Koechli v. BIP Intern., Inc.

• Decision Date: 26 April 2004
• Docket Number: No. 1D03-1511.,1D03-1511.
• Citation: 870 So.2d 940
• Parties: Urs KOECHLI, Charles R. Cushing, and C.R. Cushing & Company, Inc., Appellants, v. BIP INTERNATIONAL, INC. d/b/a Global Interior Group, Appellee.
• Court: Florida District Court of Appeals

870 So.2d 940

Urs KOECHLI, Charles R. Cushing, and C.R. Cushing & Company, Inc., Appellants, v. BIP INTERNATIONAL, INC. d/b/a Global Interior Group, Appellee.

No. 1D03-1511.

District Court of Appeal of Florida, First District.

April 26, 2004.

Michael G. Tanner and Mark G. Alexander of Holland & Knight LLP, Jacksonville, for Appellants.

Gregory A. Anderson, John J. Glenn and Brian W. Davey of Anderson St. Denis & Glenn, P.A., Jacksonville, for Appellee.

VAN NORTWICK, J.

Urs Koechli, Charles R. Cushing, and C.R. Cushing & Company, Inc. appeal a non-final order denying their motions to compel arbitration. The underlying action arose out of a business transaction in which Alpha GMBH & Co. Schiffsbesitz KG (Alpha), and appellee, BIP International, Inc., doing business as Global Interior Group (BIP), entered into a vessel refurbishment agreement providing for the terms under which BIP would renovate the vessel M/Y Giant I (the vessel). Appellants were not signatories to the refurbishment agreement, but possessed rights and incurred obligations under it. Among other things, the refurbishment agreement included a provision that required arbitration of "any dispute between the parties hereto as to any matter arising out of or relating to this Contract." BIP filed suit against the appellants based upon actions they took on behalf of and as agents or officer of Alpha in connection with the refurbishment agreement. We hold that these non-signatories may invoke the arbitration provision of the refurbishment agreement and compel arbitration by BIP, a signatory, where appellants acted as the representatives or agents for Alpha in entering into and performing the refurbishment agreement; BIP's action against appellants asserts claims based upon appellants' alleged wrongful acts committed while performing their duties relating to the refurbishment agreement; and BIP's separate federal court action against Alpha, which has been referred to arbitration, is based in substantial part on allegations of wrongful acts by the appellants while acting in their capacity as agents for or officers of Alpha which are substantially interdependent to the allegations in the instant action. Accordingly, we reverse and remand for further proceedings.

I. Factual Background

Alpha purchased the M/Y Giant I with plans to refurbish and operate the vessel as a luxury charter yacht. Alpha and BIP entered into a refurbishment agreement under which BIP agreed to make specified renovations and modifications to the vessel. Cushing & Co., acting through its principal, C.R. Cushing, was appointed as Alpha's onsite representative and was authorized to act on behalf of Alpha. Urs Koechli signed the refurbishment agreement as Alpha's chief executive officer.

The refurbishment agreement contains two provisions that are relevant here. Article XIV, paragraph 1 provides in pertinent part:

In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulations herein or with respect hereto which cannot be settled by the parties themselves, such dispute shall be finally settled by binding arbitration in New York, New York, pursuant to the commercial rules of arbitration of the American Arbitration Association by a single arbitrator designated in accordance with the rules of the American Arbitration Association.

Article XXI, paragraph 6 provides:

This Contract shall not be deemed for the benefit of any third party nor shall it give any person not a party to this contract any right to enforce its provisions.

After work on the vessel began under the refurbishment agreement, both BIP and Alpha asserted that the agreement had been breached. BIP contended that Alpha had misrepresented the condition of the vessel and the extent of necessary modifications and that Alpha had failed to make agreed upon payments under the refurbishment agreement. Alpha contended that BIP failed to properly complete the modifications.

BIP filed an in-rem action in Federal District Court in the Southern District of Florida to arrest the vessel to recover progress payments. The claims between the parties included breach of contract, fraud in the performance of the contract, wrongful arrest of the vessel and defamation. The vessel filed a motion to stay the civil action and compel arbitration pursuant to article XIV of the refurbishment agreement. The Federal District Court granted the motion and the cause proceeded to arbitration.

BIP also filed suit in the Duval County Circuit Court against Cushing & Company, Cushing, Koechli, and eight other defendants. Count I of BIP's complaint alleges that the appellants and others fraudulently induced BIP to enter into the refurbishment agreement by making representations regarding the status or condition of the vessel which the defendants knew to be false. Count II alleges the same misrepresentations, but alleges that they resulted from negligence. Count III alleges that certain defendants, including Cushing, conspired to defraud BIP. Count IV alleges that appellants and others converted the proceeds of a $1,000,000 letter of credit which BIP and a corporate affiliate had posted to secure BIP's performance under the agreement. Count V alleges that appellants and other defendants tortiously interfered with BIP's business relationship with Alpha. Count VI alleges tortious interference with a contractual right against appellants and other defendants.

Appellants filed separate motions to compel arbitration and to stay. The trial court denied the motions, reasoning that the appellants were not parties to the contract between BIP and Alpha and, thus, could not enforce the arbitration provision.

II. Applicable Law

The refurbishment agreement provides that New York law applies. An arbitration agreement is not generally enforceable under Florida law if it incorporates the law of another state. Riverfront Properties Ltd. v. Max Factor III, 460 So.2d 948, 952 (Fla. 2d DCA 1984). Because this case involves interstate commerce, however, the Federal Arbitration Act applies, and Florida courts must enforce an arbitration agreement that is valid under the Federal Arbitration Act. Jensen v. Rice, 809 So.2d 895, 899 (Fla. 3d DCA 2002)("Florida courts must enforce arbitration agreements that are valid and enforceable under the Federal Arbitration Act, even where, as here, the arbitration agreement would not be enforceable under Florida law."). While federal law establishes the enforceability of arbitration agreements, state law governs the interpretation and formation of such agreements. Employers Insurance of Wausau v. Bright Metal Specialties, Inc., 251 F.3d 1316, 1322 (11th Cir.2001).

III. Issues on Appeal

On appeal, appellants contend that this case is a transparent attempt by BIP to circumvent its obligation to arbitrate under the refurbishment agreement. They contend that, as Alpha's agents, appellants are entitled to the benefit of Alpha's arbitration agreement. Alternatively, they contend that equitable estoppel applies to allow them, non-signatories, to require arbitration.

We start from the general principle that arbitration is a matter of contract and "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). Therefore, a non-signatory to a contract containing an arbitration agreement ordinarily cannot compel a signatory to submit to arbitration. While exceptions to this rule should be rare, see Westmoreland v. Sadoux, 299 F.3d 462, 465 (5th Cir.2002),

exceptions nonetheless exist depending upon the factual circumstances involved.

"Although arbitration is a contractual right that is generally predicated on an express decision to waive the right to trial in a judicial forum, [courts have] held that the lack of a written arbitration agreement is not an impediment to arbitration." Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 756-57 (11th Cir.1993). Florida law recognizes that contracts may be validly formed without an express written agreement. Nautica Intern., Inc. v. Intermarine USA, L.P., 5 F.Supp.2d 1333, 1340 (S.D.Fla.1998). Florida and federal courts have recognized that a non-signatory can compel arbitration by a signatory to an arbitration agreement when the underlying proceeding concerns actions allegedly taken by the non-signatory as an agent of a signatory, Thomson-CSF v. American Arbitration Association, 64 F.3d 773, 777 (2d Cir. 1995); Qubty v. Nagda, 817 So.2d 952, 957-58 (Fla. 5th DCA 2002); Merrill Lynch Pierce, Fenner & Smith, Inc. v. Melamed, 453 So.2d 858, 860 (Fla. 4th DCA 1984); Vic Potamkin Chevrolet, Inc. v. Bloom, 386 So.2d 286, 288 (Fla. 3d DCA 1980); when the non-signatory is an intended third party beneficiary of the contract in question, E.I. Dupont de Nemours & Co. v. Rhone, Poulenc Fiber and Resin Intermediates, S.A.S., 269 F.3d 187, 194 (3d Cir.2001); Henderson v. Idowu, 828 So.2d 451, 452 (Fla. 4th DCA 2002); Technical Aid Corporation v. Tomaso, 814 So.2d 1259, 1261 (Fla. 5th DCA 2002); and, under the doctrine of equitable estoppel, when the signatory's claims allege substantially interdependent and concerted misconduct by the signatory and the non-signatory or when the claims relate directly to the contract and the signatory is relying on the contract to assert its claims against the non-signatory. MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir.1999); Armas v. Prudential Securities, Inc., 842 So.2d 210, 212 (Fla. 3d DCA 2003); see also Jensen v. Rice, 809 So.2d 895, 900 (Fla. 3d DCA 2002)

. See generally Reynolds v. York, 2003 WL 22880945 (S.D.Tex. November 21, 2003). Finally, "it matters whether the party resisting...