Is this arbitration clause enforceable under Florida law, and will it capture the tort claims the other side has pleaded?
An agreement contained in a record to submit an existing or subsequent controversy to arbitration is valid, enforceable and irrevocable except on a ground that exists at law or in equity for the revocation of a contract (Fla. Stat. § 682.02(1)); the COURT decides whether an agreement to arbitrate exists or whether a controversy is subject to it, while the ARBITRATOR decides whether a condition precedent to arbitrability has been fulfilled and whether the container contract is enforceable (§ 682.02(2)-(3)). Even under a broad 'arising out of or relating to' clause, a tort claim is arbitrable only if, as pleaded, it arises from and bears a significant relationship to the contract.
The trap
Florida does not read a broad arbitration clause as reaching every dispute between the parties. Seifert refused to compel arbitration of a common-law negligence claim (carbon monoxide death) arising between parties to a home purchase contract because no allegation referred to the agreement: the 'significant relationship' test looks at the complaint's allegations, and even the broadest wording does not reach a tort claim with no significant relationship to the contract. Do not read Seifert as holding that a narrow clause gets a narrow reading as a matter of Florida law. The passage distinguishing a clause limited to disputes 'under' or 'arising out of' a contract from the broader 'arising out of or relating to' is Seifert's survey of other courts: it is introduced with 'These cases reason' and 'has been interpreted broadly', and the two decisions the court gives for the narrow reading are federal (the Ninth and Second Circuits). The court's own framing of that passage is that 'courts around the country, as well as courts here in Florida, have pronounced differing views on the interpretation of contracts and their arbitration provisions', so it is not a statement of what Florida law requires. The clause in Seifert was itself a broad one, reaching, in its own words, 'Any controversy or claim arising under or related to this Agreement or to the Property', and it still did not reach the tort claim. Two further grounds carried that result: the contract's silence about personal injury and death created ambiguity and uncertainty as to the parties' intent, which the court was constrained to construe against the drafter; and public policy, because compelling arbitration would deprive the plaintiff of her rights to a trial by jury, due process and access to the courts. The clause also designated the Federal Arbitration Act by name, and the court applied the three-element framework it drew from 'both federal statutory provisions and Florida's arbitration code' without conducting any preemption analysis, so the authorities cited here do not establish how a preemption argument fares on a contract within the FAA. Note also the code's timing rule in § 682.013: the Revised Florida Arbitration Code governs agreements made on or after July 1, 2013, and from July 1, 2016 governs every agreement to arbitrate, so a pre-2013 clause was litigated under the older code for years.
13 authorities
- statuteFla. Stat. § 682.02enactment date not established
The words that state the rule
(1) An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract. (2) The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate. (3) An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable.
The words that state the rule
Any controversy or claim arising under or related to this Agreement or to the Property (with the exception of "consumer products" as defined by the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. Section 2301 et seq., and the regulations promulgated under the Act) or with respect to any claim arising by virtue of any representations alleged to have been made by the Seller or Seller's representative, shall be settled and finally determined by mediation or binding arbitration as provided by the Federal Arbitration Act ( 9 U.S.C. Section 1-14 ) and similar state statutes and not by a court of law.
The words that state the rule
Under both federal statutory provisions and Florida's arbitration code, there are three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.
The words that state the rule
These cases reason that where an arbitration clause refers solely to disputes or controversies "under" or "arising out of" the contract, arbitration is restricted to claims "relating to the interpretation of the contract and matter of performance." Mediterranean Enters., 708 F.2d at 1464 (quoting Kinoshita, 287 F.2d at 953 ). On the other hand, the phrase "arising out of or relating to" the contract has been interpreted broadly to encompass virtually all disputes between the contracting parties, including related tort claims.
The words that state the rule
As the prevailing case law illustrates, even in contracts containing broad arbitration provisions, the determination of whether a particular claim must be submitted to arbitration necessarily depends on the existence of some nexus between the dispute and the contract containing the arbitration clause. Disputes arise in many and varied contexts and the mere coincidence that the parties in dispute have a contractual relationship will ordinarily not be enough to mandate arbitration of the dispute. In other words, the mere fact that the dispute would not have arisen but for the existence of the contract and consequent relationship between the parties is insufficient by itself to transform a dispute into one "arising out of or relating to" the agreement.
The words that state the rule
As in Dusold and Michaels , because this case involves a claim sounding in tort, i.e., negligence, we must determine whether the tort claim, as alleged in the complaint, arises from and bears such a significant relationship to the contract between the parties as to mandate application of the arbitration clause.
The words that state the rule
Even under a broad approach, the dispute does not create a "significant relationship" to the contract because none of the allegations in the complaint refer to or mention the sales agreement between the Seiferts and U.S. Home. Accordingly, we are unable to conclude that the tort action dispute in this case bears a significant relationship to the contract or that the parties in contracting necessarily contemplated the existence and arbitration of future tort claims for personal injuries based on a party's common law negligence.
The words that state the rule
The absence of any mention of the parties' rights in the event of personal injuries or death arising out of any alleged tortious conduct such as that which allegedly occurred in this case creates ambiguity and uncertainty as to the intent of the parties. Under a well-established rule of construction, we are constrained to construe the provisions of the U.S. Home contract against its drafter, U.S. Home.
The words that state the rule
Moreover, public policy also supports the result we reach in this case. As noted by the trial court, to require petitioner to submit her tort claim to binding arbitration would deprive her of her rights to a trial by jury, due process and access to the courts.
The words that state the rule
Based on this holding, we quash the decision below and approve the decision in Michaels . The case is remanded with directions that the trial court's denial of arbitration be affirmed.
- statuteFla. Stat. § 682.013enactment date not established
The words that state the rule
(1) The Revised Florida Arbitration Code governs an agreement to arbitrate made on or after July 1, 2013. (2) Until June 30, 2016, the Revised Florida Arbitration Code governs an agreement to arbitrate made before July 1, 2013, if all the parties to the agreement or to the arbitration proceeding so agree in a record. Otherwise, such agreements shall be governed by the applicable law existing at the time the parties entered into the agreement.
- statuteFla. Stat. § 682.013enactment date not established
The words that state the rule
(3) The Revised Florida Arbitration Code does not affect an action or proceeding commenced or right accrued before July 1, 2013. (4) Beginning July 1, 2016, an agreement to arbitrate shall be subject to the Revised Florida Arbitration Code.
The words that state the rule
At the outset, we must note that courts around the country, as well as courts here in Florida, have pronounced differing views on the interpretation of contracts and their arbitration provisions. Not surprisingly, courts have given different meaning to clauses on the basis of the actual terminology used.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.