In Truly Nolen of Am., Inc. v. King Cole Condo. Ass’n, Inc., — So.3d —, 2014 WL 3608888 (Fla. 3d DCA July 23, 2014), Florida’s Third District Court of Appeal held that a party did not waive its right to compel arbitration by filing a forum non conveniens motion to transfer venue, while simultaneously filing a motion to compel arbitration. The Court reasoned that filing a motion to transfer was not inconsistent with the right to enforce an arbitration clause in the contract between the parties.
Truly Nolen entered into a contract with King Cole Condominium Association, Inc. (“King Cole”) to provide pest control services. King Cole became dissatisfied with Truly Nolen’s performance of services and sued Truly Nolen in Hillsborough County, Florida. As its first action in the litigation, Truly Nolen filed a motion to transfer the case to Miami-Dade County, Florida. Simultaneously, Truly Nolen also moved to compel arbitration of the dispute, based on a mandatory arbitration clause in the parties’ contract.
Florida courts have routinely held that a party’s “active participation” in a lawsuit is inconsistent with the right to compel arbitration, and therefore constitutes a waiver of that right. Truly Nolen of Am., Inc., 2014 WL 3608888, at *2. However, Florida courts have also held that the filing of certain pre-answer motions, particularly when filed simultaneously with a motion to compel arbitration, does not waive the right to compel arbitration. Id.
The Hillsborough trial court entered an order transferring the case to Miami-Dade County. After the case was transferred to the Miami-Dade Circuit Court, Truly Nolen renewed its motion to compel arbitration. King Cole argued that Truly Nolen waived its right to compel arbitration by affirmatively arguing for a transfer of venue in the Hillsborough trial court. The Miami-Dade trial court agreed, holding that Truly Nolen’s venue motion was inconsistent with Truly Nolen’s right to arbitrate.
The Third District Court of Appeal reversed the Miami-Dade trial court. The appellate court ruled unequivocally that “Truly Nolen asserted its right to compel arbitration simultaneously with its motion to transfer venue and as its first action in the lawsuit. Such action can hardly be considered inconsistent with the right to compel arbitration.” Truly Nolen of Am., Inc., 2014 WL 3608888, at *2. The Third District went on to say that “Truly Nolen took the only action it could to protect both its right to compel arbitration and its right to seek a convenient transfer because the motion to transfer could have been waived if not filed in its first motion or pleading.” Id.
This case reminds businesses and individuals to exercise caution when litigating contracts which contain arbitration provisions, or risk potential waiver. It is prudent for defendants that wish to exercise a contractual right to arbitrate to move to compel arbitration at the first available opportunity.
Additionally, courts are responsible for confirming an arbitration award. Based on the opinion in Truly Nolen, non-resident defendants may move for a pre-answer change in venue – while contemporaneously moving to compel arbitration – without waiving their arbitration rights, in order to spare the expense of litigating to confirm an award in an inconvenient forum once the arbitration has concluded.