Title: Kathryn B. Moser v. Barron Chase Securities, Inc.

State: florida

Issuer: Florida Supreme Court

Document:

Supreme Court of Florida
 
____________
No. SC96714
____________
KATHRYN B. MOSER,
Petitioner,
vs.
BARRON CHASE SECURITIES, INC.,
Respondent.
[April 5, 2001]
ANSTEAD, J.
We have for review Barron Chase Securities, Inc. v. Moser, 745 So. 2d 965
(Fla. 2d DCA 1999), which expressly and directly conflicts with Josephthal Lyon &
Ross, Inc. v. Durham, 734 So. 2d 487 (Fla. 5th DCA 1999), on the issue of the
jurisdiction and authority of a circuit court to award attorney’s fees following
arbitration proceedings.  We have jurisdiction.  Art. V, § 3(b)(3), Fla. Const.  We
quash the Second District’s decision reversing the circuit court’s award of
attorney’s fees, and hold that a trial court has the authority to remand proceedings
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to an arbitration panel, if such remand is necessary for the trial court to determine
the issue of attorney’s fees.
This case arose out of claims initially brought by petitioner, Kathryn B.
Moser (“Moser”), against Barron Chase Securities, Inc., (“Barron”), and Carl W.
Allen, Jr., a broker for Barron, that proceeded through arbitration with the National
Association of Securities Dealers (NASD), and to the circuit court for confirmation
of the arbitration award.  Because one of her claims was based on a Florida statute
that also provided for attorney’s fees, Moser included a claim for attorney’s fees in
the arbitration proceedings.  Upon granting Moser a monetary award on her claims
the arbitration panel also concluded that “[t]he Claimant’s request for attorney’s
fees is referred to a court of competent jurisdiction.”  The trial court held a hearing
upon Moser’s petition to correct and confirm the arbitration award and her petition
for an award of attorney’s fees and subsequently awarded fees to Moser based
upon the language in the arbitration award referring the fee claim.
At the trial court hearing expert testimony was presented by witnesses for the
plaintiff and for the defendant relating to NASD practice and procedure concerning
awards.  The expert testimony reflected that awards are typically drafted by the
NASD staff rather than the arbitrators who actually heard and decided the case. 
One of the experts, an arbitrator himself, testified that at training, NASD
1Section 517.211(6), Florida Statutes (1997), provides: “In any action
brought under this section, including an appeal, the court shall award reasonable
attorney’s fees to the prevailing party unless the court finds that the award of such
fees would be unjust.”  
2The defense expert testified that he had seen some awards that did specify
the basis for recovery.
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emphasizes to both arbitrators and staff that they should not specify the decisional
bases of their awards.  One expert testified that out of dozens of awards he
reviewed over the years, he had never seen one which specifically found a violation
of chapter 517, Florida Statutes,1 even though the claimants in those cases, given
the issues submitted, could not have recovered without such a finding.  The
defense expert, however, countered that while it is true that arbitrators are
discouraged from setting out a rationale for an award, arbitrators remain free to
state the legal theory upon which a party prevailed.2  This expert indicated that the
reason for a policy of brevity and for not specifying the basis of an award is simply
to reduce the potential for further litigation after an award.  
At issue upon our review is the Second District’s holding that the trial court
lacked authority to grant attorney’s fees to Moser for successfully prosecuting her
claim in arbitration, because the award did not explicitly specify that she prevailed
on her statutory claim.  The parties agree that Moser is entitled to attorney’s fees if
she prevailed on her statutory claim.
3Turnberry further held that the issue of whether a party has waived its rights,
if contested, is to be determined by the circuit court.  See 651 So. 2d at 1175. 
Waiver is not an issue here.  
In Turnberry we also suggested that the Legislature reexamine this issue to be
certain legislative policy was being followed.  While we continue to invite legislative
review we note that no change has been made to the statutory scheme.
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RELEVANT STATUTORY PROVISIONS
Florida statutory and case law authorize and endorse the resolution of
disputes through arbitration.  However, there has been substantial confusion as to
the procedure and appropriate forum for recovering attorney’s fees incident to
arbitration proceedings.  Section 682.11, Florida Statutes (1997), provides: “Unless
otherwise provided in the agreement or provision for arbitration, the arbitrators’
and umpire’s expenses, not including counsel fees, incurred in the conduct of the
arbitration, shall be paid as provided in the award.” (Emphasis added.)  This
provision has been construed to vest jurisdiction for the award of attorney’s fees in
the circuit court.  See Davidson v. Lucas, 579 So. 2d 886, 887 (Fla. 2d DCA
1991).  
In Turnberry Associates v. Service Station Aid, Inc., 651 So. 2d 1173 (Fla.
1995), we approved the holding in Davidson, but held that arbitrating parties may
waive their right to have the circuit court address the issue and agree that the
arbitrators may do so.3  District courts have since consistently addressed this issue
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in accordance with Turnberry.  See Barron Chase Securities, Inc., 745 So. 2d at
967; Charbonneau v. Morse Operations, Inc., 727 So. 2d 1017, 1020 (Fla. 4th
DCA 1999); GCA, Inc. v. 90 S.W. 8th St. Enterprises, 696 So. 2d 1230, 1233 (Fla.
3d DCA 1997); Robert Gay Const. Co. v. Ceco Bldg. Sys., 680 So. 2d 1124,
1126 (Fla. 1st DCA 1996).  Notwithstanding, confusion remains as to the authority
of a trial court to award fees when an arbitration award is silent or ambiguous as to
whether the award was based on a legal theory that carries with it an entitlement to
attorney’s fees.
RELEVANT CASE LAW
As mentioned earlier, the Second District held here that the circuit court was
without authority to grant fees on an arbitration award that fails to set out that it is
predicated upon a claim that carries with it an entitlement to fees.  See Barron
Chase Securities, Inc., 745 So. 2d at 967.  Similarly, in Pharmacy Management
Services, Inc. v. Perschon, 622 So. 2d 75 (Fla. 2d DCA 1993), the Second District
reversed an award of fees and held that because the arbitrators failed to “inform”
the parties of the legal basis of an award in a multiple claim arbitration the trial court
had no authority to award fees.  See id. at 76.  
In Raymond, James & Associates v. Wieneke, 591 So. 2d 956 (Fla. 2d DCA
1991), however, the court approved an award of fees where arbitration claims were
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filed under both the common law and under section 517.211.  In making an award
for the Wienekes, the arbitrators did not specify the basis of the award, but stated
“that they ‘determined to make an award in favor of the Claimants and against
[Raymond James] for attorneys’ fees.’”  Id. at 957.  After the trial court ruled that
such language was sufficient to authorize an award of fees under section 517.211,
the Second District affirmed, holding that the arbitrators’ comments about
attorney’s fees was a sufficient “signal” to the courts that the statutory claim was
allowed.  
The Fifth District has also accepted such “signaling” language from
arbitrators as a basis for an award of attorney’s fees.  In Josephthal Lyon & Ross
v. Durham, 734 So. 2d 487 (Fla. 5th DCA 1999), the claimant asserted various
state and federal claims, including one under chapter 517.  At arbitration, Durham
prevailed and was awarded compensatory damages, although the award did not
specify the specific basis upon which Durham prevailed.  As to attorney’s fees, the
award provided:
The respondents be and hereby are liable, jointly and severally, and
shall pay to the Claimant her attorney’s fees as determined by a court
of competent jurisdiction.
Id. at 488.  Based upon the attorney’s fees reference in the award, the circuit court
awarded fees to Durham.  On appeal, the Fifth District affirmed, holding that
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although the award did not specify the precise claim upon which Durham prevailed,
“[t]his language [in the award] was sufficient to permit a fee award under section
517.211(6).”  Id. at 489 (citing Wieneke, 591 So. 2d at 957-58).
The Fifth District also considered the issue in Kirchner v. Interfirst Capital
Corp., 732 So. 2d 482 (Fla. 5th DCA 1999), where the court held that “[a]lthough
the arbitrator must indicate that the one seeking attorney’s fees prevailed on a cause
of action authorizing fees, this indication may be either direct or indirect.”  Id. at
483 (emphasis added).  Kirchner is distinguishable from Durham, however, in that
the Fifth District found that the arbitrators in Kirchner had expressly indicated that
the award was predicated upon a theory which provided for attorney’s fees. 
In the instant case Moser asserts that the trial court properly entertained and
determined her claim for attorney’s fees based upon the express language in the
arbitration award referring the claim for attorney’s fees to the circuit court.  As
shown by the relevant case law at the district court level discussed above, we agree
that the courts have recognized similar language by arbitrators as an acceptable,
although indirect, means by which arbitrators have informed the circuit court of the
basis of their decision for purposes of facilitating the court’s award of attorney’s
fees.  As such, we conclude the trial court did not err in interpreting the award
language as an indication that Moser prevailed on her statutory claim.  Indeed,
4§§ 682.09, 682.10, 682.12-682.15, Fla. Stat. (1997).
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without such an implicit finding, there would have been no reason for the arbitrators
to refer the matter to the circuit court.  A finding against the claimant on her
statutory claim would have made a reference of the attorney’s fee issue to the
circuit court unnecessary. 
ARBITRATION CODE 
While we have found on this record a sufficient basis for the trial court to
act, we recognize the need for clarification of a trial court’s authority under the
arbitration code on this issue in order to avoid similar problems in the future. 
Although we approve the trial court’s action, we acknowledge, as noted above, that
there appears to be a great deal of uncertainty concerning the procedure for the
award of attorney’s fees in arbitration proceedings.  This confusion is only
exacerbated when an award fails to set out the basis for the award and a trial court
must look for “signals” or speculate as to the basis of an award in exercising its
statutory authority to determine and award fees.
The Florida Arbitration Code provides little guidance as to the contents of an
award but, instead, focuses on the procedural framework within which the parties
may seek to confirm, vacate, or modify an award. 4  See Air Conditioning
Equipment, Inc. v. Rogers, 551 So. 2d 554, 556 (Fla. 4th DCA 1989).  For
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example, section 682.09(1), states that “[t]he award shall be in writing and shall be
signed by the arbitrators.”  Section 682.14(1)(c) provides for the modification or
correction of an award where “[t]he award is imperfect as a matter of form, not
affecting the merits of the controversy.”  Last, section 682.13 provides a list of
criteria upon which an award may be challenged.  However, it is limited to concerns
which may taint the process such as fraud, partiality and the like, and says nothing
about the essentials of an award.  See id. 
Under the code it has been held that an award does not have to reflect the
precise reasoning, findings of facts, conclusions of law, or ultimately the basis
upon which a decision was arrived at by the arbitrators.  See generally Prudential-
Bache Securities, Inc. v. Shuman, 483 So. 2d 888, 889 (Fla. 3d DCA 1986).  The
Shuman court reasoned that the legal basis of an award is immaterial to the
subsequent determination by a trial court of whether an award should be vacated. 
See id. (“The fact that the relief granted is such that it could not or would not be
granted by a court of law or equity is not a ground for vacating or modifying the
award.”).  This view appears to be consistent with a policy favoring the termination
of disputes with an arbitration decision and limited review by the courts.
Notwithstanding our recognition of this underlying policy, we find the
practice of arbitrators not disclosing the basis upon which an award is made
5Article I, section 9 of the Florida Constitution provides that “[n]o person
shall be deprived of life, liberty or property without due process of law.” 
(Emphasis added.)  See also U.S. Const. amend. XIV, § 1 (same).  The notion of a
property interest encompasses a variety of valuable interests that go well beyond
the traditional view of property.  See 16B Am. Jur.2d, Constitutional Law, § 585
(1998).  However, these interests do not make up some exclusive list; rather, they
are defined in light of existing rules or understanding.  See Perry v. Sinderman, 408
U.S. 593, 601 (1972).  As stated by the Third District:
     Procedural due process rights derive from a property
interest in which the individual has a legitimate claim. 
Once acquired, a property interest falls within the
protections of procedural due process.  A property
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inadequate and inconsistent with the policy goals of the arbitration process as
provided by the Florida Legislature with regard to the award of attorney’s fees.  As
noted above, the code vests exclusive authority, absent waiver by the parties, over
the award of fees in the circuit court.  We do not believe that the Legislature on the
one hand would have vested the authority in trial courts to resolve the attorney’s
fees issue, and, yet, on the other hand, would have restricted that authority by not
permitting trial courts to compel the assistance of arbitrators in order to determine
the issue. 
The NASD’s practice of discouraging disclosure of the basis of an award as
described in the trial court proceedings also raises concerns as to the due process
rights of the parties as it relates to a property interest in recovering attorney’s fees
incurred in litigating securities violations cases.5  The courts have long held that
interest may be created by statute, ordinance or contract,
as well as policies and practices of an institution which
support claims of entitlement.
Metropolitan Dade County v. Sokolowski, 439 So. 2d 932, 934 (Fla. 3d DCA
1983) (footnotes omitted).  This Court has further recognized that “[p]roperty
rights are among the basic substantive rights expressly protected by the Florida
Constitution.”  Department of Law Enforce. v. Real Property, 588 So. 2d 957, 964
(Fla. 1991).
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rights to attorney’s fees granted by statute are substantive rather than procedural. 
See, e.g., U.S. Security Insurance Co. v. Cahuasqui, 760 So. 2d 1101, 1107 (Fla.
3d DCA 2000).  As such, the due process standards necessary in safeguarding
such a right must provide for a “meaningful, full, and fair” hearing to the affected
individual.  Rucker v. City of Ocala, 684 So. 2d 836, 841 (Fla. 1st DCA 1996). 
In the instant case, the record reveals that Moser, a sixty-seven-year-old clerk
at a pharmacy at the time, invested her savings and retirement funds with Barron. 
The broker in charge of Moser’s investments allegedly committed various
irregularities resulting in the depletion of Moser’s funds.  As previously mentioned,
section 517.211(6) provides remedies, including the payment of attorney’s fees, for
just the kind of irregularities allegedly committed by Barron. However, since Moser
brought her claim under several theories and the award fails to specify the basis for
her recovery, the respondent contends that she is not entitled to fees since one
cannot tell on the face of the award whether she is entitled to recovery of fees.  In
6We note that in the instant case, the claimant expressly asked the arbitrators
to indicate the basis of their decision.  Despite this request by Moser, the
arbitrators chose not to do so.  See Moser, 745 So. 2d at 966. 
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effect, then, the arbitrators’ arbitrary action in failing to indicate the basis of an
award would effectively deprive Moser of not just a “meaningful, full, and fair
hearing,” Rucker, 684 So. 2d at 841, but of any hearing at all on the denial of a
property interest in attorney’s fees expressly provided for by section 517.211(6).6 
The Fifth District rightfully expressed concern about such an outcome in Kirchner
wherein it opined, “It would be an empty victory for [a claimant] to have prevailed
in obtaining redress from her broker who violated the consumer protection
provisions of the securities law if she now had to use her recovered investment to
pay the fees to her lawyer made necessary by defendant’s violation of its statutory
duty.”  732 So. 2d at 484.  We agree with this concern. 
We hold today that where a party brings claims in arbitration based upon
several theories, one or more of which provide for the recovery of attorney’s fees,
the arbitration award must specify the theory under which the claimant prevailed, or
otherwise clearly indicate whether the claimant has prevailed on a theory that would
permit the trial court to award fees.  In the event that the award fails to reflect such
a finding, the circuit court may remand the matter to the arbitration panel for the
purpose of resolving the issue.  Thereafter, the circuit court may determine the fee
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issue in accord with the finding of the arbitrators.  
We believe this holding is implicitly mandated by Florida’s statutory
schemes, both as to attorney’s fees and arbitration, and especially the code
provision vesting authority in the circuit court to award fees.  Section 682.14(1)(c)
of the code also provides for the modification or correction of an award where the
award is inadequate as a matter of form.  We conclude that to the extent that
knowledge of the basis of an award is necessary for the subsequent determination
of an entitlement to attorney’s fees, an award without a basis is per se inadequate
and subject to correction by the trial court.  
Accordingly, based on the foregoing, we quash that part of the Second
District’s decision in Moser which reversed the trial court’s ruling in its
determination of the issue of entitlement to attorney’s fees, and remand this case to
the district court for further proceedings consistent herewith.
It is so ordered.
WELLS, C.J., and SHAW, HARDING, PARIENTE, LEWIS and QUINCE, JJ.,
concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
Application for Review of the Decision of the District Court of Appeal - 
Direct Conflict
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Second District - Case No. 2D98-04009 
(Pasco County)
Allan J. Fedor and Franell Fedor of Fedor & Fedor, Largo, Florida, and Richard
R. Logsdon, Clearwater, Florida,
for Petitioner
Karol K. Williams, Tampa, Florida, and Eugene M. Kennedy, Fort Lauderdale,
Florida,
for Respondent