Century 21 Maselle and Assoc., Inc. et al. v. Smith


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Docket Number: 2005-IA-01696-SCT
Linked Case(s): 2005-IA-01696-SCT

Supreme Court: Opinion Link
Opinion Date: 08-16-2007
Opinion Author: RANDOLPH, J.
Holding: Reversed and Remanded

Additional Case Information: Topic: Contract - Arbitration - Waiver - M.R.C.P. 38
Judge(s) Concurring: SMITH, C.J., EASLEY, CARLSON, DICKINSON AND LAMAR, JJ.
Judge(s) Concurring Separately: DIAZ, P.J. JOINED BY GRAVES, J.; GRAVES, J. JOINE
Non Participating Judge(s): WALLER, P.J.
Dissenting Author : DIAZ, P.J.; GRAVES, J.
Dissent Joined By : GRAVES, J.; DIAZ, P.J.
Procedural History: Venue; Motion to Compel Arbitration
Nature of the Case: CIVIL - CONTRACT; Motion to Transfer Venue

Trial Court: Date of Trial Judgment: 08-17-2005
Appealed from: Hinds County Circuit Court
Judge: Winston Kidd
Disposition: Denied Appellant's Motion to Compel Arbitration & Motion to Transfer Venue
Case Number: 251-04-1223CIV
  Consolidated: 2005-CA-01814

  Party Name: Attorney Name:  
Appellant: CENTURY 21 MASELLE AND ASSOCIATES, INC., AND CINDY SMITH




JOE S. DEATON, III TRAVIS MAC HAYNES DAVID CHRISTOPHER DANIEL



 

Appellee: TONY L. SMITH AND LINDA N. SMITH DONALD W. BOYKIN  

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Topic: Contract - Arbitration - Waiver - M.R.C.P. 38

Summary of the Facts: John Hendon entered into a contract to sell his home to Tony Smith and Linda Smith. Century 21 and its agent, Cindy Smith, represented the Smiths. The contract contained an arbitration clause. The Smiths later filed a complaint against John Hendon, Union Planters Bank, NA, First American Real Estate Solutions of Texas, L.P., Successor in Interest to First American Flood Data Services, Inc., Century 21 Maselle & Assoc., Inc., Cindy Smith, Coldwell Banker Graham & Associates, Inc., Cindy Lai, Mark S. Bounds Realty Partners, Inc., Donald Conn, Jr., and Wayne C. Williams for alleged negligence and/or fraudulent inducement in the purchase of their new home, in violation of the contract. Century 21 and Cindy Smith filed separate answers and affirmative defenses. The first defense was entitled “Motion to Dismiss” asking that this cause of action be dismissed and arbitration compelled. The circuit court denied both Century 21's and Cindy Smith’s motion to compel arbitration and to transfer venue. The Supreme Court granted an interlocutory appeal.

Summary of Opinion Analysis: The circuit court found that the right to arbitration had been waived in this case. Arbitration can be waived where a party actively participates in a lawsuit or takes other action inconsistent with the right to arbitration. Either active participation or substantial invocation of the litigation process which results in detriment or prejudice to the other party, or engaging in conduct inconsistent with timely enforcing the arbitration agreement, constitutes waiver. However, parties claiming waiver must offer sufficient evidence at a hearing to overcome the presumption in favor of arbitration. Here, the Smiths failed to offer any evidence to defeat the presumption. Century 21 and Cindy Smith simultaneously requested a jury trial and asserted a right to arbitration in their answers and affirmative defenses, only forty-one days after the Smiths filed their amended complaint. They noticed the same for a hearing a mere twenty days thereafter. This act simply does not rise to the level of active participation in the lawsuit, substantial invocation of the judicial process, or a delay in pursuing the right. While a request for a jury trial is inconsistent with asserting the right to arbitration, standing alone it does not constitute waiver. The request for a jury trial did not delay resolution of the controversy, did not add to the expense of litigation, and did not substantially invoke the judicial process. Nor, for that matter, did it even constitute increased involvement in the litigation process, as it is automatic under M.R.C.P. 38, unless opted out of, in civil actions in Mississippi. The forum of arbitration is outside the scope of the Mississippi Rules of Civil Procedure, and discovery in that forum is neither automatic nor guaranteed. Initiating discovery is inapposite to seeking to compel arbitration. Although Century 21 and Cindy Smith’s acts are precipitously close to satisfying the waiver exception by initiating discovery, the Smiths offered no evidentiary basis for the lower court to find detriment or prejudice either by incurred legal expense or procedural delay, and the record reflects they failed to answer the discovery. Litigants shall prospectively separately file a “Motion to Compel Arbitration and to Stay Proceedings Pending Arbitration,” and then promptly schedule and notice a hearing on their motions. Discovery, a procedural implement of the courts, should not be initiated as its use may be deemed active participation in a court proceeding and inconsistent with the right to arbitration.


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