Bland v. Green Acres Group, L.L.C.

• Decision Date: 27 May 2009
• Docket Number: No. 4D08-3632.,4D08-3632.
• Citation: 12 So.3d 822
• Parties: Julian BLAND, Appellant, v. GREEN ACRES GROUP, L.L.C., a Florida Corporation, Appellee.
• Court: Florida District Court of Appeals

12 So.3d 822

Julian BLAND, Appellant, v. GREEN ACRES GROUP, L.L.C., a Florida Corporation, Appellee.

No. 4D08-3632.

District Court of Appeal of Florida, Fourth District.

May 27, 2009.

Rehearing Denied August 5, 2009.

Wesley R. Harvin, II of Harvin, Harvin & Pinnock, LLP, Stuart, for appellant.

Clifford A. Kornfield of Clifford A. Kornfield, P.A., Miami, for appellee.

MAASS, ELIZABETH T., Associate Judge.

Julian Bland, the defendant below, filed an interlocutory appeal from the trial court's denial of his request to compel arbitration. We conclude that there was competent, substantial evidence that Bland's actions before and during suit waived the contract's arbitration clause, and affirm.

On March 19, 2005, Bland contracted to sell raw land to Green Acres Corp., LLC's predecessor in interest. Green Acres sued Bland for breach of contract in 2005. In March of 2006, Bland, a British citizen, filed a limited appearance and motion to dismiss when Green Acres was unable to timely effect service. Green Acres filed a notice of lis pendens against the property August 10, 2005, of which Bland became aware not later than May 26, 2006. Green Acres voluntarily dismissed the 2005 case on August 21, 2007.

That same day, Green Acres again sued Bland for breach of contract. A week later, Green Acres's counsel wrote Bland's counsel, told him that Green Acres had refiled the case, and asked whether he could accept service. Instead, Bland was purportedly served by constructive process in the 2007 suit. The court entered a default October 22, 2007. Four days later, Bland's counsel reinstigated settlement negotiations, demanding "the dismissal without prejudice of the action in question" as part of the settlement. On December 6, 2007, Green Acres filed a motion for default final judgment. Bland served a Notice of Limited Appearance and unsworn motion on December 14, 2007. The motion alleged that service was improper; that he did not know he had been constructively served; that his failure to timely respond was excusable; and that he had "Contractual Defenses to bringing of this action in the Circuit Court," without stating what they were. Hearing on Bland's motion was set for January 23, 2008, but canceled by Bland so that the parties could further pursue settlement.

On May 8, 2008, Green Acres served a motion to enforce settlement. That motion was set for hearing in August of 2008. On July 29, 2008, Bland served a Motion to Stay and to Compel Arbitration asking, for the first time, that the dispute be resolved in arbitration.¹ Hearing on Bland's motion to set aside the default was set for August 8, 2008.

Bland piggybacked his motion to compel arbitration onto the August 8, 2008 hearing. The trial court refused to vacate the default. Since no final judgment has been entered, that order is not yet subject to review. See Fla. R.App. P. 9.130(a)(3). Consequently, we do not comment on the propriety of that order but assume for the purpose of this opinion that it was correct.² The trial court denied the motion to compel arbitration, finding that Bland had waived the contract's arbitration clause.

The parties' contract provided, in pertinent part, that:

Buyer and Seller will have 30 days from the date a dispute arises between them to attempt to resolve the matter through mediation, failing which the parties will resolve the dispute through neutral binding arbitration in the county where the property is located....

In ruling on a motion to compel arbitration, the court must consider whether a valid written agreement to arbitrate exists; whether an arbitrable issue exists; and whether the right to arbitration has been waived. See Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999). The parties agree that there is an arbitration clause and that the issue raised in Green Acres's complaint is arbitrable. Green Acres waived its right to seek arbitration, at a minimum, when it filed suit. See Lapidus v. Arlen Beach Condo. Ass'n, Inc., 394 So.2d 1102, 1103 (Fla. 3d DCA 1981). Bland denies that he had waived the clause, though.

Determining whether a party has waived an arbitration clause involves the same fact sensitive analysis as finding waiver of any other contractual provision. See Raymond James Fin. Serv., Inc. v. Saldukas, 896 So.2d 707, 711 (Fla.2005). Thus, a party may waive a right to arbitrate after suit has been filed by actively participating in the suit. See Miller & Solomon Gen. Contractors, Inc. v. Brennan's Glass Co., 824 So.2d 288, 290 (Fla. 4th DCA 2002). Filing an answer without claiming the action should be referred to arbitration waives the right to arbitrate. King v. Thompson & McKinnon, Auchincloss Kohlmeyer, Inc., 352 So.2d 1235, 1235 (Fla. 4th DCA 1977); Lapidus, 394 So.2d at 1103.

Here, a default was entered against Bland, the effect of which was to admit the complaint's well pled allegations. See Donohue v. Brightman, 939 So.2d 1162, 1164-65 (Fla. 4th DCA 2006). Assuming proper service of process and actual knowledge of the case, it is difficult to imagine a more emphatic repudiation of the right to arbitrate than an admission that a court is a proper forum to determine the claim.³

Even when Bland moved to vacate the default and thus was required to apprise the court of his meritorious defenses, he did not directly raise the arbitration clause. See Global Constr. Servs., Inc., 890 So.2d 445, 446 (Fla. 4th DCA 2004); Perry v. Univ. Cabs, Inc., 344 So.2d 914, 915 (Fla. 3d DCA 1977). Arguably, his failure to specifically raise the arbitration clause at that point waived his right to assert it. See Transamerica Ins. Co. v. Weed, 420 So.2d 370, 372 (Fla. 1st DCA 1982). An arbitration clause is not a "Contractual Defense" to the action's merits. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (agreeing to arbitrate a claim does not forgo substantive rights but merely submits their resolution to arbitral, not judicial, forum); Global Travel Markg., Inc. v. Shea, 908 So.2d 392, 403 (Fla.2005) (arbitration clause does not extinguish the underlying claim). Bland did not move to compel arbitration until over seven months after appearing in the 2007 suit, and almost eleven months after he knew about it.

Bland's post-filing actions alone support the trial court's finding of waiver. Like any other contract provision, though, arbitration may be waived before suit is even filed if "under the totality of the circumstances, the defaulting party has acted inconsistently with the arbitration right." Raymond James Fin. Servs., Inc., 896 So.2d at 711 (citation omitted). It follows, then, that a finding of waiver may be predicated on both pre- and post-suit actions in tandem. Here, the trial court heard evidence that Bland knew of the 2005 suit no later than March of 2006; actively avoided service; never sought to trigger the mediation pre-condition to arbitration; never made a demand to arbitrate under Fla. Stat. § 684.22(1); waited eleven months after learning suit had been refiled and over seven months after appearing to seek to compel arbitration; and engaged in settlement negotiations for years without raising the arbitration clause. These actions are sufficient to waive arbitration. See O.J. Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345, 358-59 (6th Cir.2003). We find competent, substantial evidence to support the trial judge's conclusion, and affirm.

GROSS, C.J., concurs.

FARMER, J., dissents with opinion.

FARMER, J., dissenting.

I certainly agree that a contract right to arbitrate can be waived. But if I am no fan of arbitration—at least not as it is sometimes imposed in consumer transactions—I am concerned that the majority's decision waiving arbitration marks a serious and substantial departure from the statutory policy of enforcing arbitration agreements in the same way contracts are generally enforced. In my opinion, it is most casual in its unprecedented extension of the grounds on which contract rights to arbitrate may be deemed waived. And the grounds said to support the waiver conflict with clear precedent in this district. The majority opinion demands a detailed response, the length of which impels me to beg the reader's leave.

The principal contentions of Green Acres⁴ begin with its legal argument that a default operated to waive arbitration. Then it argues Bland's various conduct before and after the filing of its second try at suing him also waived his right to arbitrate. I think Green Acres fails in all these contentions.

A. Default as a waiver of arbitration

How did Bland waive arbitration by suffering a default in the second lawsuit filed during the long settlement discussions of the parties? The majority claim Bland's default admitted the "well-pleaded" allegations and liability stated in the complaint filed by Green Acres.⁵ But what does the law actually regard as admitted by this particular default?

The rules require that any contract on which action is brought be attached and made a part of the pleading.⁶ A contract then becomes part of the pleading for all purposes.⁷ The statute's term for all purposes undoubtedly includes any issues raised by a default. We must therefore look to the Complaint and its well-pleaded allegations and assay the default's effect on the contract provision for arbitration.

The March 15, 2005, Sales and Purchase Contract was attached to the Complaint. Its arbitration provision says this:

14. DISPUTE RESOLUTION: This Contract will be construed under Florida law. All controversies, claims or other matters in question arising out of or relating to this transaction or this Contract or for breach will be settled as follows:

(a) Disputes concerning entitlement to deposits made and agreed to be made: ...

(b) All other disputes: Buyer and Seller will have 30 days from the date a dispute arises between them to resolve the matter through mediation, failing which the parties will...