Arbitration & Mediation

Deferring Public Policy Challenges to the Arbitrator: Is the Second District Right in Its Conflict With Three Other Courts?

By Christopher B. Hopkins, Esq.

Often when the majority portion of an appellate decision is short and a separate concurring/dissenting opinion is long, there frequently is some great legal pursuit afoot. The case of Jaylene, Inc, Candansk, Dansk Management, Inc.; Senior Management Services a/k/a Carrington Place Care Center v. Marguerite Steuer by and through Victoria Paradise (Davis, Villanti, and Northcutt) is one such example. Moreover, this case not only has the chance of further appeal to the state supreme court, there is even a hint of constitutional challenges which might meander to the U.S. Supreme Court -- much like Buckeye Check Cashing v. Cardegna did only a few years ago.

As a bonus, the concurring opinion quotes this 2005 article which pointed out that the placement of liability limitation clauses and the arbitration clause could jiggle out differing results. That same article also bird-dogged the conflict which the Second DCA now openly admits exists. "Emerging Trends" indeed.

As we saw in our last post, the first issue between the parties was the question of whether the POA had authority to sign the admission agreement and arbitration provision on behalf of the nursing home resident. In a swift and fact-less paragraph or two, the court concluded that the POA was empowered to make that decision.

The court briefly referenced that the arbitration clause called for the AHLA / NHLA to decide the case but overlooked the nettlesome issues involved in that issue.

It appears the contract(s) in question include terms which potentially limit the defendants' liability. The question turned to whether the court or the arbitrator takes the first crack at that issue. The appellate court took the trial court to task for overlooking the Rollins, Inc. v. Lighthouse Bay Holdings, Ltd. opinion where the Second DCA held that question was first for the arbitrator. Of note, the First, Fourth and Fifth Districts are in conflict on that point. See Alterra v. Linton, Alterra v. Bryant, and SA-PG-Ocala v. Stokes.

One would think the issue ends there. Judge Northcutt, however, points out some interesting facets to the conflict.

The concurrence argues that the Second District (Rollins) method is better because (1) it honors the parties' agreement to arbitrate, (2) it avoids differing results based only upon where the drafter places the limitation-on-damages clause, (3) it avoids differing results dependent on the existence of a severance clause, and (4) it avoids considering unripe issues.

There are two problems: (1) the first prong of the Seifert test calls upon the trial court to consider the validity of an agreement to arbitrate, including applying the "violation of public policy" common law defense to contracts and (2) the question of whether the five grounds to vacate an arbitration award in Florida Statute 682.13(1) would empower the trial court to later address public policy arguments.

The hitch, according to Northcutt, turns considerably on whether the limitations of liability are IN the arbitration clause or placed elsewhere in the contract. He suggests that, if the two provisions are placed together, the trial court may decide that the arbitrator exceeded its power under Florida Statute 682.13(1)(c). But, if the provisions were separated, Judge Northcutt suggests that the trial court may not have the power to review.

Full post as published by Florida Arbitration Law on December 09, 2009 (boomark / email).