Court of Appeals articulates prejudice standard in denials of motions to compel arbitration

In Rhodes v. Benson Chrysler, the Court of Appeals affirmed the trial court denial of Benson's motion to compel arbitration. Prior to ever raising the arbitration issue, Benson answered (and raised the arbitration issue), engaged in extensive discovery, noticed and took five depositions, and sought the circuit court's help in executing in executing out-of-state subpoenas. Once Benson finally moved to compel arbitration, Rhodes argued Benson waived its right by participating in significant discovery. The circuit court agreed and its reasoning was echoed by the court of appeals. Because Rhodes incurred substantial “costs resulting from discovery processes that likely could have been avoided in arbitration,” the resulting prejudice to Rhodes counseled against granting the motion to compel arbitration.

This case is pretty straightforward. It really baffles me how a party can engage in such a large amount of discovery and then move for arbitration--especially when the party asserted his right to arbitration in the original answer. Fundamental fairness, it seems to me, would also dictate that Benson pay Rhodes' costs and attorneys fees in this unnecessary appeal.