Pierce v. J.W. Charles-Bush Securities, Inc.

• Decision Date: 05 August 1992
• Docket Number: No. 90-3120,CHARLES-BUSH,90-3120
• Citation: 603 So.2d 625
• Parties: George PIERCE and Linda Pierce, Appellants, v. J.W.SECURITIES, INC., f/k/a Alan Bush Brokerage Co.; and David Freudenberg, Appellees. 603 So.2d 625, 17 Fla. L. Week. D1805
• Court: Florida District Court of Appeals

Page 625

603 So.2d 625

George PIERCE and Linda Pierce, Appellants, v. J.W. CHARLES-BUSH SECURITIES, INC., f/k/a Alan Bush Brokerage Co.; and David Freudenberg, Appellees.

No. 90-3120.

603 So.2d 625, 17 Fla. L. Week. D1805

District Court of Appeal of Florida Fourth District.

Aug. 5, 1992.

Warren B. Brams and Jack Scarola of Searcy, Denney, Scarola, Barnhart & Shipley, P.A., West Palm Beach, for appellants.

Roy E. Fitzgerald of Gunster, Yoakley & Stewart, P.A., West Palm Beach, for appellees.

EN BANC

FARMER, Judge.

We confront, as a full court, whether to recede from our decision in Loxahatchee River Environmental Control District v. Guy Villa & Sons, Inc., 371 So.2d 111 (Fla. 4th DCA 1978), cert. denied, 378 So.2d 346 (Fla.1979). The issue attracting our attention is whether an arbitrator (or arbitration panel) may, with the consent of all parties, determine entitlement to attorney's fees for claims that the parties have explicitly consented to arbitrate. We now conclude that there is no reason not to allow parties to submit attorney's fees claims to arbitration, if they so desire, and that the applicable statutes do not evidence a legislative intent to require that all attorney's fees be determined by a judge in a court proceeding.

The facts of this case are straightforward. The Pierces brought an action against J.W. Charles-Bush Securities Inc. [Bush] and Freudenberg, alleging violations of the Securities Exchange Act of 1934, violations of section 517.301, Florida Statutes (1989), common law fraud, breach of fiduciary duty, breach of contract, and negligence. All of these claims arose from a stock broker's account that the Pierces maintained with Bush, which was itself governed by a written account agreement between the parties. After the federal claims were dismissed, the court ordered arbitration of all remaining claims in accordance with an arbitration provision in the account agreement.

During the course of the arbitration proceedings, which lasted for six days, the parties stipulated on the record that the arbitrators would also determine the issue of entitlement to attorney's fees. Ultimately, the arbitrators determined that the Pierces were entitled to no damages on any of their claims. The arbitrators then expressly decided that "[e]ach party shall bear its own attorneys' fees and costs." Their decision thus exonerates the Pierces from paying attorney's fees to their prevailing adversaries.

Notwithstanding the arbitrators' decision, in its motion for confirmation of the award Bush prayed for an award of attorney's fees for defending the entire action. Bush argued that under our Loxahatchee decision arbitrators have no power to decide matters relating to attorney's fees and that the arbitration of fees was unenforceable. It cited the provision in the account agreement to the effect that, in any legal action arising from the agreement, the prevailing party would be entitled to attorney's fees and argued that the provision required an award of fees because it prevailed on all of the Pierces' claims. The trial court agreed with Bush, citing Loxahatchee. This appeal followed.

We turn to our holding in Loxahatchee. The arguments there were summed up by Judge Downey in his usual trenchant manner:

Appellant contends that the judgment of confirmation should be reversed because the arbitrators had no power even by stipulation to adjudicate entitlement to or amount of attorney's fees. On the other hand, appellees argue that, even if the arbitrators did not have the authority to determine attorney's fees in the first instance, if the parties stipulate that a fee may be awarded by the arbitrators, they may do so.

371 So.2d at 112. This court's view of the controlling law at that time was:

In this case Section 682.02, Florida Statutes (1975), provides for the submission of any controversy to arbitration; but that broad grant of authority is subsequently limited by Section 682.11, wherein the arbitrators are expressly authorized (unless the agreement provides otherwise) to determine the arbitrators' and umpires' fees and expenses, "together with other expenses; not including counsel fees ...." (Emphasis added.) [e.o.]

371 So.2d at 113. We went on to hold that "[t]he proper place to determine the entitlement to and amount of attorney's fees authorized by statute or contract is in the circuit court upon application for confirmation of the award." Id.

Since 1978 when Loxahatchee was decided, the judicial perspective on arbitration has undergone a change. American courts had earlier adopted the English common law view that arbitration agreements could not be enforced. See, e.g., Pacific Mills v. Hillman Garment, Inc., 87 So.2d 599 (Fla.1956) (agreement to arbitrate could not be specifically enforced by injunction). Generally, this view was based on the notion that such agreements constituted an attempt to oust courts of their lawful jurisdiction.

A series of United States Supreme Court decisions since then began a change of perception, however. In Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), the Court announced an invariable rule for cases covered by the United States Arbitration Act [USAA], 9 U.S.C. sections 1-14 (1982):

The [USAA] establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues, should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.

460 U.S. at 24-25, 103 S.Ct. at 941.

That was followed less than a year later with the decision in Southland Corporation v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). At issue there was a provision of the California Franchise Investment Law which required judicial consideration of claims brought under the state law, even if the parties had agreed in writing to arbitrate such issues. Once again, the Court invoked a national policy favoring arbitration. It expressly noted that one purpose of USAA was to address the failure of state arbitration statutes to require enforcement of arbitration agreements. The Court said:

In creating a substantive rule applicable in state as well as federal courts, Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements. We hold that [section] 31512 of the California Franchise Investment Law violates the Supremacy Clause.

465 U.S. at 16, 104 S.Ct. at 861. Hence, the Court's holding was that USAA withdrew any power of the states to require a judicial forum for the resolution of claims that the contracting parties had agreed to resolve by arbitration.

Keating involved a statute that exemplifies hostility to arbitration by deciding that certain statutory claims are inappropriate for non-judicial resolution. In a steady drumbeat of cases since Keating, the Court has reversed a number of decisions precluding arbitration for various statutory claims. In Mitsubishi Motors Corporation v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), the Court rejected a long line of cases which had held that arbitration was inappropriate, and thus could not be compelled even if agreed, for antitrust and RICO claims. Similarly, in Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), the Court ended the long held belief that securities fraud claims, as here, under the Securities Exchange Act of 1934 and rule 10b-5 cannot be ordered to agreed arbitration. And, in Gilmer v. Interstate/Johnson Lane Corporation, --- U.S. ----, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), the Court found no exemption even for civil rights claims, in that case under the Age Discrimination in Employment Act. If civil rights, antitrust and securities fraud claims are not inappropriate for arbitration, it is very difficult to imagine a civil claim in which an agreement to arbitrate would not be enforced. See also Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985); and Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974).

In this case the arbitration agreement is included in a stockbroker's account agreement. Although neither party has raised the subject, there is a question in our minds as to whether the margin account has been captured by USAA section 2, which applies the Act's provisions to any "contract evidencing a transaction involving commerce," as defined in USAA section 1. Under the previously cited Supreme Court decisions, we have little doubt that Congress has barred the states from refusing to enforce arbitration awards under USAA which determine entitlement to attorney's fees. The record being silent, however, on the application of USAA, we proceed to consider whether the comparable Florida law on arbitration, properly understood, precludes agreed arbitral determination of fee claims.

Our own supreme court recently held that "arbitration is a favored means of dispute resolution and courts indulge every reasonable presumption to uphold proceedings resulting in an award." Roe v. Amica Mut. Ins. Co., 533 So.2d 279, 281 (Fla.1988). Indeed, we ourselves recently applied that very principle. Ronbeck Const. Co., Inc. v. Savanna Club Corp., 592 So.2d 344, 346 (Fla. 4th DCA 1992). In fact we went even further and held that under the Florida Arbitration Code [FAC] ¹ courts should resolve all doubts in favor of arbitration rather than against it. Following the lead of the Third District in Sabates v. International Medical Centers, Inc., 450 So.2d 514 (Fla. 3d DCA 1984), we rejected the notion that civil theft claims were so distinctive that agreed arbitration would have been against public policy.

The premise of Loxahatchee is that attorney's fees are somehow different. To reach that conclusion, we relied on Tassinari...