Hubbard Const. Co. v. Jacobs Civil, Inc.

• Decision Date: 12 October 2007
• Docket Number: No. 5D06-3640.,5D06-3640.
• Citation: Hubbard Const. Co. v. Jacobs Civil, Inc., 969 So.2d 1069 (Fla. App. 2007)
• Parties: HUBBARD CONSTRUCTION COMPANY, Appellant, v. JACOBS CIVIL, INC., Appellee.
• Court: Florida District Court of Appeals

969 So.2d 1069

HUBBARD CONSTRUCTION COMPANY, Appellant, v.JACOBS CIVIL, INC., Appellee.

No. 5D06-3640.

District Court of Appeal of Florida, Fifth District.

October 12, 2007.

Rehearing Denied November 30, 2007.

Philip E. Beck of Smith, Currie & Hancock, LLP, Atlanta, GA, for Appellant.

A. Anderson B. Dogali and Joel Ewusiak of Forizs & Dogali, P.L., Tampa, for Appellee.

PALMER, C.J.

Hubbard Construction Company(HCC) appeals the non-final order entered by the trial court granting Jacobs Civil, Inc.'s (JCI)motion to compel arbitration.Determining that JCI failed to comply with the conditions precedent set forth in the parties' arbitration agreement, we reverse.

JCI filed a motion to compel arbitration with HCC.The motion explained that the parties entered into a written subcontract agreement which provided that JCI would provide certain services in connection with the design and construction of a section of interstate highway.Of importance to this appeal, said agreement contains the following arbitration provisions:

DESIGN SUBCONTRACT AGREEMENT

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16.Miscellaneous Provisions.The following miscellaneous provision shall govern this Agreement:

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(b) Except as otherwise provided in this agreement, any dispute concerning a question of fact arising under the agreement which is not resolved shall be decided by Hubbard, who shall reduce its decision to writing and furnish a copy thereof to [JCI].Unless the decision impairs [JCI's] obligation as a professional engineer, [JCI] shall immediately implement such decision without interruption, deficiency or delay.The decision of Hubbard shall be final and conclusive unless, within (20) days from the date of receipt of such copy, [JCI] makes written demand to Hubbard for arbitration proceedings, unless otherwise agreed in writing by the parties hereto.

(c) This agreement shall be governed by the laws of the state of Florida.If any controversy should arise between the parties relating to this agreement or the failure or refusal of any party to perform the whole or any part hereof, the parties will submit such matter to binding arbitration.Such arbitration shall be governed by the Florida Arbitration Code with the venue to be in Orange County, Florida.Each party shall choose one arbitrator with a third arbitrator mutually chosen by the two arbitrators.

JCI's motion to compel arbitration alleged that a controversy arose between the parties concerning amounts due under the contract.Specifically, JCI maintained that HCC owed JCI more than $600,000 pursuant to the terms of the parties' agreement, and HCC claimed that JCI owed "an even higher sum in relation to impact allegedly caused by [JCI's] defective performance."The motion further alleged that said controversies were required to proceed to arbitration pursuant to the terms of the parties' agreement.

HCC filed an answer to JCI's motion to compel arbitration.In its answer, HCC alleged that JCI's motion should be dismissed because it failed to state a valid claim upon which relief could be granted.The answer further alleged defenses of waiver, time-bar, and noncompliance.In its answer, HCC also set forth a counterclaim/cross-motion for a declaratory judgment that JCI's claim was not subject to arbitration because JCI failed to comply with paragraph 16(b) of the parties' arbitration agreement which sets forth a 20-day time limitation for the exercise of the option to arbitrate.

To support its counterclaim, HCC explained that numerous disputes arose between the parties during the course of the construction project and that, on January 18, 2006, HCC sent a letter to JCI issuing its "final decision" regarding those collective disputes.Said letter specifically stated that, since the parties had not been able to resolve disputed issues concerning disagreements about the construction in the five months following the completion of the construction project, the letter constituted HCC's

"final decision pursuant to Paragraph 16(b) of the design Subcontract Agreement between [the parties].Hubbard remains willing to discuss these issues with Jacob further if it appears that further discussions would be mutually beneficial.Accordingly, if Jacob disagrees with the final decision set forth herein, but desires to meet with [HCC] in an attempt to resolve these issues without resorting to arbitration, please advise us as soon as possible and we will be happy to discuss with you the possibility of the parties agreeing in writing to extend the deadline for initiating arbitration proceedings a reasonable length of time in order to allow such a meeting to occur."

On February 12, 2006, the twentieth day after JCI received HCC's "final decision letter", counsel for JCI sent a letter to HCC.In that letter, counsel for JCI stated that JCC would need additional time to review the case and requested that HCC agree to a 60-day extension of the time limitation set forth in paragraph 16(b) of the parties' agreement.No demand for arbitration was made by JCI in the February 12th letter.HCC responded via letter to JCI noting that the time limit for seeking arbitration had expired.

The trial court conducted a hearing on the parties' competing motions.During the hearing, counsel for JCI argued that all issues relating to JCI's defenses must be determined by the arbitrators, not the trial court.HCC responded by arguing that paragraph 16(b) of the parties' contract created a condition precedent to JCI's right to seek arbitration; specifically, making a demand for arbitration within 20 days of any final action undertaken by HCC, and that JCI failed to comply with said condition by failing to demand arbitration within 20 days of HCC's January 18, 2006 final decision letter, thereby waiving its right to seek arbitration.

Upon review, the trial court entered an order summarily granting JCI's motion to compel arbitration.HCC appeals, maintaining that the trial court erred in granting JCI's motion.We agree.

The standard of review of a trial court's ruling on a motion to compel arbitration is de novo.Avid Engineering, Inc. v. Orlando Marketplace, Ltd.,809 So.2d 1(Fla. 5th DCA2001).

In this case, the issue is whether JCI failed to comply with a condition precedent to arbitration and, as a result, is not entitled to demand arbitration.Two cases presenting similar factual scenarios lead to the conclusion that JCC is not entitled to demand arbitration.

First, in Lyons v. Krathen,368 So.2d 906(Fla. 3d DCA1979), a general contractor appealed the trial court's order denying its motion to compel arbitration pursuant to an agreement that contained an express 30-day time limitation for demanding arbitration.The motion to compel arbitration was denied by the trial court because the demand was not timely made.On appeal, the Third District affirmed, ruling that the contractor failed to timely make demand for arbitration.

Similarly, in Seaboard Surety Co. v. Cates,604 So.2d 570(Fla. 3d DCA1992), the Third District held that the trial court properly determined, as a matter of law, that the defendant had no right to arbitrate contractual disputes where its contract specifically provided that demand within 30 days was a precondition for arbitration and defendant failed to file any such demand.

Applying this case law to facts in this case, the trial court erred in granting JCI's motion to compel arbitration since it was undisputed that JCI failed to comply with the 20-day time limitations set forth in the parties' contract.

JCI argues that these two cases are not controlling because other Florida courts have broadly held that any issue concerning whether demand for arbitration has been "timely made" is a question of fact to be decided by an arbitrator.We disagree.

JCI's arguments confuse the concepts of timeliness and failure to meet a condition precedent.A claim alleging mere delay in seeking arbitration which creates a timeliness issue must be decided by the arbitrators.SeeAlderman v. City of Jacksonville, Fire & Rescue Div.,902 So.2d 885(Fla. 1st DCA2005).However, the issue here was whether JCI failed to comply with a condition precedent to seeking arbitration and, as such, whether the trial court was required to consider that issue.None of the arbitration provisions contained in the cases cited by JCI set forth express time limitations for the invocation of arbitration rights like the 20-day requirement existing in this case.

JCI also argues that the time limitation set forth in paragraph 16(b) does not apply to the instant controversy because the intent behind the paragraph was that the provision only applied to conduct between the parties"during the pendency of the construction project," not to conduct occurring after the project was completed.We reject this argument because the language set forth in paragraph 16(b) is not ambiguous as to its applicability to all disputes "arising under the agreement."

REVERSED and REMANDED.

LAWSON, J., concurs.

SAWAYA, J., dissents, with opinion.

SAWAYA, J., dissenting.

There is an arbitrable issue that must be decided by the arbitrator: whether Hubbard Construction Company is estopped from asserting noncompliance by Jacobs Civil, Inc., with the twenty-day time limitation contained in the agreement between the parties for demanding arbitration.Therefore, I do not agree with the majority that Jacobs Civil, Inc., is not entitled to demand arbitration because it failed to comply with that time limitation.Based on the facts and circumstances relating to the estoppel issue raised by Jacobs, the trial court properly compelled arbitration so the issue of estoppel could be resolved by the arbitrator.I, therefore, respectfully dissent.

The proceedings in circuit court began when Jacobs filed a motion to compel arbitration.There are three elements a court must consider in ruling on a motion to compel arbitration of a given dispute: "(1) whether a valid written...