Opinion ID: 1836737
Heading Depth: 2
Heading Rank: 2

Heading: whether the university and the nursing pllc waived their right to arbitration.

Text: ¶ 15. The University and the Nursing PLLC contend that accountings are subject to arbitration clauses. The chancellor did not reach this issue because she ruled that the University and the Nursing PLLC (1) did not waive their right to arbitration because of participating in litigation, but, (2) did waive their right to arbitration because of their delay in seeking arbitration. We will now address these rulings. ¶ 16. The grant or denial of a motion to compel arbitration is reviewed de novo. East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002). See also Webb v. Investacorp, Inc., 89 F.3d 252, 256 (5th Cir.1996).
¶ 17. A party seeking to invoke arbitration may waive that right if it actively participates in litigation. Cox v. Howard, Weil, Labouisse, Friedrichs, Inc., 619 So.2d 908, 914 (Miss.1993) (citing the Federal Arbitration Act which applies to claims arising from interstate commerce); [6] see also Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156, 1158-59 (5th Cir.1986); Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497 (5th Cir.1986). Waiver of arbitration is not a favored finding, and there is a presumption against it; this is particularly true when the party seeking arbitration has included a demand for arbitration in its answer, and the burden of proof then falls even more heavily on the party seeking to prove waiver. Steel Warehouse Co. v. Abalone Shipping Ltd. of Nicosai, 141 F.3d 234, 238 (5th Cir.1998); Miller Brewing, 781 F.2d at 496. We have expressed our intention to uphold arbitration agreements if at all possible under the circumstances. See IP Timberlands Operating Co. v. Denmiss Corp., 726 So.2d 96, 104 (Miss.1998) (Articles of agreement to arbitrate ... are to be liberally construed so as to encourage the settlement of disputes and the prevention of litigation, and every reasonable presumption will be indulged in favor of the validity of arbitration agreements.). ¶ 18. One encyclopedia has opined that serving an answer and filing a motion to dismiss does not constitute a waiver of arbitration by participation in litigation: Whether participation in an action is a waiver of the right to arbitration depends on whether the participation bespeaks an intention to abandon the right.... It has been held that the service of an answer in an action on the contract does not constitute waiver of the right to arbitration, even though the answer does not set up the arbitration clauses as a defense.... The mere serving of an answer and the making of a motion to dismiss a complaint does not constitute a waiver. 6 C.J.S. Arbitration § 37 (1975). ¶ 19. The Fifth Circuit has held that where the party seeking arbitration has made a timely demand for arbitration at or before the commencement of judicial proceedings in the trial court, the burden of proving waiver falls even more heavily on the shoulders of the party seeking to prove waiver. Tenneco Resins, Inc. v. Davy Int'l, AG, 770 F.2d 416, 420 (5th Cir.1985) (quoting Southwest Indus. Imp. & Exp., Inc. v. Wilmod Co., 524 F.2d 468, 470 (5th Cir.1975)); see also General Guar. Ins. Co. v. New Orleans Gen. Agency, Inc., 427 F.2d 924, 929 n. 5 (5th Cir.1970) (Once the defendant, by answer, has given notice of insisting on arbitration the burden is heavy on the party seeking to prove waiver.). ¶ 20. In a case involving interstate commerce and therefore the Federal Arbitration Act, we have held that a right to arbitrate was waived when the party requesting arbitration had participated in almost every aspect of litigation and made extensive use of various modes of pre-trial litigation. Cox, 619 So.2d at 913 (citing Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156 (5th Cir.1986) (Right to arbitrate waived by party who had initiated discovery and dispositive motions before demanding arbitration)). In Cox, the party demanding arbitration filed an answer and counterclaim, a motion for summary judgment, argued the motion for summary judgment, requested two continuances, filed an interlocutory appeal, and requested various types of discovery. Cox, 619 So.2d at 914. But see Tenneco Resins, 770 F.2d at 420 (A defendant did not waive arbitration, prior to moving for a stay, by filing an answer, interrogatories and a request for production of documents, moving for a protective order, and agreeing to a joint motion for continuance requesting an extension of the discovery period). ¶ 21. Phillips argues that the University and the Nursing PLLC waived their right to arbitrate because they filed a response to her petition for an accounting and objections to her discovery requests and attended a hearing on her motion to compel. In response, the University and the Nursing PLLC contend that they asserted their right to arbitration in their answer and at the hearing on the motion to compel, and that they therefore did not waive their right to arbitrate. ¶ 22. The chancellor found that the participation by the University and the Nursing PLLC in this litigation did not constitute a waiver of its right to arbitrate. We agree that, under the above-cited precedent, the minimal pretrial activities of the University and the Nursing PLLC did not constitute a waiver of arbitration. The University and the Nursing PLLC did not propound any discovery requests to Phillips. They objected to Phillips' discovery requests, raised arbitration in their answer, and asserted the right to arbitration at a subsequent hearing on a motion to compel. ¶ 23. As a practice note, parties desiring to seek arbitration should promptly file and present to the trial court a motion to stay proceedings and a motion to compel arbitration.
¶ 24. Congress' clear intent, in the Arbitration Act, [was] to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Co., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983) (quoted with favor in Miller Brewing, 781 F.2d at 496). In Miller Brewing, Fort Worth Distributing Company first sued Miller Brewing, and then, three and a half years later, after losing in court, sought arbitration. The Fifth Circuit held Miller Brewing could hardly be seen as moving the parties into arbitration `as quickly and easily as possible.' Id. at 497. ¶ 25. Phillips argues that University and the Nursing PLLC waived their right to arbitrate by their delay in asserting their right to arbitration. She contends that the dispute originated in June of 2000 and that the University and the Nursing PLLC chose to dispute this matter with Phillips outside the arbitration process by resorting to an internal grievance process. The University and the Nursing PLLC argue that they did not waive arbitration but, rather, timely made their demand. ¶ 26. Phillips initially brought up her dissatisfaction with the University and the Nursing PLLC and her request for an accounting in a letter to the Dean of Nursing on August 11, 2000. Phillips was terminated by letter dated August 31, 2000. On September 15, 2000, Phillips filed the petition for accounting. On November 9, 2000, the University and the Nursing PLLC asserted arbitration as an affirmative defense in their answer, but the issue was not brought before the chancellor until the hearing on the motion to compel in March of 2001. The chancellor found that Phillips was prejudiced as this matter was not expeditiously referred to arbitration. ¶ 27. We disagree with the chancellor's finding that University and the Nursing PLLC did not expeditiously refer the matter to arbitration. The Fifth Circuit has held that a delay of 13 months did not constitute a waiver, Walker v. J.C. Bradford & Co., 938 F.2d 575 (5th Cir.1991), but that a delay of 17 months did constitute a waiver. Price, 791 F.2d at 1160-62. There was no undue delay by the University or the Nursing PLLC in asserting arbitration before the chancellor. We therefore reverse the chancellor's finding that the delay of the University and the Nursing PLLC in raising arbitration constitutes a waiver of the right to arbitrate.
¶ 28. Waiver will be found when the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party. Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th Cir.1999); Miller Brewing, 781 F.2d at 497. ¶ 29. The chancellor found that Phillips had been prejudiced by the actions of the University and the Nursing PLLC: [Phillips] has been relieved from her current position as faculty on the nursing staff, incurred expense in seeking resolution of this matter and much time has past since her original request for information ... Thus, had this matter been expeditiously referred to arbitration the need for terminating Phillips' contract may have been avoided. ¶ 30. However, according to the Fifth Circuit, [P]rejudice ... refers to the inherent unfairnessin terms of delay, expense, or damage to a party's legal positionthat occurs when the party's opponent forces it to litigate an issue and later seeks to arbitrate that same issue. Subway Equip., 169 F.3d at 327 (citing Doctor's Associates v. Distajo, 107 F.3d 126, 134 (2d Cir.), cert. denied, 522 U.S. 948, 118 S.Ct. 365, 139 L.Ed.2d 284 (1997)). Phillips made no showing of prejudice due to delay, expense, or damage to her legal position. Furthermore, neither the University nor the Nursing PLLC invoked the judicial proceedingsPhillips did. Finally, because we find that the University and the Nursing PLLC did not substantially participate in litigation and did not cause an undue delay, their actions could not have caused any prejudice to Phillips.