Rhonda J. Lewallen v. Green Tree Servicing, L.L.C.; U.S. Bank Trust National Association, as Trustee for Conseco Finance Home Equity Loan Trust

Summary

The Eighth Circuit affirmed the denial of Green Tree Servicing and U.S. Bank's motion to dismiss or compel arbitration in a Chapter 13 bankruptcy adversary proceeding. The court held that Green Tree waived its contractual right to arbitrate by delaying its request, participating in litigation and discovery, seeking merits-based relief, and prejudicing Lewallen. The court therefore did not reach whether the claims were core bankruptcy matters or whether the bankruptcy court had discretion to deny arbitration.

Holdings

1. Green Tree waived its contractual right to arbitrate because it acted inconsistently with that right and prejudiced Lewallen by delaying its arbitration demand, urging resolution on the merits, participating in discovery, and otherwise invoking the litigation process.
2. Green Tree's filing of a proof of claim did not, by itself, waive its right to invoke the arbitration clause because the agreement reserved the lender's option to use judicial proceedings to collect the debt or foreclose on collateral.

Questions Presented

1. Whether Green Tree waived its contractual right to arbitrate by substantially invoking the litigation process before moving to compel arbitration.
2. Whether Green Tree's litigation conduct prejudiced Lewallen so as to establish waiver of arbitration.
3. Whether the bankruptcy court had discretion to refuse arbitration because Lewallen's claims were core bankruptcy proceedings.

Disposition

affirmed