Court Opinion

ID: 9948071
Source: CourtListenerOpinion
Date Created: 2024-03-06 15:04:05.925305+00
Date Added: 2024-06-11T14:29:03.728343
License: Public Domain

DISTRICT COURT OF APPEAL OF FLORIDA
                       SECOND DISTRICT

                    VENN THERAPEUTICS, LLC;
               SAM SHRIVASTAVA; and SANDIP PATEL,

                               Appellants,

                                   v.

              CAC PHARMA INVESTMENTS, LLC, and C&J
                 HEALTHCARE INVESTMENTS, LLC,

                               Appellees.

                       Nos. 2D23-819, 2D23-821
                            CONSOLIDATED

                             March 6, 2024

Appeal pursuant to Fla. R. App. P. 9.130 from the Circuit Court for
Hillsborough County; Rex Martin Barbas, Judge.

Steven L. Brannock and Sarah B. Roberge of Brannock Berman & Seider,
Tampa, for Appellants.

Lindsay Patrick Lopez, Adam B. Brouillet, and Brigid A. Merenda of
Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, P.A., Tampa, for
Appellees.

CASANUEVA, Judge.

     The Appellants seek review of an order denying their motions to
compel arbitration or dismiss the Appellees' complaint. They argue that
the arbitration provision contained in the parties' agreements require
that this dispute be resolved in arbitration. The trial court found that
although the arbitration clause in the parties' contracts is broad, the
Appellees' claims are not subject to arbitration because the claims do not
arise from the contract. We conclude that a significant nexus exists
between the allegations in the complaint and the parties' agreements,
and we reverse.
                    I. THE ARBITRATION PROVISION
      CAC Pharma Investments and C&J Healthcare Investments both
invested in Venn Therapeutics; CAC and Venn entered into a
Subscription Agreement, and C&J and Venn entered into a Private
Placement Agreement. Both of the Appellees' agreements contain the
same arbitration clause, and the discrete focus of the issue before this
court is the language of that arbitration clause.
      The arbitration provision in the parties' agreements provides as
follows:
      13. Arbitration
      13.1. The parties agree to submit all controversies to
      arbitration in accordance with the provisions set forth below
      and understand that:
           a.    Arbitration shall be final and binding on the
           parties.
           b.    The parties are waiving their right to seek
           remedies in court, including the right to a jury trial.
           c.    Pre-arbitration discovery is generally more limited
           and different from court proceedings.
           d.    The arbitrator's award is not required to include
           factual findings or legal reasoning and any party’s right
           to appeal or to seek modification of rulings by
           arbitrators is strictly limited.
           e.    The panel of arbitrators will typically include a
           minority of arbitrators who were or are affiliated with
           the securities industry.

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            f.    All controversies which may arise between the
            parties concerning this Agreement shall be determined
            by arbitration pursuant to the rules then pertaining to
            the Financial Industry Regulatory Authority ("FINRA").
            Judgment on any award of any such arbitration may be
            entered in the courts of the State of Ohio sitting in
            Warren County and the United States District Court for
            the Southern District of Ohio sitting in Cincinnati, and
            any state or appellate court therefrom, or in any other
            court having jurisdiction of the person or persons
            against whom such award is rendered. Any notice of
            such arbitration or for the confirmation of any award in
            any arbitration shall be sufficient if given in accordance
            with the provisions of this Agreement. The parties agree
            that the determination of the arbitrators shall be
            binding and conclusive upon them. The prevailing
            party, as determined by such arbitrators, in a legal
            proceeding shall be entitled to collect any costs,
            disbursements and reasonable attorney's fees from the
            other party. Prior to filing an arbitration, the parties
            hereby agree that they will attempt to resolve their
            differences first by submitting the matter for resolution
            to a mediator, acceptable to all parties, and whose
            expenses will be borne equally by all parties. The
            mediation will be held in the County of Warren, Ohio,
            on an expedited basis. If the parties cannot
            successfully resolve their differences through mediation,
            the matter will be resolved by arbitration as provided
            above. The arbitration shall take place in Cincinnati,
            Ohio, on an expedited basis.
      In the first part of this arbitration provision, the parties agreed
"to submit all controversies to arbitration in accordance with the
provisions set forth below." Importantly, subsection (f) provides
additional illumination of the term "all controversies." It states that "all
controversies" subject to arbitration are those "which may arise between
the parties concerning this Agreement." Therefore, to be arbitrable the
claim must concern the agreement.
                              II. DISCUSSION

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A. Standard of Review
     The scope of an arbitration clause is a matter of contractual
interpretation. Beck Auto Sales, Inc. v. Asbury Jax Ford, LLC, 249 So. 3d
765, 768 (Fla. 1st DCA 2018). "Determining whether an arbitrable issue
exists requires the court to examine the plain language of the parties'
arbitration agreement." Bailey v. Women's Pelvic Health, LLC, 309 So. 3d
698, 701 (Fla. 1st DCA 2020). The standard of review we use when
examining a trial court's construction of an arbitration agreement as well
as its application of the law to the facts is de novo. Addit, LLC v.
Hengesbach, 341 So. 3d 362, 366 (Fla. 2d DCA 2022) (quoting Woebse v.
Health Care & Ret. Corp. of Am., 977 So. 2d 630, 632 (Fla. 2d DCA
2008)).
B. Governing Arbitration Law
     The parties' contracts provide that they are to be "governed by the
laws of the State of Ohio and the federal laws applicable therein." The
parties have stipulated that in this instance the laws of the State of Ohio
and the State of Florida are the same. Accordingly, we will examine both
the law in Ohio and Florida as it relates to the interpretation of the
arbitration provision.
     1. Ohio Arbitration Law
     We begin our examination with two opinions from Ohio courts,
Academy of Medicine of Cincinnati v. Aetna Health, Inc., 842 N.E.2d 488
(Ohio 2006), an opinion of the Supreme Court of Ohio, and Arnold v.
Burger King, 48 N.E.3d 69 (Ohio App. 8th Dist. 2015), a decision of the
Eighth District Court of Appeals.
     The issue before the Ohio Supreme Court in Academy of Medicine
of Cincinnati, 842 N.E.2d at 491, was "whether the parties agreed to
submit the dispute at issue to arbitration." To resolve this issue, the

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court indicated that the first step is to determine "whether the arbitration
clause itself . . . contains limitations as to arbitrability." 842 N.E.2d at
492.1 The next step requires a court to determine "whether the
arbitration clause limits itself only to certain aspects of the underlying
contract." Id. In making this determination, it is necessary to classify
the clause as either narrow or broad. Id. The court held that when the
clause "contains the phrase 'any claim or controversy arising out of or
relating to the agreement,' " it is considered to be a broad arbitration
clause. Id. at 492-93 (first quoting Collins & Aikman Prods. Co. v. Bldg.
Sys., Inc., 58 F.3d 16, 20 (2d Cir. 1995); and then quoting ADR/JB, Corp.
v. MCY III, Inc., 299 F. Supp. 2d 110, 114 (E.D.N.Y. 2004)). The court
noted that "[a]rbitration is not limited to claims alleging a breach of
contract, and creative pleading of claims as something other than
contractual cannot overcome a broad arbitration provision." Id. at 493.
      In Arnold, the court recognized that Academy of Medicine remained
a touchstone for arbitration clause analysis. Further, the court
recognized that any ambiguity in the language of the contract clause
"should be resolved in favor of arbitration." Arnold, 48 N.E.3d at 76
(quoting Taylor v. Ernst & Young, L.L.P., 958 N.E.2d 1203, 1210 (Ohio
2011)).
      Additionally, relying on the federal standard set forth in Fazio v.
Lehman Bros., 340 F.3d 386 (6th Cir. 2003), the Arnold court indicated
that the proper manner of analysis was "to ask if an action could be
maintained without reference to the contract or relationship at issue. If
it could, it is likely outside the scope of the arbitration agreement." 48
N.E.3d at 76 (quoting Acad. of Med. of Cincinnati, 842 N.E.2d at 491).

      1 In the present case, the arbitration clause does not contain any

limitation as to the scope of the arbitration agreement.
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This doctrine operates to allow "courts to make determinations of
arbitrability based upon the factual allegations in the complaint instead
of on the legal theories presented." Id. at 77 (quoting Acad. of Med. of
Cincinnati, 842 N.E.2d at 494).
      2. Florida Arbitration Law
      The seminal arbitration opinion in Florida is Seifert v. U.S. Home
Corp., 750 So. 2d 633 (Fla. 1999). There, our supreme court identified
the proper rules of construction our courts are to follow. When reviewing
an arbitration clause, a court is to consider three elements: "(1) whether
a valid written agreement to arbitrate exists; (2) whether an arbitrable
issue exists; and (3) whether the right to arbitration was waived." Id. at
636 (citing Terminix Int'l Co., L.P. v. Ponzio, 693 So. 2d 104, 106 (Fla. 5th
DCA 1997)). While arbitration is favored in Florida, such clauses still
require courts to engage in contract interpretation to identify the intent
of the contracting parties. Id. It is the agreement that determines which
issues the parties agreed to arbitrate. See MacDougald Fam. Ltd. P'ship,
LLP v. Rays Baseball Club, LLC, 371 So. 3d 988, 991 (Fla. 2d DCA 2023)
(holding that the scope of the arbitration clause is a matter of contractual
interpretation requiring the examination of the plain language used by
the parties in their contract (first quoting Beck Auto Sales, Inc., 249 So.
3d at 768; and then quoting Bailey, 309 So. 3d at 701)).
      In discussing the interpretation of an arbitration provision, the
Seifert court noted that the actual terminology of the provision indicates
its meaning. 750 So. 2d at 636. "For example, clauses including all
claims or controversies 'arising out of' the subject contract" limit
arbitration to "claims having some direct relation to the terms and
provisions of the contract." Id. The supreme court noted that the use of
"the phrase 'arising out of or relating to' the contract has been

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interpreted broadly to encompass virtually all disputes between the
contracting parties, including related tort claims." Id. at 637. To come
within the reach of a broad arbitration clause "it must, at a minimum,
raise some issue the resolution of which requires reference to or
construction of some portion of the contract itself." Id. at 638.
C. The Instant Clause
     1. The trial court correctly found that the arbitration clause is broad.
     It is the text of the arbitration clause before us that governs and
determines whether the parties must submit their claims to arbitration.
The words determine the outcome. See Antonin Scalia & Bryan Garner,
Reading Law: The Interpretation of Legal Texts 56 (2012). Thus, an
examination of the arbitration clause is necessary to conclude whether it
is narrow or broad. The language which the parties agreed on is critical:
"The intent of the parties to a contract, as manifested in the plain
language of the arbitration provision and contract itself, determines
whether a dispute is subject to arbitration." Jackson v. Shakespeare
Found., Inc., 108 So. 3d 587, 593 (Fla. 2013).
     In the present case, the contract requires the parties to submit to
arbitration "[a]ll controversies which may arise between the parties
concerning this Agreement." Therefore, our focus is first upon the word
"concerning." The parties' contract does not define the term. When a
contractual term is not defined in a contract, "[d]ictionaries aid us in
establishing the publicly understood plain meaning of a word whose
relevant definition is contested." Parrish v. State Farm Fla. Ins. Co., 356
So. 3d 771, 776 (Fla. 2023); see also Tsuji v. Fleet, 366 So. 3d 1020,
1028 (Fla. 2023) (holding that, absent a supplied definition, we look to
dictionaries for evidence of that meaning). To that end, we first consult
Black's Law Dictionary, which defines "concerning" as "[r]elating to;

                                     7
pertaining to; affecting; involving; being substantially engaged in or
taking part in." Concerning, Black's Law Dictionary (6th ed. 1990).
Additional illumination of the term's meaning is found in the definition of
"concern." This word is defined as "[t]o pertain, relate, or belong to; be of
interest or importance to; to have connection with; to have reference to;
to involve; to affect the interest of." Concern, Black's Law Dictionary (6th
ed. 1990).
     Similar definitions are found in Webster's New World College
Dictionary, which defines "concerning" as "relating to or having to do
with; in regard to; about." Concerning, Webster's New World College
Dictionary (4th ed. 1999). Likewise, the word 'concern' is defined to
mean "to have a relation to or bearing on; deal with." Concern, Webster's
New World College Dictionary (4th ed. 1999).
     As the term "concerning" is often defined as "relating to," we look to
cases involving arbitration clauses that contain the language "relating
to." In both Ohio and Florida, courts have categorized arbitration
clauses containing "relating to" as broad clauses. See Acad. of Med. of
Cincinnati, 842 N.E.2d at 492-93 (holding that the arbitration clause is
broad when it includes the language "arising out of or relating to the
agreement"); ABC Home Care & Nursing Servs., Inc. v. Molina Healthcare
of Ohio, Inc., 114 N.E.3d 757, 763 (Ohio 10th Dist. 2018) (noting that
arbitration clause was broad where it required arbitration for "[a]ny claim
or controversy arising out of or in connection with this Agreement"); see
also Seifert, 750 So. 2d at 637 (holding that the language "arising out of
or relating to" the contract is broad and "encompass[es] virtually all
disputes between the contracting parties"). Therefore, similar to those
cases interpretating the language "relating to" in arbitration clauses as
broad, we interpret the language "concerning this Agreement" as broad.

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But see Jackson, 108 So. 3d at 593 (reasoning that an arbitration
provision that required arbitration of claims "arising out of" the contract
is typically narrow in scope and that an arbitration provision that
required arbitration of claims "arising out of or relating to" the contract is
broad in scope because "[t]he 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").
      We find support for our conclusion in the recent opinion of this
court in MacDougald, 371 So. 3d 988. There, this court reviewed an
arbitration clause containing the word "concerning." The arbitration
clause in MacDougald provided:
      If at any time during the existence of the Partnership, any
      question, disagreement, difference or controversy including,
      without limitation, determination of whether cause exists
      under Section 7.4 . . . or Section 10.3 . . . shall arise between
      any of the Partners concerning the meaning or
      interpretation of this Agreement, then the Managing
      Partner or any General Partner may direct that such
      question, disagreement, difference or controversy be
      submitted to nonbinding mediation in St. Petersburg, Florida,
      in accordance with the mediation rules then obtaining of the
      American Mediation Association (or such other rules as to
      which the parties may agree), and all of the Partners agree to
      participate in such mediation. If such mediation does not
      result in a resolution of the issue, then the Managing
      Partner . . . may direct that such question, disagreement,
      difference or controversy be submitted to and determined by
      binding arbitration . . . in accordance with the rules then
      obtaining of the American Arbitration Association.
Id. at 990.
      Writing for the court, Judge Black discussed the meaning of
"concerning" in the context of an arbitration provision: " 'Concerning,' in
this context, has no materially different meaning than 'relating to,'

                                      9
'about,' 'with reference to,' and 'regarding.' " Id. at 991 n.2 (citing Ham v.
Portfolio Recovery Assocs., 308 So. 3d 942, 948-49 (Fla. 2020)). This
court held that the arbitration clause in that case was broad as it
contained the term "concerning" but that the clause restricted the
subject matter of arbitrable disputes to those involving the " 'meaning or
interpretation' of the Partnership Agreement." Id. From this holding, two
points are made. First, the use of "concerning" generally signifies a
broad arbitration clause, unless, second, additional language in the
arbitration provision restricts its scope or application. In MacDougald,
arbitration was limited to claims "concerning the meaning or
interpretation of this Agreement." Id. at 990. Here, in comparison, such
limiting language is not found in the arbitration clause.
     2. A significant nexus exists between the allegations in the
complaint and the parties' agreements.
      To determine whether a claim must be submitted to arbitration
when the contract contains a broad arbitration clause, the court must
examine "whether a 'significant relationship' exists between the claim
and the agreement containing the arbitration clause, regardless of the
legal label attached to the dispute (i.e., tort or breach of contract)."
Seifert, 750 So. 2d at 637-38 (citing Am. Recovery Corp. v. Computerized
Thermal Imaging, Inc., 96 F.3d 88, 93-94 (4th Cir. 1996)). A "significant
relationship" exists if there is a "contractual nexus" between the contract
and the claim. Id.
      "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." Jackson, 108 So. 3d at 593. There is a nexus if the claim
"emanates from an inimitable duty created by the parties' unique
contractual relationship." Id. Here, the Appellees agree to the general
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concept that fraud and securities law claims may be arbitrable, but they
argue that their statutory and tort claims are not arbitrable because
there is no nexus between the claims and the agreements. They argue
that the Appellants breached a duty that arises from law and is generally
owed to the public, not from a duty imposed by the contract.
      The allegations in the present case pertain to events surrounding
the contract's formation and the execution of the contract.
      If the contract places the parties in a unique relationship that
      creates new duties not otherwise imposed by law, then a
      dispute regarding a breach of a contractually-imposed duty is
      one that arises from the contract. Barmat [v. John and Jane
      Doe Partners A–D], 155 Ariz. [519, 523], 747 P.2d [1218, 1222
      (1989)]. Analogously, such a claim would be one arising from
      the contract terms and therefore subject to arbitration where
      the contract required it. If, on the other hand, the duty
      alleged to be breached is one imposed by law in recognition of
      public policy and is generally owed to others besides the
      contracting parties, then a dispute regarding such a breach is
      not one arising from the contract, but sounds in tort. Id.
      Therefore, a contractually-imposed arbitration
      requirement . . . would not apply to such a claim.
Seifert, 750 So. 2d at 640 (first alteration in original) (quoting Dusold v.
Porta-John Corp., 807 P.2d 526, 531 (Ariz. Ct. App. 1990)); see also
Citigroup, Inc. v. Amodio, 894 So. 2d 296, 300 (Fla. 4th DCA 2005)
(holding that the claims were not dependent on the contract where the
complaint alleged a breach "of law imposed generally to enforce public
policy creating duties owed to the public at large").
      In the present case, the Appellees' complaint alleged three counts
against the Appellants for violations of Florida's Securities and Investor
Protection Act, see § 517.211, Fla. Stat. (2019). Count I alleged that the
sale of Venn's securities to Appellees was made in violation of section
517.07 because the securities were not registered pursuant to that
chapter, the securities were not exempt from such registration, and prior
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to each sale, the Appellees were not given a prospectus as required by
the Financial Services Commission.
     Count II asserted that the sale of Venn's securities to the Appellees
violated section 517.12(1) because the Appellants were not registered
with the Office of Financial Regulation of the Financial Services
Commission as required by section 517.12. Count III claimed that the
Appellants violated section 517.301(1)(a), as they misrepresented and
omitted material facts and the Appellees relied on those
misrepresentations and omissions in deciding to invest in Venn.
     The Appellees also alleged two counts against Venn for fraudulent
inducement and negligent misrepresentation. Count IV alleged that
Venn, in order to induce the Appellees to invest, made fraudulent
representations and omissions of material facts regarding other
investments secured by Venn. Count V made similar factual claims,
alleging a cause of action for negligent misrepresentation.
     Finally, count VI alleged an action for recission against Venn,
claiming that Venn failed to inform the Appellees of their right to void
their investments pursuant to section 517.061(11)(a)5.
     We conclude that the claims alleged in the complaint are
inextricably intertwined with the contracts and arise from the formation
of the contracts. Further, the resolution of the claims will require
consideration and reference to the terms found in the parties' contracts.
In Beazer Homes Corp. v. Bailey, 940 So. 2d 453, 456 (Fla. 5th DCA
2006), the court examined an arbitration clause stating that "[s]hould a
controversy, claim or dispute arise out of this contract, Buyer(s) shall
submit to binding arbitration." The court noted that when a claim is
founded on the breach of a statute, instead of breach of contract, it is not
exempt from arbitration and that "[c]laims brought under FDUTPA have

                                    12
been held to be subject to arbitration if a contract between the parties
provides for arbitration." Id. at 461.
            Where claims of fraud are alleged based on the FDUTPA,
      Florida courts have refused to enforce arbitration clauses on
      only a limited basis, such as where the arbitration clause is
      unconscionable, Fonte v. AT & T Wireless Services, Inc., 903
      So. 2d 1019 (Fla. 4th DCA 2005); Stewart Agency, Inc. v.
      Robinson, 855 So. 2d 726 (Fla. 4th DCA 2003); where it is
      against public policy, Presidential Leasing, Inc. v. Krout, 896
      So. 2d 938 (Fla. 5th DCA 2005); or where the provision is
      deemed to limit access to the courts, Value Car Sales, Inc. v.
      Bouton, 608 So. 2d 860, 861 (Fla. 5th DCA 1992). Thus,
      arbitration under the FDUTPA rises or falls on grounds such
      as equity, public policy, or constitutional prohibition.
Id. at 462.
      The court held that the relationship between the parties was
created by the sales contract and that even though "there is a general
common law duty not to lie or misrepresent facts in connection with"
such a sale, a third person could not have sued the defendant based on
the same allegations. Id. at 460.
      Further, "duties alleged under theories such as fraud in the
inducement of a contract, fraud in the performance of a contract, or
negligent misrepresentation are duties dependent upon the existence of a
contractual relationship between the parties." Stacy David, Inc. v.
Consuegra, 845 So. 2d 303, 306 (Fla. 2d DCA 2003); see Qubty v. Nagda,
817 So. 2d 952, 956 (Fla. 5th DCA 2002) ("Nor does the fact that the
Nagdas are seeking rescission of the contract on the basis of fraud in the
inducement preclude enforcement of the arbitration provisions contained
in the contract, as long as the claims for rescission are directed at the
contract as a whole, as opposed to the arbitration provision contained in
the contract."); see also Abbey v. Skokos, 303 Fed. Appx. 911, 913 (2d
Cir. 2008) (holding that where the sale or purchase of securities is at

                                     13
issue in the action, the claims of "securities fraud in connection with that
transaction 'arises' from the agreement"). Here, the allegations in the
complaint involve the sale of the securities as contracted for in the
parties' agreements, the resolution of the claims will require reference to
the agreements, and the claims emanate from unique duties created by
the parties' contractual relationship.
                             III. CONCLUSION
     We conclude that after examination of the contractual text and the
dispositive case law, the text of the arbitration clause in this case
requires that the dispute between the parties be resolved by arbitration.
     Reversed and remanded.

LUCAS and LABRIT, JJ., Concur.

Opinion subject to revision prior to official publication.

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