Court Opinion

ID: 2750394
Source: CourtListenerOpinion
Date Created: 2014-11-12 15:02:47.342657+00
Date Added: 2024-06-11T10:17:33.953433
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FOURTH DISTRICT
                               July Term 2014

         SUNSPLASH EVENTS INC., a Florida corporation, and
               SUZANNE E. SNISKY-HOUGHTALING,
                          Appellants,

                                      v.

                             PEDRO ROBLES,
                                Appellee.

                              No. 4D13-4302

                            [November 12, 2014]

  Appeal of a non-final order from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Meenu Sasser, Judge; L.T. Case No.
502012CA008075XX.

    Enrique Nieves, III of King, Nieves & Zacks, PLLC, West Palm Beach,
for appellants.

  Jana Marie Fried and Laura E. Eggnatz of Jfried Law, Weston, for
appellee.

GERBER, J.

   The defendants appeal from the circuit court’s order denying their
motion to compel arbitration of the plaintiff’s claims arising from the
parties’ bill of sale agreement. The defendants argue that an arbitration
clause contained in the parties’ separate employment agreement was
broad enough to encompass claims arising from the bill of sale agreement.
We agree with the defendants and reverse for entry of an order compelling
arbitration of the plaintiff’s claims arising from the bill of sale agreement.

   As alleged in the second amended complaint, the plaintiff entered into
an employment agreement with defendant Sunsplash (the “company”).
The employment agreement (attached to the second amended complaint)
provided as follows regarding the possibility of the plaintiff owning a
competing business:
      Employee warrants that, as of the date of this Agreement, he
      has no ownership interest in . . . any business that competes
      with the Company . . . .

      ....

      During the period of his employment by the Company, and for
      a period of two years immediately following the termination of
      such employment for whatever reason, Employee shall not
      have any direct or indirect ownership or other financial
      interest in any business which competes with the Business of
      the Company . . . .

   The employment agreement also contained the following arbitration
provision, in pertinent part:

      [T]he Parties hereby agree and specifically stipulate that all
      differences, claims or matters of dispute relating to the
      performance of duties and/or benefits arising between the
      Parties to this Agreement contained herein shall be submitted
      to a mutually acceptable arbitrator . . . .

(emphasis added).

    Contemporaneous with the parties’ execution of the employment
agreement, the parties also executed a bill of sale agreement regarding the
plaintiff’s existing business. Under the bill of sale agreement (attached to
the second amended complaint), the plaintiff agreed to transfer ownership
of his inventory, goods, and materials to the company in exchange for cash
and the assumption of the plaintiff’s rental and other obligations.
Consistent with the employment agreement, the bill of sale agreement
provided that the plaintiff agreed to “cease and desist” in the operation of
his business. However, unlike the employment agreement, the bill of sale
agreement did not contain an arbitration provision.

    In the second amended complaint, the plaintiff sued the company and
its president under various claims related to the bill of sale agreement. In
sum, the second amended complaint alleged that the company failed to
pay the plaintiff under the employment agreement or the bill of sale
agreement, and that the company’s president made numerous
misrepresentations to the plaintiff to induce him to enter into the
employment agreement and the bill of sale agreement.

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   The defendants moved to dismiss the second amended complaint and
compel arbitration of the claims relating to the bill of sale agreement. The
defendants argued that the employment agreement’s arbitration provision,
requiring arbitration of “all differences, claims or matters of dispute
relating to the performance of duties and/or benefits arising between the
Parties to this Agreement contained herein,” was “written broadly to
encompass all matter[s] between the parties. . . . Therefore, the issue of
the bill of sale is arbitrable and this case must be dismissed.”

   The plaintiff, in response to the motion to dismiss and compel
arbitration, argued that his claims related to the bill of sale agreement
were “not arbitrable issues as they do not relate to matters specifically
contemplated by the Employment Agreement.” According to the plaintiff:

      Plaintiff’s claims related to the Bill of Sale – a wholly separate
      and independent contract – clearly do not have a contractual
      nexus to the Employment Agreement as they do not present
      circumstances in which the resolution of those claims would
      require either reference to, or construction of[,] the
      Employment Agreement. . . . The Employment Agreement
      does not reference the Bill of Sale, nor does the Bill of Sale
      reference the Employment Agreement. The Bill of Sale
      contains terms and conditions that are solely related to the
      purchase and transfer of ownership of inventory housed in
      two warehouses, and for the rental of those warehouses. The
      Bill of Sale says nothing regarding Plaintiff’s employment with
      [the company], and contains no provisions that even remotely
      suggest that reference to the Employment Agreement would
      be required should a dispute regarding the terms and
      conditions of the Bill of Sale arise. Likewise, the Employment
      Agreement contains no provisions that even remotely suggest
      that any other contracts or agreements, including the Bill of
      Sale, would require reference to the Employment Agreement
      should a dispute regarding the terms and conditions of such
      other contract or agreement arise.              The Employment
      Agreement contains terms and conditions that are solely
      related to Plaintiff’s employment with [the company].
      Therefore, Plaintiff’s claims related to the Bill of Sale are not
      arbitrable issues, and Plaintiff’s Second Amended Complaint
      should not be dismissed.

   The circuit court entered an order denying the defendants’ motion to
dismiss the second amended complaint and compel arbitration.

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   This appeal followed. The defendants argue that the employment
agreement’s broadly written arbitration provision encompasses claims
bearing a significant relationship or nexus to the employment agreement.
According to the defendants:

      [T]he [Plaintiff’s] claims arise from the same operative facts.
      The claims involve alleged misrepresentations to induce
      Plaintiff’s employment and a bill of sale. The employment
      agreement precluded the Plaintiff (a former competitor) from
      working, owning or operating any other business [which
      competes with the company]. The bill of sale itself contains a
      specific clause where [the] Plaintiff must cease and desist from
      the sale of any of the inventory located at the Plaintiff’s
      warehouse unless for the purpose of [the company], and
      requires the closure of [the] Plaintiff’s business. The parties[’]
      relationship, [and] the language of the bill of sale effective the
      same day as the employment agreement, satisfies the
      [“]relating to the performance of duties, and/or benefits[”]
      under the plain language of the arbitration clause.              A
      significant relationship exists and this case must be reversed.

   Upon our de novo review of the four corners of the second amended
complaint and its attached employment agreement and bill of sale
agreement, we agree with the defendant’s argument. See Heller v. Blue
Aerospace, LLC, 112 So. 3d 635, 636 (Fla. 4th DCA 2013) (“A trial court’s
construction of an arbitration provision and denial of a motion to compel
arbitration are reviewed de novo.”) (citation omitted); Jackson v.
Shakespeare Found., Inc., 108 So. 3d 587, 592-93 (Fla. 2013) (review of an
order on a motion to dismiss and compel arbitration “is limited to the four
corners of the complaint and its incorporated attachments”).

   “Generally, the three fundamental elements that must be considered
when determining whether a dispute is required to proceed to arbitration
are: (1) whether a valid written agreement to arbitrate exists; (2) whether
an arbitrable issue exists; and (3) whether the right to arbitration was
waived.” Jackson, 108 So. 3d at 593 (citing Seifert v. U.S. Home Corp., 750
So. 2d 633, 636 (Fla. 1999)). Here, the question is whether the plaintiff’s
claims relating to the bill of sale agreement create an arbitrable issue
under the employment agreement’s arbitration provision.

   Our answer to that question depends upon our determination of
whether the employment agreement’s arbitration provision is narrow in
scope or broad in scope. See Jackson, 108 So. 3d at 593 (“Two basic types
of arbitration provisions have emerged: (1) provisions with language and

                                      4
application narrow in scope, and (2) provisions with language and
application broad in scope.”). As our supreme court held in Jackson:

      An arbitration provision that is considered to be narrow in
      scope typically requires arbitration for claims or controversies
      “arising out of” the subject contract. This type of provision
      limits arbitration to those claims that have a direct
      relationship to a contract’s terms and provisions. In contrast,
      an arbitration provision that is considered to be broad in
      scope typically requires arbitration for claims or controversies
      “arising out of or relating to” the subject contract. The addition
      of the words “relating to” broadens the scope of an arbitration
      provision to include those claims that are described as having
      a “significant relationship” to the contract – regardless of
      whether the claim is founded in tort or contract law.

          A “significant relationship” between a claim and an
      arbitration provision does not necessarily exist merely
      because the parties in the dispute have a contractual
      relationship. Rather, a significant relationship is described to
      exist between an arbitration provision and a claim if there is
      a “contractual nexus” between the claim and the contract. A
      contractual nexus exists between a claim and a contract if the
      claim presents circumstances in which the resolution of the
      disputed issue requires either reference to, or construction of,
      a portion of the contract. More specifically, a claim has a
      nexus to a contract and arises from the terms of the contract if
      it emanates from an inimitable duty created by the parties’
      unique contractual relationship. In contrast, a claim does not
      have a nexus to a contract if it pertains to the breach of a duty
      otherwise imposed by law or in recognition of public policy,
      such as a duty under the general common law owed not only
      to the contracting parties but also to third parties and the
      public.

Id. (internal citations omitted; emphasis added to second paragraph).

   Applying our supreme court’s guidance here, we hold that the plaintiff’s
claims relating to the bill of sale agreement fall within the scope of the
employment agreement’s arbitration provision for four reasons.

   First, as with the contract at issue in Jackson, the employment
agreement here has a broad arbitration provision because it subjects to
arbitration “all differences, claims or matters of dispute relating to the

                                      5
performance of duties and/or benefits arising between the Parties to this
Agreement contained herein.” (emphasis added). See id. at 594 (“In this
case, . . . the contract at issue has a broad arbitration provision because
it subjects ‘[a]ll controversies, claims, and other matters in question
arising out of or relating to this transaction or this Contract or its breach’
to binding arbitration.”).

    Second, the plaintiff’s claims relating to the bill of sale agreement have
a significant relationship to the claims relating to the employment
agreement. According to the second amended complaint, the numerous
misrepresentations alleged to have been made by the company president
to induce the plaintiff into entering the bill of sale agreement are the same
misrepresentations alleged to have been made to induce the plaintiff into
entering the employment agreement. As a result, the claims relating to
the bill of sale agreement are inextricably intertwined with the transaction
from which the employment agreement emanated and the employment
agreement itself. Cf. id. at 595 (“[A]lthough the fraud claim is based on
common law fraud, it is inextricably intertwined with both the
circumstances that surrounded the transaction from which the contract
emanated and the contract itself.”) (footnote omitted).

   Third, resolution of the plaintiff’s claims relating to the bill of sale
agreement requires the construction and consideration of duties arising
under the employment agreement. The bill of sale agreement provided that
the plaintiff agreed to “cease and desist” in the operation of his business.
Consistent with the bill of sale agreement, the employment agreement
imposed upon the plaintiff the duties to warrant that he had “no ownership
interest in . . . any business that competes with the Company” and that,
during the period of his employment by the company, and for a period of
two years immediately thereafter, he would not have “any direct or indirect
ownership or other financial interest in any business which competes with
the Business of the Company.” Given this consistency of duties between
the bill of sale agreement and the employment agreement, the
determination of whether the plaintiff complied with the “cease and desist”
duty of the bill of sale agreement may require a determination of whether
the plaintiff complied with the non-compete provisions of the employment
agreement. Put another way, an issue exists as to whether the plaintiff’s
performance of the “cease and desist” duty under the bill of sale agreement
constituted “performance of duties . . . arising between the Parties” as
described in the employment agreement’s arbitration provision. Cf. id. at
594 (“[R]esolution of the fraud claim requires the construction and
consideration of duties arising under the contract.”).

                                      6
    Fourth, to the extent any ambiguity may exist in the scope of the
employment agreement’s arbitration provision, we resolve that ambiguity
in favor of arbitration. See id. at 593 (“Courts generally favor such
provisions, and will try to resolve an ambiguity in an arbitration provision
in favor of arbitration.”) (citations omitted).

   Based on the foregoing, we reverse for entry of an order compelling
arbitration of the plaintiff’s claims arising from the bill of sale agreement
as pled in the second amended complaint. It is not necessary for the
circuit court to dismiss the plaintiff’s action itself, as we expect the
prevailing party in the arbitration will return to the circuit court at some
point for confirmation of the arbitration decision.

   Reversed and remanded.

LEVINE and KLINGENSMITH, JJ., concur.

                            *        *         *

   Not final until disposition of timely filed motion for rehearing.

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