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Civil Procedure – arbitration — prior pending action defense

By: WISCONSIN LAW JOURNAL STAFF//January 23, 2013//

Civil Procedure – arbitration — prior pending action defense

By: WISCONSIN LAW JOURNAL STAFF//January 23, 2013//

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Wisconsin Court of Appeals

Civil

Civil Procedure – arbitration — prior pending action defense

The prior pending action defense bars a subsequent lawsuit to compel arbitration.

“PLS cites two cases for the proposition that a petition under WIS. STAT. § 788.03 is the only means of obtaining an order to compel arbitration, and, therefore, must be available even when a lawsuit has already been commenced. See State ex rel. Carl v. Charles, 71 Wis. 2d 85, 237 N.W.2d 29 (1976); Scholl v. Lundberg, 178 Wis. 2d 259, 504 N.W.2d 115 (Ct. App. 1993). Both Carl and Scholl state that, when a contract provides for arbitration, § 788.03 provides the ‘exclusive remedy’ for failure to arbitrate. Carl, 71 Wis. 2d at 90; Scholl, 178 Wis. 2d at 265. However, neither of these cases addresses the applicability of § 788.03 when a lawsuit is already pending. Instead, both cases address whether certain actions constitute a waiver of the right to arbitrate or contest arbitration. See Carl, 71 Wis. 2d at 90; Scholl, 178 Wis. 2d at 265. In contrast, J.J. Andrews explicitly provides that § 788.03 does not apply when a lawsuit is pending. Thus, when a lawsuit has been commenced, a party may not use the special procedure outlined in § 788.03 to compel arbitration. The party may still seek an order to arbitrate, but it must do so in the court where the underlying lawsuit is pending, not by initiating a separate action.”

“Moreover, when a lawsuit is pending, judicial economy demands that the party seeking to compel arbitration do so in the existing suit, rather than by filing a separate action. As Krueger and Williams, Sr., point out, allowing a party to initiate a separate action to compel arbitration when a lawsuit concerning the same subject is already pending would lead to unnecessarily multiplicitous litigation and would frustrate circuit courts’ ability to control their own dockets. It could also produce inconsistent results in a case, like this one, where multiple courts are asked to determine the arbitrability of the plaintiffs’ claims.”

Affirmed.

Recommended for publication in the official reports.

2012AP751 & 2012AP753 The Payday Loan Store of Wisconsin, Inc., v. Krueger

Dist. III, Brown County, Warpinski, Atkinson, JJ., Cane, J.

Attorneys: For Appellant: Heiser, Edward J., Jr., Milwaukee; Nowakowski, Kenneth R., Milwaukee; Lawless, Lisa M., Milwaukee; For Respondent: Weber, David H., Green Bay

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