## Facts

- Joca-Roca Real Estate, LLC and Robert T. Brennan, Jr. executed a 2005 asset purchase agreement for Maine real property containing a broad clause requiring arbitration of disputes over the agreement’s validity, interpretation, and enforcement.
- In March 2013, Joca-Roca sued Brennan in federal district court (diversity), asserting fraud and breach of contract tied to the transaction, without first invoking arbitration.
- Brennan answered and pleaded an affirmative defense referencing Joca-Roca’s failure to seek relief in the contractually required manner, but he did not move to compel arbitration.
- Over roughly eight months, the parties actively litigated under court scheduling orders and extensions, including sixteen depositions, written discovery, and exchange of thousands of pages of documents.
- Near the end of discovery and close to dispositive-motion and trial deadlines, Joca-Roca moved to stay the action pending arbitration, offering no explanation for its delay.
- The magistrate judge denied the stay on waiver grounds, and the district court affirmed; Joca-Roca appealed.

## Issues

1. Whether Joca-Roca waived its contractual right to arbitration by substantially invoking the litigation process in a manner inconsistent with an intent to arbitrate.
2. Whether waiver under the Federal Arbitration Act required a showing of prejudice to Brennan, and whether Brennan was prejudiced by Joca-Roca’s delay and litigation conduct.

## Decision

- The First Circuit affirmed the order denying a stay pending arbitration.
- The court held Joca-Roca waived arbitration by choosing to litigate, engaging in extensive discovery and pretrial activity, and seeking arbitration only late in the case.
- The court found prejudice to Brennan from substantial litigation expense and the inefficiency of duplicating efforts if the dispute were shifted to arbitration at that stage.
- Brennan’s failure to move to compel arbitration did not prevent a finding that Joca-Roca, as the party seeking arbitration, had waived the right through its own conduct.

## Legal Principles

- The Federal Arbitration Act favors enforcement of arbitration agreements, but the right to arbitrate may be waived expressly or by conduct.
- Waiver may be found when a party acts inconsistently with arbitration by initiating litigation, substantially participating in court proceedings and discovery, and delaying an arbitration demand until late in the case.
- In the First Circuit, conduct-based waiver of arbitration generally requires prejudice to the opposing party, including significant litigation costs and wasted or duplicative use of judicial and party resources.

## Conclusion

The First Circuit held that Joca-Roca forfeited its contractual arbitration right by pursuing extensive federal-court litigation for months before seeking arbitration, and that the late request prejudiced Brennan, making denial of a stay appropriate.


Joca-Roca Real Estate, LLC v. Brennan, 772 F.3d 945 (1st Cir. 2014)