Totality-of-the-Circumstances Waiver of Arbitration Through Litigation Conduct and Delay (Even Without Dispositive Motions)

Introduction

Case: LENNAR COMM. NEV., LLC v. WHALEN (CIVIL), 142 Nev., Advance Opinion 29 (Nev. Apr. 16, 2026).
Parties: Lennar Communities Nevada, LLC and Greystone Nevada, LLC (collectively “Lennar”) as appellants; Pamela Whalen as respondent.
Posture: Appeal from an order denying Lennar’s motion to compel arbitration.

Pamela Whalen alleged she was injured when she tripped over a utility box in a Lennar community. Before the accident, she had signed an amendment adding her as a purchaser under a home Purchase and Sale Agreement (PSA) containing an arbitration clause requiring mediation and then arbitration, and stating disputes must be submitted to arbitration within a “reasonable time.”

After Whalen sued for negligence, Lennar answered, demanded a jury trial, and litigated for about 17 months, engaging in extensive discovery including three NRCP 35 medical examinations. Only then did Lennar seek arbitration. The district court denied the motion on the ground the claim fell outside the clause’s scope. The Nevada Supreme Court affirmed, but on waiver grounds—while also holding the district court should not have decided scope because the PSA delegated arbitrability to the arbitrator.

Summary of the Opinion

  • Delegation enforced: The PSA stated that “[a]ll decisions respecting arbitrability of any Dispute shall be decided by the arbitrator(s).” Under Nevada law applying the FAA, that “clear and unmistakable” delegation required the arbitrator, not the district court, to decide scope.
  • Waiver found: Despite the delegation clause, the Court held Lennar waived its right to arbitrate by litigating extensively for 17 months—answering, demanding a jury, pursuing broad discovery, conducting three NRCP 35 exams, and stipulating to continue trial for more discovery—before requesting arbitration.
  • New express rule: Nevada courts must evaluate waiver using the totality of the circumstances to determine whether a party has “actively litigated” issues it later seeks to arbitrate; waiver may be found even without dispositive motions.
  • Result: Order denying arbitration affirmed; remanded for further proceedings in district court.

Analysis

Precedents Cited

1) Delegation of arbitrability to the arbitrator

Uber Techs., Inc. v. Royz, 138 Nev. 690, 517 P.3d 905 (2022), supplied the controlling rule: where an arbitration agreement “clearly and unmistakably” delegates the threshold question of arbitrability, a court may not decide the scope of the clause. The Court used Uber Technologies to label the district court’s scope analysis as error because the PSA’s delegation sentence was direct and comprehensive.

2) Appellate review and who decides waiver

Gonski v. Second Jud. Dist. Ct., 126 Nev. 551, 245 P.3d 1164 (2010), overruled on other grounds by U.S. Home Corp. v. Michael Ballesteros Tr., 134 Nev. 180, 415 P.3d 32 (2018), provided the review framework: motions to compel arbitration often involve mixed law/fact; factual findings get deference while legal questions receive de novo review.

On “who decides waiver,” the Court relied on Principal Inus., Inc. v. Harrison, 132 Nev. 9, 366 P.3d 688 (2016), for the proposition that waiver is presumptively for courts to decide unless the contract clearly commits waiver to the arbitrator. (The opinion distinguished “scope” delegation from “waiver” allocation.)

Nev. Gold & Casinos, Inc. v. Am. Heritage, Inc., 121 Nev. 84, 110 P.3d 481 (2005), supported reaching waiver on appeal as a matter of law when the “legal implications of essentially uncontested facts” control—important here because the district court made no waiver findings, yet Lennar’s litigation conduct was largely undisputed.

3) Nevada’s waiver elements and the “active litigation” inquiry

The Court reiterated the Nev. Gold three-part test for arbitration waiver: (1) knowledge of the right, (2) acts inconsistent with that right, and (3) prejudice.

For “inconsistent acts,” the Court used Principal Inus., Inc. v. Harrison again, which quoted Doctor’s Assocs., Inc. v. Distajo, 107 F.3d 126 (2d Cir. 1997), to define inconsistency as actively litigating the “same legal and factual issues” later sought to be arbitrated.

To support a broader “litigation machinery” perspective, the Court cited federal authorities:

  • Nat'l Fownd. for Cancer Rsch. v. A.G. Edwards & Sons, Inc., 821 F.2d 772 (D.C. Cir. 1987) (totality-of-circumstances / use of litigation machinery).
  • Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754 (9th Cir. 1988) (waiver where pleadings and motion practice occurred and the party waited two years to seek arbitration).

While noting Nevada had not “expressly adopted” totality-of-the-circumstances, the Court explained it had “implicitly applied it” in Harrison (where litigation of collection claims via default judgments waived arbitration of “integrally related” claims). The new contribution in Lennar v. Whalen is the Court’s explicit holding that courts should consider the totality of the circumstances when deciding whether a party litigated issues it later seeks to arbitrate.

4) Prejudice: Nevada retains it (for now) despite federal change

The Court recognized that Nevada’s emphasis on prejudice in Nev. Gold derived from federal caselaw adopting Kelly v. Golden, 352 F.3d 344 (8th Cir. 2003), but that the U.S. Supreme Court later rejected a prejudice requirement under federal waiver doctrine in Morgan v. Sundance, Inc., 596 U.S. 411 (2022).

Nevertheless, because no party asked the Nevada Supreme Court to abandon the prejudice requirement, the Court applied Nevada precedent “out of an abundance of caution,” echoing the approach described in Jenkins v. Ford Motor Co., 425 So. 3d 1011 (Miss. Ct. App. 2025).

For prejudice content, the Court relied on Nev. Gold’s three recognized forms: (1) discovery not available in arbitration, (2) litigation of substantial merits issues, or (3) duplication of effort. It also invoked Uwaydah v. Van Wert Cnty. Hosp., 246 F. Supp. 2d 808 (N.D. Ohio 2002), quoted in Nev. Gold, to condemn “testing the judicial waters” then demanding arbitration near resolution.

5) Appellate affirmance on different grounds

Finally, Saavedra-Sandoval v. Wal-Mart Stores, Inc., 126 Nev. 592, 245 P.3d 1198 (2010), supplied the doctrinal basis to affirm because the district court reached the correct result though for the wrong reason.

Legal Reasoning

1) The Court separates “scope” from “waiver” and assigns them to different decisionmakers

The opinion is structured around a two-step allocation:

  • Scope/arbitrability: If the contract “clearly and unmistakably” delegates arbitrability, courts must stop; the arbitrator decides.
  • Waiver by litigation conduct: Courts decide (absent clear contractual assignment), because waiver concerns the integrity of the judicial process and the parties’ conduct in court.

This produces a practical synthesis: even with a strong delegation clause, a party can lose arbitration by litigating too far before invoking it.

2) Adoption (express) of a totality-of-the-circumstances test for inconsistent litigation conduct

The Court’s central doctrinal development is its express instruction to evaluate inconsistency under the totality of the circumstances. It rejected Lennar’s implied “safe harbor” argument that waiver generally requires dispositive motion practice. The Court held there is no such prerequisite: extensive pleading choices (answer + jury demand), significant discovery usage, medical examinations, stipulations to extend discovery, and long delay can collectively demonstrate waiver.

3) Application to Lennar’s conduct

  • Knowledge: Lennar drafted/used the PSA, had counsel, and signed the PSA—so it knew the arbitration right.
  • Inconsistent acts (totality): Lennar (a) answered and demanded a jury trial, (b) served/answered written discovery, (c) made numerous disclosures including expert disclosures, (d) conducted three NRCP 35 medical examinations, (e) stipulated to trial continuance to complete discovery, and (f) waited 17 months and did not plead arbitration as an affirmative defense.
  • Prejudice: The Court found prejudice under two Nev. Gold prongs:
    • Discovery not available in arbitration: The three NRCP 35 exams were a centerpiece; the Court emphasized uncertainty whether arbitrators could even order such exams under NRS 38.233, and cited “discovery is the exception, not the norm” principles (21 Williston on Contracts § 57:97).
    • Duplication of efforts: After 17 months of litigation, shifting to arbitration would duplicate work and allow “judicial waters” testing.

Impact

1) Practical consequences for arbitration strategy in Nevada

  • Early invocation required: Parties seeking arbitration should raise it immediately (including as an affirmative defense where applicable), and move to compel without extensive court-driven discovery.
  • No dispositive-motion requirement: The decision removes any perceived argument that waiver is unlikely unless dispositive motions were filed. Extensive discovery alone can be enough, especially where it confers advantages unavailable in arbitration.
  • NRCP 35 examinations are high-risk for waiver: Using court authority to compel medical exams can strongly support a finding of prejudice and inconsistency, because the availability and scope of comparable arbitration discovery is uncertain.

2) Doctrinal consequences

  • Explicit totality test: Nevada now clearly aligns its waiver-by-litigation-conduct inquiry with “litigation machinery” authorities, while grounding the rule in Nevada’s own precedents.
  • Prejudice remains (for now): The Court acknowledged Morgan v. Sundance, Inc. but retained the prejudice element under Nevada law because the issue was not contested. Future litigants may directly ask the Court to reexamine whether Nevada should continue to require prejudice.
  • Delegation clauses do not immunize delay: A contract can delegate arbitrability questions to an arbitrator, but a party may still forfeit arbitration through litigation conduct—waiver remains a court gatekeeping doctrine.

Complex Concepts Simplified

  • “Arbitrability” / “scope”: Whether the arbitration clause covers the dispute at all. Here, the PSA said the arbitrator decides that question.
  • “Delegation clause”: Contract language assigning arbitrability questions to the arbitrator. The PSA’s statement that “[a]ll decisions respecting arbitrability … shall be decided by the arbitrator(s)” is a direct delegation.
  • “Waiver of arbitration”: Losing the right to arbitrate because of actions inconsistent with arbitration—like litigating for a long time, using court procedures, and only later demanding arbitration.
  • “Totality of the circumstances”: The court looks at everything together (delay, pleadings, discovery, examinations, stipulations), not one single act.
  • NRCP 35 medical examination: A rule allowing a party to request court-ordered physical/mental examinations of an opposing party in certain circumstances—powerful litigation discovery that may not exist (or may be narrower) in arbitration.
  • NRS 38.233: A Nevada arbitration statute relevant to arbitrator authority over discovery; the Court noted it has not decided whether it authorizes NRCP 35-type exams.
  • “Affirmed on other grounds”: The appellate court agrees with the outcome even though it disagrees with the lower court’s reasoning (here, scope was wrongly decided, but denial was correct due to waiver).

Conclusion

Lennar Comm. Nev., LLC v. Whalen establishes a clear Nevada rule: a party may waive arbitration through delay and substantial litigation conduct under the totality of the circumstances, even if the party did not file dispositive motions. The opinion also reinforces that where a contract “clearly and unmistakably” delegates arbitrability, courts should not decide clause scope—but they may still deny arbitration when the would-be movant has already litigated inconsistently and caused recognized prejudice (including by obtaining discovery such as NRCP 35 examinations and forcing duplicative effort). In short, Nevada strengthens enforcement of delegation clauses while simultaneously tightening the consequences for parties who attempt to invoke arbitration only after extensive court litigation.