40 Fla. L. Weekly D2110aop of Form
Contracts
— Arbitration — Arbitration pursuant to arbitration provision in distributor
agreement between cell phone manufacturer and open-market distributor of smart
phones — Claim by distributor that distributor agreement containing
arbitration provision had never been formed because agreement had been signed
by distributor but not by manufacturer is an issue to be determined by trial
court rather than by arbitrator — Although court erroneously found that
arbitrator can decide whether a valid arbitration clause exists, court
correctly found that an agreement to arbitrate had been reached — Court was not
required to conduct an evidentiary hearing before finding that a valid and
binding agreement had been reached where no substantial issue regarding the
agreement’s validity was raised — Document executed by the party against whom
contract is sought to be enforced is presumptively valid even in the absence of
the enforcing party’s signature where the events surrounding the contract’s
execution support a valid contract — Court properly determined that
distributor agreement was a valid contract where both parties had performed in
conformity with agreement — Court properly granted manufacturer’s motion to
compel arbitration of distributor’s action against manufacturer
— Arbitration — Arbitration pursuant to arbitration provision in distributor
agreement between cell phone manufacturer and open-market distributor of smart
phones — Claim by distributor that distributor agreement containing
arbitration provision had never been formed because agreement had been signed
by distributor but not by manufacturer is an issue to be determined by trial
court rather than by arbitrator — Although court erroneously found that
arbitrator can decide whether a valid arbitration clause exists, court
correctly found that an agreement to arbitrate had been reached — Court was not
required to conduct an evidentiary hearing before finding that a valid and
binding agreement had been reached where no substantial issue regarding the
agreement’s validity was raised — Document executed by the party against whom
contract is sought to be enforced is presumptively valid even in the absence of
the enforcing party’s signature where the events surrounding the contract’s
execution support a valid contract — Court properly determined that
distributor agreement was a valid contract where both parties had performed in
conformity with agreement — Court properly granted manufacturer’s motion to
compel arbitration of distributor’s action against manufacturer
CT MIAMI, LLC, Appellant, v. SAMSUNG ELECTRONICS LATINOAMERICA MIAMI,
INC., Appellee. 3rd District. Case No. 3D15-641. L.T. Case No. 15-763.
September 9, 2015. A non-final appeal from the Circuit Court for Miami-Dade
County, John W. Thornton, Judge. Counsel: Bilzin Sumberg Baena Price &
Axelrod LLP, and David Gersten, Jeffrey Gutchess, Daniel Tropin, and Brandon
Rose, for appellant. Holland & Knight LLP, and Rodolfo Sorondo, Jr., Alex
M. Gonzalez, Israel J. Encinosa, and Rebecca M. Plasencia, for appellee.
INC., Appellee. 3rd District. Case No. 3D15-641. L.T. Case No. 15-763.
September 9, 2015. A non-final appeal from the Circuit Court for Miami-Dade
County, John W. Thornton, Judge. Counsel: Bilzin Sumberg Baena Price &
Axelrod LLP, and David Gersten, Jeffrey Gutchess, Daniel Tropin, and Brandon
Rose, for appellant. Holland & Knight LLP, and Rodolfo Sorondo, Jr., Alex
M. Gonzalez, Israel J. Encinosa, and Rebecca M. Plasencia, for appellee.
(Before WELLS, ROTHENBERG, and SCALES, JJ.)
(ROTHENBERG, J.) CT Miami, LLC (“CT Miami”) appeals the trial court’s
order denying its motion to stay arbitration without an evidentiary hearing.
Because we agree with the trial court that CT Miami did not raise a substantial
issue regarding the agreement to arbitrate, we affirm the trial court’s ruling.
order denying its motion to stay arbitration without an evidentiary hearing.
Because we agree with the trial court that CT Miami did not raise a substantial
issue regarding the agreement to arbitrate, we affirm the trial court’s ruling.
FACTUAL
BACKGROUND
BACKGROUND
Samsung Electronics Latinoamerica Miami, Inc. (“SELA”) is a Miami-based
subsidiary of the multi-national electronics and cell phone manufacturer,
Samsung Electronics, Ltd. (“Samsung”). CT Miami is an open-market distributor
of smart phones, meaning that CT Miami sells phones to wholesale and retail
establishments rather than cellular service providers like AT&T or
T-Mobile.
subsidiary of the multi-national electronics and cell phone manufacturer,
Samsung Electronics, Ltd. (“Samsung”). CT Miami is an open-market distributor
of smart phones, meaning that CT Miami sells phones to wholesale and retail
establishments rather than cellular service providers like AT&T or
T-Mobile.
In 2009, CT Miami approached SELA to discuss wholesale open-market
distribution plans for many of SELA’s phones. After some preliminary
discussions, SELA’s vice president and sales manager at the time, Ernesto
Piedra, sent CT Miami an email stating: “[Prior] to any business deal we make,
it is now required we have an agreement in place.” Piedra attached a document titled
“DISTRIBUTOR AGREEMENT” to that email and requested that CT Miami finalize and
sign the agreement.
distribution plans for many of SELA’s phones. After some preliminary
discussions, SELA’s vice president and sales manager at the time, Ernesto
Piedra, sent CT Miami an email stating: “[Prior] to any business deal we make,
it is now required we have an agreement in place.” Piedra attached a document titled
“DISTRIBUTOR AGREEMENT” to that email and requested that CT Miami finalize and
sign the agreement.
The Distributor Agreement is a form contract that establishes the general
terms of the relationship between the parties and sets expectations for future
dealings. The Distributor Agreement expressly defines the “Effective Date” of
the contract as “the date on which all parties have signed and dated this
Agreement,” and it states that the contract will automatically renew yearly
unless one party gives the other thirty days’ written notice of its intent to
cancel the agreement or immediate written notice of termination upon the
occurrence of certain conditions. Finally, and most relevant to this case, the
Distributor Agreement also contains an arbitration clause stating that “any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof,” is to be resolved by arbitration administered under the rules
of the American Arbitration Association (“AAA”) in Miami, Florida.
terms of the relationship between the parties and sets expectations for future
dealings. The Distributor Agreement expressly defines the “Effective Date” of
the contract as “the date on which all parties have signed and dated this
Agreement,” and it states that the contract will automatically renew yearly
unless one party gives the other thirty days’ written notice of its intent to
cancel the agreement or immediate written notice of termination upon the
occurrence of certain conditions. Finally, and most relevant to this case, the
Distributor Agreement also contains an arbitration clause stating that “any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof,” is to be resolved by arbitration administered under the rules
of the American Arbitration Association (“AAA”) in Miami, Florida.
As requested in Piedra’s email, CT Miami’s CFO, Randy Williams, filled in
the blanks in the Distributor Agreement with the appropriate information and
then signed, dated, and returned the Distributor Agreement to SELA via email on
June 23, 2009. CT Miami’s CEO, Samuel Ohev-Zion, sent an email to SELA in
September 2009 stating that CT Miami had never received a countersigned copy of
the Distributor Agreement from SELA, and he requested a copy for CT Miami’s
records. Apparently, SELA never signed the Distributor Agreement and never
provided CT Miami with a copy of the same. Nonetheless, the companies began
doing business together shortly after Williams signed the Distributor
Agreement.
the blanks in the Distributor Agreement with the appropriate information and
then signed, dated, and returned the Distributor Agreement to SELA via email on
June 23, 2009. CT Miami’s CEO, Samuel Ohev-Zion, sent an email to SELA in
September 2009 stating that CT Miami had never received a countersigned copy of
the Distributor Agreement from SELA, and he requested a copy for CT Miami’s
records. Apparently, SELA never signed the Distributor Agreement and never
provided CT Miami with a copy of the same. Nonetheless, the companies began
doing business together shortly after Williams signed the Distributor
Agreement.
The parties’ business agreement proved to be mutually beneficial or, more
accurately, wildly successful in the short term. Between June 2009 and summer
2014, SELA and CT Miami transacted nearly $1 billion in open-market cell phone
sales together, with CT Miami dramatically increasing SELA’s open-market sales
in the region. However, in 2014, the public demand for the Galaxy S5 was
significantly less than either SELA or CT Miami had anticipated; the market
retail value of the Galaxy S5 fell to approximately $420 per unit; and CT Miami
was forced to sell the phones at a loss, resulting in a substantial hit to its
overall business. Meanwhile, competing open-market distributors began selling
the phones at a lower price than CT Miami, which further reduced CT Miami’s
profits. Following this setback, CT Miami failed to pay SELA on several of the
outstanding invoices totaling, according to SELA, approximately $21 million.
accurately, wildly successful in the short term. Between June 2009 and summer
2014, SELA and CT Miami transacted nearly $1 billion in open-market cell phone
sales together, with CT Miami dramatically increasing SELA’s open-market sales
in the region. However, in 2014, the public demand for the Galaxy S5 was
significantly less than either SELA or CT Miami had anticipated; the market
retail value of the Galaxy S5 fell to approximately $420 per unit; and CT Miami
was forced to sell the phones at a loss, resulting in a substantial hit to its
overall business. Meanwhile, competing open-market distributors began selling
the phones at a lower price than CT Miami, which further reduced CT Miami’s
profits. Following this setback, CT Miami failed to pay SELA on several of the
outstanding invoices totaling, according to SELA, approximately $21 million.
After CT Miami refused to pay its past-due invoices, SELA filed a
Statement of Claim and Demand for Arbitration with the AAA, citing the
Distributor Agreement as the operative contract between the parties and the
arbitration clause therein as a basis for the AAA’s jurisdiction over the
dispute. SELA claims that the Distributor Agreement was the sole contract
governing the parties’ long-term relationship. There do not appear to be any alternative
documents governing the parties’ relationship,1 and several emails between officers in both
companies, along with CT Miami’s yearly financial statements, all reference the
Distributor Agreement.2
Statement of Claim and Demand for Arbitration with the AAA, citing the
Distributor Agreement as the operative contract between the parties and the
arbitration clause therein as a basis for the AAA’s jurisdiction over the
dispute. SELA claims that the Distributor Agreement was the sole contract
governing the parties’ long-term relationship. There do not appear to be any alternative
documents governing the parties’ relationship,1 and several emails between officers in both
companies, along with CT Miami’s yearly financial statements, all reference the
Distributor Agreement.2
Thereafter, CT Miami filed an action in Miami-Dade County Circuit Court
alleging that it had not paid the past-due invoices because SELA had first
breached its agreement to provide price protection and make CT Miami whole in
the event of a soft market on any of SELA’s phones. CT Miami claims that the
parties never intended the Distributor Agreement to control the relationship
and that they had opted instead to reach short-term oral and email agreements
on a per-deal basis. CT Miami alleges that among these many oral agreements was
one guaranteeing that SELA would provide its products to CT Miami at the lowest
prices and would also provide price protection — meaning that SELA would
partially or fully offset any loss CT Miami took on the products it obtained
from SELA — so that CT Miami could continue to move a large volume of SELA’s
cell phones at a very small profit margin.
alleging that it had not paid the past-due invoices because SELA had first
breached its agreement to provide price protection and make CT Miami whole in
the event of a soft market on any of SELA’s phones. CT Miami claims that the
parties never intended the Distributor Agreement to control the relationship
and that they had opted instead to reach short-term oral and email agreements
on a per-deal basis. CT Miami alleges that among these many oral agreements was
one guaranteeing that SELA would provide its products to CT Miami at the lowest
prices and would also provide price protection — meaning that SELA would
partially or fully offset any loss CT Miami took on the products it obtained
from SELA — so that CT Miami could continue to move a large volume of SELA’s
cell phones at a very small profit margin.
CT Miami filed a motion to stay arbitration concurrently with its
complaint, alleging that the parties had never agreed to the terms of the
Distributor Agreement due to SELA’s failure to sign the document as required
for execution, and thus, that there was no enforceable arbitration clause to
make the disputes arbitrable. In support of its motion to stay arbitration, CT
Miami attached several documents and emails between the parties discussing the
mutually beneficial partnership between the companies — which CT Miami cites
as evidence of the oral agreements to provide price protection and the lowest
prices — along with two affidavits from former SELA employees (employees that
had left SELA to work at CT Miami) averring that SELA officers had a practice
of intentionally refusing to countersign contracts such as the Distributor
Agreement because they did not want to be bound by a written contract.
complaint, alleging that the parties had never agreed to the terms of the
Distributor Agreement due to SELA’s failure to sign the document as required
for execution, and thus, that there was no enforceable arbitration clause to
make the disputes arbitrable. In support of its motion to stay arbitration, CT
Miami attached several documents and emails between the parties discussing the
mutually beneficial partnership between the companies — which CT Miami cites
as evidence of the oral agreements to provide price protection and the lowest
prices — along with two affidavits from former SELA employees (employees that
had left SELA to work at CT Miami) averring that SELA officers had a practice
of intentionally refusing to countersign contracts such as the Distributor
Agreement because they did not want to be bound by a written contract.
SELA filed a competing motion in the circuit court to stay the action and
compel arbitration, arguing that the Distributor Agreement was in fact the
operative contract and that, even without a countersignature, the parties’
subsequent communications and course of conduct proved that they both intended
to be bound by the Distributor Agreement. SELA’s motion specifically referenced
all the emails and financial statements that mentioned a “distributor
agreement” or quoted language from the 2009 Distributor Agreement CT Miami had
signed.
compel arbitration, arguing that the Distributor Agreement was in fact the
operative contract and that, even without a countersignature, the parties’
subsequent communications and course of conduct proved that they both intended
to be bound by the Distributor Agreement. SELA’s motion specifically referenced
all the emails and financial statements that mentioned a “distributor
agreement” or quoted language from the 2009 Distributor Agreement CT Miami had
signed.
The trial court conducted a non-evidentiary hearing on the competing
motions to compel/stay arbitration. At the hearing, SELA continued to argue
that the Distributor Agreement was valid and that both parties’ claims had to
be submitted to arbitration. CT Miami argued that it had raised a substantial
issue regarding whether the Distributor Agreement was ever formed and that, at
the very least, it was entitled to an evidentiary hearing. After the hearing,
the trial court ruled that the parties were bound by the Distributor Agreement,
and thus, that the parties had to submit their disputes to arbitration. The
trial court finalized its findings and conclusions in a written order that
states:
motions to compel/stay arbitration. At the hearing, SELA continued to argue
that the Distributor Agreement was valid and that both parties’ claims had to
be submitted to arbitration. CT Miami argued that it had raised a substantial
issue regarding whether the Distributor Agreement was ever formed and that, at
the very least, it was entitled to an evidentiary hearing. After the hearing,
the trial court ruled that the parties were bound by the Distributor Agreement,
and thus, that the parties had to submit their disputes to arbitration. The
trial court finalized its findings and conclusions in a written order that
states:
THIS CAUSE comes before
the Court on Defendant Samsung Electronics Latinoamerica Miami, Inc.’s (“SELA”)
Motion to Compel Arbitration and Stay Litigation and on Plaintiff CT Miami,
LLC’s (“CT”) Motion to Stay Arbitration. The Court has reviewed the motions and
all corresponding briefs, exhibits, and supporting affidavits. An expedited
hearing was held on March 9, 2015.
the Court on Defendant Samsung Electronics Latinoamerica Miami, Inc.’s (“SELA”)
Motion to Compel Arbitration and Stay Litigation and on Plaintiff CT Miami,
LLC’s (“CT”) Motion to Stay Arbitration. The Court has reviewed the motions and
all corresponding briefs, exhibits, and supporting affidavits. An expedited
hearing was held on March 9, 2015.
For the reasons
set forth in the record, the Court makes the following determinations:
set forth in the record, the Court makes the following determinations:
1. It is
undisputed that SELA sent the distributor agreement containing the arbitration
provision at issue (the “Distributor Agreement”) to CT and that CT signed the
Distributor Agreement and sent it back to SELA.
undisputed that SELA sent the distributor agreement containing the arbitration
provision at issue (the “Distributor Agreement”) to CT and that CT signed the
Distributor Agreement and sent it back to SELA.
2. The claims
at issue fall within the scope of the arbitration provision in the Distributor
Agreement and SELA has not waived its right to arbitrate pursuant to the
arbitration provision.
at issue fall within the scope of the arbitration provision in the Distributor
Agreement and SELA has not waived its right to arbitrate pursuant to the
arbitration provision.
3. CT has not
overcome the presumption that the contract that CT signed is a valid and
binding agreement to arbitrate. See Thompkins v. Lil’ Joe Records, Inc., 476
F.3d 1294, 1305 n.12 (11th Cir. 2007) (quoting Dodge of Winter Park, Inc. v.
Morley, 756 So. 2d 1085, 1085-86: “Generally, it is enough that the party
against whom the contract is sought to be enforced signs it.”); Dodge of Winter
Park, Inc. v. Morley, 756 So. 2d 1085, 1085-86 (Fla. 5th DCA 2000) (holding
that an arbitration agreement enforceable against party who signed the
agreement even where the other party did not sign it because “[g]enerally, it
is enough that the party against whom the contract is sought to be enforced
signs it.”).
overcome the presumption that the contract that CT signed is a valid and
binding agreement to arbitrate. See Thompkins v. Lil’ Joe Records, Inc., 476
F.3d 1294, 1305 n.12 (11th Cir. 2007) (quoting Dodge of Winter Park, Inc. v.
Morley, 756 So. 2d 1085, 1085-86: “Generally, it is enough that the party
against whom the contract is sought to be enforced signs it.”); Dodge of Winter
Park, Inc. v. Morley, 756 So. 2d 1085, 1085-86 (Fla. 5th DCA 2000) (holding
that an arbitration agreement enforceable against party who signed the
agreement even where the other party did not sign it because “[g]enerally, it
is enough that the party against whom the contract is sought to be enforced
signs it.”).
4. Furthermore,
the Court finds based on the record before it, including, but not limited to,
the Distributor Agreement signed by CT, email communications, and CT’s audited
financial statements for 2010, 2011, 2012 and 2013, that the parties performed
in accordance with the Distributor Agreement and in a manner consistent with
the Distributor Agreement being a valid and binding agreement.
the Court finds based on the record before it, including, but not limited to,
the Distributor Agreement signed by CT, email communications, and CT’s audited
financial statements for 2010, 2011, 2012 and 2013, that the parties performed
in accordance with the Distributor Agreement and in a manner consistent with
the Distributor Agreement being a valid and binding agreement.
5. The Court
finds, under the Federal Arbitration Act and the ICDR rules, that the
arbitrator has the jurisdiction to make the determination on whether a valid
arbitration clause exists.
finds, under the Federal Arbitration Act and the ICDR rules, that the
arbitrator has the jurisdiction to make the determination on whether a valid
arbitration clause exists.
6.
Additionally, CT has not met its burden of establishing a substantial issue
exists as to the making of the Distributor Agreement, and thus an evidentiary
hearing and discovery is not necessary.
Additionally, CT has not met its burden of establishing a substantial issue
exists as to the making of the Distributor Agreement, and thus an evidentiary
hearing and discovery is not necessary.
7. The Court
finds that CT has not waived any future rights to challenge the arbitration at
a later time.
finds that CT has not waived any future rights to challenge the arbitration at
a later time.
8. The Court finds that
CT’s participation in the pending arbitration thus far did not result in a
waiver of any right it may have had to litigate (though the Court nonetheless
denies CT’s Motion to Stay Arbitration and grants SELA’s Motion to Compel
Arbitration for the separate reasons stated in this Order).
CT’s participation in the pending arbitration thus far did not result in a
waiver of any right it may have had to litigate (though the Court nonetheless
denies CT’s Motion to Stay Arbitration and grants SELA’s Motion to Compel
Arbitration for the separate reasons stated in this Order).
9. The Court
further finds that if CT participates in the arbitration pending any appeal of
this order that such participation will not be deemed a waiver of its right to
object to the arbitration.
further finds that if CT participates in the arbitration pending any appeal of
this order that such participation will not be deemed a waiver of its right to
object to the arbitration.
Accordingly, it
is ORDERED AND ADJUDGED that CT’s Motion to Stay Arbitration is DENIED, and
SELA’s Motion to Compel Arbitration and Stay Litigation is GRANTED. This litigation
is hereby stayed and the Court reserves jurisdiction for further proceedings
including motions to enforce an arbitral award.
is ORDERED AND ADJUDGED that CT’s Motion to Stay Arbitration is DENIED, and
SELA’s Motion to Compel Arbitration and Stay Litigation is GRANTED. This litigation
is hereby stayed and the Court reserves jurisdiction for further proceedings
including motions to enforce an arbitral award.
CT Miami appeals the trial court’s order on several bases. First, CT Miami
argues that the trial court has exclusive jurisdiction to determine whether an
agreement was reached between the parties such that an enforceable arbitration
clause exists, and the trial court erred by punting on this issue and allowing
the arbitrator to decide. Second, CT Miami argues that the trial court erred by
making its findings without conducting an evidentiary hearing.
argues that the trial court has exclusive jurisdiction to determine whether an
agreement was reached between the parties such that an enforceable arbitration
clause exists, and the trial court erred by punting on this issue and allowing
the arbitrator to decide. Second, CT Miami argues that the trial court erred by
making its findings without conducting an evidentiary hearing.
We agree with CT Miami that it is the exclusive province of the trial
court to determine the validity of an agreement to arbitrate, and thus,
paragraph (5) of the trial court’s order was error. The validity of the
arbitration provision is, however, not at issue. Rather, CT Miami claims that
no binding agreement exists because SELA never executed the Distributor
Agreement. Because we find that the trial court correctly ruled that CT Miami
has not presented a substantial issue regarding the formation of the
Distributor Agreement, and thus a binding contract had been formed, we conclude
that the trial court did not err by ordering the parties to arbitration.
court to determine the validity of an agreement to arbitrate, and thus,
paragraph (5) of the trial court’s order was error. The validity of the
arbitration provision is, however, not at issue. Rather, CT Miami claims that
no binding agreement exists because SELA never executed the Distributor
Agreement. Because we find that the trial court correctly ruled that CT Miami
has not presented a substantial issue regarding the formation of the
Distributor Agreement, and thus a binding contract had been formed, we conclude
that the trial court did not err by ordering the parties to arbitration.
ANALYSIS
While we review a trial court’s ruling on a motion to compel arbitration
de novo, DFC Homes of Fla. v. Lawrence, 8 So. 3d 1281, 1282 (Fla. 4th
DCA 2009), we are mindful that arbitration provisions are favored by the courts
and that all doubts should be resolved in favor of arbitration, Mendez, Jr.
v. Hampton Court Nursing Ctr., LLC, 140 So. 3d 671, 674 (Fla. 3d DCA 2014).
The parties agree that the arbitration clause in this case is governed by the
Florida Arbitration Code, chapter 680, Florida Statutes (2009) (“FAC”), rather
than the Federal Arbitration Act (“FAA”).3 Moreover, although the FAC was revised
substantially in 2013, the parties correctly agree that the pre-2013 version of
the statute applies because the contract at issue was drafted and signed in
2009. See § 682.013, Fla. Stat. (2015) (providing that the 2013 Revised
FAC governs agreements to arbitrate made on or after July 1, 2013, and that
other agreements shall be governed by the applicable law existing at the time
the parties entered into the agreement). We now apply these legal principles to
the disputed issues.
de novo, DFC Homes of Fla. v. Lawrence, 8 So. 3d 1281, 1282 (Fla. 4th
DCA 2009), we are mindful that arbitration provisions are favored by the courts
and that all doubts should be resolved in favor of arbitration, Mendez, Jr.
v. Hampton Court Nursing Ctr., LLC, 140 So. 3d 671, 674 (Fla. 3d DCA 2014).
The parties agree that the arbitration clause in this case is governed by the
Florida Arbitration Code, chapter 680, Florida Statutes (2009) (“FAC”), rather
than the Federal Arbitration Act (“FAA”).3 Moreover, although the FAC was revised
substantially in 2013, the parties correctly agree that the pre-2013 version of
the statute applies because the contract at issue was drafted and signed in
2009. See § 682.013, Fla. Stat. (2015) (providing that the 2013 Revised
FAC governs agreements to arbitrate made on or after July 1, 2013, and that
other agreements shall be governed by the applicable law existing at the time
the parties entered into the agreement). We now apply these legal principles to
the disputed issues.
I. Whether
the trial court or arbitrator should decide whether an agreement was formed.
the trial court or arbitrator should decide whether an agreement was formed.
The first issue is whether the arbitrator or the trial court should
determine whether the parties entered into an agreement to arbitrate when one
of the parties disputes that the contract containing the arbitration provision
was ever reached in the first place. We hold that this particular issue is
exclusively within the province of the trial court, not the arbitrator.
determine whether the parties entered into an agreement to arbitrate when one
of the parties disputes that the contract containing the arbitration provision
was ever reached in the first place. We hold that this particular issue is
exclusively within the province of the trial court, not the arbitrator.
“Under both federal statutory provisions and Florida’s arbitration code,
there are three elements for courts to consider in ruling on a motion to compel
arbitration of a given dispute: (1) whether a valid written agreement to
arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the
right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So. 2d
633, 636 (Fla. 1999); Truly Nolen of Am., Inc. v. King Cole Condo. Ass’n,
143 So. 3d 1015, 1016-17 (Fla. 3d DCA 2014). The parties agree that SELA has
not waived its right to arbitrate and that their dispute is subject to the
arbitration provision if the contract and that provision are valid. Thus, the
only issue presented by this appeal is the first of those elements: whether a
valid written agreement to arbitrate exists. The question of which
decision-maker (the trial court or the arbitrator) should determine whether a
valid agreement exists would appear on its surface to be a simple one, but the
case law from federal and Florida courts makes that determination somewhat
difficult. Some challenges to a contract containing an arbitration provision or
the arbitration provision itself are to be decided by the trial court, and
others are to be decided by the arbitrator.
there are three elements for courts to consider in ruling on a motion to compel
arbitration of a given dispute: (1) whether a valid written agreement to
arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the
right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So. 2d
633, 636 (Fla. 1999); Truly Nolen of Am., Inc. v. King Cole Condo. Ass’n,
143 So. 3d 1015, 1016-17 (Fla. 3d DCA 2014). The parties agree that SELA has
not waived its right to arbitrate and that their dispute is subject to the
arbitration provision if the contract and that provision are valid. Thus, the
only issue presented by this appeal is the first of those elements: whether a
valid written agreement to arbitrate exists. The question of which
decision-maker (the trial court or the arbitrator) should determine whether a
valid agreement exists would appear on its surface to be a simple one, but the
case law from federal and Florida courts makes that determination somewhat
difficult. Some challenges to a contract containing an arbitration provision or
the arbitration provision itself are to be decided by the trial court, and
others are to be decided by the arbitrator.
The United States Supreme Court has written extensively on this issue,
albeit in reference to the FAA, not the FAC. For example, in Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), the Court addressed a
challenge to an arbitration agreement in a Florida contract based on a party’s
allegations that the contract itself was illegal and void as a matter of public
policy. Id. at 442. The Court expressly noted and addressed the
following types of challenges to arbitration agreements: (1) challenges to the
validity of the agreement to arbitrate, id. at 444, which must be
decided by the trial court, id. at 445-46; and (2) challenges to 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, id. at 444, which should be decided by the arbitrator, id.
at 445-46. The Court, however, also identified a third type of challenge to an
arbitration agreement or contract — “whether any agreement between the alleged
obligor and obligee was ever concluded” — and expressly reserved ruling on
which decision maker was to decide such a challenge. Id. at 444 n.1. The
Court reaffirmed the validity of these three categories of challenge in its
more-recent decision of Rent-A-Center, West, Inc. v. Jackson, 561 U.S.
63, 70, 70 n.2 (2010); see also Rowe, 932 So. 2d at 539
(inferring from the above-cited United States Supreme Court decisions that
there are three categories of challenges to an arbitration agreement).
albeit in reference to the FAA, not the FAC. For example, in Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), the Court addressed a
challenge to an arbitration agreement in a Florida contract based on a party’s
allegations that the contract itself was illegal and void as a matter of public
policy. Id. at 442. The Court expressly noted and addressed the
following types of challenges to arbitration agreements: (1) challenges to the
validity of the agreement to arbitrate, id. at 444, which must be
decided by the trial court, id. at 445-46; and (2) challenges to 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, id. at 444, which should be decided by the arbitrator, id.
at 445-46. The Court, however, also identified a third type of challenge to an
arbitration agreement or contract — “whether any agreement between the alleged
obligor and obligee was ever concluded” — and expressly reserved ruling on
which decision maker was to decide such a challenge. Id. at 444 n.1. The
Court reaffirmed the validity of these three categories of challenge in its
more-recent decision of Rent-A-Center, West, Inc. v. Jackson, 561 U.S.
63, 70, 70 n.2 (2010); see also Rowe, 932 So. 2d at 539
(inferring from the above-cited United States Supreme Court decisions that
there are three categories of challenges to an arbitration agreement).
We therefore conclude that there are three categories of challenge to an
arbitration clause: (1) a challenge specific to the arbitration provision
itself; (2) a challenge to the contract as a whole that would invalidate the
contract after an agreement has been reached, such as fraud, duress, or a
contractual provision (other than the arbitration provision itself) that is
contrary to public policy, see Shotts, 86 So. 3d at 480-81
(holding that the trial court, not the arbitrator, must decide a challenge to
an arbitration provision based on public policy); and (3) a challenge to the
contract as a whole that alleges there was never an agreement between the
parties to form a contract (and therefore no agreement to form the arbitration
clause contained therein) in the first place.
arbitration clause: (1) a challenge specific to the arbitration provision
itself; (2) a challenge to the contract as a whole that would invalidate the
contract after an agreement has been reached, such as fraud, duress, or a
contractual provision (other than the arbitration provision itself) that is
contrary to public policy, see Shotts, 86 So. 3d at 480-81
(holding that the trial court, not the arbitrator, must decide a challenge to
an arbitration provision based on public policy); and (3) a challenge to the
contract as a whole that alleges there was never an agreement between the
parties to form a contract (and therefore no agreement to form the arbitration
clause contained therein) in the first place.
To date, the United States Supreme Court has not expressly ruled whether
that third category should be decided by the trial court or the arbitrator, but
lower court decisions — both state and federal — have largely agreed that
this third category must be decided by the trial court. See, e.g., Chastain
v. Robinson-Humphrey Co., 957 F.2d 851, 854 (11th Cir. 1992) (holding that
the trial court must determine whether there was an agreement to arbitrate when
the party contesting arbitration claimed she had never signed the contract or
intended to be bound); Lepisto v. Senior Lifestyle Newport Ltd. P’ship,
78 So. 3d 89, 93 (Fla. 4th DCA 2012) (“[I]t is for a court, not an arbitrator,
to decide in the first instance whether a party signed a contract and assented
to its terms.”); Rowe, 932 So. 2d at 539 (holding that the trial court
must determine whether there was ever an agreement when the party resisting
arbitration alleged that its signature was a forgery); Bank of the Ozarks,
Inc. v. Walker, 434 S.W.3d 357, 360-61 (Ark. 2014) (holding that the trial
court must determine whether an agreement to arbitrate was reached when several
contracts the subject of a class action allegedly did not contain an
arbitration provision); Texas La Fiesta Auto Sales, LLC v. Belk, 349
S.W.3d 872, 881-82 (Tex. Ct. App. 2011) (holding that the trial court must
determine whether a subsequent contract superseded and invalidated a prior
contract containing an arbitration provision).
that third category should be decided by the trial court or the arbitrator, but
lower court decisions — both state and federal — have largely agreed that
this third category must be decided by the trial court. See, e.g., Chastain
v. Robinson-Humphrey Co., 957 F.2d 851, 854 (11th Cir. 1992) (holding that
the trial court must determine whether there was an agreement to arbitrate when
the party contesting arbitration claimed she had never signed the contract or
intended to be bound); Lepisto v. Senior Lifestyle Newport Ltd. P’ship,
78 So. 3d 89, 93 (Fla. 4th DCA 2012) (“[I]t is for a court, not an arbitrator,
to decide in the first instance whether a party signed a contract and assented
to its terms.”); Rowe, 932 So. 2d at 539 (holding that the trial court
must determine whether there was ever an agreement when the party resisting
arbitration alleged that its signature was a forgery); Bank of the Ozarks,
Inc. v. Walker, 434 S.W.3d 357, 360-61 (Ark. 2014) (holding that the trial
court must determine whether an agreement to arbitrate was reached when several
contracts the subject of a class action allegedly did not contain an
arbitration provision); Texas La Fiesta Auto Sales, LLC v. Belk, 349
S.W.3d 872, 881-82 (Tex. Ct. App. 2011) (holding that the trial court must
determine whether a subsequent contract superseded and invalidated a prior
contract containing an arbitration provision).
We agree with and join the above holdings due to their undeniable logic.
Arbitrators have no inherent authority over a dispute or the parties to that
dispute; the only authority vested in the arbitrator is that contractually
designated in the parties’ agreement. Thus, in the absence of an agreement to
allow the arbitrator to decide the dispute, the arbitrator has no authority to
determine anything. See Chastain, 957 F.2d at 854 (“If a party
has not signed an agreement containing arbitration language, such a party may
not have agreed to submit grievances to arbitration at all.”). Thus, we hold
that challenges to either party’s agreement to the contract in the first
instance are exclusively to be determined by the trial court and that, when
raised, such challenges must be decided by the trial court before arbitration
can be compelled.
Arbitrators have no inherent authority over a dispute or the parties to that
dispute; the only authority vested in the arbitrator is that contractually
designated in the parties’ agreement. Thus, in the absence of an agreement to
allow the arbitrator to decide the dispute, the arbitrator has no authority to
determine anything. See Chastain, 957 F.2d at 854 (“If a party
has not signed an agreement containing arbitration language, such a party may
not have agreed to submit grievances to arbitration at all.”). Thus, we hold
that challenges to either party’s agreement to the contract in the first
instance are exclusively to be determined by the trial court and that, when
raised, such challenges must be decided by the trial court before arbitration
can be compelled.
CT Miami’s challenge in this case undeniably falls into
this third category of challenge; it is claiming that no contract exists due to
SELA’s failure to sign the Distributor Agreement. Thus, the trial court was
legally required to rule on this issue before compelling the parties to arbitration.
The trial court’s finding in paragraph 5 of the order (that under the FAA and
ICDR rules, the arbitrator can decide whether a valid arbitration clause
exists) is legally incorrect. Additionally, to the extent that paragraph 7 of
the trial court’s order (finding that CT Miami has not waived future rights to
challenge the arbitration) is meant to allow CT Miami to relitigate that issue
before the arbitrator, it is also legally incorrect. The trial court must
determine whether an agreement to arbitrate exists before compelling
arbitration; only those defenses that may invalidate the contract
post-agreement may be arbitrated. The trial court’s erroneous findings in
paragraphs 5 and 7 of the order do not, however, necessarily mandate reversal
if the trial court also correctly ruled that there was in fact a valid
agreement to arbitrate. We turn now to that issue.
this third category of challenge; it is claiming that no contract exists due to
SELA’s failure to sign the Distributor Agreement. Thus, the trial court was
legally required to rule on this issue before compelling the parties to arbitration.
The trial court’s finding in paragraph 5 of the order (that under the FAA and
ICDR rules, the arbitrator can decide whether a valid arbitration clause
exists) is legally incorrect. Additionally, to the extent that paragraph 7 of
the trial court’s order (finding that CT Miami has not waived future rights to
challenge the arbitration) is meant to allow CT Miami to relitigate that issue
before the arbitrator, it is also legally incorrect. The trial court must
determine whether an agreement to arbitrate exists before compelling
arbitration; only those defenses that may invalidate the contract
post-agreement may be arbitrated. The trial court’s erroneous findings in
paragraphs 5 and 7 of the order do not, however, necessarily mandate reversal
if the trial court also correctly ruled that there was in fact a valid
agreement to arbitrate. We turn now to that issue.
II. Whether
the trial court correctly found that an agreement to arbitrate had been reached
without conducting an evidentiary hearing.
the trial court correctly found that an agreement to arbitrate had been reached
without conducting an evidentiary hearing.
As explained above, if the trial court had simply deferred ruling on the
contract formation issue as CT Miami avers, we would have reversed its decision
compelling arbitration and remanded for an evidentiary hearing because that
determination is exclusively vested in the trial court, not the arbitrator.
That, however, is not what happened. The trial court ruled that the parties
entered into a binding contract containing an arbitration provision. Thus, if
the trial court correctly ruled that the parties entered into a binding
contract containing an arbitration provision, and that finding was properly
reached without an evidentiary hearing, we may affirm despite the erroneous
conclusion in paragraph 5 of the order. Cf. State Farm & Cas. Co.
v. Levine, 837 So. 2d 363, 365 (Fla. 2002) (holding that a trial court
order reaching the right result with erroneous or incomplete reasoning can be
affirmed under the “tipsy coachman” doctrine so long as the alternative ruling
is supported by the record before the trial court); Robertson v. State,
829 So. 2d 901, 906-07 (Fla. 2002) (“This longstanding principle of appellate
law, sometimes referred to as the ‘tipsy coachman’ doctrine, allows an
appellate court to affirm a trial court that ‘reaches the right result, but for
the wrong reasons’ so long as ‘there is any basis which would support the
judgment in the record.’ (quoting Dade Cnty. School Bd. v. Radio Station
WQBA, 731 So. 2d 638, 644 (Fla. 1999)).4 We turn to each of these issues in turn.
contract formation issue as CT Miami avers, we would have reversed its decision
compelling arbitration and remanded for an evidentiary hearing because that
determination is exclusively vested in the trial court, not the arbitrator.
That, however, is not what happened. The trial court ruled that the parties
entered into a binding contract containing an arbitration provision. Thus, if
the trial court correctly ruled that the parties entered into a binding
contract containing an arbitration provision, and that finding was properly
reached without an evidentiary hearing, we may affirm despite the erroneous
conclusion in paragraph 5 of the order. Cf. State Farm & Cas. Co.
v. Levine, 837 So. 2d 363, 365 (Fla. 2002) (holding that a trial court
order reaching the right result with erroneous or incomplete reasoning can be
affirmed under the “tipsy coachman” doctrine so long as the alternative ruling
is supported by the record before the trial court); Robertson v. State,
829 So. 2d 901, 906-07 (Fla. 2002) (“This longstanding principle of appellate
law, sometimes referred to as the ‘tipsy coachman’ doctrine, allows an
appellate court to affirm a trial court that ‘reaches the right result, but for
the wrong reasons’ so long as ‘there is any basis which would support the
judgment in the record.’ (quoting Dade Cnty. School Bd. v. Radio Station
WQBA, 731 So. 2d 638, 644 (Fla. 1999)).4 We turn to each of these issues in turn.
a. The trial
court made specific findings that an agreement to arbitrate had been reached.
court made specific findings that an agreement to arbitrate had been reached.
The trial court did not simply defer ruling on the issue of whether the
Distributor Agreement was a binding contract. Although we conclude that the
trial court’s finding in paragraph 5 of the order was legally infirm — as was
paragraph 7 to the extent it allows the arbitrator to rehear the issue of
contract formation — it also made a specific finding that the agreement was
valid and binding for several reasons. First, in paragraph 3 of the order, the
trial court specifically ruled, with supporting citations to both federal and
Florida decisions: “CT [Miami] has not overcome the presumption that the
contract that CT [Miami] signed is a valid and binding agreement to arbitrate.”
The trial court buttressed that finding by making an additional finding in
paragraph 4 that
Distributor Agreement was a binding contract. Although we conclude that the
trial court’s finding in paragraph 5 of the order was legally infirm — as was
paragraph 7 to the extent it allows the arbitrator to rehear the issue of
contract formation — it also made a specific finding that the agreement was
valid and binding for several reasons. First, in paragraph 3 of the order, the
trial court specifically ruled, with supporting citations to both federal and
Florida decisions: “CT [Miami] has not overcome the presumption that the
contract that CT [Miami] signed is a valid and binding agreement to arbitrate.”
The trial court buttressed that finding by making an additional finding in
paragraph 4 that
based on the record before it, including, but not limited
to, the Distributor Agreement signed by CT [Miami] email communications, and
CT[Miami’s] audited financial statements for 2010, 2011, 2012 and 2013, that
the parties performed in accordance with the Distributor Agreement and in a
manner consistent with the Distributor Agreement being a valid and binding
agreement.
to, the Distributor Agreement signed by CT [Miami] email communications, and
CT[Miami’s] audited financial statements for 2010, 2011, 2012 and 2013, that
the parties performed in accordance with the Distributor Agreement and in a
manner consistent with the Distributor Agreement being a valid and binding
agreement.
If the trial court had merely ruled that the arbitrator should decide the
issue as CT Miami claims, it would not have made these specific factual
findings.
issue as CT Miami claims, it would not have made these specific factual
findings.
Moreover, these findings were not couched in terms of deference to the
arbitrator. If we remove the erroneous legal conclusions from paragraphs 5 and
7 of the order, the order stands independently as an order granting SELA’s
motion to compel arbitration based on the specific factual findings that a
legal and binding contract was formed. Thus, the trial court did in fact find
that the parties reached an agreement. The only issue left to resolve is
whether the trial court had the authority to make such findings without the
benefit of an evidentiary hearing.
arbitrator. If we remove the erroneous legal conclusions from paragraphs 5 and
7 of the order, the order stands independently as an order granting SELA’s
motion to compel arbitration based on the specific factual findings that a
legal and binding contract was formed. Thus, the trial court did in fact find
that the parties reached an agreement. The only issue left to resolve is
whether the trial court had the authority to make such findings without the
benefit of an evidentiary hearing.
b. The trial
court was not required to conduct an evidentiary hearing where no “substantial
issue” regarding the contract’s validity was raised.
court was not required to conduct an evidentiary hearing where no “substantial
issue” regarding the contract’s validity was raised.
CT Miami’s final point on appeal is that the trial court was statutorily
required to conduct an evidentiary hearing before ruling that the Distributor
Agreement is a valid and binding agreement over CT Miami’s protestations. CT
Miami would be correct if it had raised a “substantial issue” regarding the
making of the agreement, but we agree with the trial court that it did not.
required to conduct an evidentiary hearing before ruling that the Distributor
Agreement is a valid and binding agreement over CT Miami’s protestations. CT
Miami would be correct if it had raised a “substantial issue” regarding the
making of the agreement, but we agree with the trial court that it did not.
Section 682.03(1) of the pre-2013 Florida Statutes provides:
A party to an
agreement or provision for arbitration subject to this law claiming the neglect
or refusal of another party thereto to comply therewith may make application to
the court for an order directing the parties to proceed with arbitration in
accordance with the terms thereof. If the court is satisfied that no
substantial issue exists as to the making of the agreement or provision, it
shall grant the application. If the court shall find that a substantial issue
is raised as to the making of the agreement or provision, it shall summarily
hear and determine the issue and, according to its determination, shall grant
or deny the application.
agreement or provision for arbitration subject to this law claiming the neglect
or refusal of another party thereto to comply therewith may make application to
the court for an order directing the parties to proceed with arbitration in
accordance with the terms thereof. If the court is satisfied that no
substantial issue exists as to the making of the agreement or provision, it
shall grant the application. If the court shall find that a substantial issue
is raised as to the making of the agreement or provision, it shall summarily
hear and determine the issue and, according to its determination, shall grant
or deny the application.
(emphasis added). Although the statute requires only that the trial court
“summarily hear and determine the issue,” id., decisions from the other
district courts of appeal have clarified that a trial court should conduct an
evidentiary hearing when a substantial issue regarding contract formation is
raised, e.g., Crystal Motor Car Co. of Hernando, LLC v. Bailey,
24 So. 3d 789, 791 (Fla. 5th DCA 2009); Rowe, 932 So. 2d at 541-42; Tandem
Health Care of St. Petersburg, Inc. v. Whitney, 897 So. 2d 531, 532 (Fla.
2d DCA 2005); Melamed, 425 So. 2d at 128. The question then becomes,
“What constitutes a ‘substantial issue?’ ”
“summarily hear and determine the issue,” id., decisions from the other
district courts of appeal have clarified that a trial court should conduct an
evidentiary hearing when a substantial issue regarding contract formation is
raised, e.g., Crystal Motor Car Co. of Hernando, LLC v. Bailey,
24 So. 3d 789, 791 (Fla. 5th DCA 2009); Rowe, 932 So. 2d at 541-42; Tandem
Health Care of St. Petersburg, Inc. v. Whitney, 897 So. 2d 531, 532 (Fla.
2d DCA 2005); Melamed, 425 So. 2d at 128. The question then becomes,
“What constitutes a ‘substantial issue?’ ”
In Chastain — which was cited with approval in Rowe, 932
So. 2d at 540-41 — the Eleventh Circuit Court of Appeals held:
So. 2d at 540-41 — the Eleventh Circuit Court of Appeals held:
“To make a genuine issue entitling the [party seeking to
avoid arbitration] to a trial by jury [on the arbitrability question], an
unequivocal denial that the agreement had been made [is] needed, and some
evidence should [be] produced to substantiate the denial.”
avoid arbitration] to a trial by jury [on the arbitrability question], an
unequivocal denial that the agreement had been made [is] needed, and some
evidence should [be] produced to substantiate the denial.”
Chastain, 957 F.2d at 854 (quoting T&R Enters. v. Continental Grain Co.,
613 F.2d 1272, 1278 (5th Cir. 1980)). Florida cases have not so clearly
elucidated a standard, but they all seem to echo Chastain‘s reasoning by
agreeing that to raise a “substantial issue” requiring an evidentiary hearing,
a party must identify factual disputes that, if resolved in its favor, would
compel a different result. See Wallshein v. Shugarman, 50 So. 3d
89, 92 (Fla. 2010) (holding that the trial court did not need to conduct an
evidentiary hearing when the dispute could be resolved as a matter of law); Linden
v. Auto Trend, Inc., 923 So. 2d 1281, 1283 (Fla. 4th DCA 2006) (“In this
case, at the hearing on the motion to compel arbitration, Linden’s attorney
failed to specify any issue that required an evidentiary hearing.”); Affinity
Internet, Inc. v. Consolidated Credit Counseling Servs., Inc., 920 So. 2d
1286, 1289 (Fla. 4th DCA 2006) (“No evidentiary hearing was required because no
factual issues were in dispute and the issue of whether a valid arbitration
agreement existed was a matter of law.”); Proper v. Don Connolly Constr. Co.,
546 So. 2d 758, 759-60 (Fla. 2d DCA 1989) (holding that a trial court need not
conduct an evidentiary hearing on a motion to compel or stay arbitration if it
can determine the issue as a matter of law after inspecting the relevant
documents and affidavits and listening to argument on the issues).
613 F.2d 1272, 1278 (5th Cir. 1980)). Florida cases have not so clearly
elucidated a standard, but they all seem to echo Chastain‘s reasoning by
agreeing that to raise a “substantial issue” requiring an evidentiary hearing,
a party must identify factual disputes that, if resolved in its favor, would
compel a different result. See Wallshein v. Shugarman, 50 So. 3d
89, 92 (Fla. 2010) (holding that the trial court did not need to conduct an
evidentiary hearing when the dispute could be resolved as a matter of law); Linden
v. Auto Trend, Inc., 923 So. 2d 1281, 1283 (Fla. 4th DCA 2006) (“In this
case, at the hearing on the motion to compel arbitration, Linden’s attorney
failed to specify any issue that required an evidentiary hearing.”); Affinity
Internet, Inc. v. Consolidated Credit Counseling Servs., Inc., 920 So. 2d
1286, 1289 (Fla. 4th DCA 2006) (“No evidentiary hearing was required because no
factual issues were in dispute and the issue of whether a valid arbitration
agreement existed was a matter of law.”); Proper v. Don Connolly Constr. Co.,
546 So. 2d 758, 759-60 (Fla. 2d DCA 1989) (holding that a trial court need not
conduct an evidentiary hearing on a motion to compel or stay arbitration if it
can determine the issue as a matter of law after inspecting the relevant
documents and affidavits and listening to argument on the issues).
In this case, the following facts are undisputed. SELA sent an email to CT
Miami stating in no uncertain terms that CT Miami had to sign the Distributor
Agreement before SELA would agree to do business with it. The Distributor
Agreement contains an arbitration provision requiring the parties to arbitrate
any dispute arising from their relationship. The appropriate designated
corporate officer from CT Miami signed that Distributor Agreement and returned
it to CT Miami. Shortly after CT Miami signed that Distributor Agreement, the
parties began conducting business together. They continued conducting business
together for approximately five years in conformity with the terms of the
Distributor Agreement. Several references are made to a “distributor agreement”
in CT Miami’s financial statements and emails, and many of these references are
accompanied by apparent quotes or paraphrases from the Distributor Agreement.
Miami stating in no uncertain terms that CT Miami had to sign the Distributor
Agreement before SELA would agree to do business with it. The Distributor
Agreement contains an arbitration provision requiring the parties to arbitrate
any dispute arising from their relationship. The appropriate designated
corporate officer from CT Miami signed that Distributor Agreement and returned
it to CT Miami. Shortly after CT Miami signed that Distributor Agreement, the
parties began conducting business together. They continued conducting business
together for approximately five years in conformity with the terms of the
Distributor Agreement. Several references are made to a “distributor agreement”
in CT Miami’s financial statements and emails, and many of these references are
accompanied by apparent quotes or paraphrases from the Distributor Agreement.
These undisputed facts raise a nearly insurmountable presumption that the
Distributor Agreement is a binding agreement and that the arbitration clause is
therefore valid. First, a document executed by the party against whom the
contract is sought to be enforced is presumptively valid even in the absence of
the enforcing party’s signature where the events surrounding the contract’s
execution support a valid contract. Dodge of Winter Park, Inc. v. Morley,
756 So. 2d 1085, 1085-86 (Fla. 5th DCA 2000) (holding that a seller could
enforce an arbitration provision against a buyer even though only the buyer had
signed the provision); see also Gateway Cable T.V., Inc. v. Vikoa
Constr. Corp., 253 So. 2d 461, 463 (Fla. 1st DCA 1971) (“A contract may be
binding on a party despite the absence of a party’s signature. The object of a
signature is to show mutuality or assent, but these facts may be shown in other
ways, for example, by the acts or conduct of the parties.”).
Distributor Agreement is a binding agreement and that the arbitration clause is
therefore valid. First, a document executed by the party against whom the
contract is sought to be enforced is presumptively valid even in the absence of
the enforcing party’s signature where the events surrounding the contract’s
execution support a valid contract. Dodge of Winter Park, Inc. v. Morley,
756 So. 2d 1085, 1085-86 (Fla. 5th DCA 2000) (holding that a seller could
enforce an arbitration provision against a buyer even though only the buyer had
signed the provision); see also Gateway Cable T.V., Inc. v. Vikoa
Constr. Corp., 253 So. 2d 461, 463 (Fla. 1st DCA 1971) (“A contract may be
binding on a party despite the absence of a party’s signature. The object of a
signature is to show mutuality or assent, but these facts may be shown in other
ways, for example, by the acts or conduct of the parties.”).
Additionally, “[a] contract is binding, despite the fact that one party
did not sign the contract, where both parties have performed under the
contract.” Integrated Health Servs. of Green Briar, Inc. v. Lopez-Silvero,
827 So. 2d 338, 339 (Fla. 3d DCA 2002); see also Alterra Healthcare
Corp. v. Bryant, 937 So. 2d 263, 270 (Fla. 4th DCA 2006) (holding that a
trial court correctly determined an agreement was binding despite one party’s
failure to sign the document where the parties performed under the terms of the
contract). The undisputed facts that CT Miami signed the contract and performed
in conformity with that contract, thereby receiving substantial financial gain,
allowed the trial court to find that the agreement was binding unless CT Miami
was able to raise factual disputes that called the validity of the agreement
into question.
did not sign the contract, where both parties have performed under the
contract.” Integrated Health Servs. of Green Briar, Inc. v. Lopez-Silvero,
827 So. 2d 338, 339 (Fla. 3d DCA 2002); see also Alterra Healthcare
Corp. v. Bryant, 937 So. 2d 263, 270 (Fla. 4th DCA 2006) (holding that a
trial court correctly determined an agreement was binding despite one party’s
failure to sign the document where the parties performed under the terms of the
contract). The undisputed facts that CT Miami signed the contract and performed
in conformity with that contract, thereby receiving substantial financial gain,
allowed the trial court to find that the agreement was binding unless CT Miami
was able to raise factual disputes that called the validity of the agreement
into question.
To meet its burden of establishing a “substantial issue” regarding the
contract formation, CT Miami simply denied that the parties had intended to be
bound by the Distributor Agreement (a legal conclusion), denied that any
references to a “signed distributor agreement” were to the Distributor
Agreement (a very dubious claim, as noted above), and alleged that all the
parties’ transactions were governed by independent agreements (an allegation
consistent with the Distributor Agreement). None of these allegations were
substantiated with any evidence despite hundreds of pages of documents being
attached to its motion to stay arbitration. The only factual dispute
substantiated by the record, in the form of two signed affidavits, is CT
Miami’s claim that SELA intentionally failed to sign certain documents so that
SELA would not be bound by them in the future. This factual claim, however,
even if true, is completely irrelevant to the trial court’s determination.
contract formation, CT Miami simply denied that the parties had intended to be
bound by the Distributor Agreement (a legal conclusion), denied that any
references to a “signed distributor agreement” were to the Distributor
Agreement (a very dubious claim, as noted above), and alleged that all the
parties’ transactions were governed by independent agreements (an allegation
consistent with the Distributor Agreement). None of these allegations were
substantiated with any evidence despite hundreds of pages of documents being
attached to its motion to stay arbitration. The only factual dispute
substantiated by the record, in the form of two signed affidavits, is CT
Miami’s claim that SELA intentionally failed to sign certain documents so that
SELA would not be bound by them in the future. This factual claim, however,
even if true, is completely irrelevant to the trial court’s determination.
The trial court specifically found in its written order that CT Miami had
not met its burden of establishing a substantial issue regarding the making of
the Distributor Agreement, and that an evidentiary hearing was therefore
unnecessary. We agree with this ruling, and echo the trial court’s statement to
counsel during the hearing on the motion to compel/stay arbitration: “You know,
having said that, I have to say Mr. Gutchess, that was an excellent argument
but you are not a miracle maker. You can’t change the facts, and I just find
that the facts are not sufficient to overcome a signed agreement under the
circumstances in this case.”
not met its burden of establishing a substantial issue regarding the making of
the Distributor Agreement, and that an evidentiary hearing was therefore
unnecessary. We agree with this ruling, and echo the trial court’s statement to
counsel during the hearing on the motion to compel/stay arbitration: “You know,
having said that, I have to say Mr. Gutchess, that was an excellent argument
but you are not a miracle maker. You can’t change the facts, and I just find
that the facts are not sufficient to overcome a signed agreement under the
circumstances in this case.”
The “[s]peedy resolution of disputes is the raison d’etre of arbitration,”
Melamed, 425 So. 2d at 128, so it would be completely nonsensical to
require an evidentiary hearing and full discovery on an issue that the trial
court can easily resolve as a matter of law. Thus, we hold that the trial court
did not err by failing to conduct an evidentiary hearing.
Melamed, 425 So. 2d at 128, so it would be completely nonsensical to
require an evidentiary hearing and full discovery on an issue that the trial
court can easily resolve as a matter of law. Thus, we hold that the trial court
did not err by failing to conduct an evidentiary hearing.
CONCLUSION
The trial court erred in this case by making an alternative holding that
the arbitrator, not the trial court, could rule on the issue of whether the
parties had ever assented to a contract containing an arbitration clause.
Unlike other contractual defenses pertaining to the entire contract, this third
category of challenge regarding whether an agreement was ever consummated in
the first place is to be decided exclusively by the trial courts. Despite this
error, the trial court went on to make all the requisite factual findings that
an agreement had indeed been reached between the parties, and it correctly
granted SELA’s motion to compel arbitration on that basis. There was no need
for an evidentiary hearing on whether an agreement had been reached due to the
undisputed facts and overwhelming evidence establishing an agreement between
the two parties where CT Miami’s allegations and evidence challenging that
finding were either unsupported or irrelevant.
the arbitrator, not the trial court, could rule on the issue of whether the
parties had ever assented to a contract containing an arbitration clause.
Unlike other contractual defenses pertaining to the entire contract, this third
category of challenge regarding whether an agreement was ever consummated in
the first place is to be decided exclusively by the trial courts. Despite this
error, the trial court went on to make all the requisite factual findings that
an agreement had indeed been reached between the parties, and it correctly
granted SELA’s motion to compel arbitration on that basis. There was no need
for an evidentiary hearing on whether an agreement had been reached due to the
undisputed facts and overwhelming evidence establishing an agreement between
the two parties where CT Miami’s allegations and evidence challenging that
finding were either unsupported or irrelevant.
Affirmed.
__________________
1There are additional documents between the
parties discussing specific transactions and sales incentives, but none address
the big-picture partnership or sales relationship as the Distributor Agreement
appears to do.
parties discussing specific transactions and sales incentives, but none address
the big-picture partnership or sales relationship as the Distributor Agreement
appears to do.
2CT Miami disputes that these emails and
financial statements are referencing that specific Distributor Agreement,
claiming instead that the parties are speaking generally of their oral
agreement to have CT Miami distribute SELA’s products. Further, CT Miami argues
that any phrasing in the emails that appears to be quoted from the Distributor
Agreement is from its 2009 financial statements. In response to that argument,
we must borrow a legal term from negligence cases: “res ipsa loquitur” — the
emails speak for themselves.
financial statements are referencing that specific Distributor Agreement,
claiming instead that the parties are speaking generally of their oral
agreement to have CT Miami distribute SELA’s products. Further, CT Miami argues
that any phrasing in the emails that appears to be quoted from the Distributor
Agreement is from its 2009 financial statements. In response to that argument,
we must borrow a legal term from negligence cases: “res ipsa loquitur” — the
emails speak for themselves.
3It is unclear whether CT Miami and SELA
conducted their business wholly within the state of Florida, in which case the
FAC would undoubtedly control, or whether their transactions included
interstate commerce. To the extent the contract affects interstate commerce in
Florida, it is governed by both the FAC and the FAA. Shotts v. Winter Haven,
Inc., 86 So. 3d 456, 461 (Fla. 2011). Although both state and federal
arbitration acts apply to such clauses, the FAC governs the proceedings to the
extent it does not directly conflict with the FAA. Id. at 463-64. The
sections of the FAC and FAA relevant to the determination of this appeal,
however, are “virtually identical,” Rowe Enters. v. Int’l Sys. & Elecs.
Corp., 932 So. 2d 537, 539 (Fla. 1st DCA 2006) (quoting Merrill Lynch
Pierce Fenner & Smith, Inc. v. Melamed, 425 So. 2d 127, 128 n.4 (Fla.
4th DCA 1982)), so the determination is not dispositive of the case at bar.
conducted their business wholly within the state of Florida, in which case the
FAC would undoubtedly control, or whether their transactions included
interstate commerce. To the extent the contract affects interstate commerce in
Florida, it is governed by both the FAC and the FAA. Shotts v. Winter Haven,
Inc., 86 So. 3d 456, 461 (Fla. 2011). Although both state and federal
arbitration acts apply to such clauses, the FAC governs the proceedings to the
extent it does not directly conflict with the FAA. Id. at 463-64. The
sections of the FAC and FAA relevant to the determination of this appeal,
however, are “virtually identical,” Rowe Enters. v. Int’l Sys. & Elecs.
Corp., 932 So. 2d 537, 539 (Fla. 1st DCA 2006) (quoting Merrill Lynch
Pierce Fenner & Smith, Inc. v. Melamed, 425 So. 2d 127, 128 n.4 (Fla.
4th DCA 1982)), so the determination is not dispositive of the case at bar.
4The “tipsy coachman” doctrine is most
often applied when a lower court applies reasoning that is completely
incorrect, yet reaches the right result in the eyes of a reviewing court that
supplies the correct alternative theory. In this case, the trial court
ostensibly supplied its own alternative theories: It ruled that the contract
was a valid and binding agreement and, just to be safe, also found that the
arbitrator could take another look at it. We believe the “tipsy coachman” rule
of appellate efficiency applies with equal (or likely even greater) force when
the trial court is more akin to a “cautious coachmen” that reaches the correct
result while supplying two alternative bases for the ruling, only one of which
is legally accurate.
often applied when a lower court applies reasoning that is completely
incorrect, yet reaches the right result in the eyes of a reviewing court that
supplies the correct alternative theory. In this case, the trial court
ostensibly supplied its own alternative theories: It ruled that the contract
was a valid and binding agreement and, just to be safe, also found that the
arbitrator could take another look at it. We believe the “tipsy coachman” rule
of appellate efficiency applies with equal (or likely even greater) force when
the trial court is more akin to a “cautious coachmen” that reaches the correct
result while supplying two alternative bases for the ruling, only one of which
is legally accurate.
* * *