Joca-Roca Real Estate, LLC v. Brennan

Joca-Roca Real Estate, LLC (plaintiff) entered into an asset purchase agreement with Robert Brennan (defendant) to buy property. One of the terms in the contract was an arbitration provision requiring the parties to submit all disputes about the validity, interpretation, or enforcement of the contract to binding arbitration. A dispute arose between the parties about the sale, and Joca-Roca sued Brennan in federal district court for fraud and breach of contract. In his answer, Brennan raised Joca-Roca’s failure to seek arbitration as an affirmative defense to the court case. However, at that time, neither side made any efforts to submit the dispute to arbitration. Instead, the parties engaged in eight months of discovery and trial preparation in the court case. The discovery included taking multiple depositions, exchanging written discovery, and producing thousands of documents. The parties also used the court’s resources for at least four conferences to resolve disputes about these preparations. Nine months after filing the case in court, near the end of the discovery process and just a few weeks before summary-judgment motions were due in the court case, Joca-Roca moved to stay the court proceedings to submit the dispute to arbitration instead. Joca-Roca provided no explanation for the delayed request. Brennan argued that Joca-Roca had waived any contractual right to seek arbitration. The magistrate judge denied Joca-Roca’s request to stay the court proceedings, and the district court affirmed the magistrate judge’s denial. Joca-Roca appealed the matter to the court of appeals.