Court Opinion

ID: 2822478
Source: CourtListenerOpinion
Date Created: 2015-07-30 21:19:45.242017+00
Date Added: 2024-06-11T12:34:46.108914
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                             FOURTH DISTRICT

   BANK OF AMERICA, N.A., MARK R. MALLER, BRIAN MORMILE,
         DOUGLAS DIVIRGILIO and FREDERICK PERRY,
                          Appellants,

                                     v.

               DON BEVERLY and DEAN KRETSCHMAR,
                           Appellees.

                     Nos. 4D14-3167 and 4D14-3168

                             [June 10, 2015]

   Consolidated appeals of non-final orders from the Circuit Court for the
Seventeenth Judicial Circuit, Broward County; Jeffrey E. Streitfeld, Judge;
L.T. Case Nos. 14-006271 CACE 07 and 14-006251 CACE 07.

  Gary M. Bagliebter and Rachel H. LeBlanc of Shutts & Bowen LLP, Fort
Lauderdale, for appellant Frederick Perry.

   Kim M. Watterson, Mary J. Hackett and Jarrod D. Shaw of Reed Smith
LLP, Pittsburgh, PA, Richard C. Hutchinson and Katherine M. Joffe of
Holland & Knight LLP, Fort Lauderdale, and William N. Shepherd of
Holland & Knight LLP, West Palm Beach, for appellants Bank of America,
N.A., Mark R. Maller, Brian Mormile, and Douglas DiVirgilio.

   Harley S. Tropin, Thomas A. Tucker Ronzetti, Adam M. Moskowitz, Gail
A. McQuilkin and Dyanne E. Feinberg of Kozyak Tropin Throckmorton,
LLP, Coral Gables, and William R. Scherer of Conrad & Scherer, LLP, Fort
Lauderdale, for appellees.

WARNER, J.

    Bank of America appeals from orders denying its request for arbitration
in two cases, which we have consolidated for purposes of this appeal. It
claims that an arbitration provision in a loan agreement with its customer,
who is the plaintiff-appellee in one case, should apply to all appellees in
both cases, and the trial court erred in failing to order arbitration. We
agree that the court should have ordered arbitration as to the signatories
of the loan agreement, but we affirm the court’s denial of arbitration as to
the non-signatories of the agreement containing the arbitration clause.
    These consolidated cases arise out of the Scott Rothstein Ponzi scheme.
The plaintiffs in Kretschmar v. Bank of America, N.A. are Douglas Von
Allmen and his affiliated companies and family members. The plaintiffs in
Beverly v. Bank of America are individuals and entities who claim to have
been injured as a result of the bank’s conduct. The Kretschmar plaintiffs
alleged that the bank induced Von Allmen, a bank customer, to invest in
the Banyon Income Fund (a feeder fund for the Rothstein Ponzi scheme)
without informing him of its assessment that Rothstein’s investments were
most likely fraudulent. The complaint alleged that, relying on information
from Von Allmen, various members of Von Allmen’s family also invested in
the Rothstein Ponzi scheme. When the Ponzi scheme collapsed, Von
Allmen, his affiliated corporations, and family members lost most of their
investment.

   The Beverly complaint was brought by plaintiffs who were not parties
to the loan agreement and generally had no relationship with the bank.
The complaint alleged that the bank’s failure to properly advise Von Allmen
regarding the fraudulent nature of Banyon caused Von Allmen to invest in
Banyon, thus propping up Rothstein’s Ponzi scheme and allowing
Rothstein to continue his fraud and obtain monies from the seventy-eight
plaintiffs in Beverly.1 The plaintiffs also lost their investments.

   Years before, Von Allmen and his corporation, D&L Partners, had
entered into a loan agreement with the bank to construct a large yacht.
That agreement included a very broad arbitration clause. In 2009, after
Von Allmen and his family had already invested several million dollars in
Banyon, Von Allmen borrowed more funds from the bank to add to this
investment. The loan was memorialized in the Fifth Amendment to the
prior loan agreement. The agreement also contained a nearly identical
arbitration provision to the one in the original loan agreement. It included
the following terms:

    (a) This Dispute Resolution Provision concerns the resolution of
        any controversies or claims between the parties, whether
        arising in contract, tort or by statute, including but not limited
        to controversies or claims that arise out of or relate to: (i) this
        agreement . . . or (ii) any document related to this agreement
        (collectively a “Claim”).

1 Whether or not this set of facts even states a valid cause of action is not an
issue before us.

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   (b) At the request of any party to this agreement, any Claim shall
       be resolved by binding arbitration . . . .

                                 ***

   (e) . . . Any dispute concerning this arbitration provision or
      whether a Claim is arbitrable shall be determined by the
      arbitrator(s) . . . .

   After the plaintiffs filed suit, the bank moved to compel arbitration in
both cases based upon the foregoing arbitration provision, claiming that
the signatories to the agreement were bound by the arbitration provision,
and the non-signatories should also be bound because their claims rest
on allegations of the bank’s breach of duty to Von Allmen. The court
denied the motion, concluding that the causes of action did not have a
significant relationship to the loan agreement containing the arbitration
clause, relying on Seifert v. United States Home Corp., 750 So. 2d 633 (Fla.
1999). In Beverly, the court also determined that the plaintiffs, as non-
signatories, were not bound by the agreement to arbitrate. From these
orders, the bank appeals.

   An order denying a motion to compel arbitration is reviewed de novo.
Hospicecare of Se. Fla., Inc. v. Major, 968 So. 2d 117, 118 (Fla. 4th DCA
2007); Cintas Corp. No. 2 v. Schwalier, 901 So. 2d 307, 309 (Fla. 1st DCA
2005). “Courts generally favor [arbitration] provisions, and will try to
resolve an ambiguity in an arbitration provision in favor of arbitration.”
Jackson v. Shakespeare Found., Inc., 108 So. 3d 587, 593 (Fla. 2013).

   Whether to compel arbitration requires a determination of three issues:
1) whether a valid arbitration agreement exists; 2) whether an arbitrable
issue exists; and 3) whether the right to arbitration has been waived. See
Seifert, 750 So. 2d at 636. This case involves solely the second issue.

   “The question whether the parties have submitted a particular dispute
to arbitration, i.e., the ‘question of arbitrability,’ is ‘an issue for judicial
determination [u]nless the parties clearly and unmistakably provide
otherwise.’” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)
(quoting AT & T Techs., Inc. v. Commc’ns Workers, 475 U.S. 643, 649
(1986)); see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944
(1995). Where the agreement “clearly and unmistakably” provides for the
arbitrator to determine the issue of arbitrability of a dispute, courts should
enforce the agreement as written. Mercedes Homes, Inc. v. Colon, 966 So.
2d 10, 14 (Fla. 5th DCA 2007).

                                       3
    There is an express agreement in arbitration provisions in the loan
agreements that the arbitrator shall determine the arbitrability of any
claim. The scope of the arbitration provision in the agreement was very
broad, broader than simply requiring the arbitration of claims involving
the subject matter of the loan. The parties agreed to arbitrate any dispute
between them, including but not limited to, disputes arising out of the loan
agreements. They agreed to arbitrate those disputes, whether they arose
in tort or in contract. And they expressly agreed that the arbitrator would
determine the arbitrability of a claim. Both the original loan agreement
and the Fifth Amendment to it also expressly provided that the Dispute
Resolution Procedure was a “material inducement for the parties entering
into this agreement.” Based upon Howsam, the parties “clearly and
unmistakably” agreed to submit the question of arbitrability to the
arbitrator.

   The bank is entitled to enforce the terms of the arbitration agreement.
Thus, the court erred in determining arbitrability of the claims made by
the signatories to the loan agreement, namely, Douglas Von Allmen and
D&L Partners, LP. Arbitrability of a claim must be determined by the
arbitrator.

   The remainder of the plaintiffs in Kretschmar and all of the plaintiffs in
Beverly are non-signatories to the agreement. The trial court correctly
determined that none of them are bound by the arbitration provision in
the loan agreement. “Given the principle that a party can be forced to
arbitrate only those matters one has specifically agreed to arbitrate, courts
should avoid engaging in interpretation of the agreements of other parties
in order to require non-parties to arbitrate.” Morgan Stanley DW Inc. v.
Halliday, 873 So. 2d 400, 405 (Fla. 4th DCA 2004). The bank’s reliance
on cases involving derivative claims, third party beneficiary status, and
equitable estoppel are all factually far off the mark from the allegations in
this case as to the non-signatories, none of whose claims can be
categorized as such.

   As to the contention that the non-signatories’ claims should be stayed
while arbitration proceeds with respect to the signatories, the trial court
did not rule on this, as it denied arbitration entirely. On remand, the trial
court may consider whether to stay either action, although we note that
principles of res judicata and collateral estoppel would not bind any of the
non-signatories to any results of an arbitration proceeding, as there is no
identity of parties. See Accardi v. Hillsboro Shores Imp. Ass’n, 944 So. 2d
1008, 1012 (Fla. 4th DCA 2005) (In order for res judicata to bar
subsequent claims, four identities must be established: “(1) identity in the

                                     4
thing sued for; (2) identity of the cause of action; (3) identity of the persons
and parties to the actions; and (4) identity of the quality or capacity of the
persons for or against whom the claim is made. . . . Collateral estoppel
may be employed where two causes of action fail to meet the identity test
[of res judicata], but the other identities are present, i.e., identity of parties
and issues.”) (internal quotation marks and citations omitted).

    We thus reverse the trial court’s order denying arbitration in the
Kretschmar case to the extent that it determined arbitrability of the claims
of Von Allmen and D&L Partners, LP. Those claims should be submitted
to the arbitrator, pursuant to the terms of the loan agreements. We affirm
the denial of arbitration of the claims of the remaining Kretschmar
plaintiffs. We also affirm the denial of arbitration in Beverly.

   Affirmed in part; reversed in part and remanded for further proceedings.

GROSS and CONNER, JJ., concur.

                              *         *         *

   Not final until disposition of timely filed motion for rehearing.

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