Background
Shameek Champion purchased a vehicle from Merlex Auto Group in April 2020. He later alleged that the vehicle caught fire and caused personal injuries. Champion sued Merlex and other defendants in March 2022, bringing the dispute into Supreme Court rather than an arbitral forum.
Merlex answered without asserting a right to arbitration. It then participated in preliminary and compliance conferences, agreed to discovery stipulations that affirmatively declined referral to alternative dispute resolution, exchanged written disclosure, and arranged an expert inspection of the vehicle. The case proceeded in court for roughly 18 months after Merlex filed its answer.
Only in January 2024 did Merlex move under CPLR 7503(a) to compel arbitration and stay the lawsuit. Supreme Court denied the motion. The appeal presented whether Merlex’s course of litigation was inconsistent with preserving the contractual right to arbitrate.
The Court’s Holding
The Second Department affirmed. Although New York strongly favors arbitration, the right is contractual and therefore may be modified, abandoned, or waived. Courts assess waiver from the total circumstances, including participation in litigation, conduct inconsistent with arbitration, the length of delay, and prejudice to other parties.
Every significant factor pointed toward waiver. Merlex omitted arbitration from its answer, participated in multiple court conferences, declined ADR in stipulations, pursued written discovery and a physical expert inspection, and waited approximately 18 months before invoking the clause. Taken together, those steps communicated an election to litigate.
The panel rejected any attempt to use court proceedings as a provisional route before switching forums. A party cannot obtain the benefits of litigation, test the case through discovery, and later redirect the dispute to arbitration when that becomes strategically attractive.
The ruling did not invalidate the underlying arbitration language. It held that Merlex lost the ability to enforce it in this action through its own procedural conduct.
Key Takeaways
- A party that intends to arbitrate should plead the defense and move promptly, before substantial court participation.
- Discovery, expert inspection, court conferences, and express rejection of ADR can collectively establish waiver even if no single act would suffice.
- Contractual arbitration rights require active preservation; they cannot safely be held in reserve as a later litigation option.
Why It Matters
For New York litigators and businesses that use arbitration clauses, Champion is a practical docket-management warning. Counsel should evaluate arbitration immediately upon service, identify every potentially controlling agreement, and avoid merits litigation while a motion to compel is under consideration. An answer should preserve the defense even if factual investigation is continuing.
The decision also helps plaintiffs assess belated arbitration demands. The record should capture not just elapsed time but affirmative use of the judicial process: conferences, discovery requests, inspections, motion practice, and stipulations. Courts will look at the combined message of those acts when deciding whether the party chose litigation over its contracted forum.