Arbitration & Mediation

Arbitration Clauses in Home Sales Contract Do Not Seem to Include Personal Injury Claims

By Christopher B. Hopkins, Esq.

The Florida Supreme Court's 1999 decision in Seifert v. U.S. Home Corp. has become the standard for the elements to enforcing arbitration. Notably, the Seiferts were suing for a personal injury and the construction company sought arbitration, which was ultimately denied under the principal that the home construction contract's arbitration clause did not contemplate a subsequent personal injury which did not have a sufficient nexus to the contract for the building of the home.

The Second District (LaRose, Northcutt, and Davis) handed down a decision in Alexander and Denise Kaplan v. Divosta Homes, L.P. and Villagewalk of Bonita Springs Homeowners Association, where the court "piggybacked" both Seifert as well as another arbitration mainstay, Buckeye Check Cashing v. Cardegna.

In the 2nd DCA's case, there was a broad ("arising from or relating to") arbitration clause in the homebuilder's contract, which is likely the standard form for Divosta Homes, a nationwide homebuilder. At some point, the home was built. At some point, an unknown personal injury allegedly occurred. Little to no details are provided, hence we question the procedural strength of this case (contrast with Seifert, where the dates, injuries and claims were more fully set out).

First, since the contract affirmatively said there were no third party beneficiaries, the (presumably builder-controlled) Association was not entitled to arbitration.

Second, the Kaplans could not avoid arbitration through challenges to the contract as a whole (as we saw just recently in this case).

Third, while "arising from or relating to" was recognized as encompassing virtually al disputes between the contracting parties, the Panel found there was no significant relationship between the (unstated, undescribed) personal injury claim and the construction contract. The nexus requires "some issue of resolution which requires reference to or construction of some portion of the contract."

Full post as published by Florida Arbitration Law on December 17, 2008 (boomark / email).