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A party does not waive its right to compel arbitration when its actions do not force the opposing party to incur additional legal expenses or endure procedural delay, according to the Mississippi Supreme Court.
In Century 21 Maselle and Associates, Inc. v. Smith, No. 2005-IA-01696-SCT, 2007 WL 2325271 (Miss. Aug. 16, 2007), Century 21, as an agent of Smith, entered into a real estate agreement with Hendon, containing a provision to arbitrate any controversy or claims arising out of or relating to the agreement. Smith later filed a complaint against Century 21 and other parties, alleging negligence and fraudulent misrepresentation in violation of the agreement. In response to the complaint, Century 21 filed a document entitled "Jury Trial Requested," but the pleading also averred that the cause of action should be dismissed and arbitration compelled. Century 21 also noticed its motion to compel, sixty-one days after suit was filed but after it had requested written discovery.
The trial court denied the motion to compel, holding that Century 21 had waived its right to arbitrate. Specifically, the court held that Century 21 had waived the right to compel by serving discovery on Smith and requesting a jury trial in its answer.
On appeal, the Court found that Century 21 had not waived its right to compel arbitration. The Court observed that, despite titling its answer as a request for a jury trial, Century 21 did assert its right to compel arbitration as an affirmative defense. Furthermore, the Court noted that the fact that the answer was framed as a request for a jury trial did not add to the expense of the litigation, nor did it substantially invoke the judicial process, since the request is automatic under Mississippi law.
The Court did find that Century 21's discovery request was "precipitously close to satisfying the waiver exception," but that Smith had not borne the burden of showing a detriment or prejudice to Smith's position through Century 21's request. While the Court noted that discovery "should not be initiated as its use may be deemed active participation" in litigation, waiver of the right to compel was not found when Smith did not incur legal expense or suffer procedural delay, especially since Smith did not answer Century 21's discovery request.
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