DAVID WILSON v. AMERILIFE OF EAST PASCO, L L C , 270 So. 3d 542 ( 2019 )

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
DAVID WILSON, )
)
Appellant, )
)
v. ) Case No. 2D18-2431
)
AMERILIFE OF EAST PASCO, LLC )
(f/k/a AMERI-LIFE AND HEALTH )
SERVICES OF EAST PASCO, LLC), a )
Delaware Limited Liability Company, )
)
Appellee. )
)
)
Opinion filed May 8, 2019.
Appeal from the Circuit Court for Pinellas
County; George M. Jirotka, Judge.
Christopher L. DeCort and Nicole Deese
Newlon of Johnson & Cassidy, P.A.,
Tampa, for Appellant.
Ryan M. Scully, Clearwater (withdrew
after briefing); R. Nathan Hightower,
Clearwater, for Appellee.
MORRIS, Judge.
David Wilson appeals a nonfinal order compelling arbitration of his
counterclaims, thereby staying the litigation of them, in an action brought by AmeriLife
of East Pasco, LLC, f/k/a Ameri-Life and Health Services of East Pasco, LLC.1 We
conclude that the trial court erred in compelling arbitration because the filing of
AmeriLife's complaint resulted in a waiver of its right to seek arbitration and the filing of
Wilson's counterclaims did not revive that right to arbitration. We therefore reverse the
order on appeal.
BACKGROUND
AmeriLife is an insurance company. Wilson worked as a sales agent for
AmeriLife from November 2008 until August 2016, when his employment was
terminated. AmeriLife filed a complaint against Wilson in November 2017 alleging that
after Wilson's employment was terminated, he violated provisions of an independent
agent agreement (agent agreement) and an independent agent noncompete agreement
(noncompete agreement). As a result, AmeriLife sought damages for breach of
contract, tortious interference with contractual and advantageous business agreements,
and misappropriation and use of confidential trade secrets. AmeriLife also sought an
injunction and restitution for unjust enrichment.
The agent agreement specifically includes a section entitled
"ARBITRATION," which provides in relevant part that if the parties did not settle any
dispute within sixty calendar days after the initiation of negotiation, then all claims
(except for claims made under paragraphs 10 and 12) "arising out of or relating to" the
agreement shall be resolved by arbitration. The arbitration provision provides the
exception that "[n]othing herein contained shall in any way deprive either party of its
1We have jurisdiction pursuant to Florida Rules of Appellate Procedure
9.030(b)(1)(B) and 9.130(a)(3)(C)(iv).
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right to seek a temporary restraining order, preliminary or permanent injunction or other
equitable relief in a court of competent jurisdiction."
Conversely, the noncompete agreement does not include an arbitration
provision. This fact is not in dispute. On the issue of remedies, the noncompete
agreement provides, in relevant part, that "[i]n addition to any remedies otherwise
available at law, . . . the Agency shall be entitled to recover damages for your
replacement of, or interference with, business of Agency, whether done directly or
indirectly, by you or to which you are a participant in any manner." The remedies
provision of the noncompete agreement also sets forth a liquidated damages amount for
each day that Wilson is found to be in violation of that agreement.
The noncompete agreement prohibited Wilson from competing with
AmeriLife within thirty-five miles of AmeriLife's offices for a period of twenty-four months
following the effective date of his termination. This meant that Wilson could not sell
certain insurance products or solicit or deal with AmeriLife's customers regarding the
sale of insurance products of the type sold by AmeriLife during the stated period. The
noncompete agreement also prohibited Wilson from misappropriating AmeriLife's
confidential information and trade secrets both during and following his termination.
Similarly, the agent agreement also contained terms prohibiting Wilson from contacting
and soliciting AmeriLife's customers for the purpose of obtaining their business
regarding certain insurance products and prohibiting Wilson from using or disclosing
AmeriLife's trade secrets and confidential information.
AmeriLife alleged that shortly after Wilson's termination, it learned that he
was violating both the agent agreement and the noncompete agreement by attempting
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to establish business relationships with current and potential AmeriLife customers
and/or contractors and by attempting to move their business to him in lieu of beginning
or continuing their business relationship with AmeriLife.
Wilson filed an answer and affirmative defenses which included
counterclaims for declaratory and injunctive relief, breach of contract based on improper
termination and vested renewal commissions or commission account statements, an
accounting (relating to the commissions), and for violations of the Fair Labor Standards
Act (based on an alleged overtime violation).
Instead of responding to the counterclaims, AmeriLife filed its motion to
compel arbitration and to stay litigation of Wilson's counterclaims.2 AmeriLife
acknowledged that the agent agreement contained an arbitration provision that applied
to "all claims" arising out of that agreement, and it argued that all of Wilson's
counterclaims "arise out of what Wilson alleges was the improper termination of his
Agent Agreement and damages related to the termination of the Agent Agreement."
Wilson filed a response in opposition to the motion to compel arbitration,
arguing that AmeriLife's claims were based on the agent agreement and that AmeriLife
waived its right to seek arbitration by failing to confine its request for relief to injunctive
or equitable relief and, instead, additionally seeking damages. Wilson further
contended that AmeriLife acted inconsistently "with its purported intent to arbitrate" by
requesting in January 2018 to take Wilson's deposition. Wilson then asserted that the
filing of his counterclaims did nothing to revive AmeriLife's right to seek arbitration
because his counterclaims did not "alter the scope and nature of the litigation."
2AmeriLife requested that its claims be allowed to proceed.
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The trial court held a hearing on the motion to compel arbitration but made
no factual findings. Ultimately, the trial court entered an order granting AmeriLife's
motion to compel arbitration of Wilson's counterclaims and to stay litigation related to
those counterclaims only, though the order again failed to contain any factual findings.
ANALYSIS
In determining whether parties are required to arbitrate a dispute, courts
must consider three elements: "(1) whether a valid written agreement to arbitrate exists;
(2) whether an arbitrable issue exists; and (3) whether the right to arbitration was
waived." Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999). The outcome of
this case rests on the third element: waiver.
We generally review an order granting or denying a motion to compel
arbitration de novo, but the issue of "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." Chaikin v. Parker Waichman LLP, 253 So. 3d 640, 643 (Fla.
2d DCA 2017) (quoting Green Tree Servicing, LLC v. McLeod, 15 So. 3d 682, 686 (Fla.
2009) (en banc)).
"Waiver" has been defined "as the voluntary and intentional
relinquishment of a known right or conduct which implies the voluntary and intentional
relinquishment of a known right." Raymond James Fin. Servs., Inc. v. Saldukas, 896
So. 2d 707, 711 (Fla. 2005) (citing Major League Baseball v. Morsani, 790 So. 2d 1071,
1077 n.12 (Fla. 2001)). "This general definition of waiver is applicable to a right to
arbitrate." Id. Therefore the issue of whether an arbitration agreement has been
waived "should be analyzed in much the same way as in any other contractual context,"
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and the focus is "whether, under the totality of the circumstances, the defaulting party
has acted inconsistently with the arbitration right." Id. (quoting Nat'l Found. for Cancer
Research v. A.G. Edwards & Sons, Inc., 821 F.2d 772, 774 (D.C. Cir. 1987)).
A party which seeks to rely on its right to arbitration must safeguard the
right and not act inconsistently with it. McLeod, 15 So. 3d at 687 (citing Nat'l Found. for
Cancer Research, 821 F.2d at 774). However, actively participating in a lawsuit is
inconsistent with arbitration. Id. Thus, "a party may waive [its] right to arbitration by
filing a lawsuit without seeking arbitration." Id. (citing Seville Condo. #1, Inc. v.
Clearwater Dev. Corp., 340 So. 2d 1243, 1245 (Fla. 2d DCA 1976)); see also Chaikin,
253 So. 3d at 643. Notably, "once a party has waived the right to arbitration by active
participation in a lawsuit, the party may not reclaim the arbitration right without the
consent of [its] adversary." McLeod, 15 So. 3d at 687.
Here, by filing its complaint, AmeriLife actively participated in the lawsuit
thereby waiving its right to arbitration of Wilson's counterclaims. If AmeriLife's complaint
had sought only equitable relief on its claims arising out of the agent agreement, we
might conclude that there was no waiver because the agent agreement clearly allowed
AmeriLife to seek injunctive relief in court.3
3Cf. Apartment Inv. & Mgmt. Co. v. Flamingo/S. Beach 1 Condo. Ass'n, 84
So. 3d 1090 (Fla. 3d DCA 2012). There, the Third District Court of Appeal reviewed a
circuit court's construction of an arbitration provision similar to the one in the agent
agreement in this case. The provision, while requiring arbitration of disputes arising out
of an agreement between the parties, also contained exceptions. Id. at 1091-92.
Specifically, the arbitration provision provided that the condominium association was not
precluded from seeking and obtaining equitable relief in court. Id. at 1092. Thus,
because all of the condominium association's claims were equitable in nature, the court
held that all of the claims "may be resolved by the trial court without requiring resolution
by arbitration." Id. at 1093.
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But here, the claims in AmeriLife's complaint were not solely equitable in
nature. Rather, AmeriLife sought both equitable and legal relief. See Swan Landing
Dev., LLC v. Fla. Capital Bank, N.A., 19 So. 3d 1068, 1072 (Fla. 2d DCA 2009)
(distinguishing between claim to foreclose a mortgage, which was equitable in nature
and therefore an exception to the arbitration agreement contained within the note, and
claims for breach of contract which were legal in nature and subject to arbitration
provision). Crucial to our holding is the fact that AmeriLife's legal claims had a
contractual nexus to the agent agreement that contained the arbitration provision. See
Chaikin, 253 So. 3d at 644 (explaining that a claim has a contractual nexus to a contract
"if it emanates from an inimitable duty created by the parties' unique contractual
relationship"). By electing to sue and pursue relief in the circuit court on arbitrable
claims arising out of the agent agreement, AmeriLife acted inconsistently with its right to
arbitrate the legal claims and, as a result, waived its right to seek arbitration of any
claims arising out the agent agreement. See id. at 645 (holding that by electing to sue
and seek relief in the trial court on arbitrable claims arising out of a partnership
agreement, appellee waived its right to seek arbitration).
We are not persuaded by AmeriLife's argument that its claim for
misappropriation and misuse of trade secrets was an exception to the arbitration
provision. The noncompete agreement, as we already explained, did not contain an
arbitration provision, and paragraph 5 of the noncompete agreement incorporated
paragraph 18 of the agent agreement which addresses misappropriation and misuse of
trade secrets. However, the arbitration provision in the agent agreement makes clear
that "all claims, (with the exception of claims arising out of Paragraphs 10 and 12),
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arising out of or relating to this Agreement and the transactions contemplated hereunder
to which the Agreement relates, . . . shall be resolved by arbitration." Thus the fact that
the noncompete agreement incorporates paragraph 18 of the agent agreement does not
remove paragraph 18 from being subject to arbitration. It merely means that a claim of
misappropriation and misuse of confidential trade secrets is a violation of both
paragraph 5 of the noncompete agreement and paragraph 18 of the agent agreement.
We likewise reject AmeriLife's argument that the references in paragraphs
15 and 18 of the agent agreement to the ability of AmeriLife to recover damages
somehow implicitly except those paragraphs from the arbitration provision. Clearly, the
parties knew how to specifically except types of claims as indicated by the specific
exception to arbitration for claims brought under paragraphs 10 and 12. If the parties
intended for claims brought under paragraphs 15 and 18 to also be excepted from
arbitration, they could have stated so. They did not. Once AmeriLife sought damages
for arbitrable claims arising out of the agent agreement, including those arising out of
paragraphs 15 and 18, it waived its right to seek arbitration.4
Finally, we are not convinced by AmeriLife's argument that the references
in the arbitration provision to a "court having jurisdiction" or AmeriLife "prevailing in court
proceedings" indicates that the parties intended for certain claims, such as those arising
out of paragraphs 15 and 18, to be addressed in court rather than through arbitration.
We construe those references as relating to circumstances not present here, namely,
4We note that in its answer brief, AmeriLife briefly referenced paragraph
20 of the agent agreement. Notably, however, AmeriLife made no substantive
argument relating to that paragraph. Like paragraphs 15 and 18, paragraph 20 was not
specifically excepted from the arbitration provision. Thus any claim arising out of a
violation of that paragraph would also act as a waiver of the right to arbitrate.
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an arbitration award being reduced to judgment or to court proceedings involving claims
arising out paragraphs 10 and 12.
Having determined that AmeriLife waived its right to arbitrate claims
arising out of the agent agreement, we must next determine whether Wilson, by filing
his counterclaims, revived AmeriLife's right to arbitrate legal claims under the agent
agreement. Owens & Minor Med., Inc. v. Innovative Mktg. & Distribution Servs., Inc.,
711 So. 2d 176 (Fla. 4th DCA 1998), is instructive on this issue.
In Owens, the parties entered into a contract containing an arbitration
provision that allowed the parties to submit any dispute arising out of the contract to
arbitration by sending notice to the other party. Id. at 177. A dispute arose, and the
appellant filed its action for breach of contract, foreclosure of a security agreement, and
account stated. Id. After the appellee's motion to dismiss was denied, the appellee filed
an answer, affirmative defenses, counterclaim, and third-party complaint; the
counterclaims alleged fraudulent inducement and breach of contract. Id. The
appellant's motion to stay the proceedings and compel arbitration was denied. Id.On appeal, although the appellant argued that it had not participated in the
litigation in relation to the counterclaims, the Fourth District Court of Appeal rejected that
assertion and concluded that the appellant waived its right to arbitrate due to its active
participation in the litigation. Id. The court explained that the counterclaims did "not
involve issues separate and distinct from those raised in appellant's amended
complaint" and "[t]he matters raised in the counterclaim[s] are intertwined with issues
raised in the amended complaint." Id. The court also noted that "the counterclaim[s]
did not significantly alter the scope and nature of the litigation, such that [they] revived a
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previously waived right to demand arbitration." Id. Ultimately, the court concluded that
the finder of fact would have to resolve factual issues that were common to both the
amended complaint and the counterclaims, and it affirmed the denial of the motion to
compel arbitration. Id.; see also Chaikin, 253 So. 3d at 645 (holding that appellee's
decision to pursue relief in the trial court of arbitrable claims waived its right to compel
arbitration of appellant's counterclaims which were based on same agreement, noting
that "[w]hat is sauce for the goose is sauce for the gander").
Here, the entirety of this dispute involves Wilson's employment with
AmeriLife. We reject the argument made by AmeriLife that Design Benefit Plans, Inc. v.
Enright, 940 F. Supp. 200 (N.D. Ill. 1996), a case that the Owens court cited, requires
an affirmance. Although the court in Design Benefit Plans, Inc. concluded that a
defendant's counterclaim for unpaid commissions revived any waived right to arbitrate,
the case is factually distinguishable. There, the plaintiff originally filed a complaint for
breach of restrictive covenants in an agent agreement and included claims for a
declaratory judgment, breach of contract, and tortious interference with contractual
relations. 940 F. Supp. at 202. The defendant's counterclaim for unpaid commissions
was deemed to significantly alter the nature of the litigation because it involved a claim
that was separate and distinct from the plaintiff's claims. Id. at 203. Thus the court
concluded that the plaintiff was entitled to seek arbitration of the defendant's
counterclaims. Id. at 203, 207.5
Owens distinguished Design Benefit Plans, Inc. on the basis that it
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involved claims that were subject to arbitration because they were separate and distinct
from claims for which arbitration had arguably been waived. Owens, 711 So. 2d at 177.
AmeriLife makes much of the fact that this court then relied on Owens in Hawkins v.
James D. Eckert, P.A., 738 So. 2d 1002, 1003 (Fla. 2d DCA 1999). In Hawkins, we
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But here, AmeriLife's attempt to liken Wilson's counterclaims to the
counterclaim made in Design Benefit Plans, Inc. is unavailing. Wilson's counterclaims
included a claim for breach of contract for unlawful termination of the agent agreement,
and his other claims also arise out of the agent agreement. At the very least, the
breach of contract claim based on unlawful termination is inextricably intertwined with
AmeriLife's claims for breach of contract. It matters not that the parties' claims may
have arisen under different paragraphs of the agent agreement. The crucial fact is that
both parties raised claims arising out of the agent agreement containing the arbitration
provision. See Chaikin, 253 So. 3d at 644-45 (rejecting the appellee's argument that
only the appellant's counterclaims were subject to arbitration and concluding that the
claims made in the complaint and counterclaims were intertwined because "[t]he initial
lawsuit and the counterclaims find their genesis in the Partnership Agreement"
containing the arbitration provision). We conclude that the issues raised in Wilson's
counterclaims were reasonably foreseeable in the context of AmeriLife's complaint.
Accordingly, we conclude that Wilson's counterclaims did not revive AmeriLife's
previously waived right to demand arbitration.
rejected the argument that a party's right to arbitrate was revived by the filing of a
counterclaim, as the court did in Owens, concluding that the counterclaim did not alter
the scope and nature of the litigation to the extent that it revived the appellee's
previously waived right to demand arbitration. Hawkins, 738 So. 2d at 1003. But that
passing reference to Owens was not the holding of our case. And in any event, Design
Benefit Plans, Inc. is two steps removed from our Hawkins opinion. Further, we are not
bound by cases from federal district courts, and we hesitate to give much weight to the
Design Benefit Plans, Inc. case when it provides no explanation for why the
counterclaim was deemed separate and distinct from the claims made in the complaint
such that it altered the nature of the litigation.
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We therefore reverse the order staying litigation of Wilson's counterclaims
in favor of arbitration and remand for proceedings in conformance with this opinion.
Reversed and remanded.
LUCAS and ROTHSTEIN-YOUAKIM, JJ., Concur.
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