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Litigants wishing to preserve their right to arbitration in commercial disputes should have a strong understanding of that right and take actions to zealously preserve that right. The right to arbitration may be waived, and the question as to whether a party unintentionally waived arbitration arises often in litigation.  Parties opposing arbitration often try to pounce on any perceived opportunity to challenge the arbitrability of a dispute so that the matter may be heard in their preferred forum.  Preservation of the right to arbitration requires careful process and drafting.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

Florida courts look to the written terms of the agreement to arbitrate define what disputes are arbitrable.  “‘[W]here parties bargain for and/or contemplate exceptions to arbitration in their contracts, their intentions should control.’” Apartment Inv. & Mgmt. Co. v. Flamingo/S. Beach 1 Condo. Ass’n, Inc., 84 So. 3d 1090 (Fla. 3d DCA 2012). “[T]here are three elements for courts to consider in ruling on a motion to compel arbitration: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla.1999).  “Whether or not an arbitrable issue exists is determined by the scope of the particular arbitration provision, and determination of the scope ‘requires consideration of the relationship between the contract and the claim at issue.’”  Olson v. Florida Living Options, Inc., 210 So. 3d 107 (Fla. 2d DCA 2016).

In business litigation, the analysis of arbitrability completely depends on the terms of the parties’ agreement.  “[A]rbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995).

Even when the right to arbitration is established, that right can be waived.

We have defined ‘waiver’ as the voluntary and intentional relinquishment of a known right or conduct which implies the voluntary and intentional relinquishment of a known right. This general definition of waiver is applicable to a right to arbitrate […]

The Supreme Court has made clear that the “strong federal policy in favor of enforcing arbitration agreements” is based upon the enforcement of contract, rather than a preference for arbitration as an alternative dispute resolution mechanism.  Thus, the question of whether there has been waiver in the arbitration agreement context should be analyzed in much the same way as in any other contractual context. The essential question is whether, under the totality of the circumstances, the defaulting party has acted inconsistently with the arbitration right.

Raymond James Fin. Services, Inc. v. Saldukas, 896 So. 2d 707 (Fla. 2005). “The elements of waiver are: (1) the existence of a right which may be waived; (2) actual or constructive knowledge of the right; and (3) the intent to relinquish the right.”  Progressive Exp. Ins. Co. v. Camillo, 80 So. 3d 394 (Fla. 4th DCA 2012).  “Waiver […] may be inferred from conduct or acts putting one off his guard and leading him to believe that the demanding party has waived the right sought to be enforced.”  Davis v. Davis, 123 So. 2d 377 (Fla. 1st DCA 1960).  “Proof of these elements ‘may be express, or implied from conduct or acts that lead a party to believe a right has been waived.’” LeNeve v. Via S. Florida, L.L.C., 908 So. 2d 530 (Fla. 4th DCA 2005) quoting Taylor v. Kenco Chem. & Mfg. Corp., 465 So.2d 581 (Fla. 1st DCA 1985).  “Determining whether a party has waived an arbitration clause involves the same fact sensitive analysis as finding waiver of any other contractual provision.” Bland v. Green Acres Group, L.L.C., 12 So. 3d 822 (Fla. 4th DCA 2009).

“[A] party acts inconsistently with the right to arbitration when the party actively participates in the lawsuit by either prosecuting or defending issues that are subject to arbitration.” Gen. Elec. Capital Corp. v. Bio–Mass Tech, Inc., 136 So.3d 698 (Fla. 2d DCA 2014).  However, it is not the filing in court of an arbitrable claim itself that triggers waiver, but instead, it is an event that weighs in favor of arbitration when considering the totality of the circumstances.  Avid Eng’g, Inc. v. Orlando Marketplace Ltd., 809 So. 2d 1 (Fla. 5th DCA 2001) (“the mere filing of the counterclaim was not sufficient to trigger waiver”).

In the recent case, Black Knight Servicing Techs., LLC v. PennyMac Loan Services, LLC, 46 Fla. L. Weekly D123 (Fla. 1st DCA Jan. 6, 2021), the court evaluated whether a party’s filing of ostensibly non-arbitrable claims in a separate cause of action constituted waiver of arbitration for other arbitrable claims in that case.  The court held that there was no basis to conclude that filing a lawsuit against a related party qualified as a waiver.  “‘All doubts regarding waiver should be construed in favor of arbitration rather than against it.’” Black Knight Servicing Techs., LLC v. PennyMac Loan Services, LLC, 46 Fla. L. Weekly D123 (Fla. 1st DCA Jan. 6, 2021), quoting Marine Envtl. Partners, Inc. v. Johnson, 863 So. 2d 423 (Fla. 4th DCA 2003).

[Appellee’s] filing of a separate lawsuit raising separate claims against a separate entity does not establish an evidentiary basis of its intent to relinquish the right to arbitration […].  In fact, it may show the opposite; [Appellee’s] carefully worded federal lawsuit suggests an intent to safeguard its arbitration right. […] There is doubt as to [Appellee’s] intent, and we must resolve all doubts against waiver and in favor of arbitration.

Black Knight Servicing Techs., LLC v. PennyMac Loan Services, LLC, 46 Fla. L. Weekly D123 (Fla. 1st DCA Jan. 6, 2021)

Unintentional waiver is a risk for any party seeking to compel arbitration.  This risk can be minimized with careful planning and ensuring that proper wording is used in court filings.  Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Palm Beach, Boca Raton, and Miami-Dade.  This article does not serve as a substitute for legal advice tailored to a particular situation.

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