Arbitration & Mediation

Third DCA Employs Equitable Estoppel in Contract Dispute

By Christopher B. Hopkins, Esq.

The Third District issued a fact-dense opinion regarding a real estate development project which involved a non-signatory to a contract invoking an arbitration clause. Florida courts have not addressed "equitable estoppel" in this context since late 2007.

In Debra Sinkle Kolsky v. Jackson Square, LLC (Shepherd, Suarez and Lagoa), various individuals and business entities find themselves enmeshed in a development project where there are several contracts among the various parties, the key one being an amended operating agreement which states, "in the event any dispute arise between the Members... all parties to this Operating Agreement agree that such disputes will be referred to binding arbitration..." Note, in particular, the "any dispute arise between the Members" language.

A member brought suit against another member as well as individuals and entities who are involved in the project but who were not signatories, claiming that there was fraud.

The court set forth that "equitable estoppel is warranted when the signatory to the contract containing the arbitration clause raises allegations of substantially interdependent and concerted misconduct by both the non-signatory and one or more of the signatories" (interestingly, the state court cited federal 11th Circuit authorities relating to "inherently inseparable" acts and "same factual allegations"). Applied to the (dense) facts, the panel held that there was a sufficient nexus in this case and arbitration was compelled.

Full post as published by Florida Arbitration Law on February 25, 2010 (boomark / email).