Third District Court of Appeal
State of Florida
Opinion filed March 17, 2021.
Not final until disposition of timely filed motion for rehearing.
________________
No. 3D20-1280
Lower Tribunal No. 20-8460
________________
Kratos Investments LLC, et al.,
Appellants,
vs.
ABS Healthcare Services, LLC, et al.,
Appellees.
An Appeal from a non-final order from the Circuit Court for Miami-Dade
County, William Thomas, Judge.
Cozen O’Connor, and James A. Gale, Samuel A. Lewis, David M.
Stahl, Matthew N. Horowitz and Jonathan E. Gale, for appellants.
Boies Schiller Flexner LLP, and James Fox Miller (Hollywood); Boies
Schiller Flexner LLP, Carlos M. Sires and Sigrid S. McCawley (Fort
Lauderdale), for appellees.
Before FERNANDEZ, LOGUE and GORDO, JJ.
GORDO, J.
The appellants, defendants in the suit below, appeal the trial court’s
nonfinal order denying their motion to compel arbitration and denying their
alternative motions to stay litigation or to transfer venue. We have
jurisdiction. See Fla. R. App. R. 9.130(a)(3)(A), (a)(3)(C)(iv). For the
following reasons, we reverse the portion of the order denying the appellants’
motion to compel arbitration. We affirm without further discussion the
portions of the order denying the stay of litigation and the transfer of venue.
FACTS & PROCEDURAL HISTORY
The appellees, ABS Healthcare Services, LLC and Heath Option One,
LLC, doing business as Insurance Care Direct (collectively, “ICD”), sued the
appellants, Kratos Investments LLC, Health Team One, LLC, Complete Vital
Care LLC, Health Essential Care LLC and Richard Ryscik over an alleged
scheme to steal ICD’s business.
ICD is a health and life insurance agency that contracts with licensed
insurance agents to market and sell benefit plans. ICD’s relationship with its
licensed agents is governed by ICD Exclusive Agent Agreements, pursuant
to which ICD authorizes agents to solicit customers and to use ICD’s
confidential and trade secret information in connection with the marketing
and sale of its plans. The Agreements prohibit agents from inducing
2
customers to discontinue business with ICD and prohibits agents from selling
non-ICD plans.
On April 15, 2020, ICD filed a complaint against the appellants alleging
they conspired with ICD agents in a scheme to steal ICD’s business by
setting up sham competing entities, interfering with the ICD Exclusive Agent
Agreements, illicitly soliciting ICD’s customers and prospective customers,
and misappropriating ICD’s confidential information and trade secrets. ICD’s
five-count complaint was for conspiracy to breach the ICD Exclusive Agent
Agreements, tortious interference with Agent Agreements, tortious
interference with business relationships, misappropriation of trade secrets
and conspiracy to misappropriate trade secrets. ICD prayed for the following
relief: “All compensatory damages for all injuries suffered as a result of
Defendants’ wrongdoing, including special damages such as consequential
damages, lost profits, and disgorgement of Defendants’ ill-gotten gains.”
ICD separately commenced actions against eight of its licensed agents
individually in Broward County alleging breach of contract, tortious
interference with contract, claims for permanent injunctive relief,
misappropriation of trade secrets and unjust enrichment. ICD sought both
legal and equitable relief in the form of compensatory damages, permanent
injunctive relief, disgorgement and imposition of a constructive trust.
3
On May 14, 2020, the appellants filed a motion to compel arbitration
and to stay or dismiss the action pending the resolution of arbitration in the
Broward cases, and to dismiss or transfer venue to Broward County. The
appellants, non-signatories, sought to compel ICD, a signatory, to arbitration
pursuant the ICD Exclusive Agent Agreements’ dispute resolution provision.
Both parties shall use best efforts to resolve disputes
in an amicable manner for a period of ten (10) days.
The Parties agree that any dispute arising out of or
related in any way to the solicitation, negotiation,
inception or performance of this Agreement (whether
the dispute is couched in terms of contractual,
statutory, or common law grounds) shall be
exclusively resolved and construed in accordance
with Commercial Arbitration Rules of the American
Arbitration Association pursuant to the laws of the
State of Florida governing arbitration. For any
disputes not resolved amicably, venue shall be
Broward County, Florida and any judgment upon the
award rendered by the arbitrator(s) may be entered
in any court having competent jurisdiction thereof.
The appellants argued they were entitled to enforce the arbitration provision
against the signatory under the doctrine of equitable estoppel. ICD opposed
the motion claiming there was no basis to compel it to arbitrate its claims
against non-signatories under the doctrine of equitable estoppel because
4
ICD’s claims against its own agents fell within the carve-out provision of the
arbitration clause. 1
Following a hearing, the trial court denied the motion finding that the
appellants could not invoke arbitration because they were not signatories to
the Agent Agreements and there was no direct relationship to the
Agreements that would make it inequitable to allow the appellants’ claims to
proceed outside of arbitration. This appeal followed.
STANDARD OF REVIEW
“This Court reviews an order granting or denying a motion to compel
arbitration de novo.” Duty Free World, Inc. v. Miami Perfume Junction, Inc.,
253 So. 3d 689, 693 (Fla. 3d DCA 2018).
LEGAL ANALYSIS
“[N]ot every dispute that arises between contracting parties will be
subject to arbitration . . . .” Kolsky v. Jackson Square, LLC,
28 So. 3d 965,
968 (Fla. 3d DCA 2010) (quoting Roth v. Cohen,
941 So. 2d 496, 499 (Fla.
3d DCA 2006)). “An obligation to arbitrate is based on consent . . . .” Marcus
v. Fla. Bagels, LLC,
112 So. 3d 631, 633 (Fla. 4th DCA 2013). “[F]or this
reason ‘a non-signatory to a contract containing an arbitration agreement
1
The ICD Exclusive Agent Agreement provided the following exception: “ICD
may pursue its equitable remedies, including specific performance,
injunctions and restraining orders in any court of competent jurisdiction.”
5
ordinarily cannot compel a signatory to submit to arbitration.’”
Id. (quoting
Roman v. Atl. Coast Constr. & Dev., Inc.,
44 So. 3d 222, 224 (Fla. 4th DCA
2010)). “However, courts ‘have been willing to estop a signatory from
avoiding arbitration with a nonsignatory when the issues the nonsignatory is
seeking to resolve in arbitration are intertwined with the agreement that the
estopped party has signed.’”
Id. (citation omitted). “The doctrine of equitable
estoppel on the basis of intertwined claims . . . applies when a signatory to a
contract containing the arbitration clause raises allegations of substantially
interdependent and concerted misconduct by both a non-signatory and one
or more of the signatories to the agreement.” Greene v. Johnson,
276 So.
3d 527, 531 (Fla. 3d DCA 2019) (citing Marcus,
112 So. 3d at 633–34); see
Kolsky,
28 So. 3d at 969; Beck Auto Sales, Inc. v. Asbury Jax Ford, LLC,
249 So. 3d 765, 767 (Fla. 1st DCA 2018) (“Florida and federal courts have
recognized that principles of equitable estoppel sometimes allow a non-
signatory to compel arbitration against someone who had signed an
arbitration agreement.”).
The appellants argue that, although they are non-signatories to the
Agent Agreements, they have the right to compel arbitration because ICD’s
allegations against them are intertwined with the Agent Agreements. ICD
specifically alleges the appellants conspired with its agents in a scheme to
6
steal ICD’s business by interfering with and causing the agents to breach the
Agent Agreements. The claims against the appellants and the agents are
based on the same set of operative facts and unquestionably premised upon
substantially interdependent and concerted misconduct between the non-
signatories and signatories to the Agent Agreements. Thus, we conclude
ICD is estopped from avoiding arbitration. See Kolsky,
28 So. 3d at 970
(holding equitable estoppel warranted where the signatory plaintiff’s “claims
against the non-signatory appellants arise out of the same allegations of
concerted conduct among the non-signatory appellants and [signatory], are
based on the same facts, and are inherently inseparable”); Greene, 276 So.
3d at 531 (holding plaintiff was estopped from avoiding arbitration where
plaintiff’s claims against non-signatory defendants “are based on the same
set of operative facts” that plaintiff alleged against the signatory defendant,
and “the defenses of the non-signatory defendants will be dependent upon,
if not the same as, [the signatory’s] defenses”).
In the same manner, we conclude the allegations against the
appellants fell within the scope of the arbitration clause in the Agent
Agreements as they arose out of and were related to the agents’
performance of the Agreement. The signatories to the Agent Agreements
expressly agreed that “any dispute arising out of or related in any way to the
7
solicitation, negotiation, inception or performance of this Agreement . . . shall
be exclusively resolved . . . [by] arbitration.” This Court has recognized such
language as permitting non-signatories to enforce arbitration agreements.
“[A]rbitration provisions containing the language, ‘arising out of or related to,’
in certain instances can be construed to include non-signatories.” Armas v.
Prudential Sec., Inc.,
842 So. 2d 210, 211 (Fla. 3d DCA 2003). Based on
our review, we find there is a “sufficient nexus” between ICD’s claims against
the appellants and the Agent Agreement “such that the arbitration clause
applies and is enforceable between the parties.” Kolsky,
28 So. 3d at 969.
ICD, however, argues that its claims fall within the arbitration
provision’s exception providing that the parties may seek equitable remedies
in court. The Agent Agreements contain a carve-out provision providing:
“ICD may pursue its equitable remedies . . . in any court of competent
jurisdiction.” ICD contends it mainly sought equitable relief against the
agents, thus the claims against the agents themselves are not arbitrable and
by extension neither are the claims against the appellants. We reject ICD’s
argument as on the record before us, ICD’s complaints against the individual
agents seek both legal and equitable relief and the Broward court has
compelled arbitration in several pending actions.
8
With regard to ICD’s claims against the appellants, ICD seeks
compensatory damages, including special damages such as consequential
damages, lost profits and disgorgement of ill-gotten gains. The fact that
ICD’s prayer for relief seeks disgorgement 2 does not bring ICD’s claims
under the carve-out exception. See Duty Free World, 253 So. 3d at 698
(concluding unjust enrichment claim seeking disgorgement did not fall within
the arbitration clause’s exception permitting the parties to seek “equitable . . .
relief” in the circuit court as claim sought legal, rather than equitable, relief).
Each count of ICD’s complaint asserts a legal cause of action seeking
compensatory damages. Thus, we conclude that ICD’s claims seek legal,
rather than equitable relief and the exception permitting parties to seek
equitable relief in the circuit court does not apply. See Duty Free World, 253
So. 3d at 699.
2
“Disgorgement is an equitable remedy . . . .” Duty Free World, 253 So. 3d
at 698 (quoting S.E.C. v. Monterosso,
756 F.3d 1326, 1337 (11th Cir. 2014));
see Cushman & Wakefield, Inc. v. Office Depot, Inc., No. 08-80321-CIV-
MIDDLEBROOKS/JOHNSON,
2008 WL 11409887, at *3 (S.D. Fla. Nov. 3,
2008) (“Disgorgement is a remedy . . . and not an independent cause of
action.”); Waldrop v. S. Co. Servs. Inc.,
24 F.3d 152, 157 (11th Cir. 1994)
(“[D]amages are equitable when ‘they are restitutionary, such as in “action[s]
for disgorgement of improper profits.”’” (citation omitted)).
9
CONCLUSION
For the foregoing reasons, we determine the trial court erred in denying
the motion to compel arbitration. We reverse, in part, the order and remand
the cause to the trial court with instructions to grant the motion to compel
arbitration of all claims against the appellants. We affirm the order in all other
respects.
Affirmed in part, reversed in part and remanded with instructions.
10
