In situations where a written contract provides the parties with the right to arbitration and one party files a lawsuit against the other party, the question that arises is whether the responding party can invoke its contractual right to have the issue resolved by arbitration? Keeping in mind the rules of procedure which may require the responding party to also file a counterclaim and the fact that the responding party will possibly waive its right to arbitration by participating in the litigation, the outstanding question is, “Does A Party Waive Its Right To Arbitration By Filing A Counterclaim?”
Does A Party Waive Its Right To Arbitration By Filing A Counterclaim?
Recently the Florida Second District Court of Appeal answered this question. The Court held that a party did not waive its contractual right to arbitration by filing a counterclaim. In the Andre Franklin, Inc. v. Wax, decision the Court held that a contractor against whom homeowners brought an action to resolve a dispute over payment for services, did not waive its contractual right to arbitration by filing a counterclaim simultaneously with its motion to compel arbitration, a motion to dismiss, and a motion to abate. The contractor did not implement discovery or take other actions that were inconsistent with the right to arbitrate the dispute. In so holding, the District Court of Appeal distinguished Coral 97 Associates, Ltd. v. Chino Elec., Inc., a case in which the defendant was found to have waived its contractual right to arbitration.
However, unlike the instant case, it was the act of implementing discovery, following the simultaneous filings of the counterclaim and motions to arbitrate and dismiss, that was inconsistent with the right to arbitrate the dispute.
Florida’s Second District Court of Appeal’s opinion in this case clearly states that in situations where the party is seeking to invoke arbitration in response to the complaint, and has not participated in discovery, a Party Does Not Waive Its Right To Arbitration By Filing A Counterclaim.
At the time of writing this article, the Andre opinion was awaiting approval for publication. The opinion in this case and others issued by the Second District Court of Appeal can be found on its website.
If you have a question about this post or would like assistance with a contract or a matter in litigation please contact me. My office is located at 115 N. Calhoun Street, Tallahassee, Florida. My telephone number is (850)577-1699. My email address is Max@maxfactorlaw.com.
Max Factor is a seasoned trial attorney who provides top-notch legal and consulting services to a broad range of clients including large companies, small businesses, governmental entities, not-for-profit entities, and individuals. He provides personal and detailed attention to each client’s case. Mr. Factor is licensed to practice in all state and federal courts within the State of Florida, State of Georgia, and the Eleventh Circuit Court of Appeals.