Plaintiffs Waived Right to Arbitrate By Initiating Lawsuit

On April 17, 2018, the First Department issued a decision in Black Rhino Investments LLC v. Wilson, 2018 NY Slip Op. 02582, holding that the plaintiffs in a lawsuit had waived their right to arbitrate their dispute by bringing the lawsuit, explaining:

Plaintiffs commenced this action upon an alleged oral agreement entered into in October 2015 involving the ownership of plaintiff Black Rhino and the licensing of defendant's intellectual property. Upon defendant's motion to dismiss the complaint, plaintiffs claimed for the first time that the controversy had to be arbitrated, pursuant to a separate agreement entered into in April 2015 involving services to be performed for Black Rhino by plaintiff Levitt. We find that plaintiffs waived their right, if any, to arbitration.

(Internal citations omitted).

Commercial litigation involves more than courts. Disputes often are--by agreement--decided by private arbitrators. But as this decision shows, a party can lose the right to arbitrate if it litigates in court instead. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a dispute that is subject to an arbitration agreement.