Spring Lake NC, LLC v. Figueroa

• Decision Date: 14 December 2012
• Docket Number: No. 2D12–1202.,2D12–1202.
• Citation: 104 So.3d 1211
• Parties: SPRING LAKE NC, LLC; SBK Capital, LLC; Clear Choice Health Care, LLC; Samuel B. Kellett; and Jason Canlas (as to Spring Lake Rehabilitation Center), Appellants, v. Benjamin FIGUEROA, as Personal Representative of the Estate of Lucy R. Figueroa, Deceased, Appellee.
• Court: Florida District Court of Appeals

104 So.3d 1211

SPRING LAKE NC, LLC; SBK Capital, LLC; Clear Choice Health Care, LLC; Samuel B. Kellett; and Jason Canlas (as to Spring Lake Rehabilitation Center), Appellants,

v.Benjamin FIGUEROA, as Personal Representative of the Estate of Lucy R. Figueroa, Deceased, Appellee.

No. 2D12–1202.

District Court of Appeal of Florida, Second District.

Dec. 14, 2012.

James D. Moriarty, Brian M. Bursa, and Kirsten K. Ullman of Lewis Brisbois Bisgaard & Smith, LLP, Tampa, for Appellants.

Isaac R. Ruiz–Carus of Wilkes & McHugh, P.A., Tampa, for Appellee.

BLACK, Judge.

Spring Lake NC, LLC, SBK Capital, LLC, Clear Choice Health Care, LLC, Samuel B. Kellett, and Jason Canlas (collectively Spring Lake) challenge the circuit court's order denying their motion to compel arbitration. Spring Lake argues that the court considered improper evidence and argument in denying the motion and that the court deprived Spring Lake of due process. We find merit in these arguments and reverse the order denying the motion.

The underlying lawsuit is Benjamin Figueroa's action as personal representative of the Estate of Lucy R. Figueroa against Spring Lake for negligence, wrongful death, breach of fiduciary duties, and violations of section 415.1111, Florida Statutes (2010). After Mr. Figueroa filed the lawsuit, Spring Lake sought to compel arbitration pursuant to the arbitration agreement signed by the decedent as part of the contract between the decedent and Spring Lake Rehabilitation Center. The agreement provided for resolution of all disputes “arising out [of] or in any way related or connected to this Agreement,” including disputes “based on contract, tort, statute, ... warranty or any alleged breach, default, negligence, wantonness, fraud, misrepresentation or suppression of fact or inducement,” as well as “claims under chapter 400 of the Florida Statutes.” It also provided:

Intending to be legally bound, the parties expressly agree that this Agreement will be governed by the Federal Arbitration Act. It is the express intent of the parties to have a binding arbitration agreement.

....

An arbitration hearing regarding any disputes shall be held before a board of three arbitrators (selected from a nationally recognized arbitration association), one chosen by each side in the dispute with the third to be chosen by the two arbitrators previously chosen. Such hearing and all other proceedings related to the arbitration of the claim(s) shall be conducted in accordance with the applicable rules of procedure governing the selected arbitrators that do not conflict with the FAA [Federal Arbitration Act].

At the hearing on Spring Lake's motion to compel, Mr. Figueroa argued that the phrase “nationally recognized arbitration association” is ambiguous. Counsel also argued that he was aware of only three nationally recognized arbitration associations and that none would accept this type of case—a predispute arbitration agreement issue—making performance of the agreement impossible. Spring Lake argued that the phrase “nationally recognized arbitration association” is not ambiguous and that there are several nationally recognized associations, including groups not mentioned by Mr. Figueroa.

Ultimately, the circuit court found the phrase could only be interpreted in one way, making it unambiguous. However, the court then ruled that it was “up to [Spring Lake] to tell me [whether other nationally recognized arbitration associations exist]. All right. Motion to compel arbitration is denied.” Neither the court's oral ruling nor its order explain the rationale for the denial. Presumably, despite its ruling that the arbitration agreement's language was not ambiguous, the court found Mr. Figueroa's impossibility argument persuasive.

On appeal, Mr. Figueroa again argues that the phrase “nationally recognized arbitration association” is ambiguous. He also argues that Spring Lake was unable to identify nationally recognized arbitration associations other than those named by Mr. Figueroa when asked to do so by the circuit court. In turn, Spring Lake argues that there is no ambiguity in the agreement's language and that Spring Lake's inability to identify other nationally recognized arbitration associations was the result of a lack of notice that Mr. Figueroa would be arguing impossibility at the hearing. Spring Lake also argues that the court improperly required Spring Lake to carry the burden of establishing the existence of nationally recognized arbitration associations other than those named by Mr. Figueroa.

This court employs “a de novo standard to review the circuit court's construction of the arbitration agreement and its application of the law to the facts found.” New Port Richey Med. Investors, LLC v. Stern ex rel. Petscher, 14 So.3d 1084, 1086 (Fla. 2d DCA 2009) (citing Shotts v. OP Winter Haven, Inc., 988 So.2d 639, 643 (Fla. 2d DCA 2008)). We also consider whether arbitration agreement terms are ambiguous de novo. SCG Harbourwood, LLC v. Hanyan, 93 So.3d 1197, 1200 (Fla. 2d DCA 2012). Where a motion to compel arbitration has been filed and the arbitration agreement is valid on its face, it is the burden of the party seeking to avoid arbitration to demonstrate that the agreement is invalid. See In re Managed Care Litigation, 132 F.Supp.2d 989, 1000 (S.D.Fla.2000), rev'd on other grounds sub nom PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 123 S.Ct. 1531, 155 L.Ed.2d 578 (2003). Generally, the court should “resolve any doubt concerning the scope of the provisions in favor of arbitration and ... give harmonious effect to all the terms.” C.C. Borden Constr., Inc. v. Walding Co., 94 So.3d 725, 725 (Fla. 1st DCA 2012); see Wallshein v. Shugarman, 50 So.3d 89, 90–91 (Fla. 4th DCA 2010). In so doing, we consider the intent of the parties as “discerned from the total writing and not particular provisions or disjointed parts.” SCG Harbourwood, 93 So.3d at 1200. “If a contract provision is clear and unambiguous, a court may not consider extrinsic or parol evidence to change the plain meaning set forth in the contract.” Id. (citing Jenkins v. Eckerd Corp., 913 So.2d 43, 52 (Fla. 1st DCA 2005)).

Neither party disputes that the issue before the circuit court was whether there was a valid agreement, an issue properly within the circuit court's province. See ManorCare Health Servs., Inc. v. Stiehl, 22 So.3d 96, 99 (Fla. 2d DCA 2009) (“[T]he trial court's role in deciding whether to compel arbitration is limited to three ‘gateway’ 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.’ ” (quoting Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999))). Presumably here, although without so ruling, the circuit court found the arbitration agreement void. No other basis to deny the motion to compel arbitration was argued.

Although Spring Lake's first issue on appeal primarily addresses parol evidence being improperly admitted to clarify the phrase “nationally recognized arbitration association,” it also makes the argument that the court erred in denying the motion to compel arbitration when it clearly found the phrase unambiguous. The court found: “That's a good question whether it's fatally ambiguous. I'm not convinced at this point. I mean I'm—I don't know what else it could mean I guess is—... just my gut feeling is there's only one way to interpret it....”

Here, the phrase “nationally recognized arbitration association” is not ambiguous. There is only one reasonable interpretation of the language. See BKD Twenty–One Mgmt. Co. v. Delsordo, ––– So.3d ––––, –––– (Fla. 4th DCA 2012) (“[C]ontractual language is ambiguous only if it is susceptible to more than one reasonable interpretation.”). Moreover, Mr. Figueroa provided no argument as to why the phrase is ambiguous, nor did he provide conflicting or varied interpretations of the phrase.¹ As a result, Mr. Figueroa's counsel's argument that he was unaware of any nationally recognized arbitration association that would handle a predispute arbitration agreement case should not have been considered by the circuit court, making its contemplation reversible error. See SCG Harbourwood, 93 So.3d at 1200; Wallshein, 50 So.3d at 92. Nonetheless, even if the phrase were ambiguous, thereby allowing extrinsic evidence, Mr. Figueroa's evidence related not to ambiguity but to his impossibility defense.² Thus, the court's reliance on this evidence is also reversible error.

With regard to the second issue on appeal, we agree with Spring Lake that the court erred in—presumably—finding the agreement invalid because it is impossible to perform. To the extent Mr. Figueroa argues that the only nationally recognized arbitration...