General Electric Capital Corp. v. Bio-Mass Tech, Inc.
Docket: No. 2D13-1657
Court: District Court of Appeal of Florida; February 11, 2014; Florida; State Appellate Court
General Electric Capital Corporation (GE) appeals a trial court order that stayed its action against Bio-Mass Tech, Inc. and compelled arbitration regarding GE's claims for replevin and breach of a note and security agreement. GE argues that Bio-Mass waived its right to arbitration by engaging in litigation. The court agrees with GE and reverses the trial court's order.
Facts outline that GE filed a complaint against Bio-Mass on January 24, 2011, alleging failure to make payments on a note secured by a Finn Hydro-Seeder, leading to a prejudgment writ of replevin. After a series of motions and hearings, including a modification agreement on April 24, 2011, Bio-Mass failed to meet payment obligations again. GE sought further relief, which included motions to compel turnover of the collateral, but faced objections from Bio-Mass claiming procedural deficiencies.
On January 23, 2013, the day before a scheduled hearing on GE's motion for summary judgment, Bio-Mass moved to compel arbitration based on an arbitration clause in the original agreement. The court ultimately concluded that Bio-Mass's prior litigation actions constituted a waiver of any arbitration rights, leading to the reversal of the trial court's decision to compel arbitration.
Awards rendered by arbitrators can be confirmed or enforced as judgments in any competent state or federal court. If either party challenges the award through judicial action and does not prevail, that party is responsible for all costs incurred by the other party, including court costs, arbitrators’ fees, and reasonable attorneys’ fees. If a party seeks judicial relief without first pursuing arbitration, they must pay the other party's costs associated with staying or dismissing the judicial action or transferring it to arbitration. Failure to exercise any rights does not constitute a waiver of those rights.
In a specific case, the trial court granted Bio-Mass’s motion for arbitration and stayed the court case. On appeal, General Electric argues that Bio-Mass waived its right to arbitration by actively participating in court proceedings for two years, including filing pleadings and motions. The case hinges on the trial court's interpretation of the arbitration provision and relevant law, warranting a de novo review. Courts must determine the existence of a valid arbitration agreement, an arbitrable issue, and whether the right to arbitration has been waived. Waiver is assessed based on whether the party has acted inconsistently with the right to arbitration, particularly through active participation in the litigation of arbitrable issues. Florida courts maintain that claims for injunctive or equitable relief are typically subject to arbitration unless explicitly excluded by the arbitration provision.
In Romar Transports, Ltd. v. Iron & Steel Co. of Trinidad & Tobago, the court held that a claim for replevin was subject to arbitration as it arose from a contractual dispute. The filing of a counterclaim for replevin constituted a waiver of the right to arbitration. Similarly, in Ram Electronics Corp. v. Westley, the court determined that a counterclaim for replevin was arbitrable under an agreement mandating arbitration for disputes related to the purchase agreement. General Electric's claim for replevin was deemed to arise from the note and security agreement, which included no exceptions for equitable relief, thus making it subject to arbitration.
Bio-Mass, while defending against General Electric's replevin claim, waived its right to arbitration by actively contesting the claim on the merits instead of demanding arbitration. This aligns with precedents establishing that engaging in litigation without demanding arbitration often results in a waiver of that right. Bio-Mass's argument that its conduct could not waive the right to arbitration under the provision was rejected, as courts have consistently found that active participation in litigation inconsistent with an arbitration demand constitutes a waiver.
The arbitration provision includes an anti-waiver clause stating that the failure of either party to exercise their rights does not constitute a waiver of those rights. However, this clause does not prevent a party from waiving the right to arbitration. Citing relevant case law, the text establishes that an anti-waiver clause can itself be waived through conduct. In this instance, Bio-Mass’s actions in defending against General Electric’s claim for replevin in court were found to have waived both the right to arbitration and the applicability of the anti-waiver clause regarding arbitration. Consequently, the court reversed the decision to stay the trial court action and compel arbitration, remanding for further proceedings. Furthermore, the text highlights that although Bio-Mass referenced Florida Statutes section 682.031, which allows for equitable relief from arbitration under certain conditions, they did not argue that arbitration could not adequately address the replevin issue. The law indicates that replevin is generally an arbitrable matter unless explicitly excluded in the arbitration agreement. The broad language of the anti-waiver provision does not permit seeking limited judicial relief for issues that are arbitrable, confirming that replevin falls within this scope.
