Arbitration & Mediation

Is Waiver of a Forum Selection Clause a "Permanent Waiver" For Subsequent Disputes?

By Christopher B. Hopkins, Esq.

We last touched upon the question of waiver back in February with the discussion of the Estate of Orlanis v. Oakwood Terrace and Regents Park case involving waiver of the right to arbitrate. The Fifth District has now issued an opinion regarding the waiver of a forum selection clause, relying upon similar case authority.

In Texas Auto Mart, Inc. v. Thrifty Rent-A-Car System, Inc., the parties got into a dispute over a lease and Texas Auto sued. Thrifty claimed that the venue was in another state under a mandatory forum selection clause. Trial court agreed even though, oddly enough, Thrify had previously sued Texas Auto in Florida under the same contract back in 2002. Texas Auto's position was that Thrifty had "permanently waived" the forum selection clause by violating it back in 2002.

While the parties and the panel (Palmer, Pleus, Evander) agreed there was little case law, the conclusion was that litigation of arbitrable issues (or issues to which a forum selection clause would require a different venue) might support waiver of the arbitration/forum selection clause in subsequent proceedings IF the earlier litigation gave the party either (a) an unfair advantage or (b) prejudice to the other side.

Interestingly, the definition of "waiver" in this forum selection case came from Raymond James v. Saldukas, which defined waiver in the arbitration context. Thus, at least in the 5th DCA, waiver of a forum selection clause is the same as the standard used in the arbitration context. Notably, for waiver of arbitration, however, no prejudice is needed to be proven. Here, however, if the forum was waived in the past, it is not a permanent waiver unless there's an unfair advantage or prejudice. That may be a twist causing some issues in future cases.

Incidentally, exactly what's the difference between an "unfair advantage" and "prejudice"....?

Full post as published by Florida Arbitration Law on May 06, 2008 (boomark / email).