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Staffing Firm’s Motion to Dismiss Did Not Create Waiver of Right to Compel Arbitration of Contract Dispute with Client

A workplace staffing firm’s attempt to force one of its staffing clients to arbitrate a dispute between the two sides received new life when the 3d District Court of Appeal reversed a lower court ruling that had concluded that the staffing firm waived its right to arbitration. The staffing firm never engaged in acts of active participation and never took a position inconsistent with its right to arbitration, so it was still entirely within its rights to seek to compel arbitration.

The case related to AMS Staff Leasing, Inc.’s contract with Ocha Engineering Corp. stating that AMS would provide Ocha with workers for one of Ocha’s projects. AMS provided the workers, but one of them became injured while working on the Ocha job. The worker sued both the staffing firm and the engineering firm for workers’ compensation.

When the case went before a workers’ compensation judge, the engineering firm claimed that its contract with the staffing firm contained a term stating that AMS would indemnify Ocha for any workers’ compensation claims. The staffing firm argued that the workers’ compensation hearing was not the proper place to address Ocha’s claim, since the administrative judge only had the authority to rule on the workers’ compensation issue. The workers’ compensation judge agreed and declared that the parties would have to take their contract dispute to a trial court for resolution.

Ocha did exactly that, filing a breach of contract suit against AMS. The staffing firm originally asked the trial court to dismiss the case on the merits but later added a motion asking the court to compel arbitration of the contract dispute. The trial court ruled that, when the staffing firm opted not to raise the arbitration issue in the workers’ compensation court, and again was silent about arbitration in its original motion to dismiss, it waived its right to compel arbitration.

The appeals court disagreed. If a contract calls for the arbitration of disputes, the parties to that contract can only waive their right to compel arbitration by engaging in actions that are “inconsistent with that right.” For example, if a party actively took part in a lawsuit where the subject matter was something governed by the contract’s arbitration clause, that would create a waiver.

AMS never engaged in any conduct that constituted active participation. Although it filed a motion to dismiss in Ocha’s breach of contract lawsuit, Florida law does not recognize motions to dismiss as the sort of active participation needed to create a waiver. Additionally, the staffing firm’s motion before the workers’ compensation judge did not constitute a waiver, either. Not only did the workers’ compensation judge lack the authority to rule on the breach of contract claim, the judge also could not have compelled arbitration of that dispute. The motion AMS made before the workers’ compensation judge was “the only action it could have taken in that scenario.”

Commercial contract disputes often involve many aspects, including the potential of one or more parties’ right to compel arbitration. To ensure you have the knowledgeable advice and zealous advocacy you need on your side for your contract dispute, consult the Florida commercial litigation attorneys at Stok Kon + Braverman. Our attorneys can help you to defend you rights under the contract to the fullest extent possible.

Contact us online or by calling (954) 237-1777 to schedule your consultation.

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