Oklahoma Supreme Court rules lender kept arbitration rights despite two-year fight
The Merit Entities claimed they repaid more than $50 million. As of April 2023, IBC Bank alleged outstanding principal exceeded $35 million, not counting accrued interest.
The Merit Entities sued in June 2022. IBC Bank responded with a motion to dismiss and, the same day, an alternative motion to compel arbitration – preserving its arbitration rights from the first filing. Months of litigation followed. The Court of Civil Appeals found waiver. The Supreme Court saw it differently.
What mattered was the anti-waiver provision. The loan agreements stated that “active participation in any pending litigation” would not constitute waiver, so long as arbitration was requested within 180 days of service. IBC Bank filed its motion 84 days after being served.
Applying Oklahoma’s four-factor waiver test from Howell’s Well Service, modified by the US Supreme Court’s 2022 ruling in Morgan v. Sundance, every factor either favored IBC Bank or carried diminished weight. Filing motions to dismiss, conducting discovery, defending against injunctive relief – all permitted. The argument that IBC Bank should have sought a stay: “one cannot actively participate in litigation that is stayed,” the court wrote.
The court also rejected the claim that the Merit Entities were fraudulently induced to agree to the arbitration clause, finding the challenge targeted the loan agreements as a whole. Under the separability principle, that question goes to the arbitrator. All nine justices concurred.
