NATIONAL MILLWORK, INC. v. ANF GROUP, INC. and LIBERTY MUTUAL INSURANCE COMPANY , 253 So. 3d 1261 ( 2018 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
NATIONAL MILLWORK, INC., a Florida corporation,
Appellant,
v.
ANF GROUP, INC., a Florida corporation, and LIBERTY MUTUAL
INSURANCE COMPANY, a foreign corporation,
Appellees.
No. 4D18-545
[September 26, 2018]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Sandra Perlman, Judge; L.T. Case No. CACE17-014537.
Marshall A. Adams and Jarad A. Gibson of Lubell & Rosen, LLC, Fort
Lauderdale, for appellant.
Laura A. Baker and Ira L. Libanoff of Ferencik Libanoff Brandt
Bustamante & Goldstein, P.A., Fort Lauderdale, for appellees.
KUNTZ, J.
National Millwork, Inc. appeals an order granting ANF Group, Inc.’s
motion to stay litigation and compel arbitration. National Millwork argues
that portions of the arbitration clause are void because they violate public
policy and that those offending portions of the agreement cannot be
severed. We agree, in part, based on our conclusion that portions of the
arbitration clause conflict with section 682.014, Florida Statutes (2016).
But the circuit court is in a better position to determine, in the first
instance, whether those portions of the agreement can be severed. Thus,
we reverse, in part, and remand for further proceedings.
Background
National Millwork entered into a “Subcontract” with ANF to provide
doors for construction of an assisted living facility. Claiming over
$100,000 remained due on the Subcontract, National Millwork filed a
complaint for breach of contract against ANF and ANF’s surety, Liberty
Mutual.
ANF and Liberty Mutual moved to compel arbitration and stay the
litigation, relying on an arbitration clause in the Subcontract providing
that “[a]ny claim, dispute or other matter in question arising out of or
related to this Subcontract Agreement shall be subject to arbitration.”
In response, National Millwork argued a provision in the arbitration
clause rendered it void and unenforceable. Section 15.7 states that on
review of an arbitration award, “the court shall be empowered to address
on review any failure by the arbitrator(s) to properly apply Florida la[w] to
the dispute. To the extent the arbitrator(s) or the court fail to apply the
law properly, the Award of the arbitrator(s) is subject to further review
through the Florida appellate process.” National Millwork argued this
conflicted with the Revised Florida Arbitration Code.
After a hearing, the circuit court granted the motion to compel
arbitration and stay litigation. National Millwork appeals the court’s order
compelling arbitration.
Analysis
The Revised Florida Arbitration Code governs the confirmation,
vacation, modification or correction, and appeal of an arbitration award.
§§ 682.12-.14, .20, Fla. Stat. (2016).
The Subcontract purports to expand that judicial review. National
Millwork argues the attempt to expand judicial review renders the
arbitration provision void and unenforceable. We agree that the attempt
to expand the scope of judicial review is unenforceable.
A court may vacate an arbitration award in limited and specifically
enumerated situations. § 682.13, Fla. Stat. Those situations include an
arbitration award “procured by corruption, fraud, or other undue means,”
or when there is “evident partiality,” corruption, or misconduct on the part
of the arbitrator. § 682.13(1)(a)-(b), Fla. Stat. An arbitration award may
also be vacated when an arbitrator refuses to postpone a hearing or
conducts a hearing without notice to a party, exceeds the powers given to
the arbitrator, or when there was no agreement to arbitrate. § 682.13(1)(c)-
(f), Fla. Stat.
Similarly, a court may modify an arbitration award when there is an
imperfection in the arbitration award not affecting the merits of the
decision, an evident mistake appears on the face of the award, or the award
includes a matter not submitted to arbitration. § 682.14, Fla. Stat.
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Considering similar provisions of the Federal Arbitration Act, the
United States Supreme Court held that a party cannot expand the scope
of judicial review. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 589
(2008). The Supreme Court noted that the applicable sections of the
Federal Arbitration Act
address egregious departures from the parties’ agreed-upon
arbitration: “corruption,” “fraud,” “evident partiality,”
“misconduct,” “misbehavior,” “exceed[ing] . . . powers,”
“evident material miscalculation,” “evident material mistake,”
“award[s] upon a matter not submitted”; the only ground with
any softer focus is “imperfect[ions],” and a court may correct
those only if they go to “[a] matter of form not affecting the
merits.”
Id. at 586 (alterations in original) (quoting 9 U.S.C. §§ 10 and 11).
Explaining the “old rule of ejusdem generis,” the Supreme Court stated
that “when a statute sets out a series of specific items ending with a
general term, that general term is confined to covering subjects
comparable to the specifics it follows.” Id. Applying the canon, the
Supreme Court held that “[s]ince a general term included in the text is
normally so limited, then surely a statute with no textual hook for
expansion cannot authorize contracting parties to supplement review for
specific instances of outrageous conduct with review for just any legal
error.” Id.In Hall Street, the Supreme Court held that the bases for modifying or
vacating an arbitration award in the Federal Arbitration Act are exclusive.
Id. The Revised Florida Arbitration Code includes similar language, and
the Court’s reasoning in Hall Street can be applied to this case. But the
Florida statute also explicitly states which portions of the Arbitration Code
a party cannot amend by contract.
The Revised Florida Arbitration Code prohibits varying the
requirements for a petition for judicial relief, permitting provisional
remedies, conferring jurisdiction, and varying the bases for appeal of an
arbitration award. § 682.014(2)(a)1., 3., 5., and 6., Fla. Stat. (2016). It
also prohibits a party from waiving or agreeing to vary
(d) A party’s right to seek judicial enforcement of an
arbitration preaward ruling under s. 682.081;
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(f) The right to confirmation of an award as provided under
s. 682.12;
(g) The grounds for vacating an arbitration award under s.
682.13;
(h) The grounds for modifying an arbitration award under s.
682.14[.]
§ 682.014(3)(d), (f), (g), and (h), Fla. Stat.
This prohibition is clear. A party may not expand the scope of judicial
review of an arbitration agreement. As a result, here, the provision of the
Subcontract seeking to do so is unenforceable.
But that does not end our inquiry. ANF and Liberty Mutual argue that
even if we find the provision unenforceable, we can sever the unenforceable
provision from the Subcontract.
The intent of the parties determines severability. See Shotts v. OP Winter
Haven, Inc., 86 So. 3d 456, 475 (Fla. 2011); Gessa v. Manor Care of Fla.,
Inc., 86 So. 3d 484, 496–97 (Fla. 2011) (Polston, J., dissenting) (citation
omitted) (“Severability has long been recognized in Florida’s law of
contracts and is determined by the intent of the parties.”). And the
Subcontract contained a detailed severability clause, which certainly is
relevant to the severance analysis. See Betts v. FastFunding The Co., Inc.,
60 So. 3d 1079, 1082 (Fla. 5th DCA 2011) (citing Fonte v. AT&T Wireless
Servs., Inc., 903 So. 2d 1019, 1024 (Fla. 4th DCA 2005)); VoiceStream
Wireless Corp. v. U.S. Commc’ns, Inc., 912 So. 2d 34, 37 (Fla. 4th DCA
2005) (footnote omitted) (“[W]here the [ ] agreement includes a severability
clause, the presence of certain unenforceable provisions in the contract
does not require a finding that the arbitration agreement is
unenforceable.”).
But the circuit court did not address severability, and we decline to do
so in the first instance. On remand, the court must determine whether
the offending portions of the Subcontract were integral to the agreement
to arbitrate. See, e.g., Obolensky v. Chatsworth at Wellington Green, LLC,
240 So. 3d 6, 11 (Fla. 4th DCA 2018); Gessa, 86 So. 3d at 498 n.12
(Polston, J., dissenting) (citing Gold, Vann & White, P.A. v. Friedenstab, 831
So. 2d 692, 695–97 (Fla. 4th DCA 2002); Harrison v. Palm Harbor MRI, Inc.,
703 So. 2d 1117, 1119 (Fla. 2d DCA 1997)).
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Conclusion
We reverse the circuit court’s order compelling arbitration and staying
litigation and remand for further proceedings.
Reversed and remanded.
MAY and FORST, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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