Supreme Court says Citibank did not waive right to arbitration

By Kyla Asbury | Nov 15, 2016

CHARLESTON – The West Virginia Supreme Court of Appeals ruled that Citibank did not waive its right to arbitration in a lawsuit seeking debt collection.

In the appeal, Citibank challenged an order entered by Boone Circuit Court that denied the bank’s motion to compel arbitration and stay the action, according to a Nov. 10 opinion.

The court said Citibank waived its right to arbitration of the matter by taking certain actions to further the case and the bank claimed it did not waive its right to arbitration pursuant to provisions contained in the arbitration agreement that allowed either party to seek arbitration after filing a lawsuit in court so long as the trial had not begun.

“We have reviewed the parties’ briefs, heard their oral arguments and considered the relevant law,” the opinion states. “Based upon our thorough consideration of this matter, we now reverse this case and remand for entry of an order compelling arbitration and staying the court action.”

Justice Robin Jean Davis authored the majority opinion.

Robert S. Perry was issued a Citibank MasterCard account in January 1998. On Sept. 20, 2010, Citibank filed a debt collection action against Perry in Boone Circuit Court seeking to garner the balance owed on the account.

Citibank filed a motion asking the court to compel arbitration of the parties’ claims presented in the action and sought to stay the action pending the outcome of the arbitration proceedings, however, the circuit court concluded on Oct. 15, 2015, that Citibank waives its right to arbitration by filing the lawsuit. Citibank then appealed to the West Virginia Supreme Court.

“It is undisputed that Citibank filed a simple debt collection action in the circuit court and that Mr. Perry filed a pro-se response wherein he conceded that the debt owed was his,” the opinion states. “Approximately six months later, Citibank filed a motion for judgment on the pleadings that never was ruled upon by the circuit court.”

After a long period of about three and one-half years of inactivity in the case, Perry ultimately obtained counsel, and the parties filed an agreed scheduling order allowing for a counterclaim.

“Markedly, Mr. Perry’s counterclaim, which asserted a putative class action claiming, inter alia, violations of the West Virginia Consumer Credit and Protection Act, significantly changed the character of the proceeding from a simple debt collection action to a potential class action lawsuit,” the opinion states. “Less than two months after Mr. Perry filed his counterclaim, Citibank filed its motion to compel arbitration and to stay the court action.”

Under these particular circumstances, the Supreme Court does not find evidence that Citibank’s conduct demonstrated an intent to relinquish a known right.

“Indeed, where Mr. Perry delayed more than four and one-half years before filing his counterclaim, we will not attribute the lengthy duration of inactivity in this case solely to Citibank” the opinion states. “Once Mr. Perry’s counterclaim was filed, Citibank responded in a reasonable time, less than two months, by filing its motion to compel arbitration.”

The Supreme Court reversed and remanded the suit back to state court so it can go through arbitration.

Citibank is represented by Jeffrey M. Wakefield, Bryan N. Price and Keith R. Hoover of Flaherty Sensabaugh Bonasso PLLC.

Perry is represented by Troy N. Giatras and Matthew W. Stonestreet of the Giatras Law Firm.

W.Va. Supreme Court of Appeals case number: 15-1121

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Flaherty Sensabaugh Bonasso PLLC The Giatras Law Firm West Virginia Supreme Court of Appeals

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