NETPLANNER SYSTEMS INC v. GSC CONSTRUCTION INC et al, No. 4:2016cv00150 - Document 39 (M.D. Ga. 2017)

Court Description: ORDER denying 36 Motion to Compel Ordered by US DISTRICT JUDGE CLAY D LAND on 08/17/2017 (glg)
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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION NETPLANNER SYSTEMS, INC., * Plaintiff, * vs. * GSC CONSTRUCTION, INC. and LIBERTY MUTUAL INSURANCE COMPANY, * CASE NO. 4:16-CV-150 (CDL) * Defendants. * O R D E R Plaintiff 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. provided the Defendant Liberty Mutual Insurance Company 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 waived found that Defendants 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. 15, ECF No. 37. See Pretrial Order 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). STANDARD “It 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 (1) “when ‘substantially inconsistent both: participates with an intent the party seeking arbitration in litigation to a point to arbitrate’; and (2) ‘this participation results in prejudice to the opposing party.’” (quoting Morewitz, 62 F.3d at 1366). 2 Id. DISCUSSION The 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. Defendants filed a joint answer that failed to raise any objection or argument against Plaintiff’s claims based on an agreement to arbitrate. assisted Plaintiff in See Answer, ECF No. 7. drafting a proposed Defendants scheduling and discovery order, see Scheduling & Discovery Order 4, ECF No. 12, and thereafter participated in discovery. Defendants responded to never Plaintiff’s discovery requests and argued Plaintiff should be compelled to arbitrate its claims. that 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 3 1, ECF No. 19. not only litigation The Court granted that motion. substantially in this participated Court, but in they Defendants thus and also delayed spawned the new and additional litigation in another court. Being parties to the subcontract containing the arbitration agreement, Defendants are presumed to know that they had the right to arbitrate this dispute all along. Account Overdraft Litig., 754 F.3d at See In re Checking 1295 (explaining that party to an agreement to arbitrate is presumed to know that it has the right to arbitrate).1 Notwithstanding that knowledge, Defendants waited until the very eve of the pretrial conference, after they helped (that failed, Plaintiff again, to draft mention a proposed that pretrial Defendants order wished to arbitrate this dispute), to file their cursory two-page motion to compel arbitration. Defendants’ conduct The Court finds that the totality of over litigation—particularly the their past sixteen 12(b)(3) motion months and of this 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. 1 While Liberty Mutual is technically not a party to the arbitration agreement, the Court uses “Defendants” for simplicity. 4 By 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)). is to “A prime objective of an agreement to arbitrate achieve results.’” ‘streamlined and expeditions Id. (quoting Preston v. Ferrer, 552 U.S. 346, 357 (2008)). Defendants invoking proceedings their Plaintiff right spend time answered to Plaintiff’s arbitration and money and complaint without proceeded to let discovery and propounding reviewing evidence, filing briefs seeking summary judgment and opposing Defendants’ motion to dismiss or transfer, and moving for in issues limine for evidentiary trial and rulings, plan its presumably to presentation of narrow the 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 favoring arbitration agreements.’” ‘liberal federal policy 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. 5 2015) (per curiam) (finding prejudice where party invoking arbitration agreement caused opposing party to endure costs in duplicative proceedings in another court). delay and prejudiced substantial Plaintiff, participation the Court in finds Because Defendants’ this that litigation Defendants has waived their right to compel arbitration. CONCLUSION The FAA was enacted “to relieve congestion in the courts and to provide parties with an alternative dispute resolution that would be speedier Morewitz, 62 F.3d at 1364. and less costly than litigation.” 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). IT IS SO ORDERED, this 17th day of August, 2017. S/Clay D. Land CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE MIDDLE DISTRICT OF GEORGIA 6