Rhonda J. Lewallen filed for Chapter 13 bankruptcy to avoid foreclosure on her home. Green Tree Servicing, L.L.C., filed a proof of claim against the estate representing the balance on her home equity loan, interest, and various fees. Lewallen objected to Green Tree’s claim and ulti *1088 mately filed an adversary proceeding against Green Tree and U.S. Bank in the bankruptcy court alleging that Green Tree, as servicer of the loan, lacked standing to make a claim, that it overestimated her debt, and that its handling of her account violated various consumer protection statutes. Green Tree and U.S. Bank filed a motion to dismiss or, in the alternative, to compel arbitration, which the bankruptcy court 1 denied. The district court 2 affirmed this denial, holding that Lewallen’s claims were core bankruptcy proceedings, the bankruptcy court had discretion to refuse to enforce the arbitration provision in the loan agreement, and Green Tree waived its right to arbitration in any event. Green Tree and U.S. Bank appeal, and we affirm.
I.
Lewallen obtained a consumer loan for $50,300 from Conseco Finance Servicing Corp. in May of 2000; the loan was secured by a deed of trust on her trailer home. Conseco consolidated this loan, along with other consumer loans, and transferred its interest in them to a securi-tization trust. Under a pooling and servicing agreement entered into between Con-seco and U.S. Bank, U.S. Bank obtained legal title to the pooled loans, while Conse-co retained the right to service the loans. Lewallen’s loan agreement provided that the parties agreed to submit their disputes to arbitration. 3
Conseco filed for bankruptcy in 2002, and Green Tree purchased the right to service Lewalleris loan from the bankruptcy estate. Lewalleris loan was in default at the time of the transfer. According to her, both Conseco and Green Tree improperly increased her monthly payments, assessed excessive late charges against her, failed to respond to her inquiries on her account, refused to accept payment from her, and sent her erroneous overdue notices. In early 2004, Green Tree began preparations to foreclose on Lewallen’s home. Lewallen attempted to refinance the loan with a new lender but her application was denied, which she attributes to Green Tree providing an inflated payoff figure to the prospective lender. On February 23, 2004, the day of the scheduled foreclosure sale, Lewallen filed her petition for bankruptcy under Chapter 13 to stop the sale. Her bankruptcy schedules listed approximately $50,000 owed on the debt serviced by Green Tree and approxi *1089 mately $6,000 of unsecured debt owed in taxes and credit card charges. Her home was the primary asset in the bankruptcy estate.
In the bankruptcy proceeding, Green Tree filed a proof of claim alleging a secured claim for over $54,000, plus over $4,000 in arrearages. Lewallen filed an objection, arguing that Green Tree’s claim included excessive charges and fees, that Green Tree had failed to credit her for payments made and wrongfully had refused to accept payment, that Green Tree had provided confusing and inaccurate bills and failed to respond to her inquiries in violation of the Real Estate Settlement Procedures Act, that Green Tree’s claim included improperly assessed late charges, and that Green Tree’s attorney’s costs and fees were not a proper claim because they were attributable to Green Tree’s own billing mistakes and failure to respond to Lewallen’s inquiries.
Although a hearing on Lewallen’s objection was scheduled in the bankruptcy court for September 2004, the matter was continued several times. Lewallen served discovery requests on Green Tree during this time. When the hearing on her objection finally took place on March 22, 2005, Le-wallen indicated that, in addition to objecting to the proof of claim, she wished to raise affirmative claims against Green Tree alleging violations of the Real Estate Settlement Procedures Act and other statutes. Counsel for Green Tree stated that an adversary proceeding was “the only way to resolve these issues” and asked the court to overrule Lewallen’s objection. The bankruptcy court dismissed Lewal-len’s objection without prejudice to enable her to raise all her issues in the adversary proceeding.
Lewallen filed her adversary action, naming Green Tree and U.S. Bank as defendants, in the bankruptcy court on May 24, 2005. Her complaint recited the same facts as the objection she had filed to Green Tree’s claim, and it alleged that Green Tree’s conduct violated the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617, 24 C.F.R. Pt. 3500, the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692o, and the Missouri Merchandising Practices Act, Mo.Rev.Stat. § 407.020. Lewallen later amended her complaint to add a count alleging that Green Tree violated the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681u. Green Tree apparently had not responded to Lewallen’s first discovery requests, as Lewallen served a new round of “first” requests which covered the same ground.
On June 7, 2005, Green Tree and U.S. Bank 4 sought and obtained an extension of time to file their answer. Green Tree served discovery requests on Lewallen on July 1, and, on July 15, sought an extension of time to respond to the discovery requests Lewallen had served. A few days later, the parties participated in a joint motion for continuance of the trial setting. On July 28, Green Tree filed a motion to dismiss or, in the alternative, to compel arbitration, citing the arbitration provision in the loan agreement. It also moved to extend the time for responding to discovery until after the hearing on the motion to dismiss, in case the bankruptcy court decided to send Lewallen’s claims to arbitration. The record indicates that Le-wallen had begun preparing responses to Green Tree’s discovery requests, but neither party served responses on the other.
The bankruptcy court denied Green Tree’s motion to dismiss or to compel arbi *1090 tration because it had waived any claim to arbitration through its active participation in the adversary proceeding—a proceeding Green Tree had suggested. The court also noted that bankruptcy courts are intended to resolve disputes like this one. Green Tree informed the bankruptcy court that it planned to appeal, as the Federal Arbitration Act, 9 U.S.C. § 16, authorized it to do, and the bankruptcy court stayed further proceedings pending the outcome of the appeal.
On appeal, the district court affirmed the bankruptcy court’s order on two independent grounds. First, it held that the bankruptcy court had discretion to refuse to enforce the arbitration provision because allowing arbitration to proceed would have seriously jeopardized core bankruptcy proceedings. In addition, it held that the bankruptcy court’s finding that Green Tree waived its right to arbitrate was not clearly erroneous. The court reasoned that Green Tree waited sixteen months after it filed its proof of claim to seek arbitration, served extensive discovery requests, and participated in six pretrial hearings. This appeal of the denial of the motion to compel arbitration ensued.
II.
We address the waiver issue first because, if Green Tree waived its right to arbitrate Lewallen’s claims, we need not consider the bankruptcy court’s discretion to deny arbitration.
5
We review de novo the legal determination of waiver but examine the factual findings underlying that ruling for clear error.
Kelly v. Golden,
A party may be found to have waived its right to arbitration if it: “(1) knew of an existing right to arbitration; (2) acted inconsistently with that right; and (3) prejudiced the other party by these inconsistent acts.”
Ritzel,
A party acts inconsistently with its right to arbitrate if the party “[s]ub-stantially invoke[s] the litigation machinery before asserting its arbitration right.”
Ritzel,
Green Tree contends that it invoked its right to arbitrate Lewallen’s claims in a timely manner by filing its motion to compel arbitration just two months after she filed her adversary complaint. Green Tree raised the issue in its first responsive pleading to that complaint. Lewallen, on the other hand, argues that we should consider Green Tree’s conduct from the time it filed its proof of claim against her bankruptcy estate. When a creditor files a proof of claim before the bankruptcy court, this amounts to a civil action to collect the debt,
Coxson v. Commonwealth Mortgage Co. of Am., L.P. (In re Coxson),
Lender retains an option to use judicial or non-judicial relief to enforce a security agreement relating to the collateral secured in a transaction underlying this arbitration agreement, to enforce the monetary obligation or to foreclose on the collateral.... [A lawsuit of this sort] shall not, constitute a waiver of the right of any party to compel arbitration regarding any other dispute or remedy subject to arbitration in this Agreement, including the filing of a counterclaim in a suit brought by Lender pursuant to this provision.
Thus, Green Tree had the right to collect Lewallen’s debt by way of judicial proceedings rather than arbitration, and its filing a proof of claim in her bankruptcy case was not inconsistent with its right to arbitrate.
While the above provision reserved Green Tree’s right to file a court action instead of arbitration to collect the debt, it is more problematic for Green Tree that it failed to seek arbitration in the fall of 2004 when Lewallen filed an objection to its proof of claim and accused it of violating the Real Estate Settlement Procedures Act, raising affirmative claims that were subject to the arbitration provision. To safeguard its right to arbitration, a party must “do all it could reasonably have been expected to do to make the earliest feasible determination of whether to proceed judicially or by arbitration.”
Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc.,
Green Tree contends that it was powerless to seek arbitration until Lewallen actually filed her complaint in the adversary proceeding on May 24, 2005. In other cases, however, creditors have sought arbitration upon the debtor’s objection to the proof of claim rather than waiting for the debtor to file an adversary proceeding. See,
e.g., In re Farmland Indus., Inc.,
Green Tree also acted inconsistently with its right to arbitrate by urging the bankruptcy court to dispose of Lewallen’s claims on the merits, reserving arbitration as an alternative avenue to resolve the dispute. Green Tree sought dismissal of the complaint on the grounds of judicial estoppel, failure to state a claim against defendant U.S. Bank, failure to establish all the elements of her Missouri law claim, statute of limitations, inapplicability of the Fair Debt Collection Practices Act, and standing. Green Tree filed a supplemental memorandum of law in support of the motion to dismiss, asserting these grounds as an alternative to arbitration. At the hearing on the motion to dismiss, Green Tree encouraged the court to dismiss the case on statute of limitations grounds or on a judicial estoppel theory “prior to even reaching the arbitration.” Green Tree especially urged the court to dismiss the complaint against U.S. Bank with prejudice, arguing that Lewallen had failed to allege wrongdoing by U.S. Bank. An ai'bi-tration provision gives parties “the choice of an alternative, nonjudicial forum” to resolve their disputes, but it does not go so far as to “allow or encourage the parties to proceed, either simultaneously or sequentially, in multiple forums.”
Cabinetree,
*1093 Green Tree’s actions in serving discovery requests on Lewallen similarly were inconsistent with its right to arbitrate. Green Tree asserts that the district court erred in finding that it served discovery requests on Lewallen during the underlying bankruptcy. Even if Green Tree did not initiate discovery during the proof of claim phase of the bankruptcy proceedings, however, the record shows that Green Tree did serve discovery requests (which it later moved to exclude from the record), including lengthy interrogatories and requests for production of documents, after the adversary proceeding commenced. Green Tree did not file its motion to compel arbitration until a few days before Lewallen’s responses were originally due, and the record shows that Lewallen had begun preparing responses to the requests. Green Tree also sought an extension of time to respond to Lewallen’s discovery requests, and the parties filed a joint motion to continue the trial setting two weeks before Green Tree raised its right to arbitration. To illustrate the minimal nature of the discovery that occurred, Green Tree emphasizes that it moved to stay discovery shortly after serving its requests and that neither party served discovery responses on the other. This assertion is somewhat disingenuous, as Green Tree moved for the stay after the bankruptcy court denied its motion to dismiss or to compel arbitration. Although the parties never served their discovery responses, we cannot say the bankruptcy and district courts clearly erred in characterizing Green Tree’s discovery requests as extensive. Green Tree’s participation in discovery was inconsistent with its right to arbitrate Lewallen’s claims.
Green Tree’s actions, however, are not the end of the inquiry. Even where a party has acted inconsistently with its right to arbitrate, it has not waived that right unless its actions prejudice the other party. A party is so prejudiced when the “parties use discovery not available in arbitration, when they litigate substantial issues on the merits, or when compelling arbitration would require a duplication of efforts.”
Kelly,
We conclude that Lewallen has been prejudiced by Green Tree’s late assertion of its right to arbitrate her claims and its participation in the litigation process. First, Green Tree requested that the bankruptcy court rule in its favor on the merits of Lewallen’s claims; she likely would incur duplicative expenses if forced to arbitrate issues that have already been presented to the courts. Lewallen also has incurred expenses in the discovery process. Green Tree argues that there can be no discovery-related prejudice where neither party has served discovery responses on the other, because their investment in the discovery process is minimal, and neither party has divulged information that would not be discoverable in arbitration.
See Leadertex, Inc. v. Morganton Dyeing & Finishing Corp.,
Having concluded that Green Tree waived its right to arbitrate Lewallen’s claims, we need not reach the parties’ vigorous dispute about whether Lewallen’s claims were “core” bankruptcy matters and whether the bankruptcy court had discretion to refuse to compel arbitration. We affirm the denial of Green Tree’s motion to dismiss or, in the alternative, compel arbitration.
Notes
. The Honorable Jerry W. Venters, Chief Judge, United States Bankruptcy Court for the Western District of Missouri.
. The Honorable Fernando J. Gaitan, Jr., Chief Judge, United States District Court for the Western District of Missouri.
. The provision reads:
ARBITRATION. All disputes, claims, or controversies arising from or relating to this Agreement or the relationships which result from this Agreement, or the validity of this arbitration clause or the entire Agreement, shall be resolved by binding arbitration by one arbitrator selected by Lender with Borrower's consent. This arbitration agreement is made pursuant to a transaction involving interstate commerce, and shall be governed by the Federal Arbitration Act, Title 9 of the United States Code.... Notwithstanding anything hereunto the contrary, Lender retains an option to use judicial or non-judicial relief to enforce a security agreement relating to the collateral secured in a transaction underlying this arbitration agreement, to enforce the monetary obligation or to foreclose on the collateral. Such judicial relief would take the form of a lawsuit. The institution and maintenance of an action for judicial relief in a court to foreclose upon any collateral, to obtain a monetary judgment or to enforce the security agreement shall not, constitute a waiver of the right of any party to compel arbitration regarding any other dispute or remedy subject to arbitration in this Agreement, including the filing of a counterclaim in a suit brought by Lender pursuant to this provision.
. Although both are defendants, Lewallen's claims focus on Green Tree’s conduct and Green Tree has taken the lead in the joint defense of the suit, so we refer to the defendants jointly as "Green Tree.”
. Although the parties do not discuss the issue, the record leaves some question about Green Tree's ability to invoke the provisions of the arbitration clause as an assignee or successor in interest of Conseco. We assume without deciding that the clause is binding on the parties to this case.