Ziegler v. Knuck
Terry ZIEGLER, James Greenbaum, Jeffrey Wallerstein and Prime Financial
Services, Inc., a Florida corporation, Petitioners,
The Honorable Francis X. KNUCK, a Judge in the Eleventh Judicial Circuit in and
for Dade County, Florida, and KGG, Inc., a Florida corporation, Respondents.
District Court of Appeal of Florida,
Sept. 28, 1982.
419 So.2d 818
The Circuit Court for Dade County, Francis X. Knuck, J., denied partner's
motion to dismiss cross claim brought by other partner and to compel arbitration,
and partner petitioned for certiorari. The District Court of Appeal, Daniel
S. Pearson, J., held that: (1) partner's right to compel arbitration was
clear unless it had waived its right by some action inconsistent with
arbitration, and (2) partner, having timely moved to compel arbitration,
did not by its subsequent obligatory pleadings waive its right to arbitration.
Petition granted; order denying motion to compel arbitration quashed with
 PARTNERSHIP k82
Right of partner to compel arbitration was clear, regardless of whether
arbitration clause made arbitration optional or mandatory, where partner
insisted upon its option to arbitrate dispute by submitting controversy
to named arbitrator simultaneously with filing motion to compel arbitration
and where dispute between partners as to entitlement to funds was disagreement
or controversy within meaning of arbitration clause, unless party waived
its right to arbitrate by action inconsistent with arbitration.
 ARBITRATION k23.3(2)
Since right of interpleading plaintiff to interplead funds at issue was
not issue subject to arbitration and since all pleadings filed by party
prior to its motion to compel arbitration were directed only to propriety
of interpleader action, there was no waiver of party's right to arbitrate
by virtue of its resisting interpleader action.
 ARBITRATION k23.3(2)
Only defense of lawsuit on issue subject to arbitration may constitute
waiver of party's right to compel arbitration.
 ARBITRATION k23.3(2)
Party, having timely moved to compel arbitration, did not by its subsequent
obligatory pleadings waive its rights to arbitration.
*818 Law Offices Cytryn and Santana, P.A., Lauderhill, for petitioners.
Steven B. Dolchin, Hollywood, for respondents.
Before DANIEL S. PEARSON, FERGUSON and JORGENSON, JJ.
*819 ON PETITION FOR WRIT OF CERTIORARI
PEARSON, DANIEL S., Judge.
KGG, Inc., the respondent, and Prime Financial Services, Inc., the petitioner,
each own fifty per cent of a partnership called Prime Financial Sales.
Frank, Strelkow & Gay, the attorneys for the partnership, recovered
a judgment and received moneys from the judgment debtor on behalf of their
client. A dispute having arisen between the partners in Prime Financial
Sales as to the entitlement to the funds, the attorneys, as holders of
the funds, filed a complaint for interpleader joining the partners as
defendants. [FN1] The trial court ordered the moneys paid into the registry
of the court and dismissed the attorney-stakeholders from the action. [FN2]
- FN1. The complaint also joined five individuals, Ziegler, et al., who were
the shareholders of Prime Financial Services, Inc. The parties make no
distinction between the petitioners.
- FN2. The propriety of the interpleader action and the dismissal of the
attorneys is the subject of a separate appeal pending in this court, Ziegler,
et al. v. Frank, Strelkow & Gay, Case No. 82-461.
After the stakeholders were dismissed, KGG, Inc. filed a cross-claim against
its partner, Prime Financial Services, Inc., for breach of contract, diversion
of partnership funds, conversion of assets, and breach of fiduciary duty.
Before filing any other pleading against KGG, the petitioner moved to
dismiss the crossclaim and to compel arbitration. The motion was denied
by the trial court, and its denial is the subject of this petition for
certiorari. We have jurisdiction.
Lapidus v. Arlen Beach Condominium Association, 394 So.2d 1102 (Fla. 3d DCA 1981).
 The partnership agreement between the petitioner and the respondent
contained the following arbitration clause:
"Arbitration of all Disagreements and Controversies
"The parties wish to provide a speedy and informal method for resolving
all disagreements and controversies and to break all 'deadlocks'. To do
this Paul H. Clancy, President of Bengal has been designated as 'arbitrator'
"Either party, with or without notice to the other party, may submit
a question or controversy to the Arbitrator for a decision, which shall
be final and binding upon both parties. The Arbitrator shall establish
such procedures as he deems appropriate, permit both sides to be heard
by him and render a speedy decision. The Arbitrator will hold a formal
hearing as requested by either party."
The respondent first urges that the language of the arbitration clause,
"either party ... may submit ...," does not require arbitration,
but instead makes arbitration optional. Of course, even if the language
of the arbitration clause were compulsory, the right to forego insistence
upon its enforcement is always optional. Thus, the use of the optional
language is little different than the use of the compulsory language--it
creates in either party the right to insist upon arbitration; it creates
in neither party the right to resist arbitration insisted upon by the
other. Construing a clause similar to the one at issue here, the court in
Bonnot v. Congress of Independent Unions Local # 14, 331 F.2d 355 (8th
Cir. 1964), stated:
"We should mention, perhaps, the union's suggestion that the bargaining
agreement does not compel arbitration, but only provides that either party
'may request it,' that it is thus permissive and optional; and that neither
it nor the contractor elected to arbitrate. The result claimed to follow
is that the arbitration here is not mandatory. We think that the result
is necessarily the other way. The obvious purpose of the 'may' language
is to give an aggrieved party the choice between arbitration or the abandonment
of its claim. The presence of this or similar language has not prevented
the conclusion that a claim, if pressed, is compulsorily subject to arbitration.
See [United Steelworkers of America v.] American Mfg. Co., supra, p. 565 of 363
U.S. , 80 S.Ct. 1343, 4 L.Ed.2d 1403*820 [ (1960) ], where the contract provided that differences 'may be submitted',
and Drake [Bakeries, Inc. v. Local 50, American Bakery, etc. Workers],
supra, p. 257 of 370 U.S. , p. 1349 of 82
S.Ct. , 8 L.Ed.2d 474, footnote 2 [ (1962) ], where the contract read, 'either party shall have
the right to refer the matter to arbitration'. The Fifth Circuit has flatly
rejected the union's argument. Deaton Truck Line, Inc. v. Local 612 etc.,
International Bhd. of Teamsters, 314 F.2d 418, 422 (5 Cir. 1962). We agree. If either
Employees Labor Ass'n v. Proctor & Gamble Mfg. Co., 172 F.Supp. 210,
214 (D.Kans.1959), or
Wisconsin Motor Corp. v. Wisconsin Employment Relations Bd., 274 Wis. 85,
79 N.W.2d 119, 124 (1956), [FN3] contains any implication to the contrary, we only note that both
were decided before American Mfg. Co. and Drake. We follow the later federal
precedents we have cited." Id. at 359-60.
- FN3. The respondent's reliance on Wisconsin Motor Corp. v. Wisconsin Employment
Relations Board, supra, is thus misplaced. In any event, we read Wisconsin
Motor Corp. as being a waiver case.
Deaton Truck Line, Inc. v. Local Union 612, International Brotherhood of
Teamsters, 314 F.2d 418 (5th Cir. 1962), relied on in Bonnot, supra, the court held:
"Appellant argues that the use of the word 'may' in the contract prevents
arbitration from being compulsory or obligatory. Clearly, however, 'may'
should be construed to give either aggrieved party the option to require
United Steelworkers of America v. American Mfg. Co., 1960, 363 U.S. 564,
565, n. 1, 80 S.Ct. 1343  4 L.Ed.2d 1403;
International Association of Machinists, AFL-CIO v. Hayes Corp., 5th Cir.,
1961, 296 F.2d 238, 241, n. 6." Id. at 422.
In our view, these cases set at rest the respondent's first contention.
Therefore, since the petitioner insisted upon its option to arbitrate
the dispute by submitting the controversy to the named arbitrator simultaneously
with the filing of its motion to compel arbitration, and the dispute between
the partners as to the entitlement to the interpleaded funds is undoubtedly
a disagreement or controversy within the meaning of the clause, the petitioner's
right to compel arbitration is clear unless, as the respondent next urges,
the petitioner has waived its right by some action inconsistent with arbitration.
 The respondent argues that waiver occurred when the petitioner resisted
the stakeholder's interpleader action, initially through motions to dismiss,
strike, and to transfer venue to Broward County, and next by its answer
and affirmative defenses to that action, all without mention of the petitioner's
right to arbitrate. The respondent further suggests that even if these
acts did not constitute a waiver, the petitioner's later act of answering
the respondent's crossclaim, and crossclaiming for the interpleaded funds
after an adverse ruling on the motion to compel arbitration was itself
a waiver. Again we disagree.
The petitioner's actions vis-a-vis Frank, Strelkow & Gay, the interpleader-
plaintiff, are irrelevant to a claim that it waived arbitration as against
KGG. The partnership agreement which gave the petitioner a right to arbitrate
was between the co-defendant, KGG, and the petitioner, not between the
interpleading plaintiff and the petitioner. The petitioner could not interpose
the arbitration agreement as a defense to the interpleader. The issue
whether the interpleader action was a proper one, raised in the petitioner's
motions to dismiss and strike the complaint for interpleader and its affirmative
defense to that action, was not an issue subject to arbitration. Only
the defense of a lawsuit on issues subject to arbitration may constitute
a waiver. See
Seville Condominium # 1, Inc. v. Clearwater Development Corp., 340 So.2d
1243 (Fla. 2d DCA 1976). Since the right of the interpleading plaintiff to interplead the funds
was not an issue subject to arbitration, and since all pleadings filed
by the petitioner prior to its motion to compel arbitration were directed
only to the propriety of the interpleader action, there was no*821 waiver of the right to arbitrate in these pleadings of the petitioner.
 It was not until the trial court allowed the interpleader that KGG
filed its crossclaim against the petitioner and the issue of arbitration
ripened. At that point, the petitioner moved to compel arbitration and
its motion was denied. It was after the denial of this motion that, its
motion to stay further proceedings having been denied by the trial court,
the petitioner, under threat of default, answered KGG's crossclaim, filed
affirmative defenses thereto, and crossclaimed against KGG for the interpleaded
funds. We do not deem this compelled submission to the trial court's ruling
to be a repudiation by the petitioner of its right to arbitration when
the very ruling denying arbitration is challenged by a timely petition
for certiorari. Nor by the same reasoning can the petitioner's crossclaim
against KGG, the equivalent of a compulsory counterclaim, be deemed a
waiver. The petitioner, having timely moved to compel arbitration, has
not by its subsequent obligatory pleadings waived its rights to arbitration.
The petition for writ of certiorari is granted, and the trial court's order
denying petitioner's motion to compel arbitration is quashed with directions
to the trial court to compel arbitration pursuant to the parties' agreement
and to stay all further proceedings in the trial court pending arbitration.