Green Tree Servicing, LLC v. McLeod

• Decision Date: 26 June 2009
• Docket Number: No. 2D08-2978.,2D08-2978.
• Parties: GREEN TREE SERVICING, LLC, Appellant, v. Elizabeth Dianne McLEOD, as Personal Representative of the Estate of Stanley McLeod, deceased, Appellee.
• Court: Florida District Court of Appeals

15 So.3d 682

GREEN TREE SERVICING, LLC, Appellant, v. Elizabeth Dianne McLEOD, as Personal Representative of the Estate of Stanley McLeod, deceased, Appellee.

No. 2D08-2978.

District Court of Appeal of Florida, Second District.

June 26, 2009.

Rehearing Denied September 2, 2009.

Mary Ruth Houston and Glennys Ortega Rubin of Shutts & Bowen, LLP, Orlando, for Appellant.

Charles M. Schropp and Charles P. Schropp of Schropp Law Firm, P.A., Tampa, for Appellee.

EN BANC

WALLACE, Judge.

Green Tree Servicing, LLC (Green Tree), appeals a nonfinal order denying its motion to stay the action in the court below and to compel arbitration.¹ Because we find no error in the circuit court's conclusion that Green Tree had waived its right to arbitration by serving multiple discovery requests related to the merits of the pending action, we affirm the circuit court's order. In so doing, we recede from Merrill Lynch Pierce Fenner & Smith, Inc. v. Adams, 791 So.2d 25 (Fla. 2d DCA 2001).

I. THE FACTS AND PROCEDURAL HISTORY

On October 21, 1998, Stanley McLeod purchased a manufactured home from Quality Mobile Homes, Inc. (the Seller). In connection with this purchase, Mr. McLeod executed a Manufactured Home Retail Installment Contract and Security Agreement (the Contract) with the Seller. The Contract contained an arbitration clause which provided — in pertinent part — that "[a]ll disputes, claims or controversies arising from or relating to this Contract or the parties thereto shall be resolved by binding arbitration." Green Tree ultimately acquired ownership of the Contract.

In November 2005, Mr. McLeod filed an action against Green Tree in the Hillsborough County Circuit Court for alleged violations of the Florida Consumer Collection Practices Act. Green Tree promptly removed the action to the United States District Court for the Middle District of Florida, Tampa Division. Two days after removing the action to federal court, Green Tree filed its motion to stay case and compel arbitration. The federal court did not rule on this motion. Instead, on February 27, 2006, the federal court remanded the case to the circuit court. On March 20, 2006, Green Tree filed its renewed motion to stay case and compel arbitration in the circuit court.

While his case was being transferred from the circuit court to federal court and back to the circuit court, Mr. McLeod died. His widow, Elizabeth Dianne McLeod, was appointed as the personal representative of her late husband's estate and was substituted as the party plaintiff in the action against Green Tree. In March 2007, Mrs. McLeod filed a second amended complaint that added a claim against Green Tree for the wrongful death of Mr. McLeod. In response, Green Tree reasserted its arbitration claim by filing a motion to stay case and compel arbitration of the second amended complaint.

Much of the later procedural history of the case stemmed indirectly from the delay that ensued in obtaining a ruling on Green Tree's request for arbitration. For reasons not material to our decision, the hearing on Green Tree's arbitration motion was scheduled, continued, and rescheduled numerous times. The circuit court did not actually hear the motion until almost two and one-half years after Mr. McLeod had filed the lawsuit.

In March 2006, Green Tree filed a motion requesting a protective order staying any discovery in the case pending a ruling on its motion to stay and compel arbitration. It does not appear that the circuit court ever ruled on this motion. In September 2006, Green Tree filed a renewed motion for protective order as to discovery pending a ruling on its motion to compel arbitration. In the renewed motion, Green Tree requested that all discovery that was not related to its pending motion to compel arbitration be stayed pending a ruling on that motion.

On February 28, 2007, the circuit court conducted a hearing on Green Tree's renewed motion to stay discovery. At the hearing, counsel for Mrs. McLeod informed the court that he wished to conduct additional discovery related to Green Tree's arbitration motion. The circuit court ruled that Mrs. McLeod would have an additional ninety days to complete "arbitration related discovery." In a significant exchange at the hearing, counsel for both parties agreed that discovery related to the merits of Mrs. McLeod's claims would not be appropriate until Green Tree's pending arbitration motion was resolved:

[Counsel for Green Tree]: Your Honor, I believe [counsel for Mrs. McLeod] has agreed to this on the record, but I want to make sure it's clear at this point, because all that's being litigated right now is whether this should go to arbitration. We are not — in order not to waive our right to arbitration, we cannot participate in any arbitration — in any discovery that goes outside the — issue of arbitration itself.

[Counsel for Mrs. McLeod]: I did stipulate to that.

THE COURT: Okay.

Thus Green Tree acknowledged at the hearing that its participation in discovery related to the merits of the case would result in a waiver of its claimed right to arbitration.

Up to this point in the litigation, Green Tree had been represented by Shutts & Bowen LLP, its current appellate counsel. However, on May 25, 2007, another law firm filed a notice of appearance as counsel for Green Tree. On July 12, 2007, in accordance with a stipulation, the circuit court entered an order substituting the new law firm as counsel for Green Tree.

Approximately one month later, the new law firm served a series of discovery requests on Mrs. McLeod. These discovery requests were all directly related to the merits of her pending claims. The discovery requests included the following items: (1) "Wrongful Death Request to Produce to Plaintiff," (2) "Collateral Source Interrogatories to Plaintiff," (3) "Expert Interrogatories to Plaintiff," and (4) "Wrongful Death Interrogatories to Plaintiff." Mrs. McLeod did not comply with the discovery requests. In November 2007, Green Tree's new counsel wrote a letter to Mrs. McLeod's counsel requesting that the completed discovery be forwarded within ten days of the receipt of the letter. The discovery responses were not forthcoming, and Green Tree filed its motion to compel discovery responses on February 8, 2008. Green Tree scheduled a hearing on its motion to compel for March 12, 2008. On the day of the scheduled hearing, Green Tree withdrew its discovery requests, withdrew the motion to compel, and cancelled the scheduled hearing on its motion.

II. THE CIRCUIT COURT'S RULING

Green Tree's motion to stay and compel arbitration was finally heard on April 22, 2008. At the hearing, Mrs. McLeod opposed arbitration on two grounds: (1) the arbitration clause was both procedurally and substantively unconscionable and (2) Green Tree had waived its right to arbitration. The circuit court found that the arbitration clause was neither procedurally nor substantively unconscionable. However, the circuit court agreed with Mrs. McLeod that Green Tree had waived its right to arbitration by participating in discovery related to the merits of the case. The circuit court's oral announcement of its ruling — in pertinent part — was as follows:

THE COURT: Now making a special appearance to file a Motion to Quash Service of Process. So there's no waiver there. But engaging in discovery — engaging in discovery on the merits of the case though, I think that crosses the line.

....

However, I think, if the interrogatories had been sent and then right away withdrawn, that's one thing. But they were sent and there were letters sent and finally the Motion to Compel. I believe the Motion to Compel was noticed for a hearing, wasn't it?

....

But, in any event, it went so far — it went so far as to — and from that I can infer — you know, from that I can infer that [Mrs. McLeod at] least [was] put on notice that [she] had to start getting some discovery, and discovery was not toward arbitrability. It was toward the damages issue of the case. So I'll find waiver.

The circuit court made similar findings in its written order denying Green Tree's arbitration motion:

This Court finds [Green Tree] waived the right to arbitration by taking actions inconsistent with its desire to arbitrate and participating in the lawsuit. Specifically, the court finds that on August 16, 2007[, Green Tree] sent multiple sets of interrogatories and a request to produce to [Mrs. McLeod] relating to issues other than whether this case was subject to arbitration. Counsel for [Green Tree] also subsequently sent a letter on November 16, 2007[,] to [Mrs. McLeod's] counsel demanding that these discovery requests be answered and ultimately moved to compel responses to this discovery on February 8, 2008.

Thus the circuit court based its conclusion about waiver on Green Tree's participation in discovery directed to the merits of Mrs. McLeod's claims.

III. DISCUSSION

A. Preliminary Matters

"In determining whether a dispute is subject to arbitration, courts consider at least three issues: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived." Stacy David, Inc. v. Consuegra, 845 So.2d 303, 306 (Fla. 2d DCA 2003) (citing Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999)). Here, we address only the issue of waiver.

"Generally, whether a party has waived the right to arbitrate is a question of fact, reviewed on appeal for competent, substantial evidence to support the lower court's findings." Mora v. Abraham Chevrolet-Tampa, Inc., 913 So.2d 32, 33 (Fla. 2d DCA 2005) (citing Raymond James Fin. Servs., Inc. v. Saldukas (Saldukas I), 851 So.2d 853, 856 (Fla. 2d DCA 2003), approved, 896 So.2d 707 (Fla.2005)). On the other hand, "the standard of review applicable to the trial court's construction of the arbitration provision, and to its application of the law to the facts found, is de novo." Gainesville...