Court Opinion

ID: 3049391
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:27:11.30779+00
Date Added: 2024-06-11T11:49:20.122820
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[PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT            FILED
                          ________________________ U.S. COURT OF APPEALS
                                                           ELEVENTH CIRCUIT
                               No. 09-13451                 OCTOBER 8, 2010
                         ________________________              JOHN LEY
                                                                CLERK
                     D. C. Docket No. 08-81474-CV-KLR

BOARD OF TRUSTEES OF THE CITY
OF DELRAY BEACH POLICE AND
FIREFIGHTERS’ RETIREMENT SYSTEM,

                                                                 Plaintiff-Appellee,

                                     versus

CITIGROUP GLOBAL MARKETS INC.,
f.k.a. Salomon Smith Barney,

                                                            Defendant-Appellant.

                         ________________________

                  Appeal from the United States District Court
                      for the Southern District of Florida
                        _________________________

                               (October 8, 2010)

Before DUBINA, Chief Judge, PRYOR and MARTIN, Circuit Judges.

PRYOR, Circuit Judge:

     This appeal from the denial of a motion to compel arbitration presents the
question whether the Board of Trustees of the City of Delray Beach Police and

Firefighters’ Retirement System agreed to arbitrate a dispute arising under its

consulting contract with Citigroup Global Markets, which helped the Board

evaluate the performance of several investment managers of pension funds the

Board oversees. The Board complained that Citigroup abused its position as

pension consultant when it provided erroneous reports about the performance of

the investment managers of the fund, recommended investment managers who

would agree to place trades through Citigroup, and engaged in self-dealing

transactions with assets of the fund. Citigroup moved to compel arbitration on the

ground that William Adams, the chairman of the Board, had bound the Board to

arbitrate any dispute with Citigroup when he signed several account agreements

through which one of the investment managers of the fund could buy and sell

securities. Those account agreements required arbitration of disputes under those

and “any other agreement between” Citigroup and the Board. The Board argued

that Adams had no authority to bind the Board to arbitrate disputes under the

consulting contract, and Citigroup responded that Adams had both implied actual

authority and apparent authority to bind the Board. The district court agreed with

the Board, held that Adams had no authority to bind the Board to arbitrate, and

denied the motion to compel arbitration. Because we conclude that Adams had

                                          2
implied actual authority to bind the Board to arbitrate disputes arising under the

consulting contract, we reverse and remand with instructions.

                                  I. BACKGROUND

      We divide our discussion of the background of this appeal into three parts.

First, we describe the decisions of the Board to hire Citigroup as its pension

consultant and to delegate to Adams the authority to execute the account

agreements. Second, we describe the lawsuit that the Board filed against

Citigroup. Third, we describe the motion of Citigroup to compel arbitration and

the decision of the district court to deny that motion.

       A. The Hiring of Citigroup and Execution of the Account Agreements

      The Board manages a pension trust fund for the benefit of the firefighters

and police officers of Delray Beach, Florida. See Fla. Stat. §§ 175.071, 185.06;

Delray Beach, Fla., Code of Ordinances ch. 33, § 33.66. As the manager of the

fund, the Board hires professional investment managers to select investments for

the fund. By law, the Board must “retain a professionally qualified independent

consultant who shall evaluate the performance of any existing professional money

manager and shall make recommendations to the board of trustees regarding the

selection of money managers for the next investment term.” Fla. Stat.

§§ 175.071(6)(a), 185.06(5)(a).

                                           3
      In October 1995, the Board hired Citigroup (formerly Salomon Smith

Barney) as its pension consultant. The parties signed a pension consultant contract,

which required Citigroup to report each quarter about the performance of the

professional investment managers who made investments on behalf of the fund.

The consulting contract required Citigroup to compute quarterly and annually the

performance of the total fund and individual managers on no less than a quarterly

basis; attend quarterly meetings; attend special meetings; and provide additional

services agreed upon. The parties signed a materially similar contract in December

2000. When that contract expired in 2004, the parties, according to the complaint,

“continued their relationship without a written contract, orally agreeing to operate

on the same terms previously agreed upon.”

      The Board approved the consulting contract after consideration by the full

Board. The Board discussed key provisions of the consulting contract, submitted

the consulting contract to outside counsel Stephen Cypen for review and approval,

and approved the consulting contract by a vote of the majority of the Board. The

Board contends that, during negotiations of the consulting contract, the Board

expressly refused to agree to arbitrate disputes under the consulting contract, but

Citigroup denies that allegation. Even so, the final consulting contract did not

contain an arbitration clause. The consulting contract provided, “Any changes to

                                          4
this Agreement requested either by the Consultant or the Board may only be

effected if mutually agreed upon in writing by duly authorized representatives of

the parties hereto.” It continued, “This Agreement shall not be modified or

amended or any rights of a party to it waived except by such a writing.”

      At a meeting in November 2003, the Board decided to hire NWQ

Investments as an investment manager. As the minutes from that meeting reflect,

the Board agreed “that once Cypen has approved the NWQ contract, Chief Adams,

Chairman, be given the authority to execute the contract on behalf of the

Board/Fund.” Cypen approved the NWQ contract and Adams signed an agreement

with NWQ. According to Citigroup, the Board needed to open an investment

account through which NWQ could invest assets of the fund on behalf of the Board

and, although the Board could have opened this account with any institution, the

Board chose to open it with Citigroup. On December 19, 2003, Adams executed

several documents to open this account. In October 2004, Adams signed several

similar documents to open a similar account, also with Citigroup, for another

investment manager of the Board.

      The account agreements contain a broad arbitration clause. Above the

signature block, the account agreements state, “I acknowledge that I have received

the Client Agreement which contains a pre-dispute arbitration clause.” The client

                                         5
agreement, in turn, contains a clause that requires arbitration of “all claims or

controversies, whether such claims or controversies arose prior, on or subsequent

to the date hereof, between me and [Citigroup].” The client agreement requires

arbitration of disputes “concerning or arising from . . . the construction,

performance or breach of this or any other agreement between us.”

                            B. Lawsuit Against Citigroup

      In November 2008, the Board sued Citigroup in a Florida court. The

complaint stated four claims. Each claim alleged misconduct by Citigroup as

pension consultant to the Board.

      Count one alleged that Citigroup breached the consulting contract “by

failing to provide the services for which it was paid.” Citigroup “computed the

performance of the Fund and the investment managers gross of fees, rather than net

of fees, and repeatedly submitted false and misleading information to the Board

concerning matters relevant to evaluating the Fund’s investment performance.”

The complaint alleged, “These matters included, without limitation, the actual rate

of return on the Fund’s investments as compared with a purportedly appropriate

benchmark rate of return, and the amount of appreciation in the Fund’s securities

portfolio.” The complaint requested compensatory damages on the ground that the

Board paid for services never performed and that if the Board had been aware of

                                           6
the real performance of the pension fund, it would have terminated Citigroup, hired

a new consultant, and achieved a better rate of return. Moreover, the complaint

alleged that Citigroup “utilized its position as pension consultant to engage in

transactions involving Fund assets through which [it] was able to obtain much

larger compensation from its relationship with the Board and the Fund than the

amount to which it was entitled under the” consulting contract.

      Count two alleged breach of fiduciary duty. It alleged that a fiduciary

relationship existed between Citigroup and the Board because Citigroup “induced

the Board to place its trust and confidence in [Citigroup], and [Citigroup] assumed

a role of superiority in its relationship to the Board with respect to the areas of its

purported expertise and exerted influence over the Board.” The Board alleged that

Citigroup breached its duties as fiduciary by, among other things, repeatedly

misleading the Board about the performance of its investments and recommending

that it hire investment managers who Citigroup knew would agree to run securities

trades through it as broker so that it could earn commissions. The complaint also

alleged that Citigroup breached its fiduciary obligations by “repeatedly entering

into fixed income and equity trades with the Fund for its own account without

disclosing to the Board that it was trading as a principal, earning undisclosed

profits from those trades, and periodically failing to provide these trades to the

                                            7
Fund at current market rates.” Additionally, Citigroup “directed certain of the

Fund’s investment managers to run all their portfolio trading for the Fund through

[Citigroup] without Board approval.” The complaint again requested

compensatory damages.

      Count three alleged fraud. The complaint alleged that Citigroup made false

statements to the Board concerning the performance of the pension fund by, for

example, “reporting . . . performance gross of fees and overstating the appreciation

of the Fund’s investment portfolio over a seven-year period.” It also alleged that

Citigroup produced false and misleading quarterly and annual reports on which the

Board relied in deciding to retain Citigroup as consultant and to retain various of

its investment managers as managers of the assets of the fund. It also alleged that

Citigroup fraudulently induced the Board to hire investment managers that would

run trades through Citigroup as broker. The complaint requested compensatory

damages.

      Finally, count four alleged negligent misrepresentation. The Board alleged

that Citigroup negligently submitted inaccurate reports about the performance of

the pension fund by reporting returns gross of fees, not net of fees as required by

Florida law; misrepresenting the actual performance of the pension fund; and

misrepresenting the appreciation of the assets of the fund. The complaint again

                                          8
sought compensatory damages on the ground that the negligence of Citigroup

caused the Board to retain an ineffective pension consultant and investment

managers that were underperforming the market.

                         C. Motion to Compel Arbitration

      In December 2008, Citigroup removed the action to federal court, 28 U.S.C.

§§ 1332, 1441, 1446, and promptly moved to compel arbitration. It relied on the

arbitration clause contained in the account agreements that Adams signed in

connection with the hiring of NWQ as an investment manager. The motion to

compel arbitration recounted the facts that we have described and stated that “[i]n

connection with its relationship with [Citigroup], the Board opened investment

accounts with [Citigroup] in which the fixed income and equity securities

transactions the Board now complains about were executed on behalf of the Fund.”

Citigroup also stated that, when opening these accounts, “the Board entered into

client agreements which contain broadly worded arbitration provisions that clearly

encompass the claims asserted by the Board in this action.” Citigroup argued that

the broad arbitration clause covered the claims of the Board “because they concern

or arise from accounts the Board maintained with [Citigroup], transactions

involving [Citigroup], the performance or breach of the Board’s agreements with

[Citigroup,] and alleged duties arising from the business of [Citigroup].”

                                          9
      The Board argued that it never agreed to arbitrate disputes under the

consulting contract. The Board argued that Adams lacked “actual authority” to

agree to arbitrate claims arising under the Board-approved consulting contract

because the Board had never voted to give him that authority. It argued that

Florida law requires “all acts and decisions [of the Board to] be effectuated by vote

of a majority of the members of the board,” Fla. Stat. §§ 175.071(2), 185.06(2),

and it observed that the Board “never voted to modify or amend the Pension

Consultant Contracts by adding an arbitration clause to them” and that the

consulting contract stated that it could not be modified except in writing by “duly

authorized representatives of the parties.” The Board also argued that Adams did

not have “apparent authority” to subject claims under the consulting contract to

arbitration because the Board did nothing at all to suggest to Citigroup that Adams

had any authority to modify the consulting contract. The Board argued, “Rather

than causing [Citigroup] to believe that Mr. Adams was authorized to amend the

Pension Consultant Agreements, [the Board] included [Citigroup] in the very

meetings that confirmed that Mr. Adams was not so authorized.” According to the

Board, because Citigroup representatives attended the meetings at which the full

Board debated the substance of the consulting contract, agreed to submit a draft of

the consulting contract to outside counsel for approval, and then approved the final

                                          10
consulting contract by majority vote, Citigroup knew that the Board would not

have given Adams the authority to alter the consulting contract by executing the

separate NWQ contract. The Board further argued that the “customary practice” of

Citigroup of alerting Adams to the need for Board or outside counsel review of

substantive documents that required Adams’s signature supported a ruling that

Citigroup could not have reasonably thought that Adams could amend the

consulting contract without involving the Board.

      The district court denied the motion to compel arbitration. The district court

considered whether Adams had actual authority to execute the account agreements

that contained the arbitration clause instead of whether he had actual authority to

bind the Board to arbitrate disputes under the consulting contract. The district

court stated that it had located no “Florida case in which a member of the board of

a police or firefighter pension trust fund was able to bind the Board via unilateral

action.” It concluded, “Absent any authority that would allow this Court to

overlook application of the previously cited Florida statutes [stating that the Board

acts through majority vote], the Court concludes that Adams lacked actual

authority to execute the Account Agreements.” The district court also held that

Adams lacked apparent authority to execute the account agreements. The court

held that “[g]iven [Citigroup’s] presence at the previously mentioned Board

                                          11
meetings, [Citigroup] knew that Adams could not sign the Account Agreements

without approval of the Board and its counsel.” Alternatively, the district court

held that, even if Adams had apparent authority to sign the account agreements

because the Board held him out as having that authority, the Florida laws that

provide that the Board manages the pension fund by majority vote prevent the

operation of ordinary principles of agency.

                          II. STANDARD OF REVIEW

      We review the denial of a motion to compel arbitration de novo. Becker v.

Davis, 491 F.3d 1292, 1297 (11th Cir. 2007).

                                 III. DISCUSSION

      We divide our discussion into two parts. First, we explain that Florida law

permitted the Board to delegate to Adams authority to bind it to arbitrate disputes

under the consulting contract. Second, we explain that Adams possessed implied

actual authority to bind the Board to arbitrate disputes under the consulting

contract.

 A. Florida Law Permitted the Board to Delegate to Adams the Authority to Bind
            the Board to Arbitration Under the Consulting Contract.

      Citigroup contends that ordinary principles of administrative law permit the

Board to delegate to Adams, its agent, the authority to bind the Board to arbitrate

disputes under the consulting contract. The Board disagrees, and advances a

                                          12
related argument that the Florida Sunshine Law, Fla. Stat. § 286.011(1), prevented

the Board from delegating authority because, under that law, all decisions affecting

the Board must be made at a public meeting. We agree with the argument of

Citigroup that Florida law permitted the Board to delegate to Adams the authority

to agree to arbitrate disputes under the consulting contract.

      Citigroup argues persuasively that general principles of administrative law

govern the Board, which is a municipal agency; those general principles of

administrative law permit delegation; and because no Florida law prohibits the sort

of delegation at issue, the Board could delegate its authority. The Board has

offered no reason to doubt this argument about Florida law. Cf. W.M. Schlosser

Co. v. Sch. Bd. of Fairfax Cnty., Va., 980 F.2d 253, 258 (4th Cir. 1992) (holding

that agent could not bind board to arbitrate because state law affirmatively

prohibited arbitration); Morgan v. S. Bend Cmty. Sch. Corp., 797 F.2d 471, 479

(7th Cir. 1986) (holding that state law affirmatively required full board to approve

employment contracts so superintendent modification was invalid). Delray Beach

municipal law does not prohibit delegation. It instead permits the Board to “hire

and appoint those persons, agents or entities . . . as in its discretion may be required

or advisable to enable it to perform custodial and investment duties.” Delray

Beach, Fla., Code of Ordinances ch. 33, § 33.66(C). Florida municipal law also

                                           13
permits the Board to carry out several enumerated investment powers “through

duly authorized agents, provided that the Board at all times maintains continuous

supervision over the acts of any agent.” Id. § 33.66(F).

      Killearn Properties, Inc. v. City of Tallahassee forecloses the related

argument of the Board that its alleged violation of the Florida Sunshine Law could

excuse it from complying with the terms of any contracts that it might have given

Adams the authority to execute, including the account agreements. 366 So. 2d
172, 181 (Fla. Dist. Ct. App. 1979). That decision makes clear as follows that a

government agency cannot benefit from its own violation of the Sunshine Law:

“It is one thing for an aggrieved citizen to seek to have set aside an agreement

between a government and another party because of Sunshine Law violations; but

quite another for the government entity itself to seek to escape its obligation based

upon its own alleged wrongdoing.” Id. The Board does not explain why this

decision is mistaken or identify any other Florida precedent that is inconsistent

with it. Consequently, the question before us is not whether the Board could have

delegated to Adams the authority to bind it to arbitrate disputes under the

consulting contract, but whether it did.

   B. Adams Possessed Implied Actual Authority to Bind the Board to Arbitrate
                  Disputes Under the Consulting Contract.

                                           14
       We have explained that, as a matter of federal law, “arbitration is a matter of

consent, not coercion.” World Rentals & Sales, LLC v. Volvo Constr. Equip.

Rents, Inc., 517 F.3d 1240, 1244 (11th Cir. 2008) (internal quotation marks

omitted). “Accordingly, a party ordinarily will not be compelled to arbitrate unless

that party has entered into an agreement to do so.” Id. (internal quotation marks

omitted). “[C]ommon law principles of contract and agency law allow a signatory

. . . to bind a non-signatory . . . to an arbitration agreement . . . .” Id. (internal

quotation marks omitted). This rule means that the Board, which has not signed an

arbitration clause, may be compelled to arbitrate if a signatory executed the

arbitration agreement as its agent. Id. at 1247.

       The determination whether a signatory like Adams had the authority to bind

a non-signatory like the Board to arbitrate “turns on the specific facts of each

case.” Id. at 1248. This issue is for us, not an arbitrator, to resolve, id., unless the

parties have clearly delegated to the arbitrator responsibility for this determination,

AT&T Techs., Inc. v. Commc’ns Workers, 475 U.S. 643, 649, 106 S. Ct. 1415,

1418 (1986). Contrary to the suggestion of Citigroup, we resolve this issue

without a thumb on the scale in favor of arbitration because the “federal policy

favoring arbitration does not apply to the determination of whether there is a valid

agreement to arbitrate between the parties.” Fleetwood Enters., Inc. v. Gaskamp,

                                             15
280 F.3d 1069, 1073 (5th Cir. 2002).

      Citigroup contends that, under general principles of agency law, Adams had

authority to execute the account agreements that contained a broad arbitration

clause. It argues that, although the Board did not expressly authorize Adams to

execute the account agreements, that power was implied in the express grant of

authority to execute the NWQ contract. Citigroup maintains that the authority to

execute the account agreements implied the authority to execute the arbitration

clause contained in those agreements, which by its plain terms requires arbitration

of the dispute at issue here.

      The Board does not argue that the account agreements are invalid or that the

arbitration clause is ineffective as to any dispute arising under those account

agreements, but the Board does argue that the arbitration clause is invalid “with

respect to the claims arising under the Pension Consultant Contract.” The Board

contends that it never provided Adams the authority “to amend the Pension

Consultant Contracts by subjecting them to arbitration.” We disagree with the

Board.

      Adams had implied authority to execute the account agreements. The Board

expressly authorized Adams to execute the NWQ contract, and that grant of

express authority implied “the authority to do acts that are incidental to it, usually

                                           16
accompany it, or are reasonably necessary to accomplish it.” 2 Fla. Jur. 2d Agency

& Employment § 47 (2005) (citing Restatement (Second) of Agency § 35 (1958)).

      In Florida, “[i]t is well-established that an agent’s authority may be inferred

from acts, conduct and other circumstances.” Bradley v. Waldrop, 611 So. 2d 31,

32 (Fla. Dist. Ct. App. 1992). Under Florida law, an agent charged with selling

property in “any way he could” possesses the implied authority to buy surveying

services on behalf of his principal, id. at 32–33, and a real estate agent possesses

the implied authority “to make representations concerning the description and

characteristics of the property to be sold,” Outlaw v. McMichael, 397 So. 2d 1009,

1010 (Fla. Dist. Ct. App. 1981). For similar reasons, the express authority to hire a

named investment manager implies the authority to open an account through which

that manager can perform the only job that it was hired to perform. See Eassa

Props. v. Shearson Lehman Bros., Inc., 851 F.2d 1301, 1304 (11th Cir. 1988).

      Adams’s authority to execute the account agreements also implied the

authority to execute an arbitration clause that requires arbitration of disputes

arising under those and all other agreements. We have held that the “express

authority to select and purchase bonds and to trade commodities on margin”

implies the authority to execute account agreements through which those trades

may be executed, which implies the authority to execute an arbitration clause

                                           17
contained in those account agreements that will bind the principal. Id. Public

entities like the Board are subject to the same rule. E.g., City of Vista v. Sutro &

Co., 52 Cal. App. 4th 401, 409-10, 60 Cal. Rptr. 2d 488, 492–93 (1997); see also

City of Hartford v. Am. Arbitration Ass’n, 174 Conn. 472, 479, 391 A.2d 137,

140–41 (1978). Nothing suggests “that a customer agreement containing an

arbitration clause with a clearing house is unusual or out of the ordinary course of

business for the securities investment world.” 99 Commercial St., Inc. v.

Goldberg, 811 F. Supp. 900, 907 (S.D.N.Y. 1993) (Sotomayor, J.). There also is

nothing unusual about an arbitration clause, especially in an account agreement,

that requires arbitration of all disputes between the parties to the agreement. We

have enforced such a clause before because it “evince[d] a clear intent to cover

more than just those matters set forth in the contract.” Belke v. Merrill Lynch,

Pierce, Fenner & Smith, 693 F.2d 1023, 1028 (11th Cir. 1982), overruled on other

grounds by Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 & n.3, 105 S.

Ct. 1238, 1240–41 & n.3 (1985); see also Coffey v. Dean Witter Reynolds, Inc.,

891 F.2d 261, 262–63 (10th Cir. 1989). The Board cannot avoid the same result

because it acted through its agent.

      Adams acted for the Board, and the Board is bound by “the plain meaning of

the agreement” that he signed. 99 Commercial St., 811 F. Supp. at 907 (binding

                                          18
principal to arbitrate disputes under a customer agreement that it signed because a

customer agreement that its agent later signed with the same party included an

arbitration clause covering “all of a customer’s accounts ‘whether entered prior to,

on or subject to the date hereof’”). Moreover, that the Board and Adams deny that

Adams possessed the authority to agree to arbitrate disputes under the consulting

contract does not determine the issue because “an agency relationship may be

found even though the principal and the agent deny the existence of such a

relationship.” Bradley, 611 So. 2d at 33. The Board has offered no persuasive

reason to conclude that it can avoid arbitration.

      The dissent erroneously contends that Adams lacked implied authority to

bind the Board to an arbitration clause because it was “clear that in the context of

the consulting agreement to these parties such a clause was highly unusual.” This

argument overlooks a critical fact: the Board admits that Adams had the authority

to execute the arbitration agreements and bind the Board to them. That is, the

Board admits that it is contractually bound to resolve by arbitration any dispute

arising out of the account agreements. The only argument of the Board is that we

should ignore that half of the plain language of the arbitration agreements that also

binds the Board to arbitrate disputes arising out of the earlier consulting agreement.

What the dissent calls a “highly unusual” clause is instead nothing of the kind. We

                                          19
refuse to rewrite the terms of the agreements exexuted by Adams so as to allow the

Board to escape its obligation to submit its entire dispute to arbitration.

                                 IV. CONCLUSION

       Because the Board agreed to arbitrate its claims against Citigroup, the

judgment of the district court is REVERSED and this appeal is REMANDED

with instructions that the district court grant the motion of Citigroup to compel

arbitration.

                                           20
MARTIN, dissenting:

      I agree with the Majority that this case turns on the existence and scope of

the principal–agent relationship between the Board and Chairman Adams. I also

agree that the Board intended to create an agency relationship and that in

delegating to Chairman Adams the authority to execute the NWQ Investments

contract, the Board empowered Chairman Adams to take incidental actions

necessary to achieve that end. However, I cannot agree with the Majority’s

conclusion that this delegation empowered Chairman Adams to fundamentally

amend unrelated and preexisting contractual relationships. Because such a result is

neither consistent with the established doctrine of implied actual authority nor

supported by the record before us, I respectfully dissent.

      In short, I believe the Board delegated far less authority to Chairman Adams

than does the Majority. Under the doctrine of implied actual authority, the scope

of an agent’s authority is limited to only that expressly conferred in the delegation

itself, together with that which is incidental to, usually accompanies, or reasonably

necessary to effect the principal’s desired outcome. 2 Fla. Jur. 2d Agency &

Employment § 47 (2010); Restatement (Third) of Agency § 2.02 cmt. d (2006) (“If

a principal’s manifestation to an agent expresses the principal’s wish that

something be done, it is natural to assume that the principal wishes, as an

                                          21
incidental matter, that the agent take the steps necessary and that the agent proceed

in the usual and ordinary way . . . .”); Union Camp Corp. v. Dyal, 460 F.2d 678,

687 (5th Cir. 1972) (invalidating sale of property by agent where sale was not

incidental to the delegation and there was “no evidence that [the land owners]

desired [the sales].”).1

       Based on these principles, the Majority’s opinion is correct only if

renegotiation of the unrelated Citigroup agreement was incidental to or necessary

to effecting the NWQ Investments contract. The problem for the Majority is that

the record does not support this conclusion. The Majority is thus left to argue that

the decision of the district court should not stand because “there . . . is nothing

unusual about an arbitration clause . . . that requires arbitration of all disputes

between the parties to an agreement.” Majority Op. 18. Never mind that the

Majority’s precedent for this point is readily distinguishable,2 the record before us

       1
        In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc) we
adopted as binding precedent all decisions of the former Fifth Circuit handed down before
October 1, 1981.
       2
          In particular, the Majority’s reliance on 99 Commercial St., Inc. v. Goldberg, 811 F.
Supp. 900, 907 (S.D.N.Y. 1993), is misplaced. See Majority Op. 18. In that case, then-Judge
Sotomayor held that in agreeing to a broadly worded arbitration clause in a new account
agreement, an agent subjected a previously opened account with the same brokerage company to
arbitration. 811 F. Supp. at 907. Unlike in this case, however, the accounts at issue in 99
Commercial St. all related to a single mortgage transaction. Id. at 903. Further, it strikes me that
the opinion does nothing to grapple with defining the scope of the agent’s implied authority,
suggesting that this issue was not even before the court. See id. at 907. Therefore, 99
Commercial St. does not speak to the crucial issue before us in this case, which is whether
Chairman Adams possessed the requisite implied actual authority in the first place.

                                                22
is clear that in the context of the consulting agreement to these parties such a

clause was highly unusual. As a result, under the appropriate fact specific inquiry

as to the scope of an agent’s implied authority, see Gadsden County Tobacco Co.

v. Corry, 137 So. 255, 257–58 (Fla. 1931); Bradley v. Waldrop, 611 So. 2d 31, 32

(Fla. 1st DCA 1992), I conclude that the Board did not delegate to Chairman

Adams the authority to amend the preexisting consulting agreement.

      The record is also clear that Chairman Adams lacked any apparent authority

to amend the consulting contract. For apparent authority to have existed, the Board

must have held Adams out as having the authority to amend the consulting contract

and Citigroup must have reasonably relied on that appearance. See Cambridge

Credit Counseling Corp. v. 7100 Fairway, LLC, 993 So. 2d 86, 90 (Fla. 4th DCA

2008). To the extent that the Board held Chairman Adams out as having such

authority, however, Citigroup’s reliance, if any, was not reasonable. It was

intimately involved in the Board’s deliberations over the previously existing

consulting contract and thus knew or should have known that Adams alone could

not effectuate a material change to the contract by inserting an arbitration clause.

See Palafrugell Holdings, Inc. v. Cassel, 940 So. 2d 492, 494 (Fla. 3d DCA 2006)

(party seeking to rely upon the representations of an agent has duty to inquire

further where representations are “facially contrary to the interests” of principal).

                                           23
       I am thus persuaded that Chairman Adams lacked the authority to insert the

disputed arbitration provision into the preexisting consulting agreement. This

being the case, the Board is not bound to arbitrate this or any other disputes arising

from the underlying consulting agreement.3

       For these reasons, I respectfully dissent from the Majority’s opinion. Rather

than overturn the well-reasoned conclusions of the district court, I would affirm

that court’s order and permit this action to proceed in district court. This result is

not only consistent with the settled expectations of both parties, but more

importantly is in accord with long settled principles of agency law that clearly limit

the scope of the implied actual authority at issue here.

       3
         By resolving this appeal on the issue of the scope of Chairman Adams’s authority, I
would not reach the question of whether Florida Sunshine Law or state and local administrative
law deprived Adams of legal authority to amend the consulting contracts. See Majority Op. 14.
However, to the extent this issue bears on the resolution of this case, I must express my
reservations regarding the majority’s reliance, id., on Killearn Properties, Inc. v. City of
Tallahassee, 366 So. 2d 172, 181 (Fla. 1st DCA 1979). Both legally and factually, Killearn is
distinguishable from the case before this Court. First, Killearn is actually a case about estoppel,
not implied authority, see 266 So. 2d at 177–82, and therefore its guidance regarding Florida
Sunshine Laws is limited at best. Second, the record in Killearn evinced substantial and
detrimental reliance on the part of the plaintiff that is not found in the present case. Id. at 174.
Thus, I do not agree that Killearn forecloses any arguments regarding the significance of the
Florida Sunshine Law. See Majority Op. 14.

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