Court Opinion

ID: 2761785
Source: CourtListenerOpinion
Date Created: 2014-12-17 16:05:21.716058+00
Date Added: 2024-06-11T10:41:44.884646
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FOURTH DISTRICT

             HOUND MOUNDS, INC. and GEOFFREY BODLE,
                           Appellants,

                                      v.

                      ADRIAN FINCH, an individual,
                               Appellee.

                              No. 4D14-1520

                           [December 17, 2014]

   Appeal of a non-final order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Carlos A. Rodriguez, Judge; L.T. Case
No. 13-21959 CACE.

   Gary E. Smith of Gary E. Smith, P.A., Pensacola, for appellants.

  Paul K. Silverberg and Kraig S. Weiss of Silverberg & Weiss, P.A.,
Weston, for appellee.

WARNER, J.

   The trial court stayed arbitration in a dispute between a Florida
resident and a Texas corporation over a franchise agreement entered into
between them. The court concluded that the entire agreement was void as
against public policy. Appellees challenged the agreement as a whole, and
not merely the arbitration provision. The law is clear that issues going to
the validity of the entire agreement are questions for the arbitrator, not the
court. We reverse.

   Appellee purchased a “Poop 911” franchise from appellant Hound
Mounds, Inc. based upon representations as to the growth potential,
services, and territory for the franchise.      The franchise agreement
contained an arbitration provision which required arbitration of disputes
“aris[ing] out of or relating to this Agreement or breach thereof . . . .
Arbitration will be the sole and exclusive procedure for the resolution of
disputes between the FRANCHISEE and Franchisor arising out of or
relating to this Agreement.”
   Later, appellee learned that the franchise was required to provide more
services than he originally thought, and appellants also expanded the
territory appellee was required to cover. Eventually, appellee “was forced
to shut down [his] Poop 911 of South Florida, LLC company to mitigate his
damages.” He then filed suit for violations of Florida Deceptive and Unfair
Trade Practices Act, alleging appellants had failed to provide him a
franchise disclosure document as required by the Federal Trade
Commission, and had misrepresented “the scope of franchise services, the
required total investment, the time and territorial commitments and the
likelihood of success of the business.” He sought damages and attorney’s
fees and “a declaratory judgment that any actions, obligations or other
benefits derived by [Hound Mounds] as a result of the violation of this part,
and therefore in violation of public policy, are unenforceable, rescinded,
void and/or of no further effect[.]”

   When appellee filed suit, Hound Mounds had already begun arbitration
proceedings with appellee in Texas as provided in the arbitration
agreement. Appellee moved the court to stay the proceedings on the
grounds that his complaint alleged that the franchise agreement violated
public policy. After a hearing, the trial court entered a stay. Hound
Mounds appeals.

  Arbitration agreements are governed by the Florida Arbitration Code,
which provided, in relevant part:

     On application the court may stay an arbitration proceeding
     commenced or about to be commenced, if it shall find that no
     agreement or provision for arbitration subject to this law exists
     between the party making the application and the party causing
     the arbitration to be had. The court shall summarily hear and
     determine the issue of the making of the agreement or provision
     and, according to its determination, shall grant or deny the
     application.

§ 682.03(4), Fla. Stat. (2010).1 Arbitration agreements may also be
governed by the Federal Arbitration Act if the agreement involves interstate
commerce, in which case the federal act supersedes inconsistent state law.
See Gilman + Ciocia, Inc. v. Wetherald, 885 So. 2d 900, 903-04 (Fla. 4th
DCA 2004). As this agreement is a franchise agreement between a Texas

1The statute was amended effective July 1, 2013. However, the 2010 version
applies because appellee’s complaint alleges he purchased the franchise in May
2010. See § 682.013(2), Fla. Stat. (2013) (unless the parties agree to be governed
by the 2013 revised code, arbitration agreements “shall be governed by the
applicable law existing at the time the parties entered into the agreement”).

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corporation and a Florida resident, we conclude that it is governed by the
federal act.

   Nevertheless, under either Florida or federal law, only a challenge to an
arbitration clause itself may be determined by the trial court. A challenge
to the entire agreement is an issue which must be arbitrated. This
principle was established by the United States Supreme Court in Buckeye
Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), which held:

     Challenges to the validity of arbitration agreements “upon such
     grounds as exist at law or in equity for the revocation of any
     contract” can be divided into two types. One type challenges
     specifically the validity of the agreement to arbitrate. . . . The
     other challenges the contract as a whole, either on a ground that
     directly affects the entire agreement (e.g., the agreement was
     fraudulently induced), or on the ground that the illegality of one
     of the contract’s provisions renders the whole contract invalid.

                                    ....

     First, as a matter of substantive federal arbitration law, an
     arbitration provision is severable from the remainder of the
     contract. Second, unless the challenge is to the arbitration
     clause itself, the issue of the contract’s validity is considered by
     the arbitrator in the first instance. Third, this arbitration law
     applies in state as well as federal courts. . . . [B]ecause
     respondents challenge the Agreement, but not specifically its
     arbitration provisions, those provisions are enforceable apart
     from the remainder of the contract. The challenge should
     therefore be considered by an arbitrator, not a court.

Id. at 444-46 (footnote omitted, citations omitted); see also Rent-A-Center,
W., Inc. v. Jackson, 561 U.S. 63, 70 (2010) (“[A] party’s challenge to another
provision of the contract, or to the contract as a whole, does not prevent a
court from enforcing a specific agreement to arbitrate.”). Florida law is in
accord. See Charles Boyd Constr., Inc. v. Vacation Beach, Inc., 959 So. 2d
1227, 1231-32 (Fla. 5th DCA 2007) (“[U]nder either the Florida or Federal
view, only an attack on the making of the arbitration provision of the
contract raises an issue for the court to decide.”); see also CFC of Delaware
LLC v. Santalucia, 91 So. 3d 899, 901 (Fla. 4th DCA 2012) (noting analysis
of whether a claim is subject to arbitration was the same under either).

    Appellee’s motion to stay arbitration was based on the alleged invalidity
of the entire franchise agreement between the parties; it did not specifically

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attack the arbitration provision. Therefore, the issue of the invalidity of
the entire agreement is subject to arbitration, and the court erred in
staying arbitration. Appellee cites to Shotts v. OP Winter Haven, Inc., 86
So. 3d 456 (Fla. 2011), and Global Travel Marketing, Inc. v. Shea, 908 So.
2d 392 (Fla. 2005), but both cases are inapposite because both dealt with
the validity of the arbitration agreement itself and not the whole agreement
between the parties.

   The trial court’s order staying the pending arbitration proceedings is
reversed and remanded to vacate the stay.

TAYLOR and KLINGENSMITH, JJ., concur.

                           *         *         *

   Not final until disposition of timely filed motion for rehearing.

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