DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
AT&T SERVICES, INC.,
MARK EBY, and DINO FARRUGGIO,
Appellants,
v.
S&S UTILITIES ENGINEERING, LLC, TONY BEDWELL, ASHLEY
CARR, COLLEEN DONAUBAUER, SANJAY KUMAR, JEANINE LAW,
RAY LAWRENCE, JAMELIA MAYS, TONY MCCRORY, FRAN
SHEPARD, WES SUMMERS, GREG THOMAS and MARA THRAILKILL,
Appellees.
No. 4D20-66
[August 5, 2020]
Appeal of a non-final order from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; James L. Martz, Judge; L.T. Case
No. 502019CA005644XXXXMBAK.
George S. Lemieux and Megan K. Moon of Gunster, Yoakley & Stewart,
P.A., Fort Lauderdale, for appellants.
Steven G. Schwartz of Schwartz Law Group, Boca Raton, for appellee
S&S Utilities Engineering, LLC.
PER CURIAM.
AT&T Services, Inc. appeals an order denying its motion to stay
litigation and compel arbitration. We reverse because the trial court erred
in interpreting the arbitration provisions in the parties’ contract as
permissive rather than mandatory and in ruling that the claims against
AT&T are not arbitrable under the contract.
AT&T contracted with S&S Utilities Engineering, LLC to locate and
mark its underground lines and equipment prior to excavation projects.
Under the contract, AT&T would pay S&S a unit rate per “locate request”
and an hourly rate for labor and equipment. In the event of any damages
to AT&T’s property as a result of S&S’s performance or lack of performance
under the contract (“supplier-at-fault damages”), AT&T could either
demand payment from S&S or deduct the damages from the amount it
owed to S&S for its services.
The contract contains two arbitration provisions. The first provision,
section 4.8, entitled “Dispute Resolution-Arbitration,” provides generally
that if the parties are unable to resolve a dispute informally or by
mediation, then either party “may initiate arbitration” by providing the
other party with written notice of its intent to arbitrate. The parties agreed
that any arbitration would be held in Dallas, Texas under the Commercial
Arbitration Rules of the American Arbitration Association. They
acknowledged that the arbitrator’s award would be final and binding and
that they were “giving up judicial rights to a jury trial, discovery and most
grounds for appeal.” The second arbitration provision, section 10 of
Appendix C, applies specifically to disputes related to supplier-at-fault
damages and provides that if the parties are unable to resolve a dispute
informally, and the claimed amount is at least $10,000, then either party
“may elect to initiate arbitration” pursuant to the “Dispute Resolution-
Arbitration” provision of section [4.8].
In the case below, S&S filed a complaint in circuit court alleging, among
other things, that AT&T frequently required S&S to investigate damage
claims at jobsites where it had not been requested to perform any work
and assessed “unilateral, unsupportable, grossly inflated” charges for
damages in order to avoid paying S&S for its services. S&S claims it is
owed more than $4.5 million in unpaid expenses and more than $1.2
million in improper chargebacks. About two months after S&S filed its
complaint, AT&T filed a demand for arbitration seeking more than $1.3
million in unpaid damage claims. It then moved to stay the litigation and
compel arbitration of S&S’s claims pursuant to the contract.
The trial court denied AT&T’s motion. It ruled that S&S, as “first to the
well,” was entitled to choose between filing a lawsuit and initiating
arbitration because the arbitration clauses in the parties’ contract provide
only that a party “may” initiate arbitration. It also expressed doubt as to
whether S&S’s claims are arbitrable under the contract. AT&T timely
appealed.
We review the trial court’s order de novo. See Best v. Educ. Affiliates,
82 So. 3d 143, 145-46 (Fla. 4th DCA 2012); BDO Seidman, LLP v. Bee,
970
So. 2d 869, 873-74 (Fla. 4th DCA 2007). We apply Texas law pursuant to
a choice-of-law provision in the parties’ contract. See Gilman + Ciocia, Inc.
v. Wetherald,
885 So. 2d 900, 902 (Fla. 4th DCA 2004) (recognizing that
“Florida courts are obligated to enforce choice-of-law provisions unless a
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showing is made that the law of the chosen forum contravenes strong
public policy or that the clause is otherwise unreasonable or unjust”).
We first conclude that the trial court erred in interpreting the
arbitration provisions in the parties’ contract as permissive rather than
mandatory. Arbitration clauses are usually interpreted as mandatory,
even if they use the permissive “may,” unless they require both parties to
consent to arbitration or otherwise make clear that one party can opt for
litigation over arbitration. See In re U.S. Home Corp.,
236 S.W.3d 761, 765
(Tex. 2007) (interpreting a provision that either party “may request”
arbitration as “a binding promise to arbitrate if either party requested it”);
S. Green Builders, LP v. Cleveland,
558 S.W.3d 251, 256-58 (Tex. Ct. App.
2018) (holding that a provision that any dispute “may be submitted to
binding arbitration” constituted a “binding promise to arbitrate if either
party requested it”); Feldman/Matz Interests, L.L.P. v. Settlement Capital
Corp.,
140 S.W.3d 879, 888 (Tex. Ct. App. 2004) (acknowledging that
“generally, an agreement to arbitrate is mandatory even though it contains
permissive terms such as ‘may’” and interpreting a provision that either
party “may” submit a dispute to arbitration to mean that “either party has
the power to require arbitration”). Here, nothing in the parties’ contract
suggests that both parties must agree to arbitrate a dispute or that the
party who is “first to the well” has a choice between filing a lawsuit and
initiating arbitration. Under Texas law, the word “may” in the arbitration
provisions means only that either party can initiate arbitration if a dispute
cannot be resolved informally; it does not mean that the other party can
avoid arbitration once it is initiated.
We also conclude that the trial court erred to the extent it denied the
motion because S&S’s claims against AT&T are not arbitrable under the
contract. The parties delegated any questions of arbitrability to the
arbitrator by agreeing to arbitrate under the Commercial Arbitration Rules
of the American Arbitration Association. See Schlumberger Tech. Corp. v.
Baker Hughes Inc.,
355 S.W.3d 791, 802 (Tex. Ct. App. 2011).
We therefore reverse the court’s order and remand with instructions to
stay the litigation and compel arbitration.
Reversed and remanded.
WARNER, DAMOORGIAN and FORST, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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