Arbitration & Mediation

11th Circuit Holds "Stand Alone" Arbitration Agreement Stands When Separate Contract Was Rescinded

By Christopher B. Hopkins, Esq.

The Eleventh Circuit slipped out an unpublished opinion on arbitration in mid-February, but some sharp readers of the blog caught it and sent the case to us. Thanks! Save yourself the PACER fees and get the opinion via the links below.

In Earl Scott v. EFN Investments, LLC d/b/a Napleton's Nissan, CitiFinancial Auto Corporation, the 11th Circuit (Black, Barkett and Marcus) held that a free-standing arbitration agreement was still valid despite the fact that the auto sales contract at issue had been rescinded.

Mr. Scott went shopping for a used car and ultimately selected one at the defendant dealership, signing both an "Agreement to Arbitrate" and a Retail Installment Sales Contract (RISC) -- the latter of which was a "spot deliver" agreement where it remains contingent on financing approval. According to the plaintiff, the dealership rescinded the deal.

The RISC had an arbitration clause but that was not featured in the opinion. Instead, the question was whether the free-standing arbitration agreement was valid. The court said, "yes," since (a) the Agreement to Arbitrate was specifically broad and detailed enough to encompass the tort/statutory claims and (b) under Buckeye Check Cashing v. Cardegna, there was no challenge to the arbitration agreement alone but instead to the entire transaction, which was for the arbitrator. Arbitration granted.

Full post as published by Florida Arbitration Law on March 16, 2009 (boomark / email).