Fort Lauderdale Arbitration Attorney - Mavrick Law Firm

FLORIDA ARBITRATION LAW: ATTACKING THE VALIDITY OF A CONTRACT DOES NOT INVALIDATE ARBITRATION PROVISIONS CONTAINED THEREIN

Mavrick Law Firm Team — Mon, 30 Oct 2017 21:54:31 GMT

It has become common practice for businesses to include arbitration provisions within agreements. Arbitration provides businesses a more efficient and less costly alternative to expensive, time-consuming litigation. Normally, arbitration provisions are drafted very broadly to cover all disputes or controversies that could arise between the contractual parties, commonly using the wording “arising from” or “relating to” the contract or agreement. Thus, anyone who signs an agreement containing such a provision will usually be required to proceed with arbitration if a contractual dispute occurs. Often times, however, a dispute will arise and the complaining party will wish to proceed in court rather than being compelled to participate in arbitration. To circumvent arbitration, the complaining party will attempt to argue that the contract is not valid for some reason, i.e. lack of consideration or arguing that the contract was procured by fraud. Based on these arguments, the complaining party will assert that the contract, as well as the arbitration provision contained therein, is not enforceable. Peter Mavrick is a Fort Lauderdale business litigation attorney who has defeated such arguments by arguing that courts, at both the state and federal levels, have concluded that attacking the validity of a contract does not remove a party from the scope of an arbitration provision contained therein.

The leading authority for this principle is the 1967 United States Supreme Court decision in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967). In Prima Paint, the plaintiff brought an action seeking to rescind a contract based on fraud in the inducement. The contract contained an arbitration provision, and the Supreme Court held that the plaintiff’s action for fraud was undoubtedly encompassed by the broad wording of the arbitration provision. In so holding, the court reasoned that if the alleged fraud related to the arbitration clause itself, then a court should resolve the issue. But if the fraud in inducement related to the whole contract which contained an agreement to arbitrate, that issue should be resolved by arbitration.

Although Prima Paint was decided under federal law, Florida courts have found its reasoning persuasive and have extended Prima Paint’s holding to contracts formed and executed in Florida. For example, in Simpson v. Cohen, 812 So. 2d 588 (Fla. 4th DCA 2002), the Florida Fourth District Court of Appeal cited Prima Paint when holding that “[c]ontract language agreeing to arbitrate ‘[a]ny controversy or claim arising out of or relating to this Agreement, or breach thereof ’ has been found to be broad enough to encompass a claim that the execution of an agreement itself was procured by fraud…The fraud in the inducement claim arises from the contract and relates to the other claims that the arbitrator must determine.”

There is an exception, however, to the general rule in Prima Paint which was explained by Florida’s Fifth District Court of Appeal in Beazer Homes Corp. v. Bailey, 940 So. 2d 453, 457 (Fla. 5th DCA 2006). Beazer discussed a line of Florida decisions that departed from the Supreme Court’s rationale in Prima Paint and instead held that “where a party seeks to rescind a contract based on fraud in the inducement, the arbitration provision itself is not enforceable.” This line of Florida decisions relies on the rationale stated by the minority in Prima Paint that “[i]f there is not contract, there can be no arbitration clause ‘of the contract.”’ Nevertheless, Beazer clarified that this exception is limited to cases “where only rescission is sought, and where the controversies between the parties have no relation to the contract itself.” If you have any questions concerning commercial arbitration agreements or the application of Prima Paint to Florida contracts, Peter Mavrick is a Fort Lauderdale Business litigation lawyer who can assist you.

The Fort Lauderdale business litigation attorneys at the Mavrick Law Firm have extensive experience dealing with arbitration, claims for fraud, and other types of business litigation cases throughout the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeal. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.

COMMERCIAL ARBITRATION: PROVISIONAL RELIEF – A LIMITED CIRCUMSTANCE WHERE COURTS CAN INTERFERE WITH ARBITRATION PROCEEDINGS

Mavrick Law Firm Team — Mon, 16 Oct 2017 20:22:47 GMT

Arbitration proceedings, and their outcomes, are generally not subject to the interference or review of a court. However, Section 682.031 of the Revised Florida Arbitration Code allows courts to issue and review provisional remedies that involve parties to ongoing arbitration proceeding. Provisional remedies can protect an arbitration-party to the same extent that the party would be protected in a traditional civil action. Provisional remedies are equitable in nature and include attachment, garnishment, replevin, and temporary injunctions such as temporary restraining orders or preliminary injunctions. Peter Mavrick is a Fort Lauderdale commercial arbitration attorney who has significant experience with assessing the validity of arbitration clauses and successfully representing clients in arbitration proceedings.

If a party to an arbitration proceeding meets the statutory legal standard of “good cause” and files a motion with the court prior to the time when an arbitrator is “appointed, authorized, and able to act,” the court may enter an order for provisional remedies. The statutory purpose of the “provisional remedies” is to protect a party to an arbitration proceeding to the same degree that the party would have been protected in traditional litigation. See section 682.031(1). On the other hand, if an arbitrator is “appointed, authorized and able to act,” and can provide a timely and adequate provisional remedy, the court cannot interfere with the arbitrator’s proceedings. An arbitrator may tailor remedies to the extent “necessary to protect the effectiveness of the arbitration proceeding and to promote the fair and expeditious resolution of the controversy.” Section 682.031(2). Accordingly, if a party waits until the arbitrator is empowered to preside over the proceeding, the arbitrator will have the ultimate discretion for issuing such orders. However, if an arbitrator cannot timely enter a provisional remedy on an urgent matter or if the arbitrator lacks the authority to provide such a remedy, a party to arbitration may file a motion with the court for a provisional remedy. Section 682.031 provides one of the extremely limited circumstances when a court is authorized to usurp an arbitrator’s authority.

In stark contrast to the high degree of deference that is usually paid to an arbitrator’s ruling, courts review provisional remedy awards de novo before they are confirmed. Awards for provisional relief are only confirmed if the court determines that “the award satisfies the legal standards for awarding a party injunctive or equitable relief.” Section 682.081, Fla. Stat. Traditional arbitration awards are usually confirmed even when the arbitrator makes errors of fact or law. See Schnurmacher, 542 So. 2d at 1329 (“An award of arbitration may not be reversed on the ground that the arbitrator made an error of law”). Furthermore, the award is still subject to being vacated, modified, or corrected under sections 682.13 or 682.14, Fla. Stat. (For more information on vacating, modifying, or correcting arbitration awards, see the Mavrick Law Firm’s earlier article, FLORIDA COURTS HAVE LIMITED AUTHORITY TO MODIFY ARBITRATION AWARDS.) Thus, provisional remedies present a rare opportunity for judicial intervention in, and review of, arbitration proceedings.

In sum, a party to arbitration that is seeking an injunction or some other form of urgent equitable relief can get protection from the courts if the party acts before an arbitrator is authorized to act. If an arbitrator is already authorized to act, the party’s award will be subject to the arbitrator’s discretion. Moreover, if an arbitrator enters an order for a provisional remedy, the non-moving party has the benefit of judicial review using a de novo standard to confirm the award. If a party believes that it is entitled to a provisional remedy and wants traditional legal standards to apply, the party needs to promptly file a motion for relief as provided by sections 682.031 and 682.81 Fla. Stat.

Sections 682.031 and 682.81 became law in 2013, as such, there is very little case law interpreting these statutes. Courts might be reluctant to interfere with arbitration proceedings as courts traditionally viewed arbitration awards as final and unreviewable. See Schnurmacher Holding, Inc. v. Noriega, 542 So. 2d 1327 (Fla. 1989) (“the standard of judicial review of statutory arbitration awards is extremely limited”). If you are currently bound by an arbitration clause and you believe that you need a provisional remedy, or if you simply would like more information regarding arbitration in general, Peter Mavrick is a Fort Lauderdale commercial arbitration lawyer who will assist you.

The Mavrick Law Firm has successfully represented many parties in arbitration proceedings. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.

FLORIDA COURTS HAVE LIMITED AUTHORITY TO MODIFY ARBITRATION AWARDS

Mavrick Law Firm Team — Sat, 30 Sep 2017 02:10:38 GMT

Arbitration is an increasingly popular alternative to traditional litigation because arbitration proceedings are faster and more cost effective. Many would-be litigants are incorporating binding arbitration clauses into their agreements for the economic benefits. However, parties who enter agreements with arbitration clauses should consider the conclusive nature of an arbitration proceeding. As arbitration clauses become prevalent in the consumer and commercial context, more and more individuals and businesses will face the reality of an oftentimes-unreviewable arbitration award. The Mavrick Law Firm has significant experience with assessing the validity of arbitration clauses and successfully representing clients in arbitration proceedings.

The Revised Florida Arbitration Code allows parties to arbitration to file a motion to vacate, modify, or correct an award in limited circumstances. See §§ 682.13 – 682.14, Fla. Stat. § 682.13 provides, in part, that a court can vacate an arbitration award only if:

(a) The award was procured by corruption, fraud…(b) There was:1. Evident partiality by an arbitrator …3. Misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding; (c) An arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to hear evidence material to the controversy, …(d) An arbitrator exceeded the arbitrator’s powers;(e) There was no agreement to arbitrate …(f) The arbitration was conducted without proper notice …

Further, § 682.14, Fla. Stat., provides, in part, that a court can modify or correct an award only if:

(a) There is an evident miscalculation of figures or an evident mistake…(b) The arbitrators have awarded upon a matter not submitted in the arbitration …(c) The award is imperfect as a matter of form, not affecting the merits of the controversy. Therefore, a party that encounters any of the grounds listed in §§ 682.13 – 682.14 should timely file a motion to vacate, modify, or correct with the court. See Nestor v. Ward, 163 So. 3d 582, 585 (Fla. 3d DCA 2015) (“In the absence of a motion to vacate, modify, or correct the arbitration award, the trial court must confirm the award”).

In sum, potential parties to arbitration proceedings should understand the finality of an arbitrator’s decision. Like a judgment from a lower court, “[t]he binding effect of an arbitration … award becomes final once the arbitrator releases his findings.” Capital Factors, Inc. v. Alba Rent-A-Car, Inc., 965 So. 2d 1178, 1182–83 (Fla. 4th DCA 2007). Unlike a judgment from a lower court, the right to judicial review is exclusively limited to the grounds enumerated in the Revised Florida Arbitration Code: This is true even if an arbitrator makes errors of judgment as to the law or fact and even when an award is excessive under substantive law. See Managed Care Ins. Consultants, Inc. v. United Healthcare Ins. Co., 2017 WL 3085339 (Fla. 4th DCA July 19, 2017); Prudential-Bache Sec., Inc. v. Shuman, 483 So. 2d 888 (Fla. 3d DCA 1986). No matter the facts, unless provided for by statute, the award of an arbitrator cannot be disturbed. An arbitration award operates “as a final and conclusive judgment, and – however disappointing it may be – the parties must abide by it.” Cassara v. Wofford, 55 So. 2d 102, 105 (Fla. 1951). Therefore, individuals and businesses should enter agreements with an awareness of dispute resolution clauses and negotiate accordingly if the concept of arbitration of an unassailable arbitration award is undesirable.