RIVERWALK APART. v. RTM Gen. Contractors, Inc., 2D00-1118.

• Decision Date: 22 December 2000
• Docket Number: No. 2D00-1118.,2D00-1118.
• Citation: 779 So.2d 537
• Parties: RIVERWALK APARTMENTS, L.P. and Affirmative Equities Company, L.P., Appellants, v. RTM GENERAL CONTRACTORS, INC., Appellee.
• Court: Florida District Court of Appeals

779 So.2d 537

RIVERWALK APARTMENTS, L.P. and Affirmative Equities Company, L.P., Appellants, v. RTM GENERAL CONTRACTORS, INC., Appellee.

No. 2D00-1118.

District Court of Appeal of Florida, Second District.

December 22, 2000.

Steven L. Brannock and William L. Grant of Holland & Knight LLP, Tampa, for Appellants.

Rosemary Hanna Hayes of Vose Blau & Hayes, P.A., Winter Park, for Appellee.

NORTHCUTT, Acting Chief Judge.

Riverwalk Apartments and Affirmative Equities Company (collectively referred to as Riverwalk) challenge the nonfinal order lifting a stay of arbitration in this lawsuit concerning construction work allegedly performed by an unlicensed contractor, Russell DeVore. We reverse and remand to the circuit court to conduct an evidentiary hearing concerning the existence of the agreements to arbitrate and Riverwalk's claim that the agreements were unenforceable.

Purporting to be the president of RTM General Contractors, Inc., DeVore signed contracts to perform renovations to Riverwalk's apartment complex. RTM was qualified to act as a construction company through a licensed general contractor named Thomas Ault. Riverwalk refused to pay for the work, contending that it was shoddy and incomplete. RTM sued and arbitration proceedings commenced pursuant to arbitration clauses in the contracts.

Thereafter, Riverwalk filed a motion to stay arbitration to allow the circuit court to consider its claim that the contracts were procured by fraud and were unenforceable under section 489.128, Florida Statutes (1997), which provides that contracts with unlicensed contractors are void and unenforceable. Riverwalk proffered evidence suggesting that DeVore was not, in fact, the president of RTM, that the work was performed by DeVore or DeVore d/b/a DeVore & Associates without a license, and that neither RTM nor Ault had anything to do with the project. In short, Riverwalk charged, it was fraudulently induced into believing it was contracting with RTM when, in fact, RTM merely permitted DeVore to use its name and its supposed involvement with the project was a sham. The court described Riverwalk's proffered evidence as significant, and it granted the stay to permit further discovery and an evidentiary hearing on Riverwalk's assertion that the contracts were unenforceable.

Shortly before the evidentiary hearing, RTM filed a motion to lift the stay of arbitration. It argued that the licensing problem had been "cured", and that no further court proceedings were necessary, because RTM recently had filed a fictitious name registration to do business under the name "DeVore & Associates" and Ault had applied to act as qualifying agent for "RTM General Contractors, Inc. d/b/a De-Vore & Associates." The circuit court agreed that these actions cured the licensing defect and lifted the stay of arbitration. This appeal followed.

A party who alleges and offers colorable evidence that a contract containing an arbitration clause is illegal cannot be compelled to arbitrate the threshold issue of the existence of the agreement to arbitrate; only a court can make that determination. See Party Yards, Inc. v. Templeton, 751 So.2d 121 (Fla. 5th DCA 2000)

; Alphagraphics Franchising, Inc. v. Stebbins, 617 So.2d 463 (Fla. 4th DCA 1993). The issue before us is whether the actions taken by RTM necessarily resolved Riverwalk's challenge to the enforceability of the contracts.

As it did in the circuit court, RTM argues that section 489.128 and our decision in Poole and Kent Co. v. Gusi Erickson Const. Co., 759 So.2d 2 (Fla. 2d DCA 1999), allowed it to cure the licensing problem and render the contracts enforceable. Section 489.128 provides that "as a matter of public policy, contracts entered into on or after October 1, 1990, and performed in full or in part by any contractor who fails to obtain or maintain a license in accordance with this part shall be unenforceable in law or equity." Until recently, the last sentence of the statute stated that "[i]n the event the contractor obtains or reinstates his or her license, the provisions of this section shall no longer apply." In the mentioned case, Poole and Kent, a general contractor, contended that its...