IN THE SUPREME COURT OF FLORIDA TALLAHASSEE, FLORIDA
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1 IN THE SUPREME COURT OF FLORIDA TALLAHASSEE, FLORIDA CASE NO. SC LUIS R. COLON, Petitioner, -vs- MERCEDES HOMES, INC., ETC. Respondent. / BRIEF OF PETITIONER, COLON, ON JURISDICTION Michael Manglardi, Esq. MARTINEZ MANGLARDI, ET AL. 540 N. Semoran Blvd. Orlando, FL and Robert Hornstein, Esq Peachtree Circle East Jacksonville, FL and BURLINGTON & ROCKENBACH, P.A Palm Beach Lakes Blvd., Ste. 410 West Palm Beach, FL (561) (phone) (561) (fax) Attorneys for Petitioner
2 TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES ii PREFACE iii STATEMENT OF THE CASE AND FACTS 1 SUMMARY OF ARGUMENT 3 ARGUMENT 4 THE DECISION OF THE FIFTH DISTRICT EXPRESSLY AND DIRECTLY CONFLICTS WITH A DECISION OF THIS COURT OR OF ANOTHER DISTRICT COURT OF APPEAL CONCLUSION 10 CERTIFICATE OF SERVICE 11 CERTIFICATE OF TYPE SIZE & STYLE 12 i
3 TABLE OF AUTHORITIES PAGE Cases Campos v. Homes By Joe Boyden, L.L.C., 140 N.M. 122, 125, 140 P.3d 543, 546 (N.M.App. 2006) 7 Citigroup, Inc. v. Boles, 914 So.2d 23, 25 (Fla. 4 th DCA 2005) 3, 4, 9 First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct (1995) 2 Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct. 588 (2002) 2, 5 Mercedes Homes, Inc. v. Colon, 966 So. 2d 10 (Fla. 5 th DCA 2007) 1, 2, 6 Mercedes Homes, Inc. v. Rosario, 920 So. 2d 1254 (Fla. 2d DCA 2006) 3 Nunez v. Westfield Homes of Florida, Inc., 925 So.2d 1108 (Fla. 2d DCA 2006) 3, 4, 9 Seifert v. U.S. Home, Inc., 750 So. 2d 633 (Fla. 1999) 3, 4, 5, 6, 7, 8, 9 Other Authorities Article 5, '(3)(b)(3), Florida Constitution 4 Rule 9.030(a)(2)(A)(iv), Fla. R. App. P. 10 ii
4 PREFACE The parties will be referred to by their proper names or as they appear in this Court. The following designation will be used: (A) - Petitioner=s Appendix iii
5 STATEMENT OF THE CASE AND FACTS The Petitioner, Colon, entered into a contract for the purchase of a home built by Mercedes Homes. Mercedes Homes, Inc. v. Colon, 966 So. 2d 10, 11 (Fla. 5 th DCA 2007) (A.1-2). The contract included a provision requiring Mercedes to install sod on the property. Eleven days after closing on the home, Colon tripped over negligently installed sod and was injured. Ibid (A.1-2). Colon filed a lawsuit against Mercedes Homes for his personal injuries and Mercedes moved to compel arbitration based on an arbitration provision in a home warranty purchased for Colon by Mercedes. Ibid (A.1-2). The home sales contract did not contain an arbitration provision. The sales contract liability provisions did not refer to or include claims for personal injuries or wrongful death caused by the negligence of Mercedes Homes or one of its subcontractors. The warranty provisions specifically excluded personal injuries from being considered as a warranty claim. The warranty arbitration provision provided (Id. at 11-12)(A.1-3): Any disputes concerning the interpretation or the enforceability of this arbitration agreement, including without limitation, its revocability or voidability for any cause, the scope of arbitrable issues, and any defense based upon waiver, estoppel or laches, shall be decided by the arbitrator. * * * ARBITRATION Any and all claims, disputes and controversies by or between the Homeowner, the Builder, HBW VI, or any combination of the foregoing, arising from or related to this Warranty, to the subject Home, to any defect in or to the subject Home or the real property on which the 1
6 subject Home is situated, or the sale of the subject Home by the Builder, including without limitation, any claim of breach of contract, negligent or intentional misrepresentation or nondisclosure hi the inducement, execution or performance of any contract, including this arbitration agreement, and breach of any alleged duty of good faith and fair dealing, shall be submitted to arbitration The trial court denied the motion to compel arbitration and Mercedes Homes appealed. On appeal, the Fifth District reversed and held that the warranty arbitration provision gave the arbitrator the authority to decide what claims were arbitrable, citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct (1995). The court also noted that the United States Supreme Court, in Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct. 588 (2002), held that the question of arbitrability is for the court unless the parties clearly and unmistakably provide otherwise. Mercedes Homes, 966 So. 2d at 14, citing Howsam, 537 U.S. at 83 (A.3-4). The Fifth District concluded that the arbitration agreement in the home warranty clearly and unmistakably requires the arbitrator to decide, in the first instance, the scope of the arbitration provision and the enforceability of any purported limitation of Mr. Colon s right to pursue a claim for personal injuries. Mercedes Homes, 966 So.2d at 14 (A.3-4). In a lengthy dissent, Judge Griffin wrote that the effect of the majority opinion was to give judicial approval to the elimination of personal injury claims in any case where the victim has a contractual relationship with the tortfeasor. Id. at 15 (A.4-5). Judge Griffin pointed out that the majority opinion incorrectly required arbitration of the issue of the 2
7 scope of arbitrability even though the warranty clearly excluded tort claims. Id. at (A.5-7). According to Judge Griffin, the majority in this case, like the Second District in Mercedes Homes, Inc. v. Rosario, 920 So. 2d 1254 (Fla. 2d DCA 2006), required arbitration because it failed to appreciate the significance of the arbitration provision being placed in the separate warranty booklet instead of the purchase contract. Ibid. SUMMARY OF ARGUMENT The decision of the Fifth District conflicts with this Court s decision in Seifert v. U.S. Home, Inc., 750 So. 2d 633 (Fla. 1999), the decision of the Fourth District in Citigroup, Inc. v. Boles, 914 So.2d 23, 25 (Fla. 4 th DCA 2005), and the decision of the Second District in Nunez v. Westfield Homes of Florida, Inc., 925 So.2d 1108 (Fla. 2d DCA 2006). In Seifert, this Court held that a personal injury claim is not subject to arbitration unless the personal injury claim relies on duties created by the contract which contains the arbitration provision and where nothing in the contract indicates the parties contemplated that arbitration would apply to personal injuries. In this case, the Fifth District held that Plaintiff s claim for personal injuries must be arbitrated because a warranty provided without charge by Mercedes Homes contained a provision requiring arbitration. The Fifth District s decision requires arbitration, at least, of the question of whether the personal injury claim is subject to arbitration where the personal injury claim has nothing to do with the warranty which contains the arbitration provision. The warranty clearly excludes personal injury claims from coverage, and the sales contract 3
8 contains no arbitration provision or mention of personal injury claims. Requiring arbitration of a claim that is clearly not contemplated in the warranty is contradictory to the decision in Seifert. The Fifth District s opinion also conflicts with Boles and Nunez. In each of those cases, the district courts refused to compel arbitration of a claim which clearly arose outside of the contract which contained the arbitration provision. Like Siefert, those decisions rely on state law contract principles to limit the arbitration agreement to the matters contemplated by the parties in the contract. ARGUMENT THE DECISION OF THE FIFTH DISTRICT EXPRESSLY AND DIRECTLY CONFLICTS WITH A DECISION OF THIS COURT OR OF ANOTHER DISTRICT COURT OF APPEAL This Court should exercise its discretionary jurisdiction pursuant to Article 5, '(3)(b)(3), Florida Constitution because the decision of the Fifth District in this case expressly and directly conflicts with the decision of this Court in Seifert v. U.S. Home Corporation, 750 So. 2d 633 (Fla. 1999). In Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla. 1999), this Court considered whether a tort claim arising out of a home construction relationship was sufficiently related to the contract containing an arbitration provision to require arbitration of the tort claim. Because arbitration is a matter of contract, the opinion relies on rules of contract construction and, specifically, the natural corollary that no party can be forced to submit a dispute to arbitration that the party did not intend 4
9 to arbitrate. Id. at 636; See also, Howsam v. Dean Witter Reynolds, 537 U.S. 79, 82, 123 S.Ct. 588, 591 (2002). The important premise to the discussion is that an arbitrator only has jurisdiction if given jurisdiction to decide an issue by the contract. This Court discussed at length the phrase arising under or related to this Agreement contained in the contract for sale of the home in Siefert, and concluded that even if the contract uses broad language such as arising out of or related to describe the issues which are subject to arbitration, claims which did not depend on new duties created by the contract were not subject to arbitration. Because the claims brought in Seifert were based on common law duties which were otherwise imposed by tort law, this Court held that the court (Id. at 640) (emphasis added): 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 petitioner concedes that an action for breach of contract or of any of the warranties or other rights and obligations arising out of the contract would be subject to arbitration. However, because the wrongful death action here is predicated upon a tort theory of common law negligence unrelated to the rights and obligations of the contract, petitioner asserts such an action was not contemplated by the parties when the contract was made and should not be subject to arbitration. We agree. This Court limited arbitration to claims with a sufficient nexus to the contract in which the arbitration appears. The holding in Mercedes Homes below conflicts with Seifert because the arbitration agreement in this case appears only in the warranty 5
10 document which specifically excluded personal injury claims. Allowing an arbitrator to decide whether a claim is within the scope of arbitration, when the claim is clearly outside of the arbitration agreement, presents a classic chicken and egg scenario. Allowing Mercedes Homes to submit the issue of arbitrability of a personal injury claim to an arbitrator gives the arbitrator jurisdiction which the contract does not give the arbitrator. Without jurisdiction, the arbitrator has no authority to decide the issue of arbitrability. The Fifth District s decision gives the arbitrator jurisdiction to decide whether a claim which is clearly outside of the arbitration agreement is arbitrable. As an example of this problem, assume Colon brought a claim against Mercedes Homes for a personal injury inflicted when one of its vehicles struck him while they were both 100 miles from the homesite and the accident clearly had no connection with the warranty or the home or the real property. Under the rationale of the Fifth District, Mercedes Homes could demand arbitration and the trial court would have to submit the arbitrability question to an arbitrator. By omitting the nexus analysis in Seifert and by ignoring the issue of whether the parties contemplated that such issues would be arbitrated, the Fifth District has created a one-sided agreement in which Mercedes Homes always holds the advantage 1. Mercedes Homes always wins when it demands arbitration, 1 By contrast, the Court of Appeals of New Mexico, in Campos v. Homes By Joe Boyden, L.L.C., 140 N.M. 122, 125, 140 P.3d 543, 546 (N.M.App. 2006), refused to compel arbitration of a tort and contract claim under an arbitration provision contained in a home warranty issued by HBW, the same entity involved in this case. In its decision, 6
11 even if the contract clearly does not contemplate the dispute as being contemplated by the arbitration agreement. The decision of the Fifth District also directly and expressly conflicts with Citigroup, Inc. v. Boles, 914 So.2d 23, 25 (Fla. 4 th DCA 2005) in which the Fourth District held that, despite a broad description of claims subject to arbitration, there was no nexus between the claims and the contract in which the arbitration provision appeared. In Boles, the arbitration agreement purported to apply to (Id. at 24): all claims or controversies whether such claims or controversies arose prior, on or subsequent to the date hereof,... concerning or arising from any account maintained at SSB, any transaction involving SSB, or construction, performance or breach of the agreement with SSB. In addition, the clause includes claims and controversies not only with SSB, but also with its present or former officers, directors, or employees. The claim brought by Boles was related to statements made by a Solomon Smith Barney analyst concerning MCI/Worldcom. Long after the statements were made, and long after Worldcom declared bankruptcy, Boles moved his stock account to Solomon. When he opened the account he was required to agree to the above arbitration agreement. His the court relied on general state law contract principles to conclude that the warranty arbitration provision did not apply to tort and contract claims which arose outside of the warranty. The court was unpersuaded that [the broad arbitration provision] should be read outside the warranty context or outside the rest of the language of the provision and noted that the arbitration provision was not in the new construction purchase agreement and did not appear in any of the purchaser s contract documents until after the purchaser received the warranty booklet. 7
12 claim against Solomon for statements made by its analyst that caused Boles to invest in Worldcom was totally unrelated to the coincidental opening of his investment account with Solomon after the Worldcom loss. The complaint did not refer to the investment account agreement. The Fourth District relied on this Court s decision in Seifert to conclude that a mere coincidence was insufficient to compel arbitration of a totally unrelated claim. Although it recognized that arbitration was favored, and that the arising out of or related to language of the arbitration agreement was very broad, it nevertheless affirmed the trial court s decision to deny arbitration. The court wrote: Notwithstanding the broad wording of the text, we need not turn a blind eye to the context in which it appears. The Boles claims could have been raised by any member of the public who had relied upon [Solomon s analyst s] advice in the publications. The decision of the Fifth District in this case conflicts with Boles because the Fifth District omitted the analysis of whether the claim made is within the contemplation of the contract. Regardless of the broad language used in the warranty agreement written by Mercedes Homes, the contract still fails to have a sufficient nexus to claims for personal injuries by Mr. Colon. By allowing an arbitrator to decide whether the personal injury claim should be arbitrated, the Fifth District gave jurisdiction where none existed. Similarly, the decision of the Fifth District conflicts with the decision in Nunez v. Westfield Homes of Florida, Inc., 925 So.2d 1108 (Fla. 2d DCA 2006) in which the 8
13 Second District reviewed a home warranty like the one in this case which contained an arbitration provision. Relying on Seifert, the court held that the warranty arbitration provision did not apply to a class action for violation of the building code because the warranty specifically excluded claims for violation of the building code. The court limited the warranty arbitration provision to warranty disputes. The decision in this case presents a unique and important issue. Unlike a judge, an arbitrator only gets paid if he is arbitrating. As pointed out by Judge Griffin in the dissent, the arbitrator chosen by Mercedes Homes has a powerful motivation to please Mercedes Homes. In addition, the arbitration provision in this case is buried deep in a document which has nothing whatsoever to do with claims for personal injuries or other tort claims. It is a warranty, which was given to Colon free of charge by an application he filled out nearly seven months after he signed the sales contract to purchase the house. The warranty is described in positive terms, and the purchaser is never given the chance to refuse it because it is paid for by Mercedes Homes. Under these circumstances, it is doubtful that the purchaser has consciously contemplated the arbitration provision or its potential to take away rights which the purchaser has under common law, especially since it is issued after the house is purchased. Enforcing the arbitration agreement destroys the right to a jury trial and the purchaser s access to courts. These circumstances turn an arbitration, which originated as a way for businesses to resolve commercial issues quickly, into a tool for the unscrupulous. 9
14 CONCLUSION This Court should accept jurisdiction pursuant to Rule 9.030(a)(2)(A)(iv), Fla. R. App. P. as the decision below presents an express and direct conflict with the decision of this Court and the decisions of the Second and Fourth District. 10
15 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true copy of the foregoing has been furnished, by regular U.S. mail, to David B. Weinstein, Esq./Kimberly S. Mello, Esq., Appellate Attorneys for Mercedes Homes, Inc., Greenburg Traurig, 625 E. Twiggs Street, #100 Tampa, FL 33602; and Jeffrey Kirsheman, Esq., Trial Attorneys for Mercedes Homes, Inc., FISHER RUCHMER, P.O. Box 712, Orlando, FL , on November 29, Michael Manglardi, Esq. MARTINEZ MANGLARDI, ET AL. 540 N. Semoran Blvd. Orlando, FL and Robert Hornstein, Esq Peachtree Circle East Jacksonville, FL and BURLINGTON & ROCKENBACH, P.A Palm Beach Lakes Blvd., Ste. 410 West Palm Beach, FL (561) (phone) (561) (fax) bdr@flappellatelaw.com Attorneys for Petitioner By: BARD D. ROCKENBACH Florida Bar No CERTIFICATE OF TYPE SIZE & STYLE 11
16 Respondent hereby certifies that the type size and style of the Brief of Respondent on Jurisdiction is Times New Roman 14pt. BARD D. ROCKENBACH Florida Bar No
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