Florida Court Rules Contractor Waived Right To Arbitration

• Published date: 04 December 2021
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Wood, Smith, Henning & Berman LLP
• Author: Mr Anthony S. Wong

Legal pundits often debate the merits of arbitration versus litigation in State Court. Depending on the area of law, arbitration typically is the favored forum of resolution. Employment, securities and construction are three areas that are top of mind when talking about the two choices.

In the construction context, developers and general contractors typically will include arbitration as the forum for resolution in contract agreements with home purchasers. There is many reasons underpinning this school of thought, and resulting arbitration clauses can run the gamut. One common thread is the need to be vigilant in following the contractual language setting out the arbitration agreement.

Stated simply, the right to arbitration can easily be waived if actions taken or inconsistent with the contract language. This case reminds us of that outcome.

In a recent decision in the Florida courts, the issue of waiver was squarely on the proverbial table when the contractor was found to have waived its right to compel arbitration by failing to follow the contractual provisions agreed upon between the parties. This agreement set out the steps necessary to compel arbitration in the event of a dispute. The parties were required by their own agreement to seek resolution first from an the party agreed under the contract, which both failed to do before engaging in traditional litigation methods in an effort to resolve their differences.

Facts

Plaintiffs, Mauro & Patricia Leder (Owners) entered into a contract with Imburgia Construction Services, Inc. (Contractor) for the purpose of completing renovations to their home. The contract provisions indicated that arbitration would be used as binding dispute resolution should any issues arise. The contract also required that the parties first submit any claim to the Initial Decision Maker, who the parties agreed would be Miami Shores Building Department Official. According to the terms of the contract, a claim had to be submitted within 21 days of the occurrence of the event giving rise to the claim.

Importantly, the initial decision by the IDM was a condition precedent to mediation, and mediation a condition precedent to arbitration. Finally, the contract between parties indicated that their right to proceed to binding arbitration would be waived if the conditions pertinent to arbitration were not followed correctly.

The Owners brought a claim against the Contractor for monetary damages. They asserted that the Contractor abandoned...