Opinion
No. 01 C 9450
February 13, 2003
MEMORANDUM OPINION AND ORDER
An automobile dealership fell on evil times, and various creditors seek to be first in line. Bank of Waukegan (BOW) is one of the creditors. Another of the creditors, Credit Acceptance Corporation (CAC), had a servicing agreement with the dealership, RVR Used Cars, Inc. That agreement has a broad arbitration clause providing for the arbitration of any dispute relating to the agreement or the relationship between CAC and RVR. In the welter of claims, counterclaims and cross-claims, BOW, on April 2, 2002, sought from CAC and a third creditor a declaratory judgment that its security Interest had first priority, Including a claim in count if that CAC knew RYR had assigned its rights under the servicing agreement to BOW and did not advise BOW that It was going to apply collections under the servicing agreement to pay RVR's floor plan obligations to CAC. BOW claims that estoppel and waiver preclude CAC from applying those collections to the floor plan obligations.
On November 26, 2002, BOW added a claim, this one alleging that CAC was In breach of the servicing agreement by various failures to collect amounts due on installment contracts and that It stood in the shoes of CAC in seeking damages for those breaches. CAC then advised BOW that It would seek arbitration of that claim and it shortly thereafter filed a motion to that effect and also to stay proceedings on the other BOW claims, pending arbitration. BOW does not contend that the breach claims are, on their face, not arbitrable, nor does it contest that if any of the claims go to arbitration then proceedings on the others must be stayed. Rather, it contends that CAC waived any right to seek arbitration by waiting too long after it first advanced claims in February.
A party can waive a right to arbitration because of excessive delay. Perhaps CAC had, originally, a right to arbitrate count III, although it appears that BOW is resting not so much on any rights accorded it under the servicing agreement but, rather, on a failure to advise BOW that it could not expect to receive funds, thus causing it to advance additional funds. Perhaps there was a fight to arbitrate count IV, although the thrust there is that CAC did not have rights under the servicing agreements it now claims. But CAC does not seek to arbitrate those claims. It seeks to arbitrate a different and clearly arbitrable claim with different rights and remedies, in which BOW alleges that it can prosecute RVR's right to enforce the servicing agreement against the other signatory and collect damages. And CAC sought arbitration and the stay shortly after BOW first made the claim. CAC has not waived its right to have the claim arbitrated. The motion is granted.