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A Florida appellate court has held that a party's extensive litigation activity in small claims court can waive the right to arbitrate claims once those claims are transferred to a general trial court, even if the party attempts to preserve the arbitration agreement as an affirmative defense in its small claims filings and promptly moves to compel arbitration after the matter is transferred to general court at the adverse party's request.
In Strominger v. AmSouth Bank, No. 2D07-4971, 2008 WL 4568546 (Fla. Ct. App. Oct. 15, 2008), Strominger filed a small claims court action against AmSouth Bank in connection with his accounts and loans with the bank. AmSouth cited an arbitration agreement between the parties as its first affirmative defense, but did not move to compel arbitration. Instead, the parties engaged in discovery and filed cross-motions for summary judgment.
After retaining counsel, Strominger twice attempted to transfer the matter to a trial court of general jurisdiction because the amended amount in controversy exceeded the jurisdictional limits of the small claims court. Despite AmSouth's objections, the small claims court granted Strominger's second motion to transfer. After the transfer, AmSouth moved to compel arbitration of Strominger's claims. The trial court granted the motion, noting that AmSouth had preserved this defense in prior filings.
On appeal, the Court reversed the order compelling arbitration, holding that AmSouth had waived its right to arbitrate through "active participation" and "extensive litigation" in the small claims court. The Court found AmSouth could find "no support in the case law for requiring arbitration" where extensive litigation activity in the small claims court had occurred. Instead, the Court simply focused on the time that had passed from the institution of the first claim and the attendant litigation activity in the small claims court, including discovery actions and motions for summary judgment.
The Court was also persuaded to reject the motion to compel because AmSouth opposed consolidation of Strominger's first set of claims with a second separate cause of action that was compelled to arbitration at a later date. By letting the first matter proceed in small claims court for months without moving to compel after the second set of claims were compelled to arbitration, the Court was convinced that AmSouth's activity in the small claims court waived the right to arbitrate the first claims.
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