Court Opinion

ID: 6113110
Source: CourtListenerOpinion
Date Created: 2022-01-27 16:02:47.009209+00
Date Added: 2024-06-11T08:00:17.605432
License: Public Domain

Supreme Court of Florida
                            ____________

                           No. SC19-1371
                            ____________

                    SHANE R. HAYSLIP, et al.,
                          Petitioners,

                                 vs.

                   U.S. HOME CORPORATION,
                          Respondent.

                         January 27, 2022

LABARGA, J.

     This case is before the Court for review of the decision of the

Second District Court of Appeal in Hayslip v. U.S. Home Corp., 276

So. 3d 109 (Fla. 2d DCA 2019), which certified the following

question as one of great public importance:

     DOES A MANDATORY ARBITRATION PROVISION
     CONTAINED WITHIN A RESIDENTIAL WARRANTY DEED
     CONVEYING RESIDENTIAL PROPERTY FROM HOME
     BUILDER TO ORIGINAL PURCHASER RUN WITH THE
     LAND SUCH THAT IT IS BINDING ON SUBSEQUENT
     PURCHASERS WHERE THE INTENDED NATURE OF
     THE PROVISION IS CLEAR AND THE PARTY AGAINST
     WHOM ENFORCEMENT IS SOUGHT WAS ON NOTICE
     OF THE PROVISION?
Id. at 118. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.

We rephrase the certified question as follows:

     DOES A DEED COVENANT REQUIRING THE
     ARBITRATION OF ANY DISPUTE ARISING FROM A
     CONSTRUCTION DEFECT RUN WITH THE LAND, SUCH
     THAT IT IS BINDING UPON A SUBSEQUENT
     PURCHASER OF THE REAL ESTATE WHO WAS NOT A
     PARTY TO THE DEED?

     We answer the rephrased certified question in the affirmative

and approve the decision of the Second District Court of Appeal.

            FACTS AND PROCEDURAL HISTORY

     In 2007, the home at issue in the present case (the Home) was

constructed and sold by U.S. Home to the original purchasers, with

transfer of title being conveyed from U.S. Home to the original

purchasers via special warranty deed (Original Deed), which was

recorded in the Official Records of Lee County, Florida. Hayslip,

276 So. 3d at 112. The Original Deed contained the following

provision (the Arbitration Provision):

     Grantor and Grantee specifically agree that this
     transaction involves interstate commerce and that any
     dispute . . . shall first be submitted to mediation and, if
     not settled during mediation, shall thereafter be
     submitted to binding arbitration as provided by the
     Federal Arbitration Act . . . and not by or in a court of law
     or equity.

                                 -2-
Id. The Original Deed also contains several covenants, conditions,

and restrictions (CC&Rs) concerning the Home. These recorded

CC&Rs provide that they: (1) bind both the original purchasers and

subsequent purchasers; and (2) require arbitration for disputes

concerning the Home. The Original Deed also provides that its

CC&Rs run with the land:

     All covenants, conditions and restrictions contained in
     this Deed are equitable servitudes, perpetual and run
     with the land including, without limitation, Sections H, I,
     and J.

Section J of the Original Deed expressly states that acceptance of

the Original Deed binds successors and assigns to its terms:

     Grantee, by acceptance of this Deed, automatically
     agrees for itself, and its heirs, personal representatives,
     successors and assigns, to observe and to be bound by
     all of the terms and conditions set forth in this Deed.

Id. at 112.

     In 2010, the original purchasers sold the Home to the

Hayslips. The Hayslips’ 2010 deed provides that it is “[s]ubject to

easements, restrictions, reservations and limitations, if any.” Id.

     In 2017, the Hayslips filed a lawsuit against U.S. Home

pursuant to section 553.84, Florida Statutes (2016), alleging that

U.S. Home improperly installed the stucco system on the Home in

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violation of the Florida Building Codes Act. 276 So. 3d at 112. In

response, U.S. Home filed a Motion to Dismiss or Stay and Compel

Arbitration. Id. at 112-13. Following a hearing, the general

magistrate denied U.S. Home’s request to dismiss the action and

granted U.S. Home’s request to stay the action and compel

arbitration. Id. at 113. The circuit court adopted the general

magistrate’s report and recommendation, and the Hayslips

appealed. Id. On appeal to the Second District, the court held that

a valid arbitration agreement existed, that it was a covenant

running with the land, and affirmed the circuit court’s order. Id. at

118. The district court then certified the question set forth above

as one of great public importance.

                             ANALYSIS

     The Hayslips argue that they are not bound by the Arbitration

Provision because it is not a covenant running with the land.

Covenants are divisible into two major classes: (1) real covenants

which run with the land and typically bind the heirs and assigns of

the covenanting parties, and (2) personal covenants which bind only

the covenanting parties personally. See Palm Beach Cnty. v. Cove

Club Invs. Ltd., 734 So. 2d 379, 382 n.4 (Fla. 1999); see also Caulk

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v. Orange County, 661 So. 2d 932, 933 (Fla. 5th DCA 1995).

Although they dispute the application of the test to the facts of this

case, the parties agree that the following three conditions must

exist to create a valid and enforceable covenant running with the

land: “(1) the existence of a covenant that touches and involves the

land; (2) an intention that the covenant run with the land; and

(3) notice of the restriction on the part of the party against whom

enforcement is sought.” Winn-Dixie Stores, Inc. v. Dolgencorp, Inc.,

964 So. 2d 261, 265 (Fla. 4th DCA 2007). We conclude that all

three factors are present here and that the arbitration provision is a

real covenant running with the land.

     The distinction between a real covenant and a personal

covenant was articulated by the Third District Court of Appeal in

Maule Industries, Inc. v. Sheffield Steel Products, Inc., 105 So. 2d

798 (Fla. 3d DCA 1958). The Third District defined a real covenant

running with the land as one concerning the property conveyed and

the occupation and enjoyment thereof. Id. at 801. “If the

performance of the covenant must touch and involve the land or

some right or easement annexed and appurtenant thereto, and

tends necessarily to enhance the value of the property or renders it

                                 -5-
more convenient and beneficial to the owner, it is a covenant

running with the land.” Id.

     The performance of the covenant in the present case affects

the occupation and enjoyment of the home, as it dictates the means

by which the Hayslips must seek to rectify building defects related

to the home. See, e.g., Hagan v. Sabal Palms, Inc., 186 So. 2d 302,

310 (Fla. 2d DCA 1966). Not only is the covenant triggered when an

apparent defect in the home is realized and the homeowners seek

recourse from the builder, but the outcome of the arbitration

proceeding necessarily impacts the home as well. Thus, the

arbitration provision touches and concerns the property itself

because it “affect[s] ‘the mode of enjoyment of the premises.’ ”

Winn-Dixie Stores, 964 So. 2d at 264 (quoting Dunn v. Barton, 16

Fla. 765, 771 (1878)). Moreover, “the thing required to be done” in

the present case—arbitrate the dispute—touches the enjoyment of

the land because the Hayslips benefit from the defective stucco

being resolved. Hagan, 186 So. 2d at 310 (quoting Maule Indus.,

105 So. 2d at 801). The responsibility to build the home in

accordance with the applicable laws and regulations is directly

                                 -6-
linked to the contract. For all of these reasons, we conclude that

the arbitration provision touches and involves the land.

     As to the original contracting parties’ intent, the Original Deed

specifies that all covenants run with the land.

     G. All covenants, conditions and restrictions contained in
     this Deed are equitable servitudes, perpetual and run
     with the land including, without limitation, Sections H, I,
     and J.

      ....

     I. Grantor and Grantee specifically agree that this
     transaction involves interstate commerce and that any
     Dispute (as hereinafter defined) shall first be submitted
     to mediation and, if not settled during mediation, shall
     thereafter be submitted to binding arbitration as provided
     by the Federal Arbitration Act (9 U.S.C. §§1 et seq.) and
     not by or in a court of law or equity.

     Therefore, the language of the Original Deed expressly

provides that the original parties intended that the arbitration

provision runs with the land.

     Finally, as to notice, the Hayslips also dispute the existence of

a valid arbitration agreement because, by not being signatories to

the Original Deed, they did not intend to be bound by the

arbitration provision. However, a deed covenant may be enforced

against a successor grantee so long as the successor grantee had

                                 -7-
notice of the covenant, see Park Ave. BBQ & Grille of Wellington, Inc.

v. Coaches Corner, Inc., 746 So. 2d 480, 482 (Fla. 4th DCA 1999),

and under section 695.11, Florida Statutes (2016), if an instrument

is recorded in the official county records, such recording “shall be

notice to all persons.” See also Hagan, 186 So. 2d at 310 (quoting

26 C.J.S. Deeds § 167(1) (“[I]f [a restrictive covenant] runs with the

land, the covenant binds the owner regardless of knowledge, and if

not, he is bound only if he took the land with notice.”). The

Hayslips had constructive notice of the arbitration provision

because it was properly recorded. Accordingly, the Hayslips are

bound by the arbitration provision.

                            CONCLUSION

     For the reasons expressed, we answer the rephrased certified

question in the affirmative and approve the result reached in the

Second District Court of Appeal.

     It is so ordered.

CANADY, C.J., and POLSTON, LAWSON, MUÑIZ, COURIEL, and
GROSSHANS, JJ., concur.

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

Application for Review of the Decision of the District Court of Appeal

                                 -8-
     Certified Great Public Importance

     Second District – Case No. 2D17-4372

     (Lee County)

Joshua E. Burnett of Burnett Law, P.A., Tampa, Florida,

     for Petitioners

David M. Gersten, Marie H. Kim, and Ryan M. Wolis of Gordon Rees
Scully Mansukhani LLP, Miami, Florida; and C. David Harper of
Foley & Lardner LLP, Tampa, Florida,

     for Respondent

Kenneth B. Bell and John W. Little, III of Gunster, West Palm
Beach, Florida; and Robert W. Goldman of Goldman Felcoski &
Stone, P.A., Naples, Florida,

     for Amicus Curiae Real Property Probate & Trust Law Section
     of The Florida Bar

Manuel Farach of McGlinchey Stafford, PLLC, Fort Lauderdale,
Florida,

     for Amicus Curiae Florida Land Title Association

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