SUNTRUST BANK v. LILLISTON Et Al.
338 Ga. App. 738
| Ga. Ct. App. | 2016Background
- SunTrust and plaintiffs (Jedon Lilliston and L-T Adventures, Inc.) had two loan transactions and an ISDA "Swap Agreement" (2005) containing an arbitration clause (mediation then arbitration).
- Plaintiffs sued SunTrust in April 2013 in state court over interest charges; case transferred to Fulton County Superior Court and remained pending over 21 months.
- During the original litigation SunTrust participated in discovery, filed a summary judgment motion, and allowed the case to be placed on the trial calendar without demanding arbitration.
- Plaintiffs voluntarily dismissed the original action in January 2015; they filed a renewal action in June 2015 in the same court asserting related claims.
- SunTrust moved to compel arbitration in the renewal action; the trial court found the arbitration agreement valid but ruled SunTrust waived the right to arbitrate because its prior litigation conduct prejudiced the plaintiffs.
- SunTrust appealed; the Court of Appeals affirmed, holding waiver can occur when a party substantially invokes litigation machinery to the other party's prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SunTrust waived its contractual right to arbitrate claims in the renewal action | SunTrust waived arbitration by litigating extensively and causing prejudice | SunTrust: renewal action is de novo; may assert defenses not raised previously, so arbitration may be demanded now | Court: Waiver—SunTrust acted inconsistently with the arbitration right and prejudiced plaintiffs; motion to compel arbitration denied |
| Whether a renewal action bars raising defenses not asserted in the original action | Renewal can be de novo so defendants may assert defenses not previously raised | SunTrust relied on precedent allowing new defenses in renewals to argue arbitration may be raised now | Court: A defendant may raise defenses in a renewal, but waiver remains available if prior conduct prejudiced the plaintiff; Hornsby does not preclude a waiver finding |
Key Cases Cited
- Order Homes v. Iverson, 300 Ga. App. 332 (Ga. Ct. App.) (standard of review for motion to compel arbitration)
- S & H Contractors v. A. J. Taft Coal Co., 906 F.2d 1507 (11th Cir.) (party may waive arbitration by substantially invoking litigation and causing prejudice)
- AT&T Mobility v. Concepcion, 563 U.S. 333 (U.S. Sup. Ct.) (federal policy favoring arbitration)
- Morewitz v. West of England Ship Owners Mut. Protection & Indem. Assoc., 62 F.3d 1356 (11th Cir.) (prejudice where opposing party incurs litigation expenses arbitration would avoid)
- USA Payday Cash Advance Center #1 v. Evans, 281 Ga. App. 847 (Ga. Ct. App.) (waiver inquiry is fact-specific; appellate review limited)
- Hornsby v. Hancock, 165 Ga. App. 543 (Ga. Ct. App.) (renewal action treated de novo; defendant may assert defenses not raised earlier)
- Adams v. Gluckman, 183 Ga. App. 666 (Ga. Ct. App.) (defendant not estopped from raising defenses in renewal)
- Fine v. Higgins Foundry & Supply Co., 201 Ga. App. 275 (Ga. Ct. App.) (same)