CONTRACTS | BREACH
11-2-5221 Galaxy Builders, LLC v. Serodio, App. Div. (per curiam) (6 pp.) Nearly four years after plaintiffs Galaxy Builders, LLC, Thomas Finley, and Jerry Kubis filed their complaint in this breach-of-contract action, defendant Lai-No Chiu-Serodio filed a motion to dismiss the complaint based on the arbitration clause in the parties’ contract. During the intervening time, the parties had completed discovery and attended settlement conferences, Chiu-Serodio had filed a bankruptcy petition, and the court had twice scheduled the case for trial. The court denied Chiu-Serodio’s motion. Chiu-Serodio appealed. The appellate panel affirms. Chiu-Serodio neither asserted the right to arbitrate in the answer to the complaint, nor took any other measure to preserve the affirmative defense before filing the belated motion to dismiss. Rather, Chiu-Serodio completed discovery and avoided going to trial by filing a bankruptcy petition. When the bankruptcy petition was dismissed and this action relisted for trial in the Law Division, Chiu-Serodio obtained plaintiffs’ consent to an adjournment. The panel rejects the proposition that asserting “failure to state a claim” as an affirmative defense is sufficient to either state or preserve a contractual arbitration claim, particularly where no other measures are taken to preserve this affirmative defense. Chiu-Serodio engaged in litigation conduct that was entirely inconsistent with the preservation of the contractual right to arbitrate the parties’ dispute. Chiu-Serodio implicitly waived the right to arbitration.
