Augusta v. Keehn & Associates
193 Cal. App. 4th 331
| Cal. Ct. App. | 2011Background
- Augusta sued Keehn for legal malpractice; arbitration clause existed but not invoked at filing.
- FAC added fraud and breach claims based on same conduct; underlying securities matter involved a Ponzi scheme and a 2002 letter allegedly tolling the statute of limitations.
- Keehn sought sanctions and demurred; Augusta sought discovery and the court denied sanctions while discovery disputes persisted.
- Keehn associated new defense counsel; Keehn indicated arbitration could apply; Augusta delayed petition to compel arbitration until July 2, 2009.
- Augusta pursued extensive discovery in superior court (including depositions) despite arbitration clause; the court tentatively denied arbitration.
- Court affirmed denial of arbitration, finding waiver due to unreasonable delay, inconsistent litigation conduct, and prejudice to Keehn.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Augusta’s delay in seeking arbitration reasonable? | Augusta: delay was reasonable given discovery and defenses. | Keehn: delay evidence of intent not to arbitrate. | Yes; substantial delay supports waiver. |
| Did Augusta’s conduct show an intent not to arbitrate? | Augusta: discovery here was defensive, not intent to avoid arbitration. | Keehn: conduct showed litigation over arbitration and not arbitration intent. | Yes; conduct indicated lack of intent to arbitrate. |
| Did Augusta’s discovery and litigation prejudice Keehn? | Augusta: no prejudice from arbitration denial. | Keehn: prejudice shown by discovery and strategic timing. | Yes; prejudice supported waiver. |
| Is arbitration right self-executing and require affirmative action to invoke? | Augusta: need not act beyond raising defense. | Keehn: arbitration right requires affirmative steps. | Yes; mere defense was insufficient to invoke arbitration. |
Key Cases Cited
- Sobremonte v. Superior Court, 61 Cal.App.4th 997 (1998) (arbitration right must be timely invoked with affirmative steps)
- Guess?, Inc. v. Superior Court, 79 Cal.App.4th 553 (2000) (waiver consideration includes unreasonable delay)
- Davis v. Continental Airlines, Inc., 59 Cal.App.4th 205 (1997) (prejudice from judicial discovery can defeat arbitration waiver)
- St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1187 (2003) (prejudice assessment in waiver cases)
- Berman v. Health Net, 80 Cal.App.4th 1359 (2000) (waiver when discovery processes used to gain information not available in arbitration)
- Zamora v. Lehman, 186 Cal.App.4th 1 (2010) (timing of petition to compel arbitration must be reasonable)
- Kaneko Ford Design v. Citipark, Inc., 202 Cal.App.3d 1220 (1988) (five-and-a-half-months delay deemed unreasonable)
- Groom v. Health Net, 82 Cal.App.4th 1189 (2000) (prejudice analysis where discovery responses not provided)