Case Name: LENNAR HOMES, INC., Appellant, v. DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES, Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 2004-09-27
Citations: 888 So. 2d 50
Docket Number: No. 1D03-3020
Parties: LENNAR HOMES, INC., Appellant, v. DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES, Appellee.
Judges: WOLF, C.J., CONCURS and ERVIN, J., DISSENTS WITH WRITTEN OPINION.
Reporter: Southern Reporter, Second Series
Volume: 888
Pages: 50–58

Head Matter:
LENNAR HOMES, INC., Appellant, v. DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES, Appellee.
No. 1D03-3020.
District Court of Appeal of Florida, First District.
Sept. 27, 2004.
William P. McCaughan and Jeffrey P. Margolis of Duane Morris LLP, Miami, for Appellant.
Karl M. Scheuerman, Staff Counsel, Department of Business and Professional Regulation, Tallahassee, for Appellee.

Opinion:
VAN NORTWICK, J.
Lennar Homes, Inc. (Lennar), appeals a declaratory statement issued by the Department of Business and Professional Regulation, Division of Land Sales, Condominiums and Mobile Homes (Division), ruling that a mandatory arbitration provision in a condominium purchase and sale agreement is prohibited by sections 718.111(3), 718.303 and 718.506, Florida Statutes (2002), and that the arbitration language in Lennar's agreement is void as against public policy. For the reasons that follow, we hold that the Division was without authority to interpret and declare void Lennar's contractual arbitration provision in a declaratory statement proceeding under section 120.565 and to announce a general policy of far-reaching applicability against arbitration provisions in a declaratory statement proceeding. Accordingly, we reverse.
Section 120.565(1) provides:
Any substantially affected person may seek a declaratory statement regarding an agency's opinion as to the applicability of a statutory provision, or of any rule or order of the agency, as it applies to the petitioner's particular set of circumstances.
Lennar is a builder and developer of residential condominiums. The purchase and sale agreement utilized by Lennar in selling condominiums includes a provision requiring that disputes between Lennar and a condominium purchaser be resolved by binding arbitration. Pursuant to section 120.565(1), Lennar filed a petition for declaratory statement seeking the opinion of the Division
as to whether § 718.111(3), 718.303, and 718.506, Florida Statutes, or any other provision of Chapter 718, Florida Statutes, prohibit a mandatory and binding arbitration provision requiring mandatory and binding mediation and arbitration of disputes between a purchaser and condominium developer in a purchase agreement for a condominium unit
The Division found that such an arbitration provision is prohibited. After reviewing the disputed binding arbitration language in Lennar's purchase contract, the Division ruled that it exceeded and contradicted the prescribed statutory remedies and was void as against public policy.
Generally, sections 718.111(3), 718.303 and 718.506 grant a condominium purchaser causes of action for rescission or damages against a developer for the publication of false and misleading disclosures in any sales materials, authorize the condominium association or unit owner to file actions for damages or for injunctive relief or both, and grant the associations the power to bring an action on behalf of unit owners concerning matters of common interest. Further, sections 718.303(1) and 718.506(2) provide that the prevailing party in such actions is entitled to recover reasonable attorney's fees. Although none of these statutes mention arbitration or provide for exclusive jurisdiction in courts of law, the Division reasoned that by expressly granting specific remedies and procedures, the legislature intended that condominium contract disputes be brought solely in a court of law. See Aztec Medical Services, Inc. v. Burger, 792 So.2d 617, 621 (Fla. 4th DCA 2001)(reeognizing that to rule the legislature intended to preclude the submission of a dispute to arbitration, "the legislature would have to state such a requirement in unambiguous text," quoting Sharpe v. Lytal & Reiter, Clark, Sharpe, Roca, Fountain, Williams, 702 So.2d 622, 624 (Fla. 4th DCA 1997)).
On appeal, Lennar asserts that these transactions involve interstate commerce. Lennar argues that, as a result, these statutes cannot be construed as precluding arbitration of disputes arising out of the sale of its condominiums because the Federal Arbitration Act (FAA), 9 U.S.C. § 1-16, applies and preempts any state statute that prohibits arbitration. See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Thus, under the FAA, their arbitration provision must be enforceable.
The FAA also provides that
[a] written provision in . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2 (emphasis added). Therefore, an arbitration provision may be challenged "based upon any state-law contract defense." Gainesville Health Care Center v. Weston, 857 So.2d 278, 283 (Fla. 1st DCA 2003); see also Allied-Bruce Terminix, 513 U.S. at 281, 115 S.Ct. 834. Seizing upon this principle, the Division argues that, under Florida law, Lennar's contract is both procedurally and substantively unconscionable. See generally Powertel, Inc. v. Bexley, 743 So.2d 570 (Fla. 1st DCA 1999).
"A declaratory statement by a state administrative agency is subject to judicial review by appeal . under Section 120.68(1).... " Chiles v. Department of State, Division of Elections, 711 So.2d 151, 155 (Fla. 1st DCA 1998). However, unlike our ability to review the agency's interpretation of the statute in Chiles, this court cannot engage in meaningful review of the declaratory statement appealed because the issues raised on appeal were not expressly raised in the declaratory statement proceedings.
Intertwined with the issue of statutory preclusion of arbitration is the constitutional issue of FAA preemption. Southland Corp. v. Keating, 465 U.S. 1, 15-16, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). However, this issue was not addressed below; nor could it have been since an agency does not possess the authority to determine the constitutionality of statutes. See Palm Harbor Special Fire Control District v. Kelly, 516 So.2d 249, 250 (Fla.1987). Similarly, although the Division found Lennar's arbitration provision void as against public policy, the issue of the unconscionability of Lennar's arbitration provision was not expressly raised below. Further, the determination of unconsciona-bility of a contract is fact-driven and generally requires an evidentiary hearing, see Stewart Agency, Inc. v. Robinson, 855 So.2d 726, 727 (Fla. 4th DCA 2003), which is not accorded in a declaratory statement proceeding. Florida Optometric Association v. Department of Professional Regulation, Board of Opticianry, 567 So.2d 928, 936 (Fla. 1st DCA 1990).
The authority of the Division to issue declaratory statements is limited by section 120.565 to a determination "as to the applicability of a statutory provision . to the petitioner's particular set of circumstances." See generally Grippe v. Florida Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums, and Mobile Homes, 729 So.2d 459 (Fla. 4th DCA 1999). In our Chiles decision, which the Supreme Court expressly approved in Florida Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering v. Investment Corp. of Palm Beach, 747 So.2d 374, 375 (Fla.1999), this court explained:
A declaratory statement may not be employed in place of a rule to require compliance with general agency policy. See Regal Kitchens Inc. v. Florida Department of Revenue, 641 So.2d 158 (Fla. 1st DCA 1994); Tampa Electric Company v. Florida Department of Community Affairs, 654 So.2d 998 (Fla. 1st DCA 1995). If an agency is presented with a petition for a declaratory statement requiring a response that amounts to a rule, the agency should decline to issue the statement and initiate rulemaking. See Florida Optometric Association; Agency for Health Care Administration v. Wingo, 697 So.2d 1231 (Fla. 1st DCA 1997). However, a declaratory statement is not transformed into a rule merely because it addresses a matter of interest to more than one person.
Chiles, 711 So.2d at 154. Given the express directive of the language in the declaratory statement issued here, we are confronted with the issue of whether the response of the agency here "amounts to a rule" or "merely . addresses a matter of interest to more than one person." Id
In Chiles this court found that Commissioner Brogan was entitled to a declaratory statement whether section 215.3206(2), Florida Statutes, precludes certification of candidates for public campaign financing, even though other state candidates could raise the same issue. Id. at 155. In Investment Corp., 747 So.2d at 385, the Florida Supreme Court determined that an agency can issue a declaratory statement dealing with a petitioner's "particular set of circumstances," while at the same time announcing its intention to initiate rulemaking on the same subject. The court reasoned:
It must be observed that under circumstances such as those presented in this case, involving such a unique industry having very limited participants engaged in almost identical operations, declaratory statements as to one would almost invariably be of interest to others in the very limited group. We are not aware of any rule of law that precludes an agency from simultaneously pursuing both courses of action. Further, such an approach to these issues does not appear to harm the rights of "[a]ny substantially affected person[(s)].
Id.
We find the instant case to be factually distinguishable from both Chiles and Investment Corp. The declaratory statement in this case not only determined the applicability of several Chapter 718 statutes to Lennar's particular purchase contract, it announced a broad agency policy that prohibited the use of arbitration provisions in condominium purchase and sale agreements. We do not' believe that a statement of policy regulating all purchases and sales of condominiums in Florida can be likened' to the "very limited participants engaged in almost identical operations" which the court addressed in Investment Corp. Further, here, unlike Investment Corp., the agency has not announced its intention to institute rulemaking on this subject. The Division cannot use the declaratory statement proceeding as a vehicle to announce a broad policy against arbitration. See Tampa Electric Company v. Florida Department of Community Affairs, 654 So.2d 998, 999 (Fla. 1st DCA 1995) (a declaratory statement which sets forth "broad agency policy . that applies] to an entire class of persons" is impermissibly broad.)
In the case before us, the Division went beyond applying the condominium statutes to Lennar's contract and ruled that the contract language requiring arbitration was void as against public policy. We know of no statute which confers authority on the Division to declare a party's contract void. The Division may not interpret a party's contract and. then enforce its interpretation on the parties. Peck Plaza Condominium, v. Division of Florida Land Sales and Condominiums, Department of Business Regulation, 371 So.2d 152, 153-54 (Fla. 1st DCA 1979). "Jurisdiction to interpret such contracts is, under our system, vested solely in the judiciary." Id. at 154; see also Weston, 857 So.2d at 283 (recognizing that a court determines the validity of an arbitration provision and whether it is unconscionable or not).
In summary, we conclude that this case involves issues which cannot be determined in a section 120.565 proceeding and that the Division lacked the authority to declare void the appellant's condominium purchase and sale agreement. Accordingly, the Division should have declined to issue a declaratory statement. See, e.g., Grippe, 729 So.2d at 459.
REVERSED.
WOLF, C.J., CONCURS and ERVIN, J., DISSENTS WITH WRITTEN OPINION.
. Section 43.3 of Lennar's proposed purchase and sale agreement provides in pertinent part:
If the Dispute is not fully resolved by mediation, the Dispute shall be submitted to binding arbitration and administered by the AAA [American Arbitration Association] in accordance with the AAA's Supplemental Rules for Residential Construction Arbitration Rules in effect on the date of the request.
. Without citation to the récord, Lennar states that the construction of its condominiums involves interstate commerce because materials and equipment are used which are manufactured and/or produced in states outside of Florida; Lennar engages in marketing and advertising activities throughout the United States; and Lennar sells to purchasers located outside of Florida.
. This court is precluded from addressing the preemption issue on appeal because the determination that the FAA applies only comes into play if the contract is one affecting interstate commerce. See 9 U.S.C. § 2; Perry v. Thomas, 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987)(the FAA "embodies Congress' intent to provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause."). Because the parties did not and could not litigate the interstate commerce issue below, we are unable to decide this factual issue on appeal. See, e.g., Lytle v. CitiFinancial Services, Inc., 810 A.2d 643, 655-56 (Pa.Super.Ct.2002).
. Section 120.52(15), Florida Statutes (2002), defines "Rule," in pertinent part, as follows:
[E]ach agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency....
. The parties do not argue, and therefore we do not address, whether under the 1996 and 1999 amendments to Florida's Administrative Procedure Act regarding the scope of agency rulemaking authority, see sections 120.52(8) and 120.536(1), sections 718.111(3), 718.303 and 718.566 provide the Division with the rule-making authority to prohibit arbitration. See, e.g., State, Board of Trustees of the Internal Improvement Trust Fund v. Day Cruise Association, Inc., 798 So.2d 847 (Fla. 1st DCA 2001); Southwest Florida Water Management District v. Save the Manatee Club, Inc., 773 So.2d 594 (Fla. 1st DCA 2000).