Court Opinion

ID: 4649428
Source: CourtListenerOpinion
Date Created: 2021-01-06 16:03:27.441969+00
Date Added: 2024-06-11T08:01:25.142602
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                            FOURTH DISTRICT

                      PETROLEOS MEXICANOS,
                            Appellant,

                                    v.

EXECUTIVE MFE AVIATION, LLC, JET HELI EXECUTIVE SERVICES,
  LTD, PEMEX PROCUREMENT INTERNATIONAL, INC., MATRIX
  AVIATION, INC., and OSCAR MAURICIO OAXACA RODRIGUEZ,
                          Appellees.

                             No. 4D20-0102

                            [January 6, 2021]

   Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Carlos A. Rodriguez, Judge; L.T. Case No. CACE18-
0162647 (14).

   Mark R. Cheskin, Richard C. Lorenzo, and William J. Homer of Hogan
Lovells US LLP, Miami, and Jessica Black Livingston of Hogan Lovells US
LLP, Denver, Colorado, for appellant.

  Susan Granoff and Pablo R. Bared of Bared & Associates, P.A., Coral
Gables, and Juan Ramirez, Jr., of ADR Miami LLC, Coral Gables, for
appellees Executive MFE Aviation, LLC and Jet Heli Executive Services,
LTD.

  Peter T. Mavrick and Jacob M. Resnick of Mavrick Law Firm, Fort
Lauderdale, for appellee Pemex Procurement International, Inc.

PER CURIAM.

   Petroleos Mexicanos (“Pemex”) appeals an order denying its motion to
compel arbitration. Pemex argued that the plaintiffs were bound by two
written arbitration clauses, even though they were not parties to the
contracts containing those clauses, either because they were joint
venturers with one of the parties or because they were third-party
beneficiaries of the contracts. The trial court did not resolve that issue
but ruled that Pemex could not compel arbitration in any event because
the contracts had terminated and the plaintiffs’ claims arose from a
subsequent oral agreement. We conclude that the court erred in failing
to determine, as a threshold issue, whether the plaintiffs are bound by
the arbitration clauses. If they are bound, and if Pemex did not waive its
right to compel arbitration, then any other issue is for the arbitrator to
decide.

                               Background

   This case arises from Pemex’s alleged failure to pay for maintenance
and repair services the plaintiffs performed on two aircraft that Pemex
had recently purchased from Matrix Aviation, Inc. Pemex, through its
procurement agent, executed a written purchase agreement with Matrix
for each aircraft. Each purchase agreement contains a clause requiring
arbitration of “any claims, disputes and controversies arising out of or
relating to” the agreement, subject to the rules of the American
Arbitration Association.

   The plaintiffs were not parties to the purchase agreements but claim
they had a joint venture agreement with Matrix for the purpose of selling
the aircraft to Pemex. The plaintiffs claim they were entitled to a share of
the sale proceeds and had the exclusive option to provide any post-
delivery maintenance services and receive the proceeds from those
services.

   The plaintiffs began performing maintenance and repair services on
both aircraft shortly after they were delivered to Pemex. Pemex claims
the plaintiffs’ services were either contemplated by the purchase
agreements or covered by the commercial warranty contained in those
agreements. The plaintiffs, however, claim they formed a separate oral
agreement with Pemex and its procurement agent to substantially modify
the aircraft to be used by the Mexican Air Force. The plaintiffs claim
they are owed almost $8 million for their services.

   The plaintiffs sued Pemex, Pemex’s procurement agent, and Matrix.
They allege that Pemex and its procurement agent breached the oral
agreement by failing to pay for the services they performed on the
aircraft.  They also allege that Matrix breached the joint venture
agreement by retaining all of the proceeds from the sale of the aircraft
and by wrongfully attempting to obtain payment from Pemex and its
procurement agent for the plaintiffs’ services.

   Pemex moved to compel arbitration of the plaintiffs’ claims based on
the arbitration clauses in the purchase agreements. Even though the
plaintiffs were not parties to the purchase agreements, Pemex contended
that they were bound by the arbitration clauses either through their joint

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venture with Matrix or as third-party beneficiaries of the agreements.
The plaintiffs argued that the purchase agreements had terminated upon
delivery of the aircraft and that their claims arose from the subsequent
oral agreement. They also argued that Pemex had waived its right to
compel arbitration as a result of its or its procurement agent’s
participation in the litigation.

   The court denied Pemex’s motion to compel arbitration after a non-
evidentiary hearing. The court did not make any findings as to whether
the plaintiffs were bound by the arbitration clauses in the purchase
agreements or as to whether Pemex waived its right to compel
arbitration. Instead, the court ruled that Pemex could not compel
arbitration under the purchase agreements because those agreements
had terminated and the parties had formed a new oral agreement from
which the plaintiffs’ claims arose.

   This appeal followed.

                                  Analysis

    We review the trial court’s order de novo. See Countyline Auto Ctr.,
Inc. v. Kulinsky, 257 So. 3d 1086, 1088 (Fla. 4th DCA 2018) (“[T]he
standard of review applicable to the trial court’s construction of an
arbitration provision, and to its application of the law to the facts found,
is de novo.” (citation omitted)).

   In ruling on a motion to compel arbitration, the trial court must
consider three elements: (1) whether a valid written agreement to
arbitrate existed; (2) whether an arbitrable issue has been raised; and (3)
whether the right to compel arbitration has been waived. See Seifert v.
U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999).

   The court in this case erred in failing to determine, as a threshold
issue, whether the plaintiffs are bound by the arbitration clauses in the
purchase agreements. The court’s inquiry as to whether a valid written
agreement to arbitrate existed required it to address Pemex’s argument
that the plaintiffs are bound by the arbitration clauses either through
their joint venture with Matrix or as third-party beneficiaries of the
purchase agreements. See Lion Gables Realty Ltd. v. Randall Mech., Inc.,
65 So. 3d 1098, 1099-1100 (Fla. 5th DCA 2011) (stating that the issue of
whether a valid written agreement to arbitrate exists “necessarily involves
a determination of whether a valid agreement exists between the
parties”); Martha A. Gottfried, Inc. v. Paulette Koch Real Estate, 778 So. 2d
1089, 1090 (Fla. 4th DCA 2001) (recognizing that non-signatories can be

                                     3
bound by arbitration agreements under “ordinary principles of contract
law and agency”).

   If the plaintiffs are bound by the arbitration clauses, and if Pemex did
not waive its right to compel arbitration, then it is for the arbitrator—not
the court—to decide whether the purchase agreements terminated upon
delivery of the aircraft or whether the plaintiffs’ claims arose from a
subsequent oral agreement rather than the purchase agreements. The
question of whether the purchase agreements terminated upon delivery
of the aircraft must be arbitrated because it concerns the continued
validity of the contract as a whole rather than the validity of the
arbitration clause itself. See Hound Mounds, Inc. v. Finch, 153 So. 3d
368, 370-71 (Fla. 4th DCA 2014) (recognizing that under both federal
and Florida law, the court can resolve only a challenge to the arbitration
clause itself; any challenge to the entire contract is an issue that must be
arbitrated); see also Arrasola v. MGP Motor Holdings, LLC, 172 So. 3d
508, 513 (Fla. 3d DCA 2015) (holding that a claim of “termination of the
agreement as a whole” must be considered by the arbitrator rather than
the court). And the question of whether the plaintiffs’ claims arose not
from the purchase agreements but from a subsequent oral agreement
must also be arbitrated because it is a question of arbitrability, which
the parties delegated to the arbitrator under the rules of the American
Arbitration Association. See Miami Marlins, L.P. v. Miami-Dade Cty., 276
So. 3d 936, 940 (Fla. 3d DCA 2019) (recognizing that rule 7(a) of the
Commercial Arbitration Rules of the American Arbitration Association
“makes the arbitration panel the gateway for determinations regarding
arbitrability”); see also Henry Schein, Inc. v. Archer and White Sales, Inc.,
139 S. Ct. 524, 529-30 (2019) (holding that where the parties have
delegated questions of arbitrability to the arbitrator, the court may not
decide any issue of arbitrability even if it finds the argument that the
arbitration agreement applies to a particular dispute to be “wholly
groundless”).

   We therefore reverse the order denying Pemex’s motion to compel
arbitration and remand for the court to determine whether the plaintiffs
are bound by the arbitration clauses in the purchase agreements. The
court also may consider whether Pemex waived its right to compel
arbitration by participating in the litigation. See, e.g., Palmcrest Homes
of Tampa Bay, LLC v. Bank of Am., N.A., 67 So. 3d 1169, 1173 (Fla. 2d
DCA 2011) (recognizing that waiver is an issue for the court, not the
arbitrator, to decide). An evidentiary hearing may be required. See
Linden v. Auto Trend, Inc., 923 So. 2d 1281, 1282-83 (Fla. 4th DCA
2006); Epstein v. Precision Response Corp., 883 So. 2d 377, 379 (Fla. 4th
DCA 2004). If the court determines that the plaintiffs are bound by the

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arbitration clauses and that Pemex did not waive its right to compel
arbitration, then it must stay the litigation and compel arbitration,
leaving any other issue for the arbitrator to decide.

   Reversed and remanded.

LEVINE, C.J., CIKLIN, and KLINGENSMITH, JJ., concur.

                           *         *        *

   Not final until disposition of timely filed motion for rehearing.

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