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David G. Walther, et ux. v. Sovereign Bank No. 61, September Term, 2004 Headnote: Arbitration clause that was entered into as part of a secondary mortgage loan contract was not unconscionable but an enforceable part of the agreement. The arbitration clause, which was located in the Disclosure Agreement, was conspicuously distinct from other provisions in the Disclosure Agreement and the clause immediately preceded petitioners' signatures. Therefore, there existed no procedural unconscionability. Further, numerous substantive reasons that petitioners claim made the arbitration clause substantively unconscionable are not so one-sided to make the agreement unenforceable. Respondent bank's filing of a "Petition to Compel Arbitration and Motion to Dismiss or to Stay Proceedings" did not constitute a waiver of the arbitration agreement. The petition was filed in response to a complaint filed by petitioners that sought judicial adjudication of matters that the parties had agreed to make subject to arbitration. This response to petitioners' complaint and the circuit court's subsequent order to arbitrate resulted in no final adjudication of arbitrable issues.

Circuit Co urt for Baltim ore Cou nty Case # 03-C-02-014006

IN THE COURT OF APPEALS OF MARYLAND No. 61 September Term, 2004

David G. Walther, et ux. v. Sovereign Bank

Bell, C. J. Raker Wilner Cathell Harrell Battaglia Greene, JJ.

Opinion by Cathell, J. Bell, C.J. and Greene, J ., dissent. Filed: April 20, 2005

This case involves the enforceability of an arbitration agreement entered into as part of a second mortgage loan contract between David and Tamera Walther, petitioners, and Sovereign Bank, the assignee of the loan contract and respondent in the case at bar. Petitioners present two questions for our review, which we rephrase for the sake of clarity as follows: I. Is an arbitration clause contained in a "Direct Loan Note & Truth in Lending Disclosures" agreement between petitioner and a lender unconscionable and therefore unenforceable? Did respondent waive the arbitration clause when it sought dismissal on the merits in addition to seeking an order to compel arbitration?

II.

For the reasons discussed herein, we hold that the arbitration clause at issue is not unconscionable but is part of an enforceable agreement validly entered into by petitioners for the purpose of securing a second mortgage loan. We also hold that Sovereign Bank's action of seeking dismissal on the merits did not amount to a waiver of its right to arbitrate petitioners' claims against it. I. Facts On or about February 17, 1998, petitioners obtained a secondary mortgage loan1 (the

Maryland Code (1975, 2000 Repl. Vol.),

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