IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

December 5, 2019 Session

BRENDA GIBBS v. CAPITAL RESORTS GROUP, LLC, ET AL.

Appeal from the Chancery Court for Sevier County

No. 18-10-262 Telford E. Forgety, Jr., Chancellor

___________________________________

No. E2019-00295-COA-R3-CV

___________________________________

This appeal involves the denial of a motion to dismiss and to compel mediation and 

arbitration. The Trial Court determined that the plaintiff had properly challenged the 

mandatory arbitration provisions of the contract, including the delegation clause, on the 

basis of fraudulent inducement of the contract including the delegation clause. The Trial 

Court, therefore, denied the defendants’ motion to dismiss and to compel mediation and 

arbitration. Discerning no reversible error, we affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court 

Affirmed; Case Remanded

D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which JOHN W.

MCCLARTY, and THOMAS R. FRIERSON, II, JJ., joined.

Janet Strevel Hayes and Preston A. Hawkins, Knoxville, Tennessee, for the appellants, 

Capital Resorts Group, LLC, and Capital Resorts Management, LLC.1

Matthew A. Grossman, Kevin A. Dean, and Brittany K. Coss, Knoxville, Tennessee, for 

the appellee, Brenda Gibbs.

 

1

Janet Strevel Hayes submitted an appellate brief on behalf of the appellants. Thereafter, Preston A. 

Hawkins participated in oral arguments on behalf of the appellants and subsequently filed a notice of 

appearance. The notice of appearance did not state that Mr. Hawkins was substituting Ms. Strevel Hayes 

as counsel for appellants. Therefore, we have included both attorneys as counsel for appellants.

02/24/2020
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OPINION

Background

The plaintiff, Brenda Gibbs (“Plaintiff”), and the defendant, Capital Resorts Group, 

LLC, entered into the “Capital Resorts Club Purchase Agreement” (the “Contract”) in 

August 2018. The Contract states as follows in relevant part:

34. Governing Law, Venue, and Jurisdiction. This Agreement shall 

be construed in accordance with the laws of the State of Florida; excepting, 

however, the provisions relating to the Purchaser’s right to cancel this 

Agreement and the escrow of Purchaser deposit payments made prior to 

closing, which provisions shall be construed, interpreted and enforced in 

accordance with laws of the state where Purchaser executes this Agreement.

* * *

38. Mandatory Arbitration. In the event of any bona fide dispute,

claim, question, or disagreement arising from or relating to this Agreement 

in any manner or the breach thereof, the parties hereto shall use their best 

efforts to amicably settle the dispute, claim, question or disagreement. To 

this effect, and prior to filing a lawsuit or lodging any complaint with a 

governmental or non-governmental agency or other third party, the parties 

shall participate in at least (3) hours of mandatory mediation in Clearwater, 

FL, or such other location as may be mutually agreed upon by the parties, 

before a mediator mutually agreed upon by the parties, during which they 

shall consult and negotiate with each other in good faith and, recognizing 

their mutual interests, attempt to reach a just and equitable solution 

reasonably satisfactory to both parties. Each party shall bear its own costs, 

except that the costs of the mediator shall be split equally between the 

parties. Any complaints or litigation initiated by a party hereto without first 

participating in mandatory mediation shall be subject to immediate 

withdrawal and/or dismissal and the party initiating same shall be 

responsible to pay all attorney costs, fees and expenses of the other party in 

obtaining such withdrawal and/or dismissal. If the parties do not reach a 

mutually agreeable solution to the dispute at mediation, then, upon notice 

by either party to the other, all disputes, claims, questions or differences 

shall be finally settled by binding arbitration administered by the American 

Arbitration Association (“AAA”) in accordance with its commercial 

arbitration rules, including the optional rules for emergency measures of 

protection, and judgment on the award rendered by the arbitrator(s) may be 
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entered in any court having jurisdiction thereof. Disputes under this clause 

shall be resolved by arbitration in accordance with Title 9 of the US Code 

(United States Arbitration Act2) and the Commercial Arbitration Rules of 

the American Arbitration Association. In addition to the foregoing, 

PURCHASER EXPRESSLY WAIVES ANY RIGHT OR AUTHORITY 

TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS 

MEMBER ON ANY CLASS CLAIM OR ACTION, INCLUDING ANY 

RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF 

INDIVIDUAL ARBITRATIONS. Arbitrators shall be appointed as 

provided in the AAA Commercial Arbitration Rules. The arbitration shall 

be conducted in Atlanta, Georgia. Face-to-face proceedings should be 

conducted at a location which is reasonably convenient to both parties with 

due consideration of their ability to travel and other pertinent 

circumstances. If the parties are unable to agree on a location, the 

determination should be made by the arbitrator(s). The arbitrator(s) may 

grant any remedy or relief that the arbitrator(s) deems just and equitable 

within the scope of this Agreement. The arbitrator(s) will have no authority 

to award punitive or other damages not measured by the prevailing party’s 

actual damages, except as may be required by statute. Each party shall bear 

its own costs and expenses and an equal share of the arbitrators’ and 

administrative fees of arbitration. Except as may be required by law, 

neither a party nor an arbitrator may disclose the existence, content or 

results of any arbitration hereunder without the prior written consent of 

both parties. Within thirty (30) days of receipt of any award (which shall 

not be binding if an appeal is taken), any party may notify the AAA of an 

intention to appeal to a second arbitral tribunal, constituted in the same 

manner as the initial tribunal. The appeal tribunal shall be entitled to adopt 

the initial award as its own, modify the initial award or substitute its own 

award for the initial award. The appeal tribunal shall not modify or replace 

the initial award except for manifest disregard of law or facts. The award 

of the appeal tribunal shall be final and binding, and judgment may be 

entered by a court having jurisdiction thereof.

(Footnote added.)

On October 19, 2018, Brenda Gibbs (“Plaintiff”) filed an action in the Sevier 

County Chancery Court (“Trial Court”) against Capital Resorts Group, LLC, and Capital 

Resorts Management, LLC (collectively, “Defendants”), as well as a representative of the 

 

2 The United States Arbitration Act is also referred to by the parties as the “Federal Arbitration Act” and 

“FAA.”
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defendant companies, Sean K. Hornbeck.

3

 In her complaint, Plaintiff alleged fraud in the 

inducement of the Contract, a violation of the Tennessee Time-Share Act of 1981, a 

violation of the Tennessee Vacation Club Act of 1995, and a violation of the Tennessee 

Consumer Protection Act. Relying on these allegations, Plaintiff requested rescission of 

the Contract and monetary damages. 

Concerning the factual allegations in her complaint, Plaintiff stated that she 

intended to sell her interest in a Capital Resorts timeshare due to financial concerns and 

the rising cost of maintenance fees. Plaintiff met with the defendant, Sean Hornbeck, 

who was an agent or representative of Defendants, and he offered to place her timeshare 

on the sales “Marketplace.” Mr. Hornbeck informed Plaintiff that she should act quickly 

and that he needed to file the documents that day. 

According to Plaintiff, Defendants and Mr. Hornbeck presented documents to

Plaintiff for her signature, which they had represented to her was documentation relating 

to the sale of her timeshare. Plaintiff was not given sufficient time to read the 

documentation. Although Plaintiff believed she was selling her timeshare, the 

documentation provided to her actually operated to trade her existing timeshare as an 

equity credit toward the purchase of another timeshare through Capital Resorts. Plaintiff 

stated that she was unaware that she was purchasing another timeshare. According to 

Plaintiff, Defendants and Mr. Hornbeck further “misled and/or fraudulently induced” 

Plaintiff into opening a new credit card account with Bank of America “by presenting her 

with credit application documents to sign without disclosing that these documents were 

not for the sale of her Capital Resorts timeshare, but were, in fact, a credit card 

application and other documents incident to the purchase of a timeshare, and that 

Defendants intended to charge $7,000.00 in fees for that purchase to the Bank of America 

credit card.” Plaintiff also alleged that Defendants and Mr. Hornbeck activated that 

credit card against Plaintiff’s wishes or consent and charged $7,000 to the credit card. 

Additionally, Plaintiff alleged that when she discovered that she had been led to purchase 

another timeshare, she attempted to meet with Mr. Hornbeck during the statutorily 

prescribed ten-day rescission period, but he refused to meet with her. 

Defendants filed their “Motion to Dismiss and to Compel Mediation and 

Arbitration” and their memorandum of law in support of their motion, in December 2018 

and February 2019 respectively. In their motion, Defendants argued that Plaintiff and 

Capital Resorts Group, LLC, entered into an agreement in the Contract that “all claims 

arising from or related to the Contract would be resolved through good faith negotiation 

and mandatory mediation and through mandatory arbitration governed by the [Federal 

Arbitration Act (“FAA”)] in the event the parties were unable to resolve their disputes 

 

3 Although named as a defendant in the action, Mr. Hornbeck has not filed an appellate brief or otherwise 

participated in the appeal. 
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through mediation.” Defendants asserted that Plaintiff had filed the instant action 

“without using her best efforts to settle her disputes, without offering to participate in the 

required mediation and without attempting to negotiate a resolution of her claims in good 

faith.” Defendants argued that the arbitration agreement in the Contract is valid, 

irrevocable, and enforceable. According to Defendants, the incorporation of the 

Commercial Arbitration Rules of the American Arbitration Association (“AAA Rules”) 

required that the arbitrator determine the validity and enforceability of the arbitration 

agreement, not the court. This type provision is referred to as a delegation provision. In 

their memorandum of law, Defendants argued that the amended complaint contains no 

factual allegations regarding fraudulent inducement of the arbitration provision or 

delegation provision. Defendants further argue that Plaintiff had not specifically 

challenged the delegation provision of the arbitration agreement. Defendants argued in 

their motion that because “the parties agreed to mediate and arbitrate Plaintiff’s claims in 

accordance with the FAA and the AAA’s Commercial Arbitration Rules,” the Trial Court 

should enforce the agreement, dismiss or stay the court proceedings, and compel 

mediation and arbitration. Defendants also requested an award of attorney’s fees and 

expenses associated with the action. 

In January 2019, Plaintiff filed a response to the motion to dismiss and to compel 

mediation and arbitration. In her response, Plaintiff argues that Defendants’ motion 

ignores Plaintiff’s allegations pled in the complaint for fraudulent inducement as to the 

Contract. According to Plaintiff, the FAA does not require arbitration “where the 

arbitration clause itself was specifically fraudulently induced.” Therefore, Plaintiff 

asserted that the Court must consider Plaintiff’s claim of fraudulent inducement before 

compelling her to litigate her claims in arbitration. Plaintiff requested that the Trial Court 

deny Defendants’ motion. 

Also in January 2019, Plaintiff filed an amended complaint with the allegation that 

Defendant induced Plaintiff into entering into the mandatory arbitration provisions

contained in paragraph 38 of the Contract. Plaintiff’s claims regarding fraud in the 

inducement of the contract were as follows:

44. Plaintiffs incorporate all paragraphs found above as though set forth 

herein verbatim.

45. As set forth above, Defendants and their representatives and agents 

made representations regarding the sale of Plaintiff’s Capital Resorts 

timeshare. Most notably, Defendants represented that the voluminous 

documentation presented to Plaintiff to sign were for the sale of her Capital 

Resorts timeshare, and that executing those documents would result in the 

sale of that timeshare and the end of her payment obligations toward any 

timeshare.
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46. These representations induced Plaintiff to sign the voluminous 

documentation attached hereto as Exhibits 1-7.

47. These representations specifically induced Plaintiff to enter into the 

“Mandatory Arbitration” clause at paragraph 38 of the Contract. 

48. These representations made by Defendants and their representatives and 

agents were false.

49. The Defendants’ representations to the Plaintiff regarding the sale of 

her Capital Resorts timeshare was material to her signing the voluminous 

documentation attached hereto as Exhibits 1-7.

50. Plaintiff relied upon Defendants’ misrepresentations regarding the sale 

of her Capital Resorts timeshare in her decision to sign the voluminous 

documentation attached hereto as Exhibits 1-7.

51. Plaintiff has suffered substantial stress and anxiety as a result of 

Defendants’ conduct which has adversely affected Plaintiffs physical health 

and well-being, among other damages outlined herein because of 

Defendants’ misrepresentations.

52. Defendants’ misrepresentations set forth in this Complaint were 

malicious, reckless, fraudulent and/or intentional, entitling Plaintiff to an 

award of punitive damages.

Defendants’ motion to dismiss was heard by the Trial Court on February 1, 2019. 

At the conclusion of oral arguments, the Trial Court stated as follows in pertinent part:

Counsel, the question to me is whether the [AAA] Rules are

incorporated. The question to me is whether paragraph 38, which contains 

the arbitration provision and the [AAA] Rules, whether there was ever an 

agreement formed in the first place as to paragraph 38 containing both the 

arbitration provision and the [AAA] Rules.

I take your argument, by the way -- if you look at paragraph 47 of 

the amended complaint, your argument is that, look, it just refers back to 

the same allegations that apply to the whole contract, and to some extent it 

does, but I tell you, they have specifically and, you know, these 

representations specifically induced plaintiff to enter into the, quote, 

mandatory arbitration clause at paragraph 38 of the contract. So they have 
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challenged it. They have challenged it with that sentence. They do 

challenge it. And honestly I think that’s enough. I think that’s enough.

The Trial Court thereafter entered an order on February 12, 2019, denying 

Defendants’ motion. In its order, the Trial Court stated: “Upon consideration of the 

Motion, Plaintiff’s response in opposition thereto, Defendant’s Memorandum in Support 

of Motion to Dismiss and to Compel Mediation and Arbitration, the statements of counsel 

present, and the record in this cause as a whole, the Court will deny the Motion.” 

Defendants timely filed a notice of appeal to this Court.4

On appeal, briefing was completed. Plaintiff subsequently filed a motion to 

dismiss the appeal on the basis that this Court does not have subject matter jurisdiction. 

According to Plaintiff, “(1) federal procedural statutes do not govern procedure in 

Tennessee State Courts and thus cannot confer additional jurisdiction upon this Court, 

and (2) the contract at issue in this case expressly adopts only the Federal Arbitration Act 

(“FAA”) with respect to arbitration, adopts Florida law generally, and does not provide 

for the application of the Tennessee Uniform Arbitration Act in any event.” 

Defendants filed a response to the motion to dismiss the appeal and argued that 

this Court has subject matter to hear this appeal because Tennessee Code Annotated § 29-

5-319 is applicable to this case. According to Defendants, when a matter concerning an 

arbitration agreement is governed by the FAA and filed in a Tennessee Court, the 

procedural pre-arbitration rules in the Tennessee Uniform Arbitration Act will apply. 

This Court deferred the issue of subject matter jurisdiction to the panel in this matter.

Discussion

Although not stated exactly as such, Defendants raise the following issue for our 

review on appeal: Whether the Trial Court erred by denying Defendants’ motion to 

dismiss and to compel mediation and arbitration. Our review is de novo upon the record, 

accompanied by a presumption of correctness of the findings of fact of the trial court, 

unless the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d); Kelly v. 

Kelly, 445 S.W.3d 685, 692 (Tenn. 2014). A trial court’s conclusions of law are subject 

to a de novo review with no presumption of correctness. Kelly, 445 S.W.3d at 692.

We first address Plaintiff’s motion to dismiss the appeal for lack of subject matter 

jurisdiction. In Plaintiff’s motion to dismiss, it is unclear exactly which forum’s

procedural rules Plaintiff is asserting should be applied to this action or just that neither 

 

4 Although the motion hearing occurred on February 1, 2019, the court’s order was not entered until 

February 12, 2019. Defendants’ notice of appeal incorrectly states that they are appealing from the Trial 

Court’s February 1, 2019 order.
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the procedural law of the FAA or the Tennessee Uniform Arbitration Act should apply. 

However, Plaintiff’s counsel acknowledged during oral arguments that Tennessee 

procedural law should apply to this action. Plaintiff, however, argues that the appropriate 

remedy for appeal would have been through an interlocutory appeal pursuant to 

Tennessee Rule of Appellate Procedure 9 and that none of the provisions of the 

Tennessee Uniform Arbitration Act are applicable to this case. We disagree.

The Tennessee Supreme Court has provided that “if Tennessee’s appellate courts 

have subject matter jurisdiction to hear appeals from orders [regarding arbitration], the 

grant of jurisdiction must be found in the Tennessee Uniform Arbitration Act, not the 

Federal Arbitration Act.” Morgan Keegan & Co., Inc. v. Smythe, 401 S.W.3d 595, 607 

(Tenn. 2013). The Tennessee Uniform Arbitration Act provides an immediate appeal for 

the denial of a motion to compel arbitration at Tennessee Code Annotated § 29-5-

319(a)(1). 

Tennessee Code Annotated § 29-5-319 provides in relevant part: “(a) An appeal may be 

taken from: (1) An order denying an application to compel arbitration made under § 29-

5-303 . . . .” Tennessee Code Annotated § 29-5-319 is a procedural statute and applies to 

the current matter before us. As such, we hold that this Court has subject matter 

jurisdiction over this appeal, and Plaintiff’s pending motion to dismiss the appeal is 

denied.

We next address whether the Trial Court erred by denying Defendants’ motion to 

dismiss and to compel mediation and arbitration. Defendants argue that the delegation 

clause is unchallenged and that the facts in the complaint are insufficient to support a 

challenge to either the delegation clause or the arbitration agreement. Upon review of the 

record, the Trial Court relied on the United States Supreme Court’s opinion in Prima 

Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967). In that case, the Court 

applied the rule of severability and held that an arbitration agreement remained valid 

when the plaintiff had challenged the contract as a whole and not the arbitration 

agreement within the contract. Id. at 403-04. In that case, the Court stated as follows:

Under [section 4 of the FAA], with respect to a matter within the 

jurisdiction of the federal courts save for the existence of an arbitration 

clause, the federal court is instructed to order arbitration to proceed once it 

is satisfied that ‘the making of the agreement for arbitration or the failure to 

comply (with the arbitration agreement) is not in issue.’ Accordingly, if the 

claim is fraud in the inducement of the arbitration clause itself—an issue 

which goes to the ‘making’ of the agreement to arbitrate—the federal court 

may proceed to adjudicate it. But the statutory language does not permit 

the federal court to consider claims of fraud in the inducement of the 

contract generally.
- 9 -

Id.

The United States Supreme Court thereafter reaffirmed its decision in Prima Paint 

Corp. holding that “regardless of whether the challenge is brought in federal or state 

court, a challenge to the validity of the contract as a whole, and not specifically to the 

arbitration clause, must go to the arbitrator.” Buckeye Check Cashing, Inc. v. Cardegna, 

546 U.S. 440, 449 (2006). As such, a plaintiff must challenge the making of the 

arbitration agreement specifically, and not just the contract generally, in order for the 

court to adjudicate the fraudulent inducement claim.

Additionally, the U.S. Supreme Court subsequently applied the severability rule

from Prima Paint Corp. and enforced a delegation provision to arbitrate threshold 

matters relevant to the arbitration agreement when the contract consisted of a stand-alone

arbitration agreement. See Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 71-72 (2010). 

The Court determined that because the plaintiff had not challenged the delegation 

provision of the arbitration agreement contract, the Court would treat that provision as 

valid pursuant to section 2 of the FAA. Id. In Rent-A-Ctr., W., Inc., the Court provided 

as follows:

Here, the “written provision . . . to settle by arbitration a 

controversy,” 9 U.S.C. § 2, that Rent-A-Center asks us to enforce is the 

delegation provision—the provision that gave the arbitrator “exclusive 

authority to resolve any dispute relating to the . . . enforceability . . . of this 

Agreement[.]” The “remainder of the contract,” Buckeye, supra, at 445, 

126 S.Ct. 1204, is the rest of the agreement to arbitrate claims arising out of 

Jackson’s employment with Rent-A-Center. To be sure this case differs 

from Prima Paint, Buckeye, and Preston, in that the arbitration provisions 

sought to be enforced in those cases were contained in contracts unrelated 

to arbitration—contracts for consulting services, see Prima Paint, supra, at 

397, 87 S.Ct. 1801, check-cashing services, see Buckeye, supra, at 442, 126 

S.Ct. 1204, and “personal management” or “talent agent” services, see 

Preston [v. Ferrer], [552 U.S.346,] 352, 128 S.Ct. 978 [(2008)]. In this 

case, the underlying contract is itself an arbitration agreement. But that 

makes no difference. Application of the severability rule does not depend 

on the substance of the remainder of the contract. Section 2 operates on the 

specific “written provision” to “settle by arbitration a controversy” that the 

party seeks to enforce. Accordingly, unless Jackson challenged the 

delegation provision specifically, we must treat it as valid under § 2, and 

must enforce it under §§ 3 and 4, leaving any challenge to the validity of 

the Agreement as a whole for the arbitrator.

Id. (footnote and other internal citations omitted).
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Shortly after the United States Supreme Court’s decision in Rent-A-Ctr., W., Inc., 

the Court issued its opinion in Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 

299 (2010), emphasizing that “[a]rbitration is strictly ‘a matter of consent’ and thus ‘is a 

way to resolve those disputes—but only those disputes—that the parties have agreed to 

submit to arbitration’ (internal citations omitted).” The Supreme Court clarified the 

holding in its previous opinions as follows: 

[O]ur precedents hold that courts should order arbitration of a dispute only 

where the court is satisfied that neither the formation of the parties’

arbitration agreement nor (absent a valid provision specifically committing 

such disputes to an arbitrator) its enforceability or applicability to the 

dispute is in issue. Where a party contests either or both matters, “the 

court” must resolve the disagreement.

Id. at 299-300 (internal citations omitted).

In the present case, the contract consisted of a timeshare agreement, which 

contained a “Mandatory Arbitration” clause at paragraph 38 of the Contract. Paragraph 

38 of the Contract reads as follows:

38. Mandatory Arbitration. In the event of any bona fide dispute,

claim, question, or disagreement arising from or relating to this Agreement 

in any manner or the breach thereof, the parties hereto shall use their best 

efforts to amicably settle the dispute, claim, question or disagreement. To 

this effect, and prior to filing a lawsuit or lodging any complaint with a 

governmental or non-governmental agency or other third party, the parties 

shall participate in at least (3) hours of mandatory mediation in Clearwater, 

FL, or such other location as may be mutually agreed upon by the parties, 

before a mediator mutually agreed upon by the parties, during which they 

shall consult and negotiate with each other in good faith and, recognizing 

their mutual interests, attempt to reach a just and equitable solution 

reasonably satisfactory to both parties. Each party shall bear its own costs, 

except that the costs of the mediator shall be split equally between the

parties. Any complaints or litigation initiated by a party hereto without first 

participating in mandatory mediation shall be subject to immediate 

withdrawal and/or dismissal and the party initiating same shall be 

responsible to pay all attorney costs, fees and expenses of the other party in 

obtaining such withdrawal and/or dismissal. If the parties do not reach a 

mutually agreeable solution to the dispute at mediation, then, upon notice 

by either party to the other, all disputes, claims, questions or differences 

shall be finally settled by binding arbitration administered by the American 
- 11 -

Arbitration Association (“AAA”) in accordance with its commercial 

arbitration rules, including the optional rules for emergency measures of 

protection, and judgment on the award rendered by the arbitrator(s) may be 

entered in any court having jurisdiction thereof. Disputes under this clause 

shall be resolved by arbitration in accordance with Title 9 of the US Code 

(United States Arbitration Act) and the Commercial Arbitration Rules of 

the American Arbitration Association. In addition to the foregoing, 

PURCHASER EXPRESSLY WAIVES ANY RIGHT OR AUTHORITY 

TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS 

MEMBER ON ANY CLASS CLAIM OR ACTION, INCLUDING ANY 

RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF 

INDIVIDUAL ARBITRATIONS. Arbitrators shall be appointed as 

provided in the AAA Commercial Arbitration Rules. The arbitration shall 

be conducted in Atlanta, Georgia. Face-to-face proceedings should be 

conducted at a location which is reasonably convenient to both parties with 

due consideration of their ability to travel and other pertinent 

circumstances. If the parties are unable to agree on a location, the 

determination should be made by the arbitrator(s). The arbitrator(s) may 

grant any remedy or relief that the arbitrator(s) deems just and equitable 

within the scope of this Agreement. The arbitrator(s) will have no authority 

to award punitive or other damages not measured by the prevailing party’s 

actual damages, except as may be required by statute. Each party shall bear 

its own costs and expenses and an equal share of the arbitrators’ and 

administrative fees of arbitration. Except as may be required by law, 

neither a party nor an arbitrator may disclose the existence, content or 

results of any arbitration hereunder without the prior written consent of 

both parties. Within thirty (30) days of receipt of any award (which shall 

not be binding if an appeal is taken), any party may notify the AAA of an 

intention to appeal to a second arbitral tribunal, constituted in the same 

manner as the initial tribunal. The appeal tribunal shall be entitled to adopt 

the initial award as its own, modify the initial award or substitute its own 

award for the initial award. The appeal tribunal shall not modify or replace 

the initial award except for manifest disregard of law or facts. The award 

of the appeal tribunal shall be final and binding, and judgment may be 

entered by a court having jurisdiction thereof.

(Emphasis added.)

In her amended complaint, Plaintiff alleged that Defendants made fraudulent

representations to Plaintiff to induce her into signing the Contract and that “[t]hese 

representations specifically induced Plaintiff to enter into the ‘Mandatory Arbitration’

clause at paragraph 38 of the Contract.” Defendants argue that paragraph 38 of the 
- 12 -

Contract contains a “delegation clause” requiring the parties to submit the issue of 

arbitrability to an arbitrator and that that provision is unchallenged by Plaintiff. 

Concerning the delegation provision, the Contract reads: “Disputes under this

clause shall be resolved by arbitration in accordance with Title 9 of the US Code (United 

States Arbitration Act) and the Commercial Arbitration Rules of the American 

Arbitration Association.” The very delegation clause itself refers to paragraph 38 as “this 

clause.” We note that this “delegation clause” is buried within a long paragraph 

containing the remainder of the arbitration agreement. Although it is incredibly unclear 

that this clause is an agreement to delegate arbitrability issues to an arbitrator, we 

recognize that the parties’ adoption of the AAA Rules in a contract can provide proof that 

the parties agreed to arbitrate the issue of arbitrability. See Reunion W. Dev. Partners, 

LLLP v. Guimaraes, 221 So. 3d 1278, 1280 (Fla. Dist. Ct. App. 2017). Although the 

mandatory arbitration agreement adopts the AAA Rules, which provide for arbitration of 

the issue of arbitrability, we find no proof in the record that Plaintiff was provided with a 

copy of these rules. Plaintiff ostensibly was expected to know that the incorporation of 

the AAA Rules, without being provided a copy thereof, required her to submit the

threshold issue of arbitrability to an arbitrator. 

Despite being much less than a model of clarity as to its being a delegation clause,

we will treat the clause at issue as a delegation clause. Pursuant to Prima Paint Corp.

and Rent-A-Ctr., W., Inc., Plaintiff was required to challenge not only the arbitration 

agreement provision within the contract but also the delegation clause. Because a party 

must consent to the arbitration agreement, including the delegation provision, the court 

must resolve the disagreement if a party contests the formation of the arbitration 

agreement and the delegation provision. Granite Rock Co., 561 U.S. at 299-300. Upon

an examination of the Contract, both the arbitration agreement and delegation clause are 

included in paragraph 38 of the Contract. We note upon reviewing the Contract that 

Defendants essentially have buried the so-called delegation clause within paragraph 38

which is “Mandatory Arbitration.” Plaintiff alleged in her amended complaint that 

Defendants’ actions and misrepresentations “induced Plaintiff to enter into the 

‘Mandatory Arbitration’ clause at paragraph 38 of the Contract.” Upon a review of the 

record, we determine that Plaintiff’s challenge of paragraph 38 of the Contract, combined 

with the location of the delegation clause being buried within paragraph 38, is sufficient 

to challenge not only the mandatory arbitration agreement but also the delegation clause. 

Plaintiff alleged that misrepresentations by the Defendants induced her to agree to 

paragraph 38 of the Contract. The delegation clause is contained in and a part of 

paragraph 38. The very delegation clause itself refers to paragraph 38 as “this clause.” 

Defendants chose to head the entirety of paragraph 38 “Mandatory Arbitration” and 

cannot now fault Plaintiff for using the terminology and location of the delegation clause 

chosen by Defendants.
- 13 -

Defendants cite to the United States Supreme Court case of Henry Schein, Inc. v. 

Archer & White Sales, Inc., 139 S. Ct. 524 (2019), for the proposition that delegation 

clauses are valid and enforceable. That is not in dispute in this appeal. In that opinion, 

the Court states that “[w]hen the parties’ contract delegates the arbitrability question to an 

arbitrator, the courts must respect the parties’ decision as embodied in the contract.” Id.

at 531. The Supreme Court continues that a court must respect that agreement “even if 

the court thinks that the argument that the arbitration agreement applies to a particular 

dispute is wholly groundless.” Id. at 529. We, as we must, accept the Court’s holding

that delegation clauses in a contract are enforceable and the court must respect the party’s 

agreement. However, the Court in that case also pointed out that “before referring a 

dispute to an arbitrator, the court determines whether a valid arbitration agreement exists” 

and that “if a valid agreement exists, and if the agreement delegates the arbitrability issue 

to an arbitrator, a court may not decide the arbitrability issue.” Although parties to a 

contract can delegate the authority to determine arbitrability issues to an arbitrator,

Plaintiff in the present case has sufficiently challenged the validity of the delegation 

agreement itself, and according to Henry Schein, Inc., the court is tasked with first 

determining the validity of the delegation provision of the Contract. If the Court 

determines that the delegation provision is not valid as challenged by the Plaintiff, the 

Court then must proceed to determine the validity of the arbitration provision as 

challenged by Plaintiff. 

Defendants also cite to the United States Supreme Court’s case of Rent-A-Ctr., W., 

Inc. arguing that Plaintiff had to specifically state in her complaint that she was 

challenging the delegation clause itself, separate from the allegations concerning the 

arbitration agreement. We find that Rent-A-Ctr., W., Inc. is distinguishable from the 

present case. The contract in Rent-A-Ctr., W., Inc. consisted of a stand-alone arbitration 

agreement. Rent-A-Ctr., W., Inc., 561 U.S. at 71-72. In Rent-A-Ctr., W., Inc., the parties’ 

stand-alone arbitration agreement contained multiple provisions within the arbitration 

agreement that the parties would settle controversies between the parties by arbitration. 

Id. at 68. One section in the contract was titled, “Claims Covered by the Agreement,” 

which provided that all disputes concerning the plaintiff’s employment with the company 

would be resolved by arbitration. Id. Another section was titled, “Arbitration 

Procedures,” and provided that the arbitrator had the authority to determine any dispute 

concerning the enforceability of the arbitration agreement. Id. The defendant in Rent-ACtr., W., Inc. was seeking to enforce the latter section by requiring the arbitrator to 

determine whether the arbitration agreement was valid. Id. In Rent-A-Ctr., W., Inc., the 

district court concluded, and the appellate court affirmed, that the plaintiff had challenged 

only the contract as a whole and had not challenged the delegation provision within the 

contract. Id. at 71-72.

Unlike Rent-A-Ctr., W., Inc., Defendants in this case placed the delegation 

provision within a long single paragraph 38, referred to as “this clause,” containing the 
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arbitration agreement including the delegation clause, which Plaintiff then challenged the 

validity thereof by alleging that she had been fraudulently induced into entering. 

Defendants choose to bury the delegation clause in paragraph 38 concerning the 

arbitration agreement, and they must deal with the repercussions of their action. As the 

United States Supreme Court held in Granite Rock Co., a party to a contract must consent 

to the arbitration agreement. This reasoning also applies to the delegation provision in 

the Contract. Plaintiff’s amended complaint properly challenged both the arbitration 

agreement and the delegation provision, both of which are contained in paragraph 38 of 

the Contract.

We further disagree with Defendants’ argument that the facts in the amended 

petition did not support a claim of fraudulent inducement of either the arbitration 

provision or the delegation clause. Plaintiff included in her complaint allegations that she 

was attempting to sell her timeshare due to financial concerns but that she was 

fraudulently induced into entering into the Contract and the “‘Mandatory Arbitration’ 

clause at paragraph 38 of the Contract.” According to Plaintiff, Defendants’ agent made 

specific false representations to Plaintiff concerning the sale of the timeshare and the 

contents of the voluminous paperwork she was provided. Plaintiff further alleged that 

due to the agent’s misrepresentation, among others, that time was of the essence, she was 

not provided time to properly read the paperwork prior to signing. We find and hold that 

Plaintiff’s allegations in the amended complaint were sufficient to challenge the validity 

of the arbitration agreement and the delegation clause of the Contract on the basis of 

fraudulent inducement.

Although Defendants argue that the delegation provision was unchallenged and 

that Plaintiff’s complaint was insufficient to support a claim of fraudulent inducement as 

to the delegation clause, we find and hold, as did the Trial Court, that Plaintiff 

sufficiently pled in her amended complaint fraudulent inducement not only as to the 

entire Contract, but also the mandatory arbitration clause and the delegation clause. As 

such, the Trial Court did not err by denying Defendants’ motion to dismiss and to compel 

arbitration and mediation. 

Conclusion

The judgment of the Trial Court is affirmed, and this cause is remanded to the 

Trial Court for further proceedings consistent with this Opinion and for collection of the 

costs below. The costs on appeal are assessed against the appellants, Capital Resorts 

Group, LLC, and Capital Resorts Management, LLC, and their surety, if any.
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_________________________________

D. MICHAEL SWINEY, CHIEF 

JUDGE