davis, supra, 59 Cal. App. 4th 205, 211.) "There is no single test for waiver of the right to compel arbitration, but waiver may be found where the party seeking arbitration has: (1) previously taken steps inconsistent with an intent to invoke arbitration; (2) unreasonably delayed in seeking arbitration; (3) acted in bad faith or with willful misconduct." ( Id. at pp. 211-212.) While engaging in litigation of the matter may be inconsistent with an intent to invoke arbitration, "the party who seeks to establish waiver must show that some prejudice has resulted from the other party's delay in seeking arbitration." (Id. at p. 212.)