Arbitration & Mediation

Mold in Florida Home Construction Case Sent to Arbitration

By Christopher B. Hopkins, Esq.

A dispute over whether a home construction case should be sent to arbitration or litigation turned on the wording of the arbitration clause. Home buyers and builders may want to check the wording of their contract, since this arbitrable matter was distinguished from two DiVosta Homes cases which failed due to "non-specifically worded" clauses. While this particular dispute involves mold infestation / exposure, the precedent applies to all construction defects.

The case is Jose and Lorena Rodrigues v. Builders FirstSource - Florida, LLC, Boyton Beach Associates, XVI, LLLP, Boyton Beach XVI Corporation, and G.L. Homes of Florida, Inc. (Ciklin, May, and Damoorgian).

At first blush, the opinion seems to be over-thought since the arbitration clause (paragraph H.19) is suitably broad ("all post-closing claims, disputes and controversies between Purchaser and Seller will be resolved by binding arbitration...") as well as specific ("including without limitation any claimed defect in the home... any claims for personal injury...).

The Panel cited a prior Fourth DCA case, Engle Homes, Inc. v. Jones, as controlling precedent since it involved a similar mold infestation of a new house claim and a broad arbitration clause, "..any and all unsettled claims or disputes regarding the construction of Residence arising after closing shall be settled by binding arbitration..."

In avoiding arbitration, the Plaintiff cited Oberstar v. DiVosta Homes, L.P. and Kaplan v. DiVosta Homes, L.P., where the courts recently declined enforcement of arbitration.

However, those arbitration clauses both referenced disputes which were "arising out or or relating to this Contract or the Purchase of the Unit..." In those cases, the courts held that the parties did not need to rely on the contract to prove or disprove a tort claim, much like the Seifert v. U.S. Home decision.

Thus, if the arbitration clause is broad (any and all claims), the courts seem to contemplate just that... any and all claims. If the clause limits itself to the contract, some claims (such as torts) are not arbitrable. In short, the reference to "the contract" in the arbitration clause will curtail the scope of the arbitration clause.

BUT, be careful, as this instant case relied upon the fact that "the arbitration clause [here and in Engle] specifically related to problems with the actual construction..." which may suggest that the courts are looking both for a broad clause (any and all claims) but also reference to tort claims as a specifically cited example.

A best practice certainly includes a broad arbitration clause. Whether that needs to be followed by an "e.g., any personal injury, statutory or any other claim of any kind" remains to be seen.

Questions about your arbitration clause? Give me a call or email.

Full post as published by Florida Arbitration Law on January 29, 2010 (boomark / email).