Keren Peters v. The Keyes Company

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 10-12261 ELEVENTH CIRCUIT
Non-Argument Calendar NOVEMBER 5, 2010
________________________ JOHN LEY
CLERK
D.C. Docket No. 0:10-CV-60162-CMA
KEREN PETERS,
individually and on behalf of all others similarly situated,
lllllllllllllllllllllPlaintiff - Appellee,
versus
THE KEYES COMPANY,
a Florida corporation,
lllllllllllllllllllllDefendant - Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(November 5, 2010)
Before TJOFLAT, WILSON and PRYOR, Circuit Judges.
PER CURIAM:
The Keyes Company appeals the denial of its motion to compel Keren
Peters to arbitrate her complaint against Keyes. Peters sued Keyes for allegedly
violating federal and state laws by collecting an administrative brokerage fee
under a real estate purchase agreement between Peters and Bank United, and
Keyes moved to compel arbitration based on an arbitration clause in that
agreement. The district court ruled that Keyes could not compel Peters to arbitrate
because Keyes was not a party to or a third-party beneficiary of the agreement.
We affirm.
Peters and Bank United executed a purchase agreement that identified
Keyes as the broker and escrow agent. A section of the agreement titled
“Additional terms” provided that Keyes would collect an administrative brokerage
fee of $499 from Peters. That section also provided that Keyes, as broker, had a
“right to place a lien on the Property to ensure payment of services rendered” and
“[f]or purposes of [that] paragraph, [Keyes] [would] be treated as a party to [the]
Contract.”
The agreement contained a dispute resolution clause that Peters and Bank
United would mediate or, if necessary, arbitrate any disputes other than those
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involving deposits, but that clause allowed arbitration of any dispute with Keyes
only if Keyes consented in writing to be a party to the proceeding:
16. DISPUTE RESOLUTION: This contract will be construed under
Florida law. All controversies, claims and other matters in question
arising out of or relating to this transaction or this Contract or its breach
will be settled as follows:
(a) Disputes concerning entitlement to deposits made and agreed
to be made: Buyer and Seller will have 30 days from the date
conflicting demands are made to attempt to resolve the dispute
through mediation. If that fails, Escrow Agent will submit the
dispute, if so required by Florida law, to Escrow Agent’s choice
of arbitration, a Florida court, or the Florida Real Estate
Commission (“FREC”). Buyer and Seller will be bound by any
resulting award, judgment or order. A broker’s obligation . . . to
timely notify the FREC of an escrow dispute and timely resolve
the escrow dispute through mediation, arbitration, interpleader or
an escrow disbursement order, if the broker so chooses, applies to
brokers only and does not apply to title companies, attorneys or
other escrow companies.
(b) All other disputes: Buyer and Seller will have 30 days from
the date a dispute arises between them to attempt to resolve the
matter through mediation, failing which the parties will resolve
the dispute through neutral binding arbitration in the county
where the Property is located. . . . Any dispute with a real estate
licensee or [broker] named in Paragraph 19 will be submitted to
arbitration only if the licensee’s broker consents in writing to
become a party to the proceeding. This clause will survive
closing.
Peters purchased the property from Bank United, and Keyes collected from Peters
the administrative brokerage fee.
Peters filed a complaint “on behalf of herself and all others similarly
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situated” against Keyes. Peters alleged that Keyes violated the Real Estate
Settlement Procedures Act, 12 U.S.C. § 2607(b), and the Florida Deceptive and
Unfair Trade Practices Act, Fla. Stat. § 501.204(1), by collecting an administrative
brokerage fee that was “unearned, duplicate[d] [its] commission,” and was
unrelated to “any settlement services [it] performed.” Peters sought compensatory
damages and injunctive relief.
Keyes moved to compel Peters to arbitrate her complaint. Keyes argued that
Peters had agreed to arbitrate “[a]ll controversies, claims or other matters in
question arising out of or related to” the real estate transaction. Keyes also argued
that it could enforce the arbitration clause as a third-party beneficiary of the
contract.
The district court denied the motion to compel arbitration. The district court
ruled that Keyes could not force Peters to arbitrate her complaint based on the
decision of the Florida District Court of Appeal in Nestler-Poletto Realty, Inc. v.
Kassin, 730 So. 2d 324 (1999). In Nestler-Poletto, brokers in a real estate
transaction moved to compel the seller of the property to arbitrate her complaint
that the brokers breached their fiduciary duty and acted negligently by failing to
disclose a defect in the title of the property. Id. at 325. The brokers based their
motion to compel on an arbitration clause in the contract executed by the buyer
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and seller. Id. The arbitration clause provided that all disputes other than those
involving deposits would be submitted first to mediation and, if that failed, to
binding arbitration. Id. Paragraph 16 of the contract provided, “Any disputes with
a real estate licensee . . . will be submitted to arbitration only if the licensee’s
broker consents in writing to become a party to the proceeding.” Id. The trial
court denied the motion to compel arbitration, and the appellate court affirmed.
The appellate court ruled that the general rule in favor of arbitration did not
empower the brokers, who were “non-parties to an agreement containing an
arbitration provision[,] to force the parties to arbitrate when [those] parties . . .
waived arbitration.” Id. at 326. The court also rejected the argument of the
brokers that they were third-party beneficiaries of the agreement “by virtue of their
signing it under the brokerage clause” or of the “principal’s agreement to
arbitrate.” Id. The court ruled that the brokers were “regarded as a party to the
contract only as to the brokerage clause, and [were] otherwise purely an incidental
participant.” Id.Keyes is in the identical position as the brokers in Nestler-Poletto. Under
Florida law, a court may not compel arbitration “in the absence of express
language in the parties’ contract mandating arbitration of such disputes.” Seifert
v. U.S. Home Corp., 750 So. 2d 633, 642 (Fla. 1999). The plain language of the
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arbitration clause in the purchase agreement executed by Peters and Bank United
bound only them to arbitrate disputes involving matters other than deposits.
Although the arbitration clause provided that Keyes could not be forced to submit
to arbitration, that right of assent did not give Keyes, a non-party, a right to
compel arbitration. See Nestler-Poletto, 730 So. 2d at 326.
“‘Non-parties to a contract containing an arbitration clause cannot compel
parties to a contract to arbitrate unless it is determined that they are a third party
beneficiary to the contract,’” Fla. Power & Light Co. v. Road Rock, Inc., 920 So.
2d 201, 203 (Fla. Dist. Ct. App. 2006) (quoting Nestler-Poletto, 730 So. 2d at
326)), and Keyes cannot claim that status. To qualify as a third-party beneficiary,
the purchase agreement had to be executed “for the primary and direct benefit of”
Keyes. Morgan Stanley DW Inc. v. Halliday, 873 So. 2d 400, 403 (Fla. Dist. Ct.
App. 2004). The agreement contained nothing to suggest that Peters and Bank
United intended to benefit Keyes, much less that “the arbitration clause was done
for [Keyes’s] primary and direct benefit.” Id.The decision to deny Keyes’s motion to compel arbitration is AFFIRMED.
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