NETPLANNER SYSTEMS INC v. GSC CONSTRUCTION INC et al

Filing 39

ORDER denying 36 Motion to Compel Ordered by US DISTRICT JUDGE CLAY D LAND on 08/17/2017 (glg)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
NETPLANNER SYSTEMS, INC.,

*

Plaintiff,

*

vs.

*

GSC CONSTRUCTION, INC. and
LIBERTY MUTUAL INSURANCE
COMPANY,

*

CASE NO. 4:16-CV-150 (CDL)
*

Defendants.

*
O R D E R

Plaintiff filed this action

approximately sixteen months

ago, alleging that it completed work at Fort Benning under a
subcontract with Defendant GSC Construction, Inc. and that it
has yet to be paid.
provided

the

Defendant Liberty Mutual Insurance Company

payment

bonds

that

GSC

Construction

furnished

pursuant to its obligations under the Miller Act, 40 U.S.C. §
3131

et

seq.

The

parties

participated

in

discovery,

filed

dispositive motions, prepared a joint pretrial order, and argued
motions in limine.

In anticipation of trying this case during

the Court’s September trial term, the Court held a pretrial
conference.

On the eve of that conference, Defendants filed a

motion to compel arbitration.

At the pretrial conference, the

Court

waived

found

that

Defendants

their

right

to

compel

arbitration by engaging in conduct inconsistent with insisting

on their right to arbitrate the dispute and by waiting until the
last minute before trial to raise the issue.
15, ECF No. 37.

See Pretrial Order

The Court has examined Defendants’ late filed

motion and Plaintiff’s response.

As explained in the remainder

of this Order, the Court confirms its earlier ruling denying
Defendants’ motion to compel arbitration (ECF No. 36).
STANDARD
“It

is

by

now

basic

hornbook

law

that

the

Federal

Arbitration Act (FAA), [9 U.S.C. § 1 et seq.], reflects ‘both a
liberal federal policy favoring arbitration and the fundamental
principle that arbitration is a matter of contract.’”

Jones v.

Waffle House, Inc., No. 16-15574, 2017 WL 3381100, at *3 (11th
Cir. Aug. 7, 2017) (quoting AT&T Mobility LLC v. Concepcion, 563
U.S. 333, 339 (2011)).

Still, “[a]rbitration should not be

compelled when the party who seeks to compel arbitration has
waived that right.”

In re Checking Account Overdraft Litig.,

754 F.3d 1290, 1294 (11th Cir. 2014) (quoting Morewitz v. W. of
Eng. Ship Owners Mut. Prot. & Indem. Ass’n (Lux.), 62 F.3d 1356,
1365 (11th Cir. 1995)).

A party waives its right to compel

arbitration

(1)

“when

‘substantially
inconsistent

both:

participates
with

an

intent

the

party

seeking

arbitration

in

litigation

to

a

point

to

arbitrate’;

and

(2)

‘this

participation results in prejudice to the opposing party.’”
(quoting Morewitz, 62 F.3d at 1366).

2

Id.

DISCUSSION
The Court confirms today that Defendants waived the right
to

insist

upon

arbitration

of

this

dispute

by

substantially

participating in the litigation up to this point and by delaying
its request to compel arbitration until the very last minute.
By waiting until the last minute to file its motion, Defendants’
dilatory conduct has prejudiced Plaintiff by causing it to incur
every expense necessary to try this case but for those incurred
during the trial itself.
Defendants filed a joint answer that failed to raise any
objection or argument against Plaintiff’s claims based on an
agreement to arbitrate.
assisted

Plaintiff

in

See Answer, ECF No. 7.
drafting

a

proposed

Defendants

scheduling

and

discovery order, see Scheduling & Discovery Order 4, ECF No. 12,
and thereafter participated in discovery.

Defendants responded

to

never

Plaintiff’s

discovery

requests

and

argued

Plaintiff should be compelled to arbitrate its claims.

that

When the

discovery period eventually closed, Plaintiff filed a motion for
summary judgment, to which Defendants responded with no mention
that the claims were subject to an arbitration agreement.

To

the contrary, Defendants affirmatively invoked the machinery of
the federal court and filed a motion under Federal Rule of Civil
Procedure 12(b)(3) seeking dismissal or transfer of part of this
case based on improper venue.

See Defs.’ Mot. to Dismiss Claims

3

1, ECF No. 19.
not

only

litigation

The Court granted that motion.

substantially
in

this

participated

Court,

but

in

they

Defendants thus

and

also

delayed

spawned

the

new

and

additional litigation in another court.
Being parties to the subcontract containing the arbitration
agreement, Defendants are presumed to know that they had the
right to arbitrate this dispute all along.
Account

Overdraft

Litig.,

754

F.3d

at

See In re Checking

1295

(explaining

that

party to an agreement to arbitrate is presumed to know that it
has the right to arbitrate).1

Notwithstanding that knowledge,

Defendants waited until the very eve of the pretrial conference,
after

they

helped

(that

failed,

Plaintiff

again,

to

draft

mention

a

proposed

that

pretrial

Defendants

order

wished

to

arbitrate this dispute), to file their cursory two-page motion
to compel arbitration.
Defendants’

conduct

The Court finds that the totality of

over

litigation—particularly

the

their

past

sixteen

12(b)(3)

motion

months
and

of

this

failure

to

raise the slightest argument in favor of arbitration until the
very last minute—is inconsistent with the intent to arbitrate
and, instead, is consistent with the desire to litigate this
case in two federal courts.

1

While Liberty Mutual is technically not a party to the arbitration
agreement, the Court uses “Defendants” for simplicity.

4

By belatedly attempting to invoke their right to arbitrate,
Defendants have prejudiced Plaintiff.

“Substantially invoking

the litigation machinery qualifies as the kind of prejudice that
is the essence of waiver.”

Id. at 1295 (quoting E.C. Ernst,

Inc. v. Manhattan Constr. Co., 559 F.2d 268, 269 (5th Cir. 1977)
(per curiam)).
is

to

“A prime objective of an agreement to arbitrate

achieve

results.’”

‘streamlined

and

expeditions

Id. (quoting Preston v. Ferrer, 552 U.S. 346, 357

(2008)).

Defendants

invoking

proceedings

their

Plaintiff

right

spend

time

answered
to

Plaintiff’s

arbitration

and

money

and

complaint

without

proceeded

to

let

discovery

and

propounding

reviewing evidence, filing briefs seeking summary judgment and
opposing Defendants’ motion to dismiss or transfer, and moving
for

in

issues

limine
for

evidentiary

trial

and

rulings,

plan

its

presumably

to

presentation

of

narrow
the

the

case.

Additionally, Defendants have forced Plaintiff to litigate half
of its claims in another court in another jurisdiction away from
its home, which will likely result in duplicative expenses and
even more delays in getting paid.

“By slowing the process and

magnifying its costs, [Defendants’] delay undermined the purpose
of

the

Federal

Arbitration

Act’s

favoring arbitration agreements.’”

‘liberal

federal

policy

Id. (quoting Moses H. Cone

Mem’l Hosp. v. Mercury Cosntr. Copr., 460 U.S. 1, 24 (1983));
see also Robinson v. Alston, 596 F. App’x 871, 873 (11th Cir.

5

2015)

(per

curiam)

(finding

prejudice

where

party

invoking

arbitration agreement caused opposing party to endure costs in
duplicative proceedings in another court).
delay

and

prejudiced

substantial
Plaintiff,

participation
the

Court

in

finds

Because Defendants’
this

that

litigation

Defendants

has

waived

their right to compel arbitration.
CONCLUSION
The FAA was enacted “to relieve congestion in the courts
and to provide parties with an alternative dispute resolution
that

would

be

speedier

Morewitz, 62 F.3d at 1364.

and

less

costly

than

litigation.”

Defendants’ eve-of-trial motion is

not only inconsistent with an agreement to arbitrate but also
plainly flouts the purposes of the FAA, all to the prejudice of
Plaintiff.

Accordingly, the Court confirms its earlier ruling

denying Defendants motion to compel arbitration (ECF No. 36).
IT IS SO ORDERED, this 17th day of August, 2017.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

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