Court Opinion

ID: 2795707
Source: CourtListenerOpinion
Date Created: 2015-04-22 15:02:52.738514+00
Date Added: 2024-06-11T11:18:13.619600
License: Public Domain

Third District Court of Appeal
                                State of Florida

                            Opinion filed April 22, 2015.
          Not final until disposition of timely filed motion for rehearing.
                                ________________

                         Nos. 3D14-1804; 3D14-1803
                    Lower Tribunal Nos. 09-66466; 09-66128
                              ________________

                              Edie Laquer, et. al.,
                                     Appellants,

                                         vs.

                            Arthur Falcone, et. al.,
                                     Appellees.

      Appeals from the Circuit Court for Miami-Dade County, Jerald Bagley,
Judge.

      Paul Morris, for appellants.

      Berger Singerman LLP, and Mitchell W. Berger and Elaine Johnson James,
for appellees.

Before ROTHENBERG, EMAS and FERNANDEZ, JJ.

      FERNANDEZ, J.

      Edie Laquer, et al., appeal from a final judgment in which the trial court

confirmed an arbitration award; and the denial of their motion for rehearing and
reconsideration and motion to vacate or correct the final arbitration award. We

reverse the trial court’s final judgment because the arbitrator lacked jurisdiction to

enter the award after Laquer voluntarily dismissed her cross-claims.

      Laquer filed an action against Arthur Falcone and various limited liability

companies, known as the Joint Venture Lawsuit, which involves a dispute over

Laquer’s equity interest in a twenty-five acre real estate project. In separate

foreclosure actions, the mortgagee sued Laquer. Laquer then cross-claimed in the

Joint Venture Lawsuit against Falcone for indemnification, alleging that Falcone

breached his duty to defend in the foreclosure actions. Falcone moved to compel

arbitration of the Duty to Defend cross-claims based on the dispute resolution

provisions of the LLC operating agreements. The trial court denied the motion,

finding that the parties waived their right to demand arbitration when they

participated in the foreclosure lawsuits and the Joint Venture Lawsuit. This Court

reversed in 13 Parcels LLC v. Laquer, 104 So. 3d 377 (Fla. 3d DCA 2012),

holding that the arbitration provision in the LLC operating agreements controlled

the Duty to Defend cross-claims arising out of the foreclosure actions.

      Subsequently, Falcone moved to compel arbitration of the Joint Venture

Lawsuit. The trial court denied the motion. This Court affirmed in Falcone v.

Laquer, 132 So. 3d 1171 (Fla. 3d DCA 2014), and declined to order the Joint

Venture Lawsuit into arbitration, noting that the Joint Venture Lawsuit was a much

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larger case that included claims, parties, and alleged agreements that were not

subject to arbitration. Id. at 1173-74. On remand, the trial court stayed the cross-

claims, pursuant to section 682.03, Florida Statutes (2013), and the court referred

the cross-claims to arbitration.

      Before the start of arbitration, Laquer settled with the mortgagee. Laquer

thereafter filed voluntary dismissals of the Duty to Defend cross-claims. At the

arbitration hearing, Laquer argued that the arbitrator lacked subject matter

jurisdiction and that the hearing was futile because there was no arbitrable dispute

after she voluntarily dismissed the cross-claims. Following a three-day hearing at

which Laquer did not participate and Falcone presented witnesses and exhibits, the

arbitrator entered an award. The arbitrator concluded that Laquer would take

nothing in the Duty to Defend cross-claims. Laquer opposed confirmation of the

arbitrator’s award, noting her intention to file a motion to vacate the award within

the 90-day statutory period, pursuant to section 682.13(2), Florida Statutes (2013).

The trial court entered judgment confirming the arbitrator’s award.

      Laquer moved for rehearing and reconsideration, and to vacate the award.

Laquer maintained that the arbitrator lacked subject matter jurisdiction. Laquer

also argued that the arbitrator exceeded the scope of his jurisdiction when the

arbitrator made findings of fact relevant only to the Joint Venture Lawsuit. At the

non-evidentiary hearing, Falcone argued that the stay of litigation pending

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arbitration rendered Laquer’s notices of voluntary dismissals ineffective. The trial

court agreed with Falcone that, because Laquer did not come forward to lift the

stay, the voluntary dismissals could not receive proper recognition. The trial court

denied Laquer’s motion for rehearing and reconsideration, and the court held that

the motion was to be scheduled for an evidentiary hearing if the cross-claimants

desired.

      Our review of an arbitration award “is very limited, with a high degree of

conclusiveness attaching” to the award. Marr v. Webb, 930 So. 2d 734, 737 (Fla.

3d DCA 2006). Section 682.13(1), Florida Statutes (2013), lists the grounds upon

which a court shall vacate an arbitration award upon the application of a party.

One of the grounds upon which a court must vacate an arbitration award is when

“the arbitrators . . . in the course of her or his jurisdiction exceeded their powers.”

§ 682.13(1)(d), Fla. Stat. (2013). See also Glick v. Retamar, 922 So. 2d 1108,

1109 (Fla. 4th DCA 2006) (stating that an arbitration award will not be set aside

“for a mere error of judgment unless . . . the arbitrator exceeded the scope of his

authority”). “In the absence of one of the five factors set forth in the statute, neither

the trial court nor this court has the authority to overturn the arbitration award.”

Marr, 930 So. 2d at 737.

      The first issue we address is whether the stay entered rendered the voluntary

dismissals ineffective such that the arbitrator retained jurisdiction to enter an award

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on the Duty to Defend cross-claims. If the stay did not render the voluntary

dismissals ineffective, this Court must decide whether the voluntary dismissals

operated to deprive the arbitrator of jurisdiction to enter an award. We answer the

first issue in the negative and conclude that the voluntary dismissals deprived the

arbitrator of jurisdiction to enter an award.

      The “effect of a stay of proceedings is to prevent the taking of any further

steps in the action during the period of the stay.” Ocala Breeders’ Sales Co. v.

Brunetti, 567 So. 2d 490, 492 (Fla. 3d DCA 1990). Here, the purpose of the stay

was to allow the parties to resolve their issues through arbitration under the dispute

resolution provisions of the LLC operating agreements. We agree with Laquer that

when she voluntarily dismissed her Duty to Defend cross-claims, she did not take

any further steps in the action, instead, Laquer did the opposite—she ceased to take

any further steps in the action when she put an end to the action altogether. Thus,

the stay on the cross-claims pending arbitration should not have precluded the

voluntary dismissals.

      Laquer contends that the trial court erred when it confirmed the arbitration

award because there was no dispute left to arbitrate. We agree. Florida Rule of

Civil Procedure 1.420(a)(1), provides, in pertinent part:

             By Parties. Except in actions in which property has been
             seized or is in the custody of the court, an action, a claim,
             or any part of an action or claim may be dismissed by
             plaintiff without order of court (A) before trial by

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            serving, or during trial by stating on the record, a notice
            of dismissal at any time before a hearing on motion for
            summary judgment, or if none is served or if the motion
            denied, before retirement of the jury in a case tried before
            a jury or before submission of a nonjury case to the court
            for decision, or (B) by filing a stipulation of dismissal
            signed by all current parties to the action . . .

(emphasis added). Florida courts have consistently construed Florida Rule of Civil

Procedure 1.420 as “meaning that, at any time before a hearing on a motion for

summary judgment, a party seeking affirmative relief has nearly an absolute right

to dismiss his entire action once, without a court order, by serving a notice of

dismissal.” Ormond Beach Assocs. Ltd. v. Citation Mortg., Ltd., 835 So. 2d 292,

295 (Fla. 5th DCA 2002).

      However, “there is a common law exception to the rule that a voluntary

dismissal deprives a court of jurisdiction where a defendant demonstrates serious

prejudice if the dismissal is upheld.” Soares Da Costa Constr. Servs., LLC v. Alta

Mar Dev., LLC, 85 So. 3d 1172, 1174 (Fla. 2d DCA 2012). Serious prejudice

could include situations in which the defendant “is entitled to receive affirmative

relief or a hearing and disposition of the case on the merits, has acquired

substantial rights in the cause, or where the dismissal is inequitable.” Ormond

Beach, 835 So. 2d at 295.

      We conclude that the Ormond Beach exception does not apply.            First,

Falcone did not seek any affirmative relief. Moreover, the Duty to Defend cross-

                                         6
claims, which were the only claims subject of the arbitration, were dismissed.

Second, Falcone has not demonstrated serious prejudice. Falcone argues that he

has acquired a substantial right in the litigation, such that the Ormond Beach

exception indeed applies. Specifically, Falcone argues that the final award of the

arbitrator empowers him to obtain attorney’s fees, costs and expenses incurred as a

result of Laquer’s demand that Falcone defend the foreclosure actions, and

subsequent efforts to avoid arbitration of the dispute, as the LLC operating

agreements required.

      Falcone is mistaken that he acquired substantial rights in the litigation. In

Soares Da Costa Constr. Servs., LLC v. Alta Mar Dev., LLC, 85 So. 3d 1172 (Fla.

2d DCA 2012), the contractor filed a lien against the developer. Id. at 1173. The

parties then stipulated to stay the action pending arbitration. Id. The parties also

explicitly recognized that “the issues raised in the arbitration proceedings were the

same issues underlying the [contractor’s] complaint.” Id. at 1174. The arbitrator

entered an award in favor of the developer, who then filed a motion to confirm the

arbitration award. Id. at 1173. The contractor then filed its notice of voluntary

dismissal after the arbitrator entered an award in favor of the developer. Id. The

Second District concluded that the contractor could not voluntarily dismiss his case

because, under the Ormond Beach exception, the developer had acquired

substantial rights in the litigation after the developer prevailed on his counterclaim

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in the arbitration proceeding because the developer’s motion to confirm the

arbitration award “acted as a counterclaim in the lien action once the motion to

confirm was filed and served.” Id. The Second District also noted:

               [B]y virtue of the stipulation between the parties that the
               issues underlying the complaint in the claim of lien
               action were also the issues involved in the arbitration, the
               parties each attached some level of importance to the
               determination of the issues by the arbitration panel . . .
               [such] that the prevailing party in the arbitration
               proceedings acquired substantial rights in the cause.

Id. at 1175.

      This case, however, is distinguishable from Soares because Laquer filed the

voluntary dismissals prior to the arbitration proceeding. Falcone, as opposed to

the developer in Soares, had not yet received an arbitration award when the

voluntary dismissal was filed. Thus, at the time of the filing the voluntary

dismissals, Falcone had not acquired the substantial rights in the litigation in the

same way that the developer had in Soares. Thus, Falcone suffered no serious

prejudice.

      Laquer raised other grounds upon which to vacate the arbitration award,

including that the arbitrator exceeded the scope of his jurisdiction when the

arbitrator made findings of fact relevant only to the Joint Venture Lawsuit.

Falcone counters that the arbitrator did not exceed his jurisdiction because the LLC

operating agreements gave the arbitrator a broad grant of authority to arbitrate any

                                            8
dispute arising between the parties that had not been resolved through negotiation.

However, the matter compelled to arbitration was the Duty to Defend cross-claims,

not the Joint Venture Lawsuit. In fact, this Court had already held that the Joint

Venture Lawsuit was not subject to arbitration. See Falcone v. Laquer, 132 So. 3d

1171 (Fla. 3d DCA 2014). Thus, Laquer is correct that the arbitrator exceeded his

jurisdiction when it made findings of fact relative to the Joint Venture Lawsuit.

      We therefore conclude that Laquer’s voluntary dismissals deprived the

arbitrator of subject matter jurisdiction over the Duty to Defend cross-claims.

Because the arbitrator exceeded his jurisdiction when he entered the award, we

reverse the trial court’s judgment in which the court affirmed the arbitration award.

      Reversed and remanded.

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