Court Opinion

ID: 4173028
Source: CourtListenerOpinion
Date Created: 2017-05-31 15:09:52.368908+00
Date Added: 2024-06-11T07:47:07.429008
License: Public Domain

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
                      MOTION AND, IF FILED, DETERMINED

                                             IN THE DISTRICT COURT OF APPEAL
                                             OF FLORIDA
                                             SECOND DISTRICT

REGINALD ANDERSON and MICHELLE      )
ANDERSON,                           )
                                    )
           Appellants,              )
                                    )
v.                                  )                   Case No. 2D16-314
                                    )
TAYLOR MORRISON OF FLORIDA, INC., )
                                    )
           Appellee.                )
___________________________________ )

Opinion filed May 31, 2017.

Appeal Pursuant to Fla. R. App. P. 9.130
from the Circuit Court for Hillsborough
County; Cheryl K. Thomas, Judge.

Matthew L. Wilson and Joshua E. Burnett
of Burnett Wilson Reeder, Tampa, for
Appellants.

J. Carlton Mitchel and Neal A. Sivyer of
Sivyer Barlow & Watson, P.A., Tampa,
for Appellee.

SILBERMAN, Judge.

              Reginald and Michelle Anderson appeal a nonfinal order that stays

proceedings in the trial court and compels arbitration in this action against their home

builder, Taylor Morrison of Florida, Inc. (the Builder). Because the arbitration provision

contained in the limited warranty (the Warranty) that the Builder provided to the
Andersons limits their statutory remedies, we conclude that the provision is void as

against public policy. Therefore, we reverse the trial court's order and remand for

further proceedings. Based on this disposition, we do not reach the remaining issue the

Andersons raise of unconscionability.

              In April 2009, the Andersons entered into a sales agreement with the

Builder to purchase a home. The Andersons took possession of the home in November

2009. In June 2015, the Andersons provided notice to the Builder pursuant to section

558.004, Florida Statutes (2015), of construction defects based on building code

violations. The notice referred to an attached engineering report and stated that the

report found "construction defects associated with the application of the exterior stucco

system to [the Andersons'] home." The report specified that the installation failed to

meet the applicable building code provisions and that at multiple locations the cladding

material had an inadequate thickness.

              Unable to resolve the matter, the Andersons filed a three-count complaint

in September 2015 alleging (1) violation of the Florida Building Code under section

553.84, Florida Statutes (2009); (2) breach of contract; and (3) violation of the Florida

Deceptive and Unfair Trade Practices Act (FDUTPA), §§ 501.201-.213, Fla. Stat.

(2009). The Andersons alleged that the Builder violated the building code "by

inadequately and improperly installing the stucco system on" their home. They claimed

that the code violations were latent and not readily observable or known to them "until

damages began to manifest themselves in the form of cracking to the exterior stucco

years after construction ended." They also alleged that the Builder knew or should have

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known that the building code was violated during the construction of the home and that

the violations caused damages to them.

              The Builder sought to compel arbitration on the basis of a provision in the

Warranty provided with the purchase of the home. The Andersons argued that the

arbitration provision was void as against public policy because it barred recovery of all

statutory and contractual claims and that it was unconscionable. After a hearing, the

trial court granted the motion to compel arbitration and found the arbitration provision

valid. In doing so, the trial court appeared to implicitly reject the argument that the

provision was void as against public policy. The Andersons now challenge the order

compelling arbitration, focusing on the statutory remedy for the alleged building code

violations.

              The sales agreement between the parties states that the Builder will

provide the Andersons with a warranty in place of all other warranties, including those

arising under state law. After closing, the Builder's sole responsibility "is to cover items

under warranty." The Builder provided a copy of the three-page Warranty with the sales

agreement. The Andersons signed an acknowledgement that they had received the

copy, reviewed it, and agreed to its terms and conditions. The Warranty includes a one-

year warranty providing that materials and workmanship in the home will be in

compliance with the review criteria that are contained in "the Customer Care

Guidelines," a separate document. The Warranty also includes a ten-year warranty for

"Major Structural Issues" as defined in the document.

              Based on the definition of major structural defect in the Warranty, which

includes items such as foundation systems, load-bearing beams, and bearing walls, the

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inadequate application of exterior stucco does not appear to fall within the coverage of

the ten-year limited warranty. The one-year limited warranty addresses stucco finishes

by reference to the review criteria, which provides that small cracks are common and

that cracks that exceed one-eighth inch in width "are considered excessive" and are

covered. The warranty does not otherwise address the proper application of stucco,

including any required thickness. The complaint and notice allege violations of the

building code based on improper application of stucco but do not specifically address

whether the cracks in the home fall within the one-year warranty's definition of

excessive. Rather, the Andersons asserted that the building code violations were not

readily observable or known until the cracking appeared well after the one-year

warranty expired.

             With respect to arbitration, the Warranty contains an arbitration provision

on the third page in a section titled Dispute Settlement. That section provides as

follows:

             Dispute Settlement
             This Dispute Settlement provision sets forth the exclusive
             remedy for all disputes, claims or controversies arising out
             of, or in any manner related to, this Warranty or any alleged
             issues in your home or property. All disputes, claims or
             controversies which cannot be resolved between TM [the
             Builder] and you shall be submitted by you, not later than
             ninety (90) days after the expiration of the applicable
             warranty period, to the American Arbitration Association
             ("Arbitrator") for resolution in accordance with the rules and
             regulations of the Arbitrator. The final decision of the
             Arbitrator shall be binding on all parties and shall include
             final decisions relating to enforcement of the terms and
             provisions of this Warranty.

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In addition, at the top of page one a statement in all capitals advises that the Warranty

contains a binding arbitration provision, that the consumer should read the document in

its entirety, and that the document contains exclusions.

              The Warranty also contains a lengthy disclaimer of liability provision

before the dispute settlement section. At the end of the disclaimer provision it states as

follows:

              BUYER AGREES THAT THIS LIMITED WARRANTY
              SHALL BE THE EXCLUSIVE REMEDY FOR ANY ISSUES
              IN DESIGN, MATERIALS OR WORKMANSHIP. BUYER
              HERBY [sic] ASSUMES THE RISK OF ALL OTHER LOSS
              RESULTING FROM SUCH ISSUES, INCLUDING ANY
              CLAIMS FOR PROPERTY DAMAGE OR PERSONAL
              INJURY, AND WAIVE [sic] ALL OTHER CLAIMS,
              WHETHER IN CONTRACT, TORT OR OTHERWISE.

The Andersons contend that the arbitration provision, particularly when viewed in

context with the limitation of remedies contained in the disclaimer provision, is void as

against public policy because it prohibits any remedy, whether in tort, contract, or by

statute, apart from items covered by the Warranty.

              It is for the court, not the arbitrator, to determine whether a valid arbitration

agreement exists. Shotts v. OP Winter Haven, Inc., 86 So. 3d 456, 459 (Fla. 2011).

Our review of the validity of an arbitration agreement on the challenge that it violates

public policy is a question of law subject to de novo review. Id. at 471. If an arbitration

agreement violates public policy, then no valid agreement exists. Id. at 465; Global

Travel Mktg., Inc. v. Shea, 908 So. 2d 392, 398 (Fla. 2005) ("No valid agreement exists

if the arbitration clause is unenforceable on public policy grounds.").

              An arbitration agreement is unenforceable for public policy reasons when

it defeats the remedial purpose of a statute or prohibits the plaintiff from obtaining

                                             -5-
meaningful relief under the statutory scheme. S.D.S. Autos, Inc. v. Chrzanowski, 976
So. 2d 600, 606 (Fla. 1st DCA 2007) (dealing with FDUTPA). "A remedial statute is one

which confers or changes a remedy." Shotts, 86 So. 3d at 473 (quoting Blankfeld v.

Richmond Health Care, Inc., 902 So. 2d 296, 298 (Fla. 4th DCA 2005)) (dealing with

Nursing Home Residents' Rights Act). Section 553.84 is a remedial statute because it

provides relief for a person whose home has been built in violation of the building code,

"[n]othwithstanding any other remedies available."

              The Builder contends that if the challenge is to the agreement as a whole

but not specifically to the arbitration provision, the issue of the validity of the agreement

is for the arbitrator to decide. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440, 444, 449 (2006) (stating that the borrowers contended that the contract as a whole

was invalid based on a usurious finance charge); Kaplan v. Divosta Homes, L.P., 983
So. 2d 1208, 1210 (Fla. 2d DCA 2008) (stating that the purchasers contended that the

entire sales contract was void due to fraud); Hound Mounds, Inc. v. Finch, 153 So. 3d
368, 371 (Fla. 4th DCA 2014) (stating that the franchisee alleged the invalidity of the

entire franchise agreement and did not specifically attack the arbitration provision).

Here, though, the Andersons do not challenge the Warranty as a whole or the sales

agreement pursuant to which it was issued. Rather, they challenge the arbitration

provision because while it "sets forth the exclusive remedy for all disputes" arising from

or related to the Warranty and all issues with the home or property, it precludes their

ability to pursue their statutory claim.

              The Builder also cites to Pulte Home Corp. v. Bay at Cypress Creek

Homeowners' Ass'n, 118 So. 3d 957, 958 (Fla. 2d DCA 2013), in which this court

                                            -6-
recognized that statutory claims for violation of a building code can be subject to

arbitration. But there the arbitration agreement applied to claims for breach of warranty

and statutory claims. Id.

              Here, the sales agreement specifies that the Builder's responsibility after

closing is only as to items that are covered by the Warranty, and the disclaimer

provision precludes any claims that are not covered by the Warranty, "whether in

contract, tort or otherwise." The arbitration provision states that "[t]his Dispute

Settlement provision sets forth the exclusive remedy for all disputes, claims or

controversies arising out of" or related to the Warranty or issues with the home or

property. The next sentence states that all unresolved "disputes, claims or

controversies" must be submitted to arbitration. These provisions establish that the only

remedy afforded to the Andersons through arbitration is for specified Warranty claims

and that all other claims, including the Andersons' statutory claims, are precluded.

              Yet the Builder insists that despite the language in the documents, a non-

warranty claim could be brought and must be arbitrated. We cannot agree. As this

court stated in a case involving similar stucco claims, arbitration cannot be compelled

where "the parties did not agree to arbitrate claims such as those presented here."

Nunez v. Westfield Homes of Fla., Inc., 925 So. 2d 1108, 1109 (Fla. 2d DCA 2006).

              In Nunez, the homeowners brought a claim alleging that the builder

violated the building code by misapplying the exterior stucco. The builder moved to

compel arbitration in accordance with its limited home warranty that required arbitration

of unresolved warranty issues. Id. The court observed that the limited warranty did not

obligate the builder to conform the home to the applicable building codes. Id. at 1110.

                                            -7-
Moreover, while the warranty required the builder to repair exterior cracks in stucco that

exceeded one-eighth of an inch in width, the homeowners' claim was not based on that

condition. Id. The warranty in Nunez extended only to specified circumstances, not

including building code violations, and the builder "chose to limit the scope of disputes

subject to arbitration." Id.

              Here, the language of the arbitration provision is seemingly broader than

the arbitration language discussed in Nunez. The arbitration provision in the Warranty

indicates that all issues related to the Warranty, the home, or the property are to be

arbitrated. But read in context with other provisions in the Warranty, particularly the

disclaimer provision, it is evident that the alleged building code violations cannot be

remedied through arbitration because the claims are not covered by the Warranty and

all non-Warranty claims are waived. As the Florida Supreme Court stated in Shotts,

"any arbitration agreement that substantially diminishes or circumvents these [statutory]

remedies stands in violation of the public policy of the State of Florida and is

unenforceable." 86 So. 3d at 474. Simply put, the arbitration provision here effectively

limits the Andersons' remedies to Warranty claims, as defined in the documents, and

does not just substantially diminish the Andersons' statutory remedy for a violation of

the building code but totally eliminates it.

              Moreover, contrary to the Builder's argument this is not a situation where

the challenge is to the validity of the limited warranty contract as a whole. The

Andersons do not allege that the contract is usurious or was entered into based on

fraud. See Buckeye Check Cashing, 546 U.S. at 444; Kaplan, 983 So. 2d at 1210.

                                               -8-
Instead, they specifically challenged the arbitration provision because it precludes

enforcement of a statutory remedy that is available to them.

              Because the arbitration provision limited the Andersons to warranty claims

and prevents their assertion of a statutory claim, the arbitration provision violates public

policy and is unenforceable. See Shotts, 86 So. 3d at 474-75. Accordingly, we reverse

the order compelling arbitration and remand to the trial court for further proceedings on

the Andersons' complaint.

              Reversed and remanded.

KELLY and BLACK, JJ., Concur.

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