Failure To Pay Arbitration Fees Dooms Motion To Compel

In Rivers v. Pegar Investments LLC, an Arizona federal court denied a finance company’s motion to compel arbitration of claims brought by a borrower, for the reason that the company failed to timely pay the fees assessed by the American Arbitration Association. The plaintiff, aware of the parties’ arbitration provision, filed an arbitration demand with AAA. As the court explained, “Plaintiff paid her filing fee and AAA sent correspondence to Defendant advising it of the fees due. Defendant never paid the fees to AAA and on March 3, 2021, the parties received a letter from the AAA via email informing them that the AAA was declining to administer.”

Plaintiff thereafter filed suit in court, and defendant moved to compel arbitration, invoking the arbitration provision in the parties’ agreement.

Denying the motion, the court rejected the notion that the company could subsequently rectify the matter, explaining that “the [Federal Arbitration Act] does not require the Court to return parties to arbitration once Defendant has defaulted by failing to pay required fees…In this case, Defendant failed to pay the required fee or raise the issue with AAA and has lost its right to compel arbitration.”

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