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Citibank, N.A. v. Robert S. Perry

Citibank, N.A. v. Robert S. Perry

Case No. 
Type of Proceeding: 
Appeal from the Circuit Court of Boone County (Judge William Thompson)

Did the Circuit Court of Boone County err when it denied Citibank’s Motion to Compel on the grounds that Citibank waived its rights to arbitration by acting inconsistently with the contractual right to arbitrate?


Robert S. Perry, Defendant below and Respondent herein (“Perry”), was issued a MasterCard through Citibank in 1998. Over the years that Perry held this card, Citibank contacted him with a series of changes to the terms and conditions of the card, including the addition of an arbitration provision, and various amendments to the arbitration provision. These communications provided Perry with an option to opt-out of the binding arbitration provision, but at no time did Perry opt-out, and he continued to use the card. The 2006 Card Agreement contains the most recent arbitration clause, and is what is at issue in the instant matter. This provision provides that either party can elect mandatory binding arbitration in the event that any dispute arose which pertained to Perry’s account with Citibank. The arbitration clause also provided that “all claims” related to the account would be subject to arbitration at the election of a party, and that any questions pertaining to whether a claim is subject to arbitration would be resolved by interpreting the arbitration provision in the “broadest way the law will allow it to be enforced.” Finally, the arbitration provision stated that “at any time” either party may ask the court to compel arbitration, even if a lawsuit has already begun and progressed, up until the start of a trial or the entry of a final judgment, and that “even if a party fails to exercise these rights [to compel arbitration] at any particular time, or in connection with any particular claims, that party can still require arbitration at a later time or in connection with any other claims.”

On September 20, 2010, Citibank filed a collection action against Perry for an outstanding balance on his Citibank account. Perry responded by filing a pro se Answer on October 1, 2010. Citibank then filed a motion for judgment on the pleadings on April 22, 2011. The case then sat until around December 2014. Citibank entered into an agreement with Perry regarding scheduling in the matter. This agreed scheduling order, which provided for a number of deadlines, including the filing of third party complaints, counterclaims, joinders, and amended pleadings, was entered on February 24, 2015. The parties continued to litigate and conducted discovery. On May 1, 2015, Perry, having retained counsel, timely filed a putative class action counterclaim against Citibank. Citibank asked for additional time to respond to the counterclaim, then proceeded to file a motion to compel arbitration in June. Citibank continued to comply with the filing deadlines set forth in the agreed scheduling order while this motion was pending. On September 10, the Circuit Court held a hearing on Citibank’s motion to compel arbitration. On October 15, 2015, the Circuit Court of Boone County entered its Order Denying Citibank’s Motion to Compel Arbitration. It is from that order that Citibank now appeals.

Positions of the Parties: 


Petitioner, Citibank, argues that the Circuit Court erred in finding that Citibank was not entitled to compel arbitration because, in reaching that conclusion, the Court failed to apply well-established principles of contract interpretation, and instead interpreted the clear and unambiguous terms of the arbitration provision to change their meaning. As an initial matter, Citibank argues that the law of the state of South Dakota should control the issue of waiver because the arbitration agreement bears a substantial relationship to the state of South Dakota, where Citibank is located. South Dakota law runs no risk of violating West Virginia law or public policy, because the West Virginia Consumer Credit and Protection Act still applies. South Dakota law, like many other states, strongly favors arbitration, and Citibank argues that, had the Court applied South Dakota law as it should have done, it would have found that the arbitration provision was valid and enforceable. Citibank also believes that the Circuit Court’s order violated federal authority and policy which gives a strong preference in favor of arbitration.

Citibank argues that the Circuit Court incorrectly found that Citibank had impliedly waived its rights to arbitration because Citibank did not intentionally relinquish a known right, an element which must be found for implied waiver to have occurred. The terms of the arbitration provision state that “at any time” a party may seek to have the court compel arbitration “even if such claims are part of a lawsuit, unless a trial has begun or a final judgment has been entered.” Because no trial had begun, nor had any final judgment been entered, Citibank argues that it was inappropriate and in violation of the clear and unambiguous terms of the contract for the Circuit Court to have found that Citibank waived its right to compel arbitration by initiating and litigating the lawsuit against Perry in Boone County Circuit Court before seeking arbitration. The contract clearly permitted it to do so. The contract also contained a “no waiver” provision, which allowed Citibank to “delay…enforcing or failing to enforce any of its rights under this Agreement without losing them.” Citibank argues that this provision has been upheld by many courts who have addressed the issue, and provided separate contractual grounds for the Circuit Court to compel arbitration, because at no time during the course of this litigation did Citibank agree to waive its right to arbitration, nor did Citibank and Perry make any agreements to amend or alter the terms of the contract. Citibank argues that since there was never a real dispute that Perry owed the money sought by Citibank’s original cause of action, and that Perry seeks only to litigate the newly filed counterclaim, that there is no prejudice to Perry for the matter to be transferred to arbitration for resolution.


Perry argues that the Circuit Court of Boone County accurately concluded that Citibank repeatedly acted inconsistently with its purported right to arbitrate and properly found that Citibank had waived such a right on those grounds. Perry focuses on the lengthy pendency of the matter before the Circuit Court of Boone County, a forum chosen by Citibank for the filing of the initial cause of action. During the several years that the case was pending in Boone County, Citibank chose to engage in litigation in a variety of ways, including reaching an agreement about a scheduling order, complying with deadlines set forth in the scheduling order, serving discovery upon Perry (and receiving responsive information), and requesting an extension to respond to Perry’s counterclaim. It was only after Citibank had benefitted extensively from the litigation process that they chose to seek arbitration. Litigation tools, such as discovery, are not available to a party before an arbitrator in the same way that they are when the matter proceeds through Circuit Court. Perry argues that the Circuit Court correctly found this would prejudice Perry, and no legal authority exists to support a party pursuing its legal rights through the court system for five years, and then being permitted to “forum shop” its way back into arbitration, after reaping the benefits of the court system. As such, the Circuit Court correctly denied Citibank’s Motion to Compel Arbitration.

Probable Impact: 

This case will give the Supreme Court of Appeals the opportunity to further examine and define what acts may constitute waiver of the right to arbitrate. The Court may also determine whether no- waiver clauses can override consistent behavior by a party who chooses to litigate a case and acts inconsistently with the right to arbitrate, and then later seeks to compel arbitration.

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