Auchter Co. v. Zagloul

• Decision Date: 07 March 2007
• Docket Number: No. 1D06-2817.,1D06-2817.
• Citation: 949 So.2d 1189
• Parties: The AUCHTER COMPANY, a Florida corporation, Appellant, v. Fouad ZAGLOUL, Appellee.
• Court: Florida District Court of Appeals

949 So.2d 1189

The AUCHTER COMPANY, a Florida corporation, Appellant, v. Fouad ZAGLOUL, Appellee.

No. 1D06-2817.

District Court of Appeal of Florida, First District.

March 7, 2007.

John W. Caven, Jr., and Allan P. Clark of Foley & Lardner LLP, Jacksonville and John R. Hamilton, Foley & Lardner LLP, Orlando, for Appellant.

T. Geoffrey Heekin, S. Hunter Malin, and Jeremy T. Simons of Heekin, Malin & Wenzel, P.A., Jacksonville, for Appellee.

Christopher V. Carlyle, Shannon McLin Carlyle, and Gilbert S. Goshorn, Jr., of The Carlyle Appellate Law Firm, The Villages, for Amicus Curiae Associated General Contractors of America and Associated General Contractors of Greater Florida.

WEBSTER, J.

Appellant seeks review of a non-final order denying its Motion to Dismiss and/or Compel Mediation and/or Arbitration and Stay Action filed in response to a complaint stating causes of action based on a contract between appellant (as the contractor) and appellee (as the owner) to build a house. We have jurisdiction. Art. V, § 4(b)(1), Fla. Const. (granting to district courts of appeal jurisdiction to "review interlocutory orders ... to the extent provided by rules adopted by the supreme court"); Fla. R.App. P. 9.130(a)(3)(C)(iv) (providing for appeal to the district courts of appeal of non-final orders that "determine ... the entitlement of a party to arbitration"). See Tropical Ford, Inc. v. Major, 882 So.2d 476 (Fla. 5th DCA 2004) (concluding that rule 9.130(a)(3)(C)(iv) authorizes review of an order denying a motion to stay and compel mediation and, if mediation failed, arbitration, pursuant to a contract between the parties). Because we conclude that the trial court erred as a matter of law when it determined that the mandatory mediation and arbitration provisions of the parties' contract did not survive appellee's purported termination of the contract, we reverse and remand with directions that the trial court grant appellant's motion; compel the parties to submit to mediation and, if mediation fails, to binding arbitration; and stay the action pending the parties' compliance.

The pertinent facts are not in dispute. In 2003, the parties entered into a standard American Institute of Architects (AIA) contract for the construction of a house on appellee's property. It consisted of two documents—a "Standard Form of Agreement Between Owner and Contractor" (AIA Document A111-1997) and "General Conditions of the Contract for Construction" (AIA Document A201-1997). In 2005, roughly two months after appellant had secured a certificate of occupancy, appellee notified appellant that he was terminating the contract because of what he characterized as "substantial breaches of the [c]ontract." Appellee then filed a four-count complaint seeking damages. Appellant responded with its Motion to Dismiss and/or Compel Mediation and/or Arbitration and Stay Action, arguing that, pursuant to subparagraphs 4.5.1 and 4.6.1 of the General Conditions of the contract, appellee was required to submit any "claims arising out of or related to the [c]ontract" to mediation and, if mediation failed, to binding arbitration. Appellee opposed appellant's motion on the ground that the contract between the parties had been terminated and, as a matter of law, the mediation and arbitration provisions contained in the General Conditions did not survive that termination. Appellee relied principally on the decision in Aberdeen Golf & Country Club v. Bliss Construction, Inc., 932 So.2d 235 (Fla. 4th DCA 2005), which decision appellee contended was binding on the trial court because it was the only Florida appellate decision construing the mediation and arbitration provisions contained in the standard AIA contract. Appellant responded that Aberdeen was not controlling because the discussion of the effect of termination of the contract on the mediation and arbitration provisions was dicta, and the actual holding of the case was that the owner had waived the right to insist on mediation or arbitration when it terminated the contract. Appellant argued that, because it had done nothing to waive its right to insist upon compliance with the mediation and arbitration provisions, Aberdeen had no bearing on the issue. Ultimately, the trial court accepted appellee's position and, relying on Aberdeen for the proposition that the mediation and arbitration provisions of the standard AIA contract were not intended to survive termination of the contract, denied appellant's motion. This appeal follows. Because the trial court's order denying the motion to compel mediation and/or arbitration is based entirely on its construction of the contract documents, our standard of review is de novo. E.g., Powertel, Inc. v. Bexley, 743 So.2d 570, 573 (Fla. 1st DCA 1999).

It would appear that, given the nature of the parties' contract, the applicable law is that found in the Federal Arbitration Act (9 U.S.C. §§ 1-16 (2000)), rather than in the Florida Arbitration Code (§§ 682.01-682.22, Fla.Stat. (2005)). See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (concluding that Congress intended to exercise its full Commerce Clause power when it passed the Federal Arbitration Act). However, for purposes of this appeal, it is irrelevant which law applies because the analysis is the same in either case. According to our supreme court,

[u]nder 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 has been waived.

Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999) (citing Terminix Int'l Co. v. Ponzio, 693 So.2d 104, 106 (Fla. 5th DCA 1997)). Accord John B. Goodman Ltd. P'ship v. THF Constr., Inc., 321 F.3d 1094 (11th Cir.2003). Here, the trial court based its decision on its conclusion that the mediation and arbitration provisions of the contract did not survive termination of the contract—i.e., that no valid agreement to arbitrate existed after termination of the contract. Nobody has suggested that no arbitrable issue exists or that appellant waived its right to arbitrate. Accordingly, we are concerned only with whether the mediation and arbitration provisions contained in the contract were "valid" when appellant sought to invoke them.

The relevant portions of the parties' contract are contained in the General Conditions of the contract. Subparagraph 4.3.1 defines "Claim" as "a demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of time or other relief with respect to the terms of the Contract. The term `Claim' also includes other disputes and matters in question between the Owner and Contractor arising out of or relating to the Contract." Paragraph 4.4 is titled "RESOLUTION OF CLAIMS AND DISPUTES." Its pertinent provisions read:

4.4.1 Decision of Architect. Claims, including those alleging an error or omission by the Architect but excluding those arising under Paragraphs 10.3 through 10.5, shall be referred initially to the Architect for decision. An initial decision by the Architect shall be required as a condition precedent to mediation, arbitration or litigation of all Claims between the Contractor and Owner arising prior to the date final payment is due, unless 30 days have passed after the Claim has been referred to the Architect with no decision having been rendered by the Architect. The Architect will not decide disputes between the Contractor and persons or entities other than the Owner.

. . . .

4.4.5 . . . . The Approval or rejection of a Claim by the Architect shall be final and binding on the parties but subject to mediation and arbitration.

Paragraph 4.5 is titled "MEDIATION." Its pertinent provisions read:

4.5.1 Any Claim arising out of or related to the Contract, except Claims relating to aesthetic effect and except those waived as provided for in Subparagraphs 4.3.10, 9.10.4 and 9.10.5 shall, after initial decision by the Architect or 30 days after submission of the Claim to the Architect, be subject to mediation as a condition precedent to arbitration or the institution of legal or equitable proceedings by either party.

4.5.2 The parties shall endeavor to resolve their Claims by mediation which, unless the parties mutually agree otherwise, shall be in accordance with the Construction Industry Mediation Rules of the American Arbitration Association currently in effect. Request for mediation shall be filed in writing with the other party to the Contract and with the American Arbitration Association. The request may be made concurrently with the filing of a demand for arbitration but, in such event, mediation shall proceed in advance of arbitration or legal or equitable proceedings, which shall be stayed pending mediation for a period of 60 days from the date of filing, unless stayed for a longer period by agreement of the parties or court order.

Paragraph 4.6 is titled "ARBITRATION." Its pertinent provisions read:

4.6.1 Any Claim arising out of or related to the Contract, except Claims relating to aesthetic effect and except those waived as provided for in Subparagraphs 4.3.10, 9.10.4 and 9.10.5, shall, after decision of the Architect or 30 days after submission of the Claim to the Architect, be subject to arbitration. Prior or to arbitration, the parties shall endeavor to resolve disputes by mediation in accordance with the provisions of paragraph 4.5.

4.6.2 Claims not resolved by mediation shall be decided by arbitration which, unless the parties mutually agree otherwise, shall be in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect. The demand for arbitration shall be filed in writing with...