Court Opinion

ID: 4288927
Source: CourtListenerOpinion
Date Created: 2018-06-27 15:09:22.442067+00
Date Added: 2024-06-11T14:37:45.842663
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                                FOURTH DISTRICT

                              LINDSAY OWENS,
                                 Appellant,

                                        v.

             KATHERINE L. CORRIGAN and KLC LAW, P.A.,
                            Appellees.

                                No. 4D17-2740

                               [ June 27, 2018 ]

   Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; David A. Haimes, Judge; L.T. Case No.
062017CA007602AXXXXCE.

    Robert Garven, Coral Springs, for appellant.

    Katherine L. Corrigan of KLC Law P.A., Fort Lauderdale, for appellees.

TAYLOR, J.

   The plaintiff, Lindsay Owens, appeals a final order dismissing her legal
malpractice complaint on the ground that the parties entered into an
agreement to arbitrate the dispute. We reverse, finding that the arbitration
clause in the retainer agreement was unenforceable for violating the Rules
Regulating the Florida Bar. 1

    The plaintiff filed a three-count legal malpractice action against the
defendants, Katherine Corrigan, Esq., and the law firm KLC Law, P.A.,
alleging that the defendants negligently represented her in a dependency
case, causing her to lose custody of her children.

    The defendants moved to dismiss the complaint, asserting that the
plaintiff had signed a retainer agreement requiring her to submit the
dispute to binding arbitration. The retainer agreement included the
following arbitration clause:

1 For ease of reference, this opinion will refer to these rules collectively as the
“Florida Bar Rules,” and will refer to a specific rule as a “Florida Bar Rule.”
          Any controversy, dispute or claim arising out of or relating
      to our fees, charges, performance of legal services, obligations
      reflected in this letter, or other aspects of our representation
      shall be resolved through binding arbitration in Broward
      County, Florida, in accordance with the Fee Arbitration Rule
      (Chapter 14) of the Rules Regulating the Florida Bar, and
      judgment on the award may be entered in any court having
      jurisdiction thereof. [YOU ACKNOWLEDGE THAT BY
      AGREEING TO ARBITRATION YOU ARE RELINQUISHING
      YOUR RIGHT TO BRING AN ACTION IN COURT AND TO A
      JURY TRIAL.]

   The plaintiff filed a response in opposition to the motion to dismiss.
First, the plaintiff argued that the arbitration clause was “vague and
ambiguous” because the phrase “performance of legal services” was
included within a reference to fees and charges, and because the
arbitration clause stated that arbitration would be in accordance with the
Fee Arbitration Rule. Second, the plaintiff argued that the arbitration
clause was unenforceable because the retainer agreement did not comply
with the Florida Bar Rule 4-1.5(i), which prohibits lawyers from making
an agreement with a client for mandatory arbitration of fee disputes
without advising the client in writing that the client should consider
obtaining independent legal advice.

    At the hearing on the motion to dismiss, the plaintiff’s trial counsel
seemed to concede (albeit incorrectly) that the fee arbitration program
established in Chapter 14 of the Florida Bar Rules allowed arbitration of
legal malpractice claims. 2 Relying on the plaintiff’s counsel’s concession,
the trial court granted the motion to dismiss and reasoned: “If Chapter 14
strictly said, you know, we only arbitrate fee disputes, then I think [the
plaintiff] would be right. But Chapter 14 does not just arbitrate fees, it
arbitrates all grievances.”

   The trial court later entered a final order of dismissal, finding that the
parties “entered into an agreement to arbitrate that was not waived.”

2 Chapter 14 of the Florida Bar Rules, which is entitled “Grievance Mediation and
Fee Arbitration,” does not provide a mechanism for arbitration of legal
malpractice claims. While Chapter 14 allows for mediation of grievances other
than fee disputes, jurisdiction for arbitration under Chapter 14 is limited to fee
disputes. See R. Regulating Fla. Bar 14-1.2(a)(1) (stating that jurisdiction for
arbitration is limited to matters in which “there is no bona fide disputed issue of
fact other than the amount of or entitlement to legal fees”).

                                        2
   The plaintiff moved for rehearing, pointing out for the first time that
jurisdiction to arbitrate under Chapter 14 was limited to disputes over the
entitlement to or amount of legal fees. Thus, the plaintiff argued that her
only available forum was the Florida judicial system, and that a denial of
access to that forum would be a denial of due process.

   The trial court denied the plaintiff’s motion for rehearing. This appeal
ensued.

   On appeal, the plaintiff argues that: (1) the trial court’s order violated
her right to due process by denying her a proper forum for redress of
grievances; (2) the arbitration agreement is unenforceable because it
violated Florida Bar Rule 4-1.5(i) by omitting the cautionary notice
required under that rule; and (3) the arbitration provision was ambiguous
as to whether it required arbitration of a legal malpractice claim.

   We address the plaintiff’s second argument, which we find to be
dispositive.

    Standard of Review

   The standard of review applicable to a trial court’s conclusions
regarding the construction and validity of an arbitration agreement is de
novo. United HealthCare of Fla., Inc. v. Brown, 984 So. 2d 583, 585 (Fla.
4th DCA 2008).

    Requirements for Mandatory Arbitration

   In deciding whether arbitration of a dispute is required, there are three
elements for a court to consider: (1) whether a valid written agreement to
arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the
right to arbitration was waived. Seifert v. U.S. Home Corp., 750 So. 2d 633,
636 (Fla. 1999).

   Whether the Arbitration Clause is Unenforceable for Violating the
Florida Bar Rules?

   The plaintiff argues that the arbitration provision is invalid because it
violated Florida Bar Rule 4-1.5(i). 3 We agree.

3 Although this specific argument was not discussed at the hearing on the motion
to dismiss, it was presented to the trial court in the plaintiff’s written response in
opposition to the motion to dismiss. We find this to be sufficient to preserve the
issue for appellate review. See Tillman v. State, 471 So. 2d 32, 35 (Fla. 1985) (“In

                                          3
   Florida Bar Rule 4-1.5(i) prohibits lawyers from making an agreement
with a client prospectively providing for mandatory arbitration of fee
disputes without advising the client in writing that the client should
consider obtaining independent legal advice:

      (i) Arbitration Clauses.       A lawyer shall not make an
      agreement with a potential client prospectively providing for
      mandatory arbitration of fee disputes without first advising
      that person in writing that the potential client should consider
      obtaining independent legal advice as to the advisability of
      entering into an agreement containing such mandatory
      arbitration provisions. A lawyer shall not make an agreement
      containing such mandatory arbitration provisions unless the
      agreement contains the following language in bold print:

      NOTICE: This agreement contains provisions requiring
      arbitration of fee disputes.       Before you sign this
      agreement you should consider consulting with another
      lawyer about the advisability of making an agreement
      with mandatory arbitration requirements. Arbitration
      proceedings are ways to resolve disputes without use of
      the court system. By entering into agreements that
      require arbitration as the way to resolve fee disputes, you
      give up (waive) your right to go to court to resolve those
      disputes by a judge or jury. These are important rights
      that should not be given up without careful consideration.

R. Regulating Fla. Bar 4-1.5(i).

   Arbitration clauses in retainer agreements governed by Florida law
“must comply with the Rules Regulating The Florida Bar.” Mintz & Fraade,
P.C. v. Beta Drywall Acquisition, LLC, 59 So. 3d 1173, 1176 (Fla. 4th DCA
2011). If a mandatory arbitration provision in a fee agreement “does not
conform with Rule 4-1.5(i), the provision may be unenforceable on its face.”
Feldman v. Davis, 53 So. 3d 1132, 1137 (Fla. 4th DCA 2011).

   Here, the retainer agreement violated Florida Bar Rule 4-1.5(i) because
the agreement prospectively provided for mandatory arbitration of fee

order to be preserved for further review by a higher court, an issue must be
presented to the lower court and the specific legal argument or ground to be
argued on appeal or review must be part of that presentation if it is to be
considered preserved.”).

                                     4
disputes without giving the plaintiff the required written notice that she
“should consider obtaining independent legal advice as to the advisability
of entering into an agreement containing such mandatory arbitration
provisions.” Thus, because the arbitration clause does not comply with
Florida Bar Rule 4-1.5(i), we hold that it is unenforceable on its face.

   We disagree with the defendants’ argument that Florida Bar Rule 4-
1.5(i) is inapplicable because this case does not involve a fee dispute. Even
though the arbitration clause could be read as requiring arbitration of
matters in addition to fee disputes, 4 this does not alter the fact that the
arbitration clause clearly violated the rule by prospectively providing for
mandatory arbitration of fee disputes without giving the required warning
language. This is enough to invalidate the arbitration clause in its entirety.

   Indeed, because the retainer agreement did not contain the required
warning under Florida Bar Rule 4-1.5(i), the plaintiff was never placed on
notice that she should consider consulting with another lawyer before
signing an agreement with mandatory arbitration requirements. And, had
the plaintiff consulted independent legal counsel, she presumably would
have been advised that signing the agreement could result in her giving up
the right to litigate a malpractice claim, which is far more serious than
giving up the right to litigate a fee dispute.

   We also decline to sever the portion of the arbitration clause that
provides for mandatory arbitration of fee disputes. The portion of the
arbitration clause requiring arbitration of fee disputes was inextricably
intertwined with the portion requiring arbitration of disputes concerning
the performance of legal services. Stated another way, an attorney’s
entitlement to recover fees depends in large part upon the competence of
the attorney’s performance. See, e.g., Fla. Patient’s Compensation Fund v.
Rowe, 472 So. 2d 1145, 1150 (Fla. 1985). Thus, because the mandatory
arbitration of fee disputes went to the essence of the arbitration agreement,
we decline to sever the invalid portion of the arbitration clause, which

4 On the one hand, the arbitration clause contains broad language stating that it
applies to any claim “arising out of or relating to our . . . performance of legal
services,” which would appear to encompass a legal malpractice claim. On the
other hand, the clause states that any arbitration would occur “in accordance
with the Fee Arbitration Rule (Chapter 14) of the Rules Regulating the Florida
Bar,” which would could be interpreted as restricting the scope of the clause to
fee disputes, since jurisdiction for arbitration under Chapter 14 is limited to fee
disputes. In any event, we need not decide whether the reference to the Fee
Arbitration Rule renders the clause ambiguous as to whether the parties intended
to arbitrate a legal malpractice claim. Our conclusion that the clause violates
the Florida Bar Rules is dispositive.

                                        5
would require us to rewrite the agreement. See Shotts v. OP Winter Haven,
Inc., 86 So. 3d 456, 459 (Fla. 2011) (refusing to sever the invalid portion
of an arbitration agreement because it went to the “very essence of the
agreement”).

    In short, the contract here at issue is different than the garden variety
commercial contract. Lawyers owe ethical obligations and duties to their
clients that exceed what the common law requires of arm’s length
contracting parties. We therefore hold that the arbitration clause in the
retainer agreement was unenforceable on its face for violating Florida Bar
Rule 4-1.5(i). Because the arbitration clause was unenforceable, we
reverse the order dismissing the plaintiff’s complaint and remand for
further proceedings.

   Reversed and Remanded.

GROSS, J., concurs.
KUNTZ, J., dissents with opinion.

KUNTZ, J. dissenting.

   The majority strikes the entirety of the contract’s arbitration clause
based upon a rule that applies only to disputes relating to attorney’s fees.
But this dispute does not involve attorney’s fees. Thus, I respectfully
dissent.

   The plaintiff, the client, and defendant, the attorney, signed a retainer
agreement that included the following arbitration clause:

      Any controversy, dispute or claim arising out of or relating to
      our fees, charges, performance of legal services, obligations
      reflected in this letter, or other aspects of our representation
      shall be resolved through binding arbitration in Broward
      County, Florida, in accordance with the Fee Arbitration Rule
      (Chapter 14) of the Rules Regulating the Florida Bar, and
      judgment on the award may be entered in any court having
      jurisdiction thereof. [YOU ACKNOWLEDGE THAT BY
      AGREEING TO ARBITRATION YOU ARE RELINQUISHING
      YOUR RIGHT TO BRING AN ACTION IN COURT AND TO A
      JURY TRIAL.]

The record on appeal indicates the attorney did not provide the notice
required by Florida Bar Rule 4-1.5(i). And the majority holds this clause
is unenforceable on its face for this reason.

                                     6
    The rule states that a “lawyer shall not make an agreement with a
potential client prospectively providing for mandatory arbitration of fee
disputes.” R. Regulating Fla. Bar 4-1.5(i) (emphasis added). Similarly,
the rule expressly requires the parties add the following statement: “This
agreement contains provisions requiring arbitration of fee disputes.”
Id. (emphasis added). It is clear that Rule 4-1.5(i) undoubtedly applies to
fee disputes.

   If this dispute involved attorney’s fees, the failure to comply with Rule
4-1.5(i) would likely be dispositive of a motion to compel arbitration. But,
again, this dispute does not involve attorney’s fees.

   Rather, this dispute is a claim for malpractice—a claim that falls within
the broad language of the arbitration clause. It is firmly established that
“Florida public policy favors arbitration, and any doubts concerning the
scope of an arbitration agreement should be resolved in favor of
arbitration.” BKD Twenty-One Mgmt. Co., Inc. v. Delsordo, 127 So. 3d 527,
530 (Fla. 4th DCA 2012). In furtherance of the public policy of our state,
we should not strike the entire agreement in reliance on an inapplicable
rule.

   The majority relies on both Feldman v. Davis, 53 So. 3d 1132 (Fla. 4th
DCA 2011) and Mintz & Fraade, P.C. v. Beta Drywall Acquisition, LLC, 59
So. 3d 1173 (Fla. 4th DCA 2011), to support its contrary holding. I do not
find those cases to be controlling.

   The majority cites Feldman for the proposition that “[i]f a mandatory
arbitration provision in a fee agreement ‘does not conform with Rule 4-
1.5(i), the provision may be unenforceable on its face.’” Slip Op. 4 (quoting
Feldman, 53 So. 3d at 1137). Feldman was an appeal of the circuit court’s
dismissal of a complaint “for declaratory relief regarding his obligations to
pay attorney’s fees under a contingency fee agreement.” 53 So. 3d at 1133.
Clearly, a dispute relating to a contingency fee agreement is governed by
Rule 4-1.5(i).

    Mintz & Fraade involved a claim for legal malpractice. See 59 So. 3d at
1174. We applied the Federal Arbitration Act and reversed the circuit
court’s denial of the defendant’s motion to compel arbitration. Id. at 1175.
The majority here notes that in the Mintz & Fraade opinion we stated that
“[a]rbitration clauses in retainer agreements governed by Florida law ‘must
comply with the Rules Regulating The Florida Bar.’” Slip Op. 4 (quoting
Mintz & Fraade, P.C., 59 So. 3d at 1176). But, in support of that
statement, we cited Feldman and, as noted, Feldman was a dispute

                                     7
involving attorney’s fees. Moreover, I do not read our reference to
complying with the Rules Regulating the Florida Bar to be inconsistent
with my view in this case. A contract between an attorney and client must
comply with the applicable rules. However, here, the majority applies a
rule that does not apply to the client’s claims.

    Next, the majority concludes that the provisions of the clause relating
to fee disputes cannot be severed from the agreement. This is troubling,
especially in light of the incorrect assertion by counsel for the plaintiff to
the circuit court that malpractice disputes could fall within the parameters
of the Fee Arbitration Rule. In light of that incorrect concession, the only
inapplicable or improper portion of the arbitration clause was a reference
to fees. So the circuit court was not presented with a legitimate opposition
to severance, and we should sever the portions of the arbitration provision
relating to fee disputes and enforce the remainder of the agreement.

   The plaintiff also argues the arbitration agreement is ambiguous
because the discussion of attorney performance “is intertwined with Rule
14-1.2,” and “[a] party reading such language could reasonably conclude
that ‘arbitration in accordance with the fee arbitration rule’ would entail
fee issues only.”

    An ambiguous contract provision is to be construed against the drafter,
Delsordo, 127 So. 3d at 530, and a retainer agreement is to be construed
against the attorney and in favor of the client, Vargas v. Schweitzer-
Ramras, 878 So. 2d 415, 417 (Fla. 3d DCA 2004). But the mere fact that
an arbitration agreement can be interpreted in more than one manner does
not make it ambiguous. Delsordo, 127 So. 3d at 530. Rather, to be
ambiguous the additional manner of interpretation must be reasonable.
Id. (holding that an arbitration provision “is ambiguous only if it is
susceptible to more than one reasonable interpretation”). And “the
interpretation of a contract which gives a reasonable meaning to all
provisions of a contract is preferred to one which leaves a part useless or
inexplicable.” Resnick v. J. Weinstein & Sons, Inc., 163 So. 3d 700, 703
(Fla. 4th DCA 2015) (citations and internal quotation marks omitted).
Further, we must “try to resolve an ambiguity in an arbitration provision
in favor of arbitration.” Jackson v. Shakespeare Found., Inc., 108 So. 3d
587, 593 (Fla. 2013).

    In Vargas, the Third District addressed a similar issue, albeit with
different contractual language, where the subject of the contract was
exclusively attorney’s fees. 878 So. 2d at 417. The contract referenced
submitting a final bill and issues such as “institut[ing] proceedings against
you for the collection of fees.” Id. The following paragraph stated “[a]ll

                                      8
such disputes and any counterclaim against us in an action for
collecting for [sic] set off because of any alleged improper act or acts on
our part shall be submitted to and shall be determined by the arbitrators.”
Id. (emphasis added). The Third District concluded that the plain language
of the agreement demonstrated that it applied to fee disputes and that “the
language in the pertinent paragraphs does not constitute a general
arbitration clause establishing arbitration as the means for resolving any
dispute relating to the representation.” Id. at 417.

   As discussed above, we reached a different conclusion in Mintz &
Fraade, where the agreement stated:

      The parties agree that they shall be deemed to have agreed to
      binding arbitration in New York, New York, with respect to the
      entire subject matter of any and all disputes relating to or
      arising under this Retainer Agreement, including, but not
      limited to, any fee disputes.

59 So. 3d at 1175. We held that “[t]his language is broad enough to
encompass the malpractice and breach of fiduciary duty claims because
they are based solely on M & F’s actions while providing services obtained
through the retainer agreement.” Id. at 1177.

    Here, the arbitration agreement applied to “[a]ny controversy, dispute
or claim arising out of or relating to our fees, charges, performance of legal
services, obligations reflected in this letter, or other aspects of our
representation.” This language by itself is unambiguous and applies to
the plaintiff’s claims. However, we must consider the entirety of the
arbitration provision and the remainder of the contract. At the non-
evidentiary hearing, the circuit court noted that the first page of the
contract referenced that “these terms and conditions ‘will also apply to any
additional legal services that we may agree to provide that are outside the
initial scope of our representation.’” Based on this provision, the court
concluded that “certainly the retainer is talking about the scope of service,
the scope of obligations that” the attorney undertook. The court concluded
that “the obligations is the scope of service” and the “obligation” was
included in the arbitration provision.

   The circuit court did acknowledge the reference within the arbitration
clause to arbitrating any disputes “in accordance with the Fee Arbitration
Rule (Chapter 14) of the Rules Regulating the Florida Bar.” The court
stated that the language “could have been a little bit clearer but it’s clear
that she agreed to arbitrate all of this pursuant to Chapter 14.”

                                      9
   Chapter 14 does not apply beyond fee disputes. In fact, the Fee
Arbitration Rule specifically states that “[j]urisdiction is limited to matters
in which: (1) there is no bona fide disputed issue of fact other than the
amount of or entitlement to legal fees.” R. Regulating Fla. Bar 14-1.2. But
the plaintiff argued to the circuit court that it could apply and the court
factored the plaintiff’s argument into its decision. The court even noted
that the analysis of the purported ambiguity would be different if Chapter
14 did not apply to malpractice claims. But, the plaintiff argued, it did
apply.

   A party cannot lead the court to a conclusion and then complain that
the court accepted its argument. See, e.g., Mann v. Yeatts, 111 So. 3d
934, 938 (Fla. 5th DCA 2013) (“Although this argument is premised on a
correct statement of the law, it is not preserved for our review because it
was not argued below, and the purported error was invited by Appellant’s
incorrect argument to the trial court.”); Risk Mgmt. Servs., Inc. v.
McCraney, 420 So. 2d 374, 375 (Fla. 1st DCA 1982) (holding “appellant
induced the error by representing to the trial judge that [a case] was
controlling” even though the case relied upon was no longer controlling
when relied upon in the circuit court). Thus, the plaintiff waived its
argument that the provision was ambiguous based upon its reference to
Chapter 14. 5

   In conclusion, we should sever those portions of the clause relating to
fees and enforce the remainder of the signed contract. We should apply
the clause as written, affirm the court’s order in part, and remand with
instructions to stay the case and appoint an arbitrator to arbitrate the
dispute. 6

5 If the plaintiff had not waived this argument, I would remand the case for a
determination as to whether the selection of the chosen forum was integral to the
agreement. If the court found the chosen forum was integral to the agreement, I
agree the motion to compel arbitration should be denied. But if the court found
the chosen forum was not integral to the agreement, the motion to compel
arbitration should be granted. See New Port Richey Med. Inv’rs, LLC v. Stern ex
rel. Petscher, 14 So. 3d 1084, 1087 (Fla. 2d DCA 2009) (citing § 682.04, Fla. Stat.);
see also Betts v. FastFunding The Co., Inc., 60 So. 3d 1079, 1082–83 (Fla. 5th
DCA 2011); Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222 (11th Cir.
2000).

6Notably, Chapter 14 specifically states that all proceedings shall be governed by
the Florida Arbitration Code. R. Regulating Fla. Bar 14-1.4 (“The Florida
Arbitration Code (chapter 682, Florida Statutes), shall apply to arbitrations
conducted under this chapter except as modified by or in conflict with these
rules.”). And the Florida Arbitration Code states that the court shall appoint an

                                         10
                             *         *          *

   Not final until disposition of timely filed motion for rehearing.

arbitrator when the chosen arbitrator does not or cannot act. See New Port
Richey Med. Inv’rs, LLC, 14 So. 3d at 1087 (“[T]he parties’ arbitration agreement
is not rendered invalid or unenforceable simply because the AAA is unavailable
to conduct the arbitration. Instead, the circuit court must appoint another
arbitrator or arbitrators.”).

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