Miele v. Prudential-Bache Securities, Inc.

• Citation: 656 So.2d 470
• Decision Date: 08 June 1995
• Docket Number: No. 81467,PRUDENTIAL-BACHE,81467
• Parties: , 20 Fla. L. Weekly S260 Dom MIELE, et al., Plaintiffs-Appellants, v.SECURITIES, INC., et al., Defendants-Appellees.
• Court: United States State Supreme Court of Florida

Page 470

656 So.2d 470

64 USLW 2031, 20 Fla. L. Weekly S260

Dom MIELE, et al., Plaintiffs-Appellants, v. PRUDENTIAL-BACHE SECURITIES, INC., et al., Defendants-Appellees.

No. 81467.

Supreme Court of Florida.

June 8, 1995.

Thomas R. Grady of Grady & Associates, L.P.A., Naples, for plaintiffs-appellants.

John D. Boykin of Boose, Casey, Ciklin, Lubitz, Martens, McBane & O'Connell, West Palm Beach, for defendants-appellees.

Bridget L. Ryan, Tallahassee, amicus curiae for Dept. of Banking and Finance.

PER CURIAM.

This cause is before the Court on the following certified question of law from the United States Court of Appeals for the Eleventh Circuit in Miele v. Prudential Bache Securities, 986 F.2d 459 (11th Cir.1993):

Does Florida Statute Sec. 768.73 apply to arbitration awards?

Id. at 460. We have jurisdiction pursuant to article V, section 3(b)(6) of the Florida Constitution, and answer the question in the negative.

In 1985 Dom and Shirley Miele (the Mieles) established an investment account with Prudential-Bache Securities (Prudential). The Mieles' contract with Prudential provided for arbitration of any controversy relating to the account. The Mieles incurred substantial losses to their account over a period of four years, but Prudential refused to reimburse them for the losses. Pursuant to the contract, the Mieles filed a demand to arbitrate the dispute before the American Arbitration Association (AAA).

In June 1991, the AAA found for the Mieles and entered an award consisting of both compensatory and punitive damages. The Mieles filed a petition in the United States District Court for the Middle District of Florida, seeking to have the award confirmed. Prudential forwarded two checks to the Mieles, including one made out to the State of Florida General Revenue Fund for 60% of the punitive damage award pursuant to section 768.73(2), Florida Statutes (1991), ¹ which provides for the splitting of punitive damages between the State of Florida and the claimants in civil cases. ² Prudential responded to the Mieles' petition by representing to the district court that the award had been fully paid.

The Mieles again moved for an order confirming the award, attacking the amount tendered by Prudential on the grounds that Prudential made an erroneous calculation of the total amount of the award. The Mieles also argued that section 768.73(2) does not apply to arbitration awards, but is unconstitutional if it does. The federal district court entered an order confirming the award, including punitive damages totalling $266,654.79. The district court also held that section 768.73 applies to arbitration awards. The Mieles appealed to the Eleventh Circuit Court of Appeals, which reserved consideration of any of the issues until this Court determines whether section 768.73 applies to arbitration awards.

Both the Mieles and Prudential urge this Court to look to the plain language of the statute in determining whether it applies to arbitration awards. However, the parties find very different meaning in that "plain language." The Mieles argue that the term "civil action" in subsection (2) indicates that the legislature never intended for the statute to apply to arbitration proceedings. According to the Mieles, a "civil action" is a proceeding in court before a judicial officer, while arbitration is an arrangement to be used instead of carrying a dispute to court. The Mieles also note that related subsections of the statute use language that is foreign to an arbitration proceeding.

In contrast, Prudential contends that "civil action" is a broad term encompassing all actions except criminal actions. Prudential also notes that the legislature passed the statute to address the increasing frequency and amount of punitive damage awards, and thus the statute should apply to arbitration awards in the same way as other actions. Prudential also asserts that any action commenced by pleading or petition constitutes an action of a civil nature as provided by Florida Rule of Civil Procedure 1.050. ³ Thus, once an arbitration award is enforced by the utilization of the judicial system through a petition or motion to confirm, as the Mieles did in this case, the statutory mandate to split a punitive damage award becomes applicable.

"It is a fundamental rule of statutory construction that legislative intent is the polestar by which the court must be guided." State v. Webb, 398 So.2d 820, 824 (Fla.1981). In turn, legislative intent must be determined primarily from the language of the statute. City of Tampa v. Thatcher Glass Corp., 445 So.2d 578, 579 (Fla.1984).

Prudential argues that the definition of "civil action" in Black's Law Dictionary includes all types of actions other than criminal proceedings. While dictionaries are beneficial in determining the meaning of individual words, we should not "make a fortress out of the dictionary". Cabell v. Markham, 148 F.2d 737, 739 (2d Cir.), aff'd, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165 (1945). Words often take on a different meaning from their individual definitions when viewed in context with the other words in the text. As Judge Learned Hand once observed, "the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes." Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir.1934), aff'd 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935). Moreover, the context in which a term is used may be referred to in ascertaining the meaning of that term. City of Tampa, 445 So.2d at 579-80. Thus, although Prudential contends that the language within other subsections of the statute should not be considered in making our determination, we find that the plain meaning of "civil action" must be derived from the context in which the language lies.

Section 768.73 addresses the limitation of punitive damages. In "any civil action" based on negligence, strict liability, products liability, misconduct in commercial transactions, professional liability, or breach of warranty, punitive damages are limited to three times the amount of compensatory damages. Sec. 768.73(1)(a), Fla.Stat. (1991). Likewise, subsection (2), which is at issue in this case, provides for the splitting of an award of punitive damages between the claimant and the State in "any civil action." As the Mieles note, other parts of the statute include language that is foreign to arbitration proceedings. The subsection that sets forth the procedure for dealing with an excessive award of punitive damages states that a defendant is entitled to "remittitur" unless the claimant demonstrates to the "court" that the award is not excessive. Sec. 768.73(1)(b). The statute further provides that this procedure is not intended to prohibit an appropriate "court" from exercising its jurisdiction to determine the reasonableness of an award that is less than three times the compensatory damages. Sec. 768.73(1)(c). Moreover, the "jury" is not to be instructed or informed about the provisions of the statute. Sec. 768.73(5).

There is no provision for a remittitur or a jury in arbitration proceedings. A court need not be involved in determining the reasonableness of an award unless called upon by the parties to confirm, vacate, or modify or correct an award. See Secs. 682.12-.14, Fla.Stat. (1991). When viewed within this context, the term "civil action" in section 768.73 clearly refers to an action filed in a court of this state and does not include an arbitration proceeding.

While both parties cite Black's Law Dictionary in support of their positions, we find that the dictionary definitions support the Mieles' position that "civil action" does not include arbitration proceedings. Prudential correctly notes that Black's definition of "civil action" includes "all types of actions other than criminal proceedings." Black's Law Dictionary 222 (5th ed. 1979) (emphasis added). However, Black's definition of "action" clearly contemplates a proceeding filed in a court. ⁴

Prudential further argues that even if arbitration proceedings are not civil actions within the meaning of section 768.73, confirmation proceedings are civil actions which would subject an award of punitive damages to the splitting provisions of the statute. We disagree. Proceedings to confirm an arbitration award are governed by chapter 682, Florida Statutes (1991), the "Florida Arbitration Code." Section 682.12, Florida Statutes (1991), specifically provides that "[u]pon application of a party to the arbitration, the court shall confirm an award, unless ... grounds are urged for vacating or modifying or correcting the award."

In an amicus brief, the Florida Department of Banking and Finance (Department) argues that the state policy of discouraging punitive damage claims will be thwarted if arbitration proceedings are not subjected to the splitting provisions of section 768.73(2). The Department further argues that such an interpretation will encourage claimants to choose arbitration in order to avoid compliance with section 768.73(2). We do not agree.

Section 768.73 was enacted as a part of the 1986 Tort Reform and Insurance Act, which was intended to provide a solution for an insurance crisis that existed in the state. See Smith v. Department of Ins., 507 So.2d 1080, 1083-84 (Fla.1987). While legitimate legislative objectives underlie section 768.73(2), namely "to allot to the public weal a portion of damages designed to deter future harm to the public and to discourage punitive damage claims by making them less remunerative to the claimant and the claimant's attorney," Gordon v. State, 608 So.2d 800, 802 (Fla.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1647, 123 L.Ed.2d 268 (1993), we find no clear legislative intent that the statute apply to arbitration proceedings.

Under Florida law, arbitration is a favored means of dispute resolution and courts indulge every reasonable presumption to uphold proceedings resulting in an award. Roe v. Amica Mut....