Hensley v. Garrett

THIS
OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS
PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Billy Hensley, Respondent,

v.

Carolina First
Investments, Inc. and James T. Garrett, Jr., President, Defendants,

Of whom James
T. Garrett, Jr. is Appellant.

Appeal From York County

S. Jackson Kimball, III, Circuit Court
Judge

Unpublished Opinion No. 2010-UP-345

Submitted March 1, 2010 – Filed June 30,
2010

AFFIRMED

Richard A. Harpootlian, of Columbia, for
Appellant.

Daniel D. D'Agostino, of York, for
Respondent.

PER CURIAM: James
T. Garrett appeals the trial court's order denying his motion to compel
arbitration.  We affirm.[1] 

FACTS/PROCEDURAL
HISTORY

Billy Hensley brought this
action against Garrett and Carolina First Investments, of which Garrett was the
President, on June 21, 2005.  He asserted causes of action for negligence and
violation of the South Carolina Unfair Trade Practices Act arising from
Garrett's advice to invest his retirement funds with Thaxton Life Partners, Inc.,
which has since filed for bankruptcy.  Garrett filed a pro se answer on September 4, 2005, asserting several affirmative defenses and a
counterclaim. 

On October 11, 2005, Garrett
served a motion to dismiss/stay action and compel arbitration.  He asserted he
was entitled to arbitration under the "Senior Subordinated Term Note
Subscription Agreement" Hensley signed when purchasing the note of Thaxton
Life Partners.  The trial court denied the motion, finding Garrett was not a
party to the contract that provided for arbitration.  Garrett filed a timely
motion to alter or amend. 

Prior to the hearing on the
motion, the parties entered into an agreement in which Garrett withdrew his
motion to alter or amend and agreed to not appeal the court's order denying his
motion to compel arbitration.  The parties agreed neither party would take the
deposition of the other prior to Garrett's trial date for charges of securities
fraud and criminal conspiracy arising from his dealings with Thaxton Life
Partners.  The trial court incorporated the parties' agreement into an order
filed June 2, 2006. 

The parties proceeded with
discovery, exchanging and responding to interrogatories and requests to
produce.  In addition, the depositions of three witnesses were scheduled, but
these depositions were cancelled when the witnesses asserted their rights
against self-incrimination pursuant to the Fifth Amendment of the
United States Constitution.  Hensley filed a motion for summary judgment on
liability, which the court denied on March 4, 2008.  

Garrett then filed a motion
to compel arbitration on March 12, 2008.  In the motion, Garrett asserted he
had found two cases from the Fourth Circuit Court of Appeals in which the court
held third parties to Thaxton Life Partners' "Senior Subordinated Term
Note Subscription Agreement"[2] could enforce the agreement's arbitration provision.    

The trial court denied the
motion.  It found Garrett had waived his right to compel arbitration in the
order of June 2, 2006 in which he withdrew his motion to alter or amend and
agreed to not appeal the court's decision denying arbitration.  In addition, the
court found Garrett had waived arbitration due to his actions in the course of
the litigation.  Garrett filed a motion to alter or amend, which the court
denied.  This appeal followed. 

STANDARD OF REVIEW

The determination of whether
a party waived its right to arbitrate is a legal conclusion subject to de novo
review.  Rhodes v. Benson Chrysler-Plymouth, 374 S.C. 122, 125, 647
S.E.2d 249, 250 (Ct. App. 2007).  However, the trial court's factual findings
underlying that conclusion will not be reversed if any evidence reasonably
supporting them.  Id. at 125-26, 647 S.E.2d at 250-51.

LAW/ANALYSIS

Garrett argues the trial
court erred in holding he had waived arbitration.  We disagree. 

The right to enforce an
arbitration clause may be waived.  Liberty Builders, Inc. v. Horton, 336
S.C. 658, 665, 521 S.E.2d 749, 753 (Ct. App. 1999).  "There is no set rule
as to what constitutes a waiver of the right to arbitrate; the question depends
on the facts of each case."  Id.

Generally,
the factors our courts consider to determine if a party waived its right to
compel arbitration are:  (1) whether a substantial length of time transpired
between the commencement of the action and the commencement of the motion to
compel arbitration; (2) whether the party requesting arbitration engaged in
extensive discovery before moving to compel arbitration; and (3) whether the
non-moving party was prejudiced by the delay in seeking arbitration.  These
factors, of course, are not mutually exclusive, as one factor may be
inextricably connected to, and influenced by, the others.

Rhodes v. Benson Chrysler
Plymouth, 374 S.C. 122, 126, 647
S.E.2d 249, 251 (Ct. App. 2007).

Garrett waived arbitration by
withdrawing his motion to alter or amend the trial court's original order
denying arbitration and agreeing to not appeal the order.  Garrett asserts he should
not be deemed to have waived his right to arbitration because he did not
possess knowledge of all of the material facts when he entered into the
agreement as he was unaware the Fourth Circuit Court of Appeals would later
find the arbitration agreement enforceable by third parties.  We find this
contention is without merit.  See Janasik v. Fairway Oaks Villas
Horizontal Prop. Regime, 307 S.C. 339, 344, 415 S.E.2d 384, 387-88 (1992)
("Generally, the party claiming waiver must show that the party against
whom waiver is asserted possessed, at the time, actual or constructive
knowledge of his rights or of all the material facts upon which they depended."). 
The Fourth Circuit's opinions did not alter the material facts of the case or
the circumstances surrounding Garrett's waiver of arbitration.  They are merely
judicial decisions contradicting the trial court's original order.  It was
incumbent upon Garrett to timely appeal that order and prove to the appellate
court the trial court's ruling was in error.  Instead, Garrett agreed to forgo
his appeal and proceed with the litigation process. 

Over two and a half years
passed between the commencement of this lawsuit and Garrett's current motion to
compel arbitration.   During the course of the litigation, both parties
submitted and responded to interrogatories and requests to produce.  In
addition, Hensley filed two motions for summary judgment.  Thus, Hensley was
prejudiced by Garrett's delay in seeking arbitration due to the time and
expense incurred in engaging in discovery and preparing his motions for summary
judgment. 

We conclude the trial court
did not err in holding Garrett waived arbitration.  Accordingly, the trial
court's order denying Garrett's motion to compel arbitration is

AFFIRMED.

HUFF, THOMAS and KONDUROS,
JJ., concur. 

[1] We decide this case without oral argument
pursuant to Rule 215, SCACR.

[2] Am. Bankers Ins. Group v. Long, 453 F.3d 623 (4th Cir. 2006); Kirsh v. Finova
Group, 2007 WL 4481158 (4th Cir. 2007).  Hensley was a party in the Kirsh case.