Filing Suit Waives Arbitration—And Course of Conduct Can Waive Even an Anti-Waiver Clause

1. Introduction

This dissent addresses a recurring arbitration problem in consumer debt litigation: whether a creditor that initiates a court collection action can later pivot to arbitration—relying on “anti-waiver” language—once the consumer asserts defenses or counterclaims.

The plaintiff, Credit Acceptance Corporation (“CAC”), drafted and imposed an adhesive retail installment contract containing (1) a broad arbitration clause and (2) anti-waiver language allowing either party to demand arbitration “before or after a lawsuit has been started,” including as to “counterclaims brought later in the lawsuit.” After litigating in circuit court for roughly three-and-a-half years—pursuing discovery and summary judgment—CAC moved to dismiss its own complaint and compel arbitration only after the Stanleys obtained counsel and filed counterclaims.

The key issues, as framed by the dissent, are:

• Waiver: Did CAC waive any contractual right to arbitrate by filing and litigating its collection lawsuit?
• Anti-waiver clause: Can CAC invoke contract language purporting to preserve arbitration rights even after litigation conduct inconsistent with arbitration?
• Scope: If waiver occurred, does it extend to interrelated counterclaims arising from the same “Dispute” the contract defines broadly?
• Policy: Does enforcing CAC’s approach facilitate forum-shopping that undermines consumer-protection enforcement?

2. Summary of the Opinion (Dissent)

3. Analysis

3.1 Precedents Cited

A. Freedom of contract includes the power to “unmake” or waive terms—even anti-waiver terms

• Beatty v. Guggenheim Expl. Co., 122 N.E. 378 (N.Y. 1919): Quoted for the proposition that “Those who make a contract may unmake it,” and that even a clause forbidding waiver “may itself be waived.” The dissent uses Cardozo’s formulation to ground a broad, conduct-based view of waiver and modification.
• Bartlett v. Stanchfield, 19 N.E. 549 (Mass. 1889): Cited for Holmes’s view that attempts to “tie up by contract” future freedom of dealing are “futile.” The dissent deploys this as an anti-entrenchment principle: parties cannot permanently disable waiver by contractual fiat.

B. Waiver of arbitration focuses on the movant’s knowledge and inconsistent conduct—without a prejudice requirement

• Morgan v. Sundance, Inc., 596 U.S. 411 (2022): Cited for rejecting arbitration-specific waiver rules and confirming that “prejudice is not a condition” for waiver under the FAA. The dissent argues the majority effectively smuggles prejudice back in by minimizing extensive litigation as “modest.”
• Parsons v. Halliburton Energy Servs., Inc., 237 W. Va. 138, 785 S.E.2d 844 (2016), Syl. Pt. 6: Cited for West Virginia’s two-part test (knowledge + inconsistent conduct) and for expressly stating there is “no requirement” to show prejudice or detrimental reliance.

C. Bright-line approaches: filing suit (or answering on the merits) presumptively waives arbitration

• Galion Iron Works & Mfg. Co. v. J.D. Adams Mfg. Co., 128 F.2d 411 (7th Cir. 1942): Quoted for the proposition that commencing suit and answering on the merits waives arbitration rights.
• Cabinetree of Wisconsin, Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388 (7th Cir. 1995): Cited for the “presumptive waiver” rule when a party elects a non-arbitral tribunal.
• Ampler Burgers Ohio LLC v. Bishop, 250 W. Va. 269, 902 S.E.2d 818 (2024) (Hutchison, J., and Wooton, J., dissenting): Cited to show members of the Court have advocated a bright-line rule—failure to assert arbitration by complaint/answer equals waiver—and to criticize the majority’s “totality” approach in waiver disputes.

D. Knowledge of contractual terms

• Williams v. Tucker, 239 W. Va. 395, 801 S.E.2d 273 (2017): Cited for deeming parties to know the terms of agreements they executed—applied here with extra force because CAC drafted the arbitration clause and attached the contract to its complaint.

E. Anti-waiver clauses in arbitration provisions do not defeat waiver analysis

• Citibank, N.A. v. Perry, 238 W. Va. 662, 797 S.E.2d 803 (2016): Treated by the dissent as West Virginia authority recognizing that a “no waiver” clause does not alter ordinary waiver analysis; otherwise it enables “test the water before taking the swim.”
• Johnson Assocs. Corp. v. HL Operating Corp., 680 F.3d 713 (6th Cir. 2012): Quoted (via Citibank, N.A. v. Perry) for the same concern about wasted judicial resources and strategic delay.
• Home Gas Corp. of Massachusetts v. Walter's of Hadley, Inc., 532 N.E.2d 681 (Mass. 1989): Cited for the identical policy rationale against letting anti-waiver language enable late-stage arbitration demands after near-complete litigation.
• S & R Co. of Kingston v. Latona Trucking, Inc., 159 F.3d 80 (2d Cir. 1998): Cited for narrowly construing anti-waiver clauses as preserving access to provisional judicial remedies (attachments, injunctions) rather than enabling forum-switching on the merits.

F. Scope of waiver: waiver extends to interrelated claims and counterclaims

• Charles J. Frank, Inc. v. Associated Jewish Charities of Baltimore, Inc., 450 A.2d 1304 (Md. 1982): Cited for the proposition that waiver can extend to “all of the parts of the dispute” that are interrelated.
• Cain v. Midland Funding, LLC, 156 A.3d 807 (Md. 2017): Cited to define relatedness—claims are related when they are part of one basic issue.
• Maddy v. Castle, 58 Cal. App. 3d 716 (Ct. App. 1976): Cited for the rule that waiver as to part of a single-issue dispute waives arbitration as to the entire dispute.

G. Once waived, arbitration (and even the nonwaiver provision) is not unilaterally revivable

• Shields Ltd. P'ship v. Bradberry, 526 S.W.3d 471 (Tex. 2017): Quoted for the principle that contractual rights under a nonwaiver provision “may indeed be waived” expressly or impliedly, and that waiver reflects individual self-determination—if abandoned, “lost…forever.”
• Lowe's Home Centers Inc. v. THF Clarksburg Dev. Two, LLC, No. 1:12CV72, 2014 WL 1048521 (N.D.W. Va. Mar. 18, 2014): Cited for the idea that no-waiver clauses are themselves subject to waiver upon a showing the party waived rights under another contract provision.

H. Litigation “gamesmanship” and arbitration as a fallback option

• In re Mirant Corp., 613 F.3d 584 (5th Cir. 2010): Cited for the concern that litigants may seek merits resolution in court while holding arbitration as a “backup plan.”

I. Record-based policy evidence from similar CAC cases

• Credit Acceptance Corporation v. Laprad: Quoted (via Berkeley County order) as finding “gamesmanship in forum selection” where CAC sues in court against pro se consumers but seeks arbitration once consumer claims arise.
• Credit Acceptance Corporation v. Murray: Referenced as another order denying CAC’s motion to compel arbitration.

3.2 Legal Reasoning

A. Waiver should follow naturally from filing and litigating a court action

Applying the Morgan v. Sundance, Inc. / Parsons v. Halliburton Energy Servs., Inc. two-part test, the dissent finds:

• Knowledge: CAC necessarily knew arbitration existed because it drafted the clause and attached the contract to its complaint; Williams v. Tucker reinforces that parties are deemed to know their contract terms.
• Inconsistent conduct: Filing suit, serving discovery, threatening judgment, and seeking summary judgment are quintessential acts inconsistent with an intent to arbitrate.

The dissent criticizes the majority’s characterization of this as “modest litigation activity,” arguing that the court’s “totality” approach functions as a de facto prejudice test—contrary to Parsons and Morgan.

B. Anti-waiver language cannot immunize strategic forum-switching—and can be waived by conduct

The dissent reframes the contractual “after a lawsuit has been started” language as an anti-waiver clause and insists it does not control the waiver inquiry:

• Doctrinal foundation: Citing treatises (8 Corbin on Contracts § 40.13; 13 Williston on Contracts § 39:36), the dissent emphasizes that waiver is post-formation and parties cannot permanently deprive themselves of the power to alter or discharge terms—including anti-waiver terms.
• West Virginia support: Citibank, N.A. v. Perry is invoked to show that “no waiver” clauses do not negate ordinary waiver analysis because they otherwise allow litigants to “test the water before taking the swim.”
• Proper narrow use: S & R Co. of Kingston v. Latona Trucking, Inc. is cited to cabin such clauses to provisional relief, not merits litigation followed by a late arbitration demand.

C. Waiver should extend to counterclaims when the dispute is a single interrelated controversy

Because CAC’s contract defines “Dispute” in maximally broad, “in any way related” terms, the dissent concludes CAC’s court election waived arbitration for the entire controversy, including interrelated counterclaims. Authorities such as Charles J. Frank, Inc. v. Associated Jewish Charities of Baltimore, Inc., Cain v. Midland Funding, LLC, and Maddy v. Castle supply the principle that waiver in a unified dispute is not claim-by-claim reversible at the plaintiff’s option.

D. Public policy: preventing debt-collection forum shopping that chills consumer-protection claims

The dissent situates the dispute within documented debt-collection patterns: heavy reliance on court dockets for defaults, then use of arbitration clauses to suppress consumer statutory counterclaims (including under the FDCPA, 15 U.S.C. § 1692). The Berkeley County order in Credit Acceptance Corporation v. Laprad is used as concrete record evidence of repeated conduct by CAC in West Virginia. The dissent warns the majority’s rule effectively enables “arbitration for thee but not for me.”

3.3 Impact

Although a dissent is not binding precedent, Justice Wooton’s reasoning articulates a clear alternative framework that—if later adopted—would materially change West Virginia arbitration practice in consumer and commercial disputes:

• More predictable waiver determinations: Treating the filing of a lawsuit (and other merits litigation steps) as presumptive waiver would reduce fact-intensive “totality” balancing and align waiver analysis with non-arbitration waiver doctrine.
• Limits on anti-waiver engineering in form contracts: If anti-waiver clauses are treated as waivable by conduct, creditors cannot draft around waiver by inserting “you can always demand arbitration later” language while still using courts as a collection engine.
• Stronger enforcement of consumer-protection counterclaims: Extending waiver to interrelated counterclaims would keep statutory claims in the chosen judicial forum when the collector initiated litigation there.
• Judicial resource protection: The dissent’s approach would discourage late-stage arbitration demands that consume judicial time before removal to a private forum.

4. Complex Concepts Simplified

• Waiver: The intentional relinquishment of a known right. Here, waiver is inferred from actions (like filing suit) that are inconsistent with insisting on arbitration.
• Anti-waiver (no-waiver) clause: Contract language stating that failing to enforce a right (or delaying enforcement) does not waive it, often requiring written waivers. The dissent’s key point is that such a clause can itself be waived by how the parties behave after signing.
• Adhesion contract: A standardized, take-it-or-leave-it contract drafted by one party with little or no negotiation—often relevant to concerns about fairness and real choice.
• Illusory promise / lack of mutuality: A “promise” that leaves performance entirely optional for one side can be unenforceable for lack of consideration. The dissent flags the arbitration clause’s “may require” language as raising mutuality concerns (citing Williston).
• Prejudice requirement (rejected here): Some courts historically required the opposing party to show harm from delay before finding arbitration waiver. The dissent stresses that Parsons and Morgan reject prejudice as a condition of waiver.
• Provisional remedies: Interim court orders (attachments, injunctions) sometimes needed to preserve the status quo. The dissent notes anti-waiver clauses are often meant to permit these without surrendering arbitration of the merits.

5. Conclusion

Justice Wooton’s dissent presses a contract-first, conduct-based conception of waiver: parties remain free to change course after contracting, and that includes waiving not only arbitration rights but also contractual provisions purporting to prevent waiver. In his view, CAC’s initiation and prolonged prosecution of a court collection action was a paradigmatic, irrevocable waiver of arbitration—extending to interrelated counterclaims—regardless of anti-waiver language. The dissent’s broader warning is institutional: permitting late-stage arbitration demands after years of litigation invites forum shopping, wastes judicial resources, and can functionally insulate debt-collection practices from consumer-protection scrutiny.