UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

D. RAY STRONG, as Liquidating Trustee 

of the Consolidated Legacy Debtors 

Liquidating Trust, the Castle Arch 

Opportunity Partners I, LLC Liquidating 

Trust and the Castle Arch Opportunity 

Partners II, LLC Liquidating Trust, 

 Plaintiff - Appellee, 

v. 

WILLIAM H. DAVIDSON, 

 Defendant - Appellant, 

and 

JEFF AUSTIN; AUSTIN CAPITAL 

SOLUTIONS; ROBERT CLAWSON; 

HYBRID ADVISOR GROUP, 

 Defendants. 

No. 17-4085 

(D.C. No. 2:14-CV-00788-TC-EJF) 

(D. Utah) 

_________________________________ 

ORDER AND JUDGMENT*

_________________________________ 

Before LUCERO, BALDOCK, and BACHARACH, Circuit Judges. 

 *

 After examining the briefs and appellate record, this panel has determined 

unanimously to honor the parties’ request for a decision on the briefs without oral 

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore 

submitted without oral argument. This order and judgment is not binding precedent, 

except under the doctrines of law of the case, res judicata, and collateral estoppel. It 

may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 

and 10th Cir. R. 32.1. 

FILED 

United States Court of Appeals 

Tenth Circuit 

May 16, 2018

Elisabeth A. Shumaker 

Clerk of Court
2 

_________________________________ 

Four months after a multi-party arbitration proceeding was terminated because 

some of the other defendants did not pay their deposits, William H. Davidson moved 

to stay the court proceedings and to compel arbitration of the claims against him. 

The district court found that Mr. Davidson waived his right to arbitrate and denied 

his motions. Exercising jurisdiction under 9 U.S.C. § 16(a)(1),1

 we affirm. 

I. Background 

This case has been lingering for years. A real estate investment company and 

some of its special-purpose subsidiaries filed voluntary chapter 11 petitions in the 

United States Bankruptcy Court for the District of Utah in 2011. The bankruptcy 

court appointed D. Ray Strong (“the Trustee”) to act as the post-confirmation estate 

representative of several debtors and as the liquidating trustee of several trusts. The 

Trustee filed this lawsuit on behalf of those debtors and trusts in October 2014—

alleging that certain officers and directors engaged in securities fraud and other 

misconduct, which led to the loss of millions of dollars of investors’ funds. The 

individual defendants include Mr. Davidson, Jeff Austin, and Austin Capital 

Solutions. 

 1

 The Federal Arbitration Act authorizes an interlocutory appeal of an order 

refusing to stay court proceedings pending arbitration or to compel arbitration. See 

9 U.S.C. § 16(a)(1)(A), (B) (“An appeal may be taken from . . . an order . . . refusing 

a stay of any action under section 3 of this title . . . [or] denying a petition under 

section 4 of this title to order arbitration to proceed . . . .”); Jacks v. CMH Homes, 

Inc., 856 F.3d 1301, 1304 (10th Cir. 2017). 
3 

In January 2015, Mr. Austin and Austin Capital Solutions (the Austin 

defendants) filed a motion to stay the litigation and to compel arbitration of two of 

the nineteen claims. This motion spurred limited discovery as to which investors 

signed an agreement that incorporated an arbitration clause, which in turn led the 

Austin defendants to move to compel arbitration of additional claims. Ultimately, the 

district court sent the entire case to arbitration in August 2015, without opposition 

from the Trustee. The parties selected the American Arbitration Association (AAA) 

to arbitrate the dispute. In October 2015, the Trustee filed the demand for arbitration 

against a number of defendants, who were apparently separated into five groups for 

financial purposes, and paid the requisite $9,100 filing fee. AAA appointed a panel 

of three arbitrators. 

On August 9, 2016, AAA advised that it had billed $3,787.50 per defendant (or 

group of defendants) for “an initial arbitrator compensation and expenses deposit” 

due on August 23. Aplt. App. at 293. All parties including Mr. Davidson paid their 

deposits, except for the Austin defendants (the parties who first sought to compel 

arbitration) and the group of defendants referred to as the “Child Van Wagoner” 

associates. AAA followed up with a notice on October 18, warning that if the 

missing deposits were not paid by October 25, it would tell the arbitrators which 

parties had not paid and would present them with “a number of options,” including: 

 The arbitrators may proceed with work on this matter, without full 

deposits. As arbitrator compensation and expenses are incurred, the 

AAA will distribute the share of payment owed from the deposits 

received and will continue our efforts to collect any outstanding 

balance. 
4 

 The arbitrators may choose to resign, in which case the AAA will fill 

the vacancy(s). 

 The arbitrators may suspend or terminate the case. 

Alternatively, and in accordance with the Commercial Arbitration 

Rules, any party may make a deposit on behalf of the non-paying 

parties to avoid any possible interruption of the case. While we 

would prefer not to make this request of a party that has met its 

deposit obligations under the rules, the burden of funding the process 

falls on the parties and neither the AAA nor the arbitrators can cover 

these costs. The paying party(s) then may make the repayment of 

this deposit part of its claim to the arbitrators. 

Id. at 296. The letter encouraged the parties to contact AAA with any questions. 

No money was forthcoming, so AAA announced the suspension of the 

arbitration in a letter dated November 21. Still, AAA gave the parties one last 

chance—setting December 7 as the final payment deadline and reminding them of the 

arbitrators’ ability to terminate the matter for nonpayment. Through a December 9 

email, AAA extended that deadline to December 13, adding: “As a reminder, any 

party may make a payment on behalf of another party in order to prevent this matter 

from being terminated. Please let me know if there are questions.” Id. at 303. The 

arbitration was officially “dismissed due to non-payment of fees” on December 19, 

2016. Id. at 307. AAA issued refund checks for “any unused compensation 

deposits.” Id. 

The Trustee returned to district court and asked for the stay to be lifted—a 

request that was granted with no opposition from Mr. Davidson. The Trustee also 

sought to consolidate three interrelated cases because a multi-party arbitration was no 

longer an option. Meanwhile, the district court held a joint status conference in 
5 

January 2017, at which it ordered the parties to answer or otherwise respond to the 

complaint by March and set the case for a three-week trial beginning in January 

2018. In addition, the parties participated in the Fed. R. Civ. P. 26(f) discovery 

planning meeting and Mr. Davidson filed a brief opposing the Trustee’s motion to 

consolidate. Mr. Davidson did not oppose the litigation or express any desire to 

return the case to arbitration until he moved for a stay and to compel arbitration of 

the claims against him on March 20, 2017. The district court found that he waived 

his right to arbitrate under the circumstances and denied his motions. This appeal 

followed. 

II. Analysis 

Equitable principles may prevent a party from asserting a right to arbitration: 

“[T]he right to arbitration, like any other contract right, can be waived.” Reid Burton 

Constr., Inc. v. Carpenters Dist. Council of S. Colo., 614 F.2d 698, 702 

(10th Cir. 1980). The party asserting waiver bears the burden of persuasion. Hill v. 

Ricoh Americas Corp., 603 F.3d 766, 775 (10th Cir. 2010). That burden is a “heavy” 

one, Peterson v. Shearson/Am. Express, Inc., 849 F.2d 464, 466 (10th Cir. 1988)—

particularly because “we give substantial weight to the strong federal policy 

encouraging the expeditious and inexpensive resolution of disputes through 

arbitration,” Hill, 603 F.3d at 775 (internal quotation marks omitted). Even so, we 

have not hesitated to uphold a district court’s finding of waiver under appropriate 

circumstances. 
6 

 “There is no set rule as to what constitutes a waiver or abandonment of the 

arbitration agreement; the question depends upon the facts of each case . . . .” Reid 

Burton, 614 F.2d at 702. We have outlined six factors that courts should weigh in 

considering whether a party waived its right to arbitration: 

 (1) whether the party’s actions are inconsistent with the right to 

arbitrate; (2) whether the litigation machinery has been substantially 

invoked and the parties were well into preparation of a lawsuit before 

the party notified the opposing party of an intent to arbitrate; 

(3) whether a party either requested arbitration enforcement close to the 

trial date or delayed for a long period before seeking a stay; (4) whether 

a defendant seeking arbitration filed a counterclaim without asking for a 

stay of the proceedings; (5) whether important intervening steps [e.g., 

taking advantage of judicial discovery procedures not available in 

arbitration] had taken place; and (6) whether the delay affected, misled, 

or prejudiced the opposing party. 

Peterson, 849 F.2d at 467-68 (alteration in original) (internal quotation marks 

omitted). This list is not exclusive, and courts should not mechanically apply the 

factors. Alwert v. Cox Commc’ns, Inc. (In re Cox Enters., Inc. Set-top Cable 

Television Box Antitrust Litig.) (Cox II), 835 F.3d 1195, 1205 (10th Cir. 2016). 

Other considerations are important too, such as “maintenance of the combined 

efficiency of the public and private dispute-resolution systems” and “whether the 

party now seeking arbitration is improperly manipulating the judicial process.” Hill, 

603 F.3d at 773-74; see also Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 568 

(2013) (describing the “essential virtue” of arbitration as “resolving disputes 

straightaway” (internal quotation marks omitted)). 

Where (as here) the historical facts are not disputed, the district court’s denial 

of a motion to compel arbitration based on waiver is subject to de novo review. Hill, 
7 

603 F.3d at 771. Because we “apply[] the same legal standard that the district court 

should apply,” id., we turn our attention to the Peterson factors and their progeny. 

We find the first and sixth factors to be the most compelling here. 

To start, Mr. Davidson’s conduct is inconsistent with the right to arbitrate. He 

urges us not to penalize him for his “apparent” and “[a]lleged [i]naction” once it 

became clear that the original arbitration was failing. Aplt. Opening Br. at 10. After 

all, he cooperated with the arbitration order and had “no reason . . . to believe . . . that 

he wouldn’t be able to assert his right to arbitration and pursue his own motion to 

compel down the road.” Id. at 8; see also id. at 14 (“Davidson did nothing that would 

imply abandonment. He paid his share of the arbitrator’s fee, participated in 

selecting an arbitration panel and participated in pre-hearing conferences.”). 

But waiver can occur outside of an intentional relinquishment of the right to 

arbitrate; it can be implied from a party’s actions or even inaction. See BOSC, Inc. v. 

Bd. of Cty. Comm’rs of Cty. of Bernalillo, 853 F.3d 1165, 1178 (10th Cir. 2017) 

(“The Peterson factors analyze a party’s conduct—that is, that party’s external 

actions showing that it waived its right to demand arbitration even if it did not 

subjectively intend to do so.”); see also Peterson, 849 F.2d at 468. In Peterson, for 

example, we concluded that the appellant “waived arbitration [of its state law claims] 

due to its inaction,” 849 F.2d at 467 (emphasis added). Similarly, we focused on 

omissions and found waiver where a party “improperly sat on its right to arbitrate” in 

Healy v. Cox Communications, Inc. (In re Cox Enterprises, Inc. Set-top Cable 

Television Box Antitrust Litigation) (Cox I), 790 F.3d 1112, 1120 (10th Cir. 2015). 
8 

Furthermore, common sense dictates that a party who intends to exercise his 

right to arbitrate would object or do something to try to preserve an existing 

arbitration that is in danger of being terminated—especially where the arbitrator 

repeatedly invites the parties to reach out. Indeed, we have instructed that a party 

considering arbitration “must do all it could reasonably have been expected to do to 

make the earliest feasible determination of whether to proceed judicially or by 

arbitration”—even if that means just mentioning the prospect of arbitration. Cox I, 

790 F.3d at 1119 (internal quotation marks omitted); see also Reid Burton, 614 F.2d 

at 703 (referencing a party’s “duty” to “insist[] upon or demand[] immediately” the 

enforcement of an arbitration provision). This practice “ensure[s] a more expedient 

and efficient resolution” of the dispute and “prevent[s] . . . improper gamesmanship.” 

Cox I, 790 F.3d at 1119. 

What could Mr. Davidson have done here? While he was understandably 

reluctant to pay his co-defendants’ fees, he could have done so and sought repayment 

later. AAA’s October 18 notice offered an assurance that “[t]he paying party(s) 

[could] make the repayment of this deposit part of its claim to the arbitrators.” Aplt. 

App. at 296. Alternatively, he could have requested relief or sanctions under Rule 57 

or Rule 58 of AAA’s Commercial Arbitration Rules and Mediation Procedures, 

respectively, which were incorporated into the parties’ arbitration agreement.2

 

 2

 Rule 57 lists remedies for nonpayment of arbitrator compensation or 

administrative charges. Rule 58 details the arbitrator’s ability to order appropriate 

sanctions (upon another party’s request) when a party does not comply with its 

(continued) 
9 

Although AAA cannot preclude a party from defending a claim or enter a default 

judgment against a non-paying party, such a request would have alerted AAA and the 

other parties of Mr. Davidson’s desire to continue with the arbitration and might have 

helped the parties overcome the impasse. The district court hinted during the status 

conference that it could have ordered the parties to pay their fees. See Aplt. App. at 

265 (“[W]e are stalled . . . with the arbitration. It looks like I am going to lift the 

stay. There is no choice other than perhaps order people to pay their fees.”). 

Instead, Mr. Davidson remained silent while the pending arbitration collapsed. 

His passive approach misled the Trustee, who posits that he might have acted 

differently had he known Mr. Davidson still intended to pursue arbitration. See

Aplee. Br. at 16 (suggesting that he “could have either (1) paid Mr. Austin’s share of 

the fees to preserve the Arbitration as to all parties; or (2) requested (just as 

Mr. Davidson could have done) to continue the Arbitration as to the Trustee and 

Mr. Davidson—the only parties who paid the fees”). 

Mr. Davidson’s behavior also prejudiced the Trustee. We have described 

prejudice as “inherent unfairness—in terms of delay, expense, or damage to a party’s 

legal position.” Cox II, 835 F.3d at 1208-09 (internal quotation marks omitted). All 

three are implicated here. A second, partial arbitration would add further delay to a 

case that has dragged on for years because of initial procedural matters. It would 

 

obligations under the Rules. “The parties shall be deemed to have made these rules a 

part of their arbitration agreement whenever they have provided for arbitration by the 

[AAA].” R-1(a), Commercial Arbitration Rules and Mediation Procedures, 

American Arbitration Association (2013). 
10 

require the Trustee—who spent a total of $12,880.50 on filing and arbitrators’ fees 

for the first arbitration, less any amounts reimbursed—to incur similar additional 

fees. And it would frustrate the Trustee’s legitimate goal of resolving related cases 

in one forum. When the Trustee agreed to arbitrate all claims, he made clear he was 

doing so “in the interest of reducing costs and maximizing the value of the Trusts.” 

Aplee. App. at 42. Likewise, when the Trustee moved to consolidate related 

litigation after the arbitration was terminated, he stressed the importance of resolving 

claims “in a single forum . . . [to] bring order, efficiency, and common sense to these 

proceedings.” Id. at 59. Although the Trustee now speculates on appeal that he 

might have been willing to proceed with the arbitration solely as to Mr. Davidson, see

Aplee. Br. at 16, we agree with the district court that forcing the Trustee to “split 

litigation of similar, if not the same, issues between two venues” is “neither fair nor a 

good use of resources.” Aplt. App. at 335-36.3

 To the contrary, it would contravene 

the “combined efficiency of the public and private dispute-resolution systems.” Hill, 

603 F.3d at 774. 

The remaining factors are somewhat neutral or not relevant. As for factors (2) 

and (5), the parties have only partially invoked the litigation machinery and are 

admittedly toward the front end of litigation, with discovery to date limited to the 

arbitrability issue; thus, this case has not yet progressed much substantively. But this 

lack of progress cuts both ways. This dispute needs to be resolved expeditiously, and 

 3

 Mr. Davidson concedes this point but minimizes the burden imposed on the 

Trustee by calling it a matter of “convenience.” Aplt. Reply Br. at 5. 
11 

the plan developed by the parties at the scheduling conference seems to present the 

most efficient path forward. As for factor (3), Mr. Davidson did not request 

arbitration close to the trial date, but he did delay announcing his intent to arbitrate as 

explained above. Finally, factor (4) is not relevant. 

III. Conclusion 

Mr. Davidson waived any right to arbitrate the claims against him. We 

therefore affirm the district court’s order denying his motion to stay the litigation and 

to compel arbitration. 

Entered for the Court 

Bobby R. Baldock 

Circuit Judge