Wednesday, September 29, 2010

Collateral Estoppel Precludes Trial Court From Deciding Issue Previously Decided By Arbitrators

In Bates v. The Betty & Ross Co. (3D09-2071), the Third District reversed an order terminating an arbitration. 
After the complaint was filed, the parties voluntarily entered into an arbitration agreement which required them to submit to arbitration “with respect to the allegations in the complaint.” The trial court then ordered the case to arbitration. Once the matter was in arbitration, Bates filed an Amended Claim alleging wrongful conduct on the part of Alec Ross, individually, and against the corporation for bad faith in providing incorrect payoff information for refinancing with regard to the loans. The civil theft allegations were dropped. The Betty & Ross Co. and Alec Ross moved the Arbitration Panel to terminate arbitration, arguing that Bates had breached the arbitration agreement by substituting a different set of allegations not encompassed by the original arbitration agreement that, they contend, are not subject to arbitration. The Arbitration Panel found a nexus between the new claims and those contained within the arbitration agreement and denied the motion to terminate arbitration without prejudice.  Unhappy with the Arbitration Panel’s decision, Alec Ross then moved in the Monroe County Circuit Court to terminate arbitration basically on the same grounds as previously argued before the Arbitration Panel. The trial judge granted the motion to terminate arbitration.
The Third District reversed, based upon two separate grounds.  Noting that "the scope of the agreement should be resolved in favor of arbitration, not against it," the court first concluded that:
We construe the facts stated in the Amended Claim as having been alleged “with respect to” those allegations in the original complaint. The Amended Claim therefore comes within the scope and meaning of the arbitration clause.
The court then concluded "that the parties were collaterally estopped from even bringing this issue before the trial court."  The court stated:
The parties in this case were collaterally estopped from bringing the issue of whether termination was appropriate before the circuit court by first raising the issue before the Arbitration Panel and receiving a ruling from the panel. The essential elements of collateral estoppel, that the parties and issues are identical and that the particular matter was fully litigated and determined resulting in a final decision of a court of competent jurisdiction, are present here. See Dep’t of Health & Rehab. Servs. v. B.J.M., 656 So. 2d 906, 910 (Fla. 1995). Therefore, the determination made in the arbitration proceeding by the Arbitration Panel to deny the motion to terminate arbitration bars the trial court from hearing the motion to terminate arbitration under the doctrine of collateral estoppel. Dadeland Depot, Inc., v. St. Paul Fire & Marine Ins. Co., 945 So. 2d at 1216.


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