Arbitration Clause Not Waived by Counsel's Delay In Seeking Arbitration Because Counsel Did Not Have Actual Knowledge of the Provision
DeVore Family Partnership LLP v. McDougal Littell, No. 06 C 3484, 2006 WL 3393844 (N.D. Ill. Nov. 22, 2006) (Conlon, J.).
Having already refused to dismiss this case (here), Judge Conlon held that defendants had not waived the arbitration clause in the parties' Agreement and stayed the case pending the results of the arbitration. Plaintiff argued that defendants waived the arbitration clause by their delay in seeking arbitration. Defendants countered that they had not delayed because when their counsel sought copies of the agreement on several occasions, defendants' employee sent copies of the front pages of the agreement, but omitted the back pages which included a set of preprinted terms and conditions including the arbitration clause at issue. Defendants' counsel received the full agreement several months after the case was filed and sought arbitration and a stay of this proceeding within two weeks of reading the full agreement.
Plaintiff argued that defendants had constructive knowledge of the arbitration clause because they signed and still had possession of the entire agreement. The Court did not accept the constructive knowledge argument because of, among other things, counsel's diligent efforts to get the entire agreement. Additionally, the Court noted that arbitration clause was not a negotiated portion of the agreement, but was part of plaintiff's preprinted contract.
