Friday, August 21, 2009

In The Second District: "The Enforceability Of The Remedial Limitations May Be Considered By The Arbitrator"

In ManorCare Health Services, Inc., et al v. Stiehl (2D08-2351), the Second District reversed the trial court's denial of a motion to compel arbitration. Judge Altenbernd specially concurred based on controlling Second District precedent, however, agrees with the case law from other districts which reach a different result. The court stated:

The right to compel arbitration arises from an agreement of the parties. As a result, the trial court's role in deciding whether to compel arbitration is limited to three "gateway" issues: "(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). The sole consideration in this case relates to the first issue—that is, whether the arbitration agreement is valid despite remedial limitations that, Ms. Stiehl argues, defeat the public policy expressed under the Nursing Home Residents Act.

In challenging the validity of an arbitration agreement, a party must assert defenses applicable to all contracts—defenses such as fraud, duress, or unconscionability...trial court is to review those defenses which go to the validity of the arbitration agreement itself, rather than to the enforceability of the contract as a whole.

We recognize that courts have, on public policy grounds, invalidated arbitration agreements found to defeat the remedial purpose of a statute on which the suit is based...Additionally, courts in this state have specifically found arbitration agreements containing remedial limitations similar to those presented here to render an agreement to arbitrate void and unenforceable.

Nonetheless, this district has treated the validity of such remedial limitations to be beyond the initial gateway determination of an arbitration agreement's enforceability where the limitations are severable from the agreement to arbitrate...In this circumstance, the enforceability of the remedial limitations may be considered by the arbitrator "in the context of a fully developed factual record."...If the arbitrator determines the remedial limitations to be unenforceable, the limitations may be severed from the remainder of the agreement.


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