In Anderson Serv. Corp. v. Old Republic Sur. Co., the District Court of Appeal for the Fourth District of Florida reversed a trial court’s order compelling arbitration, finding that a surety could not compel arbitration because no arbitration agreement existed between the surety and subcontractor.

Andersen Service Corporation (“Anderson”) entered into a subcontract with nonparty Marco Contractors, Inc. (“Marco”).  The subcontract contained a dispute resolution clause that allowed Marco to elect arbitration or litigation.  Subsequently, Andersen recorded a construction lien for unpaid work.  Marco transferred the lien to a lien transfer bond pursuant to Florida statute, a mechanism commonly sued to remove the lien from the property and substitute a surety bond as security for the claim.  The lien transfer bond was posted by Marco, but issued by Old Republic Surety Company (“Old Republic”).

Andersen filed a single-count statutory claim against the lien transfer bond against Old Republic.  Marco was not a party to the suit.  Old Republic moved to compel arbitration pursuant to the dispute resolution clause in the subcontract.  Andersen opposed the motion, but the trial court granted the arbitration motion and stayed proceedings.  Andersen appealed.

Andersen argued Old Republic was not a party to the subcontract and neither the subcontract nor the provision were incorporated into the lien transfer bond. Thus, the right to arbitrate was never triggered by a party designated as entitled to invoke arbitration.   Old Republic argued that, as surety, its obligations were coextensive with those of Marco, and it should therefore be entitled to enforce the arbitration clause just as Marco could.

The Florida appellate court reversed, holding Old Republic could not compel Andersen to arbitrate.  The Court’s reasoning was straightforward:  to compel arbitration, a party must first demonstrate the existence of a valid written agreement to arbitrate between the parties to the dispute.  Here, while there was a valid written arbitration clause between Marco and Andersen, no such agreement existed between Andersen and Old Republic.  The subcontract bound only Anderson and Marco.  The lien transfer bond contained no arbitration language of its own and made no reference to the subcontract or its terms.  Under these circumstances, the surety could not force arbitration simply by virtue of being Marco’s surety.

The Court further rejected Old Republic’s arguments that its obligations were coextensive of Marco’s by distinguishing the authority upon which it had relied:  in each case Old Republic cited, the bond had expressly incorporated the underlying contract, including dispute resolution provisions.  Because the bond here failed to incorporate the subcontract or arbitration language, Old Republic’s equitable estoppel argument failed.  The Court also specifically noted the subcontract’s arbitration provision belonged exclusively to Marco, who was not a party to the lawsuit and had made no election.

Although this is a Florida decision applying Florida arbitration and lien-law principles, its underlying logic is not unique to Florida. Courts throughout the country apply the same foundational rule: arbitration is a matter of contract, and a non-signatory cannot be compelled to arbitrate, or compel another party to arbitrate, absent a valid agreement to do so. In construction surety practice across jurisdictions, courts regularly focus on whether the bond itself incorporates the underlying contract and, with it, the contract’s dispute resolution provisions.

For construction industry participants, the lesson is to treat bond language and contract dispute resolution provisions as a coordinated system, not independent documents. When they are not aligned, the consequences in terms of forum, cost, discovery exposure, and litigation leverage can be significant.