Raymond James Fin. Servs., Inc. v. Phillips

• Decision Date: 16 May 2013
• Docket Number: No. SC11-2513,SC11-2513
• Parties: RAYMOND JAMES FINANCIAL SERVICES, INC., Petitioner, v. BARBARA J. PHILLIPS, etc., et al., Respondents.
• Court: Florida Supreme Court

RAYMOND JAMES FINANCIAL SERVICES, INC., Petitioner, v. BARBARA J. PHILLIPS, etc., et al., Respondents.

No. SC11-2513

Supreme Court of Florida

May 16, 2013

REVISED OPINION

PARIENTE, J.

Petitioner Raymond James Financial Services required its clients (the investors) to sign an agreement to arbitrate all disputes arising out of the handling of their investments. The issue in this case is not the validity of the arbitration agreement, but rather whether Florida's statute of limitations that is applicable to a "civil action or proceeding" applies to arbitration proceedings. The investors assert that the statute of limitations applies only to judicial actions and thus did not limit the time in which to bring their arbitration claims, and the Second District Court of Appeal agreed. Raymond James Fin. Servs., Inc. v. Phillips, 36 Fla. L.Weekly D2479 (Fla. 2d DCA Nov. 16, 2011). However, the Second District certified a question of great public importance,¹ which we rephrase as follows:

DOES SECTION 95.011, FLORIDA STATUTES, APPLY TO ARBITRATION?

We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.

Based on the language of the statute and the application of principles of statutory construction, we hold that Florida's statute of limitations applies to arbitration because an arbitration proceeding is within the statutory term "civil action or proceeding" found in section 95.011. Thus, we answer the rephrased certified question in the affirmative and agree with Raymond James² that the investors' arbitration claims in this case are governed by the statute of limitations.

FACTS AND BACKGROUND

This case arose after Richard Vandenberg, the Naples office branch manager of Raymond James, invested his clients' assets into allegedly non-diversified, high risk equities, which caused the investments to lose significant value between 1999 and 2005. The investors³ opened their accounts between July 1999 and March 2000, and in connection with opening the accounts, the parties all agreed to arbitrate any disputes. The parties' contract provided for the following:

Choice of Law: This agreement and any accounts opened hereunder shall be construed, interpreted, and the rights of the parties shall be determined in accordance with the Internal laws of the State of Florida . . . .

. . . .

Arbitration Disclosures:

Arbitration is final and binding on the parties.

The parties are waiving their right to seek remedies in court, including the right to trial by jury.

Pre-arbitration discovery is generally more limited than and different from court proceedings.

. . . .

Arbitration and Dispute Resolution: (a) In a dispute or controversy, either arising in the future or in existence now, between me and you (including your officers, directors, employees or agents and the introducing broker, if applicable) we agree to first endeavor to settle the dispute in an amicable manner by mediation before the National Association of Securities Dealers, Inc., at the request of either party. Thereafter, any unsettled dispute or controversy will be resolved by arbitration conducted before the New York Stock Exchange, Inc., the National Association of Securities Dealers, Inc., or the AmericanStock Exchange, Inc., or other self-regulatory organizations (SRO) subject to the jurisdiction of the Securities and Exchange Commission (SEC) pursuant to the arbitration rules of the SRO, and in accordance with the Federal Arbitration Act (Title 9 of the United States Code.)

. . . .

(d) Nothing in this agreement shall be deemed to limit or waive the application of any relevant state or federal statute of limitation, repose or other time bar. Any claim made by either party to this agreement which is time barred for any reason shall not be eligible for arbitration. The determination of whether any such claim was timely filed shall be by a court having jurisdiction, upon application by either party.

In 2005, the investors filed a joint claim for arbitration against Raymond James, alleging that Vandenberg exerted strong influence over their accounts and, irrespective of their tolerance for risk, he concentrated on purchasing high-risk equities in the technology sector that were inconsistent with the investors' investment objectives. The investors alleged federal securities violations and violations of chapter 517, Florida Statutes, which governs Florida securities transactions, and asserted that Raymond James negligently failed to supervise Vandenberg.

Raymond James moved to dismiss the causes of action, maintaining that all of the claims were barred by the relevant statute of limitations applicable to both chapter 517 actions and negligence actions because the causes of action were filed more than six years after the first unsuitable investment and more than four years after all of the alleged unsuitable purchases. The National Association ofSecurities Dealers (NASD) appointed an arbitration panel, which scheduled a hearing on the motion to dismiss.

Before the hearing, the investors filed an action in state trial court, seeking a declaratory judgment and asserting that based on the contract, the parties had agreed that a court would determine whether the claim was timely. The investors further alleged that Florida's statute of limitations does not apply to arbitration, but applies only to judicial actions. The trial court agreed and granted declaratory judgment in favor of the investors, relying on our precedent in Miele v. Prudential-Bache Securities, Inc., 656 So. 2d 470 (Fla. 1995).

On appeal, the Second District disagreed with the trial court that Miele governed. Raymond James Fin. Servs., 36 Fla. L. Weekly at D2481. The Second District, however, affirmed the trial court's order, concluding that the arbitration agreement did not expressly provide for the application of Florida's statute of limitations, but rather incorporated only relevant Florida law, and further that section 95.011 was not relevant because it did not apply to arbitration. Id. The Second District then certified the question as to the applicability of Florida's statute of limitations to arbitration agreements to be of great public importance, id., which we have rephrased.

ANALYSIS

As an initial matter, while the trial court relied on Miele for its holding and both parties discuss Miele in support of their positions, we agree with the Second District's determination that the trial court erred in relying solely upon Miele to conclude that section 95.011 did not apply to arbitration. Miele is distinguishable because it addressed only the term "civil action" and did not involve the statute of limitations. Miele, 656 So. 2d at 472-73. Accordingly, as this Court has not already answered the question presented, we turn to the issue at hand.

The parties do not dispute that Florida law controls. Because the issue pertaining to statutory construction definitively answers the issue presented in this case, we resolve only that issue and do not reach the question of whether the contract expressly incorporated the statute of limitations. After reviewing the applicable statutory provisions, we conclude that an arbitration proceeding is included within the statute of limitations set forth in section 95.011. Our conclusion is supported by well-settled principles of statutory construction.

Questions of statutory interpretation are reviewed by this Court de novo. Maggio v. Fla. Dep't of Labor & Emp't Sec., 899 So. 2d 1074, 1076 (Fla. 2005). The primary rule of statutory construction is "to give effect to legislative intent, which is the polestar that guides the court in statutory construction." Gomez v. Vill. of Pinecrest, 41 So. 3d 180, 185 (Fla. 2010) (quoting Larimore v. State, 2 So. 3d 101, 106 (Fla. 2008)). In answering a statutory interpretation question, thisCourt must "begin with the 'actual language used in the statute' " because legislative intent is determined first and foremost from the statute's text. Heart of Adoptions, Inc. v. J.A., 963 So. 2d 189, 198 (Fla. 2007) (quoting Borden v. E. European Ins. Co., 921 So. 2d 587, 595 (Fla. 2006)).

The starting point of our analysis thus begins with the actual language of the statute. In this case, the statute of limitations that applies to the investors' causes of action is contained within section 95.11. Specifically, subsections 95.11(3)(a) and (4)(e) state as follows:

95.11. Limitations other than for the recovery of real property.—Actions other than for recovery of real property shall be commenced as follows:

. . . .

(3) WITHIN FOUR YEARS.—

(a) An action founded on negligence.

. . . .

(4) WITHIN TWO YEARS.—

. . . .

(e) An action founded upon a violation of any provision of chapter 517, with the period running from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence, but not more than 5 years from the date such violation occurred.

§ 95.11, Fla. Stat. (2005) (emphasis added). Consequently, the statute of limitations is limited to "[a]ctions." To determine the meaning of this term, we look to section 95.011, which defines "action" and provides for the applicability of the statute of limitations:

A civil action or proceeding, called 'action' in this chapter, . . . shall be barred unless begun within the time prescribed in this chapter or, if a different time is prescribed elsewhere in these statutes, within the time prescribed elsewhere.

§ 95.011, Fla. Stat. (2005) (emphasis added).

In reading these two statutory provisions together, we must determine whether an arbitration proceeding is a "civil action or proceeding"—terms that chapter 95 does not expressly define. As this Court has held, "[w]hen considering the meaning of terms used in a statute, this Court looks first to the terms' ordinary definitions, . . . definitions [that] may be derived from dictionaries." Metro. Cas. Ins. Co. v. Tepper, 2 So. 3d 209, 214 (Fla. 2009). Black's Law Dictionary defines "civil action" as "[a]n action brought to enforce,...