Arbitration Case Law Update

by Donna Greenspan Solomon
September 2016

The following are recent cases of interest regarding arbitration issues:

 Estate of Novosett v. Arc Villages II, LLC, No. 5D14–4385 (Fla. 5th DCA Mar. 11, 2016).  Arbitration agreement containing limitation of liability provision, placing a cap on non-economic damages and precluding the recovery of punitive damages, is against public policy and unenforceable.  Provision was not severable, despite severability provision, because it constituted the “financial heart” of the arbitration agreement.  Previously, in Gessa v. Manor Care of Florida, Inc., 86 So. 3d 484, 489 (Fla. 2011), the Florida Supreme Court had held that a similar limitation of liability provision violated public policy and was not severable.  However, the arbitration provision in Gessa did not contain a severability provision.  Accordingly, Novosett certified the following question as one of great public importance:  DOES THE COURT’S HOLDING IN GESSA V. MANOR CARE OF FLORIDA, 86 So.3d 484 (Fla.2011), CONTROL WHERE, AS HERE, THE CONTRACT CONTAINS A SEVERABILITY CLAUSE?

Reyes v. Claria Life & Health Ins. Co., No. 3D15–1840 (Fla. 3d DCA Mar. 16, 2016).  Where a valid and enforceable forum selection clause provides for mandatory and exclusive jurisdiction in a different jurisdiction, trial court errs in addressing merits of motion to compel arbitration.

Florida Holdings III, LLC v. Duerst ex rel. Duerst, No. 2D15–1486 (Fla. 2d DCA Mar. 11, 2016).  A party seeking to avoid arbitration on grounds of unconscionability must show that the agreement to arbitrate is both procedurally and substantively unconscionable.  Procedural unconscionability focuses on the manner in which the contract containing the arbitration agreement was made and asks “whether the complaining party had a meaningful choice at the time the contract was signed.”  Relevant factors of procedural unconscionability include (1) whether the party resisting arbitration had a realistic opportunity to bargain over the provision (or conversely, whether the terms were presented on a take-it-or-leave-it basis) and (2) whether the party resisting arbitration had a reasonable opportunity to understand the terms of the contact (or conversely, whether the terms were concealed, minimized, or buried in fine print).  Substantive unconscionability focuses on the terms of the contract and requires a court to determine “whether the contract terms . . . are so outrageously unfair as to shock the judicial conscience.”  A substantively unconscionable contract term is one that “no man in his senses and not under delusion would make . . . and . . . no honest and fair man would accept.”

Wells v. Halmac Dev., Inc., No. 3D15-1081 (Fla. 3d DCA Apr. 13, 2016).  Trial court abused its discretion in failing to award section 57.105 attorney’s fees where party’s counsel knew or should have known that party did not have any reasonable basis in law to seek an order from the trial court declaring party to be the prevailing party contrary to the express determination of the arbitrator.

American Management Services & Fedorak v. Merced, 186 So. 3d 612 (Fla. 4th DCA 2016).  Where employee and employer disputed in sworn statements as to whether employee had executed arbitration agreement, the trial court erred in denying motion to compel arbitration pending further discovery without setting an expedited evidentiary hearing.

Cox v. Village of Tequesta, 185 So. 3d 601 (Fla. 4d DCA 2016).  Requirement that trial court determine, in considering statutory action to compel arbitration, whether employee “waived” right to arbitration, did not permit trial court to consider whether employee timely invoked key parts of arbitration agreement.

Ross v. Prospectsplus!, Inc., 182 So. 3d 802 (Fla. 2d DCA 2016).  Order confirming arbitration award is not a final, appealable order when no final judgment has been entered.

A.K. v. Orlando Health, Inc., 186 So. 3d 626 (Fla. 5th DCA 2016).  An arbitration agreement violates the public policy where it fails to adopt the statutory provisions required by Florida’s Medical Malpractice Act, chapter 766.  Conflict certified with Santiago v. Baker, 135 So.3d 569 (Fla. 2d DCA 2014).

Glasswall, LLC v. Monadnock Const., Inc., 187 So. 3d 248 (Fla. 3d DCA 2016).  The arbitrator, not the court, will decide the issue of arbitrability where the arbitration agreement includes clear and unmistakable evidence that the parties intended to submit the issue to an arbitrator, even where there is no specific language to that effect.

MuniCommerce LLC v. Navidor, Ltd. (Sic), 184 So. 3d 635 (Fla. 4th DCA 2016).  For a waiver provision in an arbitration agreement to be unenforceable as unconscionable, provision must show at least a modicum of both procedural and substantive unconscionability.

Donna Greenspan Solomon is one of two attorneys certified by The Florida Bar as both Business Litigator and Appellate Specialist.  Donna is a Member of the AAA’s Roster of Arbitrators (Commercial Panel).  She is a FINRA-Approved and Florida Supreme Court Qualified Arbitrator.  She is also a Certified Circuit, Appellate, and Family Mediator.  Donna can be reached at (561) 910-0054 or Donna@SolomonAppeals.com or by visiting www.solomonappeals.com.