Defendants Waived Right to Arbitration by Litigating for 17 Months Before Filing Motion

The class action plaintiffs alleged that they purchased Supplemental Liability Insurance, which they claim the defendants promised to procure from an authorized third-party insurer. However, instead of obtaining third-party insurance coverage, the defendants kept the fees as unauthorized profits and, without disclosure, indemnified renters directly for liabilities.

The defendants initially moved to dismiss the case on the merits, without raising arbitration, which was denied. The parties proceeded to litigate the case for 17 months before the defendants filed a motion to compel arbitration.

The District Court held that because the defendants first sought dismissal on the merits without invoking arbitration and then actively participated in litigation for 17 months, the defendants waived their right to compel arbitration.