United States District Court, M.D. Georgia, Columbus Division
D. LAND CHIEF U.S. DISTRICT COURT JUDGE.
filed this action approximately sixteen months ago, alleging
that it completed work at Fort Benning under a subcontract
with Defendant GSC Construction, Inc. and that it has yet to
be paid. Defendant Liberty Mutual Insurance Company provided
the payment bonds that GSC Construction furnished pursuant to
its obligations under the Miller Act, 40 U.S.C. § 3131
et seq. The parties participated in discovery, filed
dispositive motions, prepared a joint pretrial order, and
argued motions in limine. In anticipation of trying this case
during the Court's September trial term, the Court held a
pretrial conference. On the eve of that conference,
Defendants filed a motion to compel arbitration. At the
pretrial conference, the Court found that Defendants waived
their right to compel arbitration by engaging in conduct
inconsistent with insisting on their right to arbitrate the
dispute and by waiting until the last minute before trial to
raise the issue. See Pretrial Order 15, ECF No. 37.
The Court has examined Defendants' late filed motion and
Plaintiff's response. As explained in the remainder of
this Order, the Court confirms its earlier ruling denying
Defendants' motion to compel arbitration (ECF No. 36).
is by now basic hornbook law that the Federal Arbitration Act
(FAA), [9 U.S.C. § 1 et seq.], reflects
‘both a liberal federal policy favoring arbitration and
the fundamental principle that arbitration is a matter of
contract.'” Jones v. Waffle House, Inc.,
No. 16-15574, 2017 WL 3381100, at *3 (11th Cir. Aug. 7, 2017)
(quoting AT&T Mobility LLC v. Concepcion, 563
U.S. 333, 339 (2011)). Still, “[a]rbitration should not
be compelled when the party who seeks to compel arbitration
has waived that right.” In re Checking Account
Overdraft Litig., 754 F.3d 1290, 1294 (11th Cir. 2014)
(quoting Morewitz v. W. of Eng. Ship Owners Mut. Prot.
& Indem. Ass'n (Lux.), 62 F.3d 1356, 1365 (11th
Cir. 1995)). A party waives its right to compel arbitration
“when both: (1) the party seeking arbitration
‘substantially participates in litigation to a point
inconsistent with an intent to arbitrate'; and (2)
‘this participation results in prejudice to the
opposing party.'” Id. (quoting
Morewitz, 62 F.3d at 1366).
Court confirms today that Defendants waived the right to
insist upon arbitration of this dispute by substantially
participating in the litigation up to this point and by
delaying its request to compel arbitration until the very
last minute. By waiting until the last minute to file its
motion, Defendants' dilatory conduct has prejudiced
Plaintiff by causing it to incur every expense necessary to
try this case but for those incurred during the trial itself.
filed a joint answer that failed to raise any objection or
argument against Plaintiff's claims based on an agreement
to arbitrate. See Answer, ECF No. 7. Defendants
assisted Plaintiff in drafting a proposed scheduling and
discovery order, see Scheduling & Discovery
Order 4, ECF No. 12, and thereafter participated in
discovery. Defendants responded to Plaintiff's discovery
requests and never argued that Plaintiff should be compelled
to arbitrate its claims. When the discovery period eventually
closed, Plaintiff filed a motion for summary judgment, to
which Defendants responded with no mention that the claims
were subject to an arbitration agreement. To the contrary,
Defendants affirmatively invoked the machinery of the federal
court and filed a motion under Federal Rule of Civil
Procedure 12(b)(3) seeking dismissal or transfer of part of
this case based on improper venue. See Defs.'
Mot. to Dismiss Claims 1, ECF No. 19. The Court granted that
motion. Defendants thus not only substantially participated
in and delayed the litigation in this Court, but they also
spawned new and additional litigation in another court.
parties to the subcontract containing the arbitration
agreement, Defendants are presumed to know that they had the
right to arbitrate this dispute all along. See In re
Checking Account Overdraft Litig., 754 F.3d at 1295
(explaining that party to an agreement to arbitrate is
presumed to know that it has the right to
arbitrate). Notwithstanding that knowledge, Defendants
waited until the very eve of the pretrial conference, after
they helped Plaintiff draft a proposed pretrial order (that
failed, again, to mention that Defendants wished to arbitrate
this dispute), to file their cursory two-page motion to
compel arbitration. The Court finds that the totality of
Defendants' conduct over the past sixteen months of this
litigation-particularly their 12(b)(3) motion and failure to
raise the slightest argument in favor of arbitration until
the very last minute-is inconsistent with the intent to
arbitrate and, instead, is consistent with the desire to
litigate this case in two federal courts.
belatedly attempting to invoke their right to arbitrate,
Defendants have prejudiced Plaintiff. “Substantially
invoking the litigation machinery qualifies as the kind of
prejudice that is the essence of waiver.” Id.
at 1295 (quoting E.C. Ernst, Inc. v. Manhattan Constr.
Co., 559 F.2d 268, 269 (5th Cir. 1977) (per curiam)).
“A prime objective of an agreement to arbitrate is to
achieve ‘streamlined proceedings and expeditions
results.'” Id. (quoting Preston v.
Ferrer, 552 U.S. 346, 357 (2008)). Defendants answered
Plaintiff's complaint without invoking their right to
arbitration and proceeded to let Plaintiff spend time and
money propounding discovery and reviewing evidence, filing
briefs seeking summary judgment and opposing Defendants'
motion to dismiss or transfer, and moving for in limine
evidentiary rulings, presumably to narrow the issues for
trial and plan its presentation of the case. Additionally,
Defendants have forced Plaintiff to litigate half of its
claims in another court in another jurisdiction away from its
home, which will likely result in duplicative expenses and
even more delays in getting paid. “By slowing the
process and magnifying its costs, [Defendants'] delay
undermined the purpose of the Federal Arbitration Act's
‘liberal federal policy favoring arbitration
agreements.'” Id. (quoting Moses H.
Cone Mem'l Hosp. v. Mercury Cosntr. Copr., 460 U.S.
1, 24 (1983)); see also Robinson v. Alston, 596 F.
App'x 871, 873 (11th Cir. 2015) (per curiam) (finding
prejudice where party invoking arbitration agreement caused
opposing party to endure costs in duplicative proceedings in
another court). Because Defendants' delay and substantial
participation in this litigation has prejudiced Plaintiff,
the Court finds that Defendants waived their right to compel
was enacted “to relieve congestion in the courts and to
provide parties with an alternative dispute resolution that
would be speedier and less costly than litigation.”
Morewitz, 62 F.3d at 1364. Defendants'
eve-of-trial motion is not only inconsistent with an
agreement to arbitrate but also plainly flouts the purposes
of the FAA, all to the prejudice of Plaintiff. Accordingly,
the Court confirms its earlier ruling denying Defendants
motion to compel arbitration (ECF No. 36).