O'Keefe Architects v. Ced Const. Partners

• Decision Date: 19 October 2006
• Docket Number: No. SC05-1417.,SC05-1417.
• Parties: O'KEEFE ARCHITECTS, INC., Petitioner, v. CED CONSTRUCTION PARTNERS, LTD., et al., Respondents.
• Court: Florida Supreme Court

944 So.2d 181

O'KEEFE ARCHITECTS, INC., Petitioner, v. CED CONSTRUCTION PARTNERS, LTD., et al., Respondents.

No. SC05-1417.

Supreme Court of Florida.

October 19, 2006.

Lee L. Haas of Haas and Castillo, P.A., Clearwater, FL and Deborah A. Gibson of

the Marks Law Firm, P.A., Orlando, FL, for Petitioner.

Kevin P. Kelly and Amanda G. Simmons of GrayRobinson, P.A., Orlando, FL, and Kerey Marie Carpenter, Maitland, FL, for Respondent.

PARIENTE, J.

We have for review O'Keefe Architects, Inc. v. CED Construction Partners Ltd., 909 So.2d 370 (Fla. 5th DCA 2005), in which the Fifth District Court of Appeal certified conflict with Reuter Recycling of Florida, Inc. v. City of Dania Beach, 859 So.2d 1271 (Fla. 4th DCA 2003). The conflict issue is whether under the Florida Arbitration Code,¹ a statute of limitations defense is subject to arbitration when the arbitration agreement provides that claims, disputes or other matters arising out of or relating to the contract are to be decided by arbitration, but also provides that a demand for arbitration cannot be made when institution of legal or equitable proceedings based on the underlying claim would be barred by the applicable statute of limitations. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.

Because the Florida Arbitration Code allows parties to agree to arbitrate any controversy, the question of whether a dispute is subject to arbitration is a matter of contract interpretation. We hold that a broad agreement to arbitrate includes determining defenses to an otherwise arbitrable claim, including the statute of limitations.²

FACTS AND PROCEDURAL HISTORY

On August 30, 1997, O'Keefe Architects, Inc. ("O'Keefe") contracted with Vero Club Partners Ltd. ("Vero Club"), to design a 184-unit housing project. On January 7, 1999, O'Keefe entered into a nearly identical contract with Clearwater Phase I Partners Ltd. ("Phase I"), to design a 240-unit housing project. CED Construction Partners Ltd. ("CED") was the general contractor on both projects.

After discovering latent construction and design defects on their properties, Vero Club and Phase I demanded that CED fix the problems. CED did so and Vero Club and Phase I assigned CED their rights to make a claim for damages against O'Keefe for the defects. CED then filed a demand with the American Arbitration Association for arbitration against O'Keefe and several subcontractors for damages arising from negligent design and construction of both projects. O'Keefe objected to the arbitration on several grounds, including that some of the claims were barred by the statute of limitations and, therefore, were not subject to arbitration under the contracts.

Relevant to the statute of limitations issue, the arbitration clauses in both contracts provide:

7.1 Claims, disputes or other matters in question between the parties to this Agreement arising out of or relating to this Agreement or breach thereof shall be subject to and decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect unless the parties mutually agree otherwise.

7.2 Demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statutes of limitations.

After the arbitrators ruled adversely to O'Keefe on several issues, including the statute of limitations, O'Keefe filed a complaint for declaratory relief against Vero Club, Phase I, and CED. O'Keefe asserted that only Vero Club and Phase I, and not CED, were authorized to bring the arbitration claims because the contracts were not assignable. O'Keefe also raised the statute of limitations defense and asserted that the trial court was required to decide this issue. The trial court entered an order compelling the completion of arbitration and staying the circuit court case. Regarding O'Keefe's statute of limitations defense, the trial court found that this issue was a matter for the arbitrators to decide.

O'Keefe appealed the order to the Fifth District. In a brief decision, the Fifth District affirmed the trial court in all respects. See O'Keefe, 909 So.2d at 370. The district court wrote "only to reiterate that an issue concerning whether a demand for arbitration is timely is a question of fact to be decided by arbitration, and not the trial court. This concept encompasses the position that arbitration is unnecessary because of the expiration of the statute of limitations." Id. (citations omitted). However, the Fifth District certified conflict with Reuter Recycling, in which the Fourth District reviewed an arbitration agreement that contained similar language regarding timeliness and reversed the trial court's order refusing to enjoin the arbitration.³

ANALYSIS

Both parties agree that the Florida Arbitration Code (FAC), rather than the Federal Arbitration Act (FAA), applies in this case. Because both parties are Florida corporations involved in Florida construction projects, interstate commerce is not involved and, thus, the provisions of the FAC control. Cf. Musnick v. King Motor Co., 325 F.3d 1255, 1258 n. 2 (11th Cir.2003) ("[T]he FAA applies to all arbitration agreements involving interstate commerce ....") (citing Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001)); Wachovia Securities, LLC v. Vogel, 918 So.2d 1004, 1007 (Fla. 2d DCA 2006) ("Where ... interstate commerce is involved, federal law governs the analysis of the arbitration proceeding.").

The FAC provides that "[t]wo or more parties ... may include in a written contract a provision for the settlement by arbitration of any controversy thereafter arising between them relating to such contract or the failure or refusal to perform the whole or any part thereof." § 682.02, Fla. Stat. (2005) (emphasis supplied). If a dispute arises regarding a party's refusal to comply with an agreement to arbitrate, the court is required to compel arbitration if it "is satisfied that no substantial issue exists as to the making of the agreement or provision." § 682.03(1), Fla. Stat. (2005).

In ruling on a motion to compel arbitration of a dispute, the court must consider three issues: "(1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived." Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999). The issue here, whether O'Keefe's statute of limitations defense to an otherwise arbitrable claim is also subject to arbitration, falls under the second of these considerations.⁴

Arbitration clauses are creatures of contract. As a result, courts look to the intent of the parties as manifested in the contract to determine whether an arbitration clause compels arbitration of a particular dispute. Seifert, 750 So.2d at 636. Thus, whether O'Keefe's statute of limitations defense is subject to arbitration is a matter of contract interpretation that is reviewed de novo. See Engle Homes, Inc. v. Jones, 870 So.2d 908, 910 (Fla. 4th DCA 2004); Hirshenson v. Spaccio, 800 So.2d 670, 674 (Fla. 5th DCA 2001).

In Stinson-Head, Inc. v. City of Sanibel, 661 So.2d 119 (Fla. 2d DCA 1995), the Second District Court of Appeal held that under the FAC, an arbitration clause almost identical to the clause in O'Keefe's contracts required the parties to arbitrate a statute of limitations defense. Id. at 121.⁵ In reaching this decision, the district court recognized that doubts concerning the scope of arbitration agreements should be resolved in favor of arbitration and noted that the plain language of the parties' broad arbitration provision required arbitration on all issues related to the contract. Id. at 120. The Second District acknowledged that the Fourth District had reached a contrary conclusion in Anstis Ornstein Associates, Architects & Planners, Inc. v. Palm Beach County, 554 So.2d 18 (Fla. 4th DCA 1989), but agreed with then Judge Anstead's dissent:

The arbitration clause in question is a broad and comprehensive one covering all disputes between the parties. Another clause provided that the claim for arbitration must be filed within a reasonable time, not to exceed the applicable legal limitation period. I see no reason why the arbitrators cannot properly resolve any dispute between the parties as to compliance with this provision.

Stinson-Head, 661 So.2d at 121 (quoting Anstis Ornstein, 554 So.2d at 19) (Anstead, J., dissenting).

Stinson-Head is consistent with decisions by the First and Third District Courts of Appeal, which have also held that in general, issues of timeliness are to be decided by the arbitrator. See Alderman v. City of Jacksonville, Fire and Rescue Div., 902 So.2d 885, 887 (Fla. 1st DCA 2005) ("[Q]uestions of timeliness are to be decided by an arbitrator, not a trial court."); Pembroke Indus. Park P'ship v. Jazayri Constr., Inc., 682 So.2d 226, 227 (Fla. 3d DCA 1996) ("[T]he issue of whether the demand for arbitration was timely is a question of fact for the arbitrator to decide, not the trial court.").

Stinson-Head is also consistent with recent United States Supreme Court decisions addressing this issue under the FAA. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002).⁶ Howsam clarified the scope of the Supreme Court's prior determination that a "`question of arbitrability' is `an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.'" Id. at 83, 123 S.Ct. 588 (quoting AT & T Techs., Inc. v. Commc'n Workers, 475 U.S. 643, 649, 106...