Often we need to determine when to sue and when to arbitrate. In a recent case filed in the New Hampshire federal district court, Pla-Fit Franchise, LLC v. Paticko, Inc, a federal judge analyzed the thorny issue of when does a party waive its right to exercise a contractual right to arbitrate a dispute when it files a lawsuit prior to requesting arbitration.
The case, which involved a franchise contract between the franchisor of a gym business and its franchisees, contained a number of prior skirmishes in state courts before a lawsuit was finally filed in the New Hampshire federal district court.
The court granted a motion to compel the arbitration of the claim and noted in its legal analysis that the court would look at a number of factors in reaching a decision. These factors include whether the court must look beyond the complaint to resolve the dispute, the preference in the law for enforcing arbitration agreements, the specific facts and relevant circumstances of the particular case, the right of a party to seek a preliminary injunction without forfeiting its right to arbitration, and the prejudice caused to the other party by proceeding with a lawsuit. Factors to consider when judging the prejudice include the length of delay, the litigation activities engaged in, and whether a party has been unfairly misled by the process.
In the particular facts of the case before it, the judge granted a motion to compel arbitration.
To learn more about how to use arbitration clauses in your contracts to protect your business or learn more about your legal rights, contact an experienced and results oriented attorney at the McGrath Law Firm, PA. To make an appointment, call (603) 224-7111 or (800) 283-1380, or visit www.mcgrathlawfirm.com.