Arbitration – Waiver of Right to Arbitrate – Federal Discovery Practice

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Defendant had all it needed to assert its right to arbitrate when the complaint was filed. Before doing so, however, it took advantage of federal discovery practice. Only as that process was ending, Defendant, armed with the fruits of that process, sought to enforce its right to arbitration. But by that time, Claiborne’s actions had waived that right.

We affirmed the district court’s decision to deny Defendant’s motion to compel arbitration.

Gordon executed a General Durable Power of Attorney (GDPOA) in 2016, appointing his wife, Cheryl as his attorney-in-fact if he became incapacitated. In 2022, Gordon, suffering from dementia, moved into Defendant memory care facility in Summerville, South Carolina. Before Gordon was admitted to the facility, Cheryl signed a “Residency Agreement” and a document titled “Binding Arbitration Agreement,” which was “Exhibit F” to the Residency Agreement. On both documents, Cheryl wrote Gordon’s name on the signature line labeled “Resident Signature” and signed her name on the line labeled “Legal Representative Signature.” Unfortunately, Gordon passed away four months later from injuries he sustained after he walked away from the facility, fell, and hit his head.

In 2023, Cheryl, as personal representative of her late husband’s estate, sued Defendant on various state-law claims arising from Gordon’s death. Defendant raised arbitration as one of several affirmative defenses. Even so, Defendant did not move to compel Cheryl to arbitrate at that time. Instead, between July 2023 and March 2024, the case proceeded in the ordinary course.

Nearly eight months after the litigation began, Defendant changed course and moved to compel arbitration and to stay the case. Cheryl argued in part that Defendant waived its right to arbitration by actively litigating the case and acting inconsistently with that right. The district court denied the motion to compel arbitration, finding that Defendant waived its right to arbitrate “by actively participating in the judicial process and by taking actions inconsistent with th[at] right[.]”

Defendant contended that the district court erred in denying its motion to compel arbitration by incorrectly concluding that it waived its right to arbitrate. Defendant knew of its right to arbitrate and had everything it needed to move to compel arbitration from the moment Cheryl filed the complaint. Rather than invoke its right to arbitrate, Defendant sat on its hands for nearly eight months. That alone tilts toward finding waiver here. Along the way, Defendant sometimes stated that, by taking some action, it was not waiving its right to compel arbitration. These representations took place while Defendant simultaneously enjoyed the fruits of litigating a case in federal court. Such double-mindedness counsels in favor of waiver; Defendant’s strategic choices were at odds with any efforts to truly preserve its right to arbitrate.

Affirmed.

Sarver v. Claiborne Senior Living LLC (Lawyers’ Weekly No. 003-033-25, 10 pp.) (Per Curiam) Appealed from the U.S. District Court for the District of South Carolina, at Charleston (Bruce H. Hendricks, J.) ARGUED: Elizabeth Craigmile Moran, HALL BOOTH SMITH, P.C., Greenwood Village, Colorado, for Appellants. Frederick Elliotte Quinn, IV, STEINBERG LAW FIRM LLP, Summerville, South Carolina, for Appellee. ON BRIEF: Ashley S. Heslop, HALL BOOTH SMITH, P.C., Charleston, South Carolina, for Appellants. Steven E. Goldberg, THE STEINBERG LAW FIRM, LLC, Summerville, South Carolina, for Appellee. U.S. Court of Appeals for the Fourth Circuit Unpublished