Krinsk v. SunTrust Banks, Inc.
654 F.3d 1194
| 11th Cir. | 2011Background
- Krinsk obtained a SunTrust HELOC and signed the Access 3 Equity Line Account Agreement containing a broad arbitration clause.
- Original complaint (May 2009) asserted multiple claims and defined a class limited to elderly Florida HELOC borrowers with specific suspension circumstances.
- SunTrust initially defended in court, opposing arbitration but did not raise arbitration issues in its early motions or Case Management Report.
- Amendment (January 2010) broadened the class definition dramatically, adding thousands of potential class members and expanding the class period.
- SunTrust answered the Amended Complaint and for the first time moved to compel arbitration under the FAA and to stay proceedings, arguing waiver did not bar arbitration.
- District court held SunTrust waived arbitration by participating in litigation for nine months before seeking arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Amended Complaint revive arbitration rights after waiver? | Krinsk | SunTrust | Yes; Amended Complaint revived arbitration rights due to changed scope. |
| Did Krinsk's Amended Complaint materially alter the case to justify reviving arbitration rights? | Krinsk | SunTrust | Yes; the amended class definition significantly broadened scope and dynamics. |
| Was SunTrust's nine-month litigation participation a waiver of arbitration that could be revived by the amended pleading? | Krinsk | SunTrust | Waiver revived; district court erred in enforcing waiver without considering amendment. |
Key Cases Cited
- Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309 (11th Cir. 2002) (healthy regard for federal policy favoring arbitration; standard for issues of arbitrability)
- S & H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d 1507 (11th Cir.1990) (two-part waiver test: inconsistency with arbitration right and prejudice)
- Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388 (7th Cir.1995) (presumptive waiver; amended pleading may justify revoking waiver if impact is unexpected)
- Gilmore v. Shearson/Am. Express Inc., 811 F.2d 108 (2d Cir.1987) (arbitration waiver not automatically revived by amended complaint)
- Envirex, Inc. v. K.H. Schussler Fur Umwelttechnik GmbH, 832 F.Supp. 1293 (E.D.Wis.1993) (amended complaint that changes the issues can revive arbitration rights)
- Brown v. E.F. Hutton & Co., 610 F. Supp. 76 (S.D. Fla. 1985) (amendments changing scope may justify revival of arbitration rights)
- Morewitz v. W. of Eng. Ship Owners Mut. Prot. & Indem. Ass'n, 62 F.3d 1356 (11th Cir.1995) (waiver inquiry factors including prejudice and delay)