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Florida District Court Holds Arbitration Provision In Sales Agreement Is Void As Against Public Policy

In Anderson v. Taylor Morrison of Florida, Inc., No. 2D16-314, 2017 WL 2374404 (Fla. Dist. Ct. App. May 31, 2017), the Second District Court of Appeal of Florida held an arbitration provision in a homeowner’s sales agreement was void as against public policy because it limited the homeowner’s statutory remedies.  

In April 2009, Reginald and Michelle Anderson entered into a sales agreement with Taylor Morrison of Florida, Inc. (the “Builder”) to purchase a newly constructed home.  The Andersons took possession of the home in November 2009. 

In June 2015, the Andersons gave notice to the Builder under Florida statues of construction defects regarding the exterior stucco system on the home.  The Andersons then filed a complaint against the Builder in September 2015 alleging “(1) violation of the Florida Building Code, Section 553.84, Florida Statutes (2009); (2) breach of contract; and (3) violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), §§ 501.201-.213, Fla. Stat. (2009).” 

The Builder sought to compel arbitration under the warranty provided with the purchase of the home.  However, the Andersons argued the arbitration provision was void as against public policy because it barred there recovery of all statutory and contractual claims.  The trial court found the arbitration provision valid and granted the Builder’s motion to compel arbitration.  The Andersons challenged the order compelling arbitration.

The warranty provided with the sales agreement included a one-year warranty for materials and workmanship compliance with “the Customer Care Guidelines” and a ten-year warranty for “Major Structural Issues.”  The warranty also contained an arbitration provision titled “Dispute Settlement,” stating in part that the provision provided the exclusive remedy for all disputes and issues related to the buyer’s home.  The warranty also contained a disclaimer of liability provision, which stated in all capital letters that the buyer agrees the limited warranty is the exclusive remedy for any design, materials, or workmanship issues and that the buyer assumes the risk of all other loss resulting.

The District Court held the arbitration provision in the warranty was void as against public policy because it limited the Anderson’s ability to assert a statutory claim for construction defects.  The District Court determined that when the arbitration provision was read in context with the other provisions of the warranty, any claims made concerning building code violations could not be remedies through arbitration because those types of claims were not covered by the warranty. 

The District Court’s decision in this case reminds builders and contractors to be careful of using arbitration language that could prevent buyers from bringing valid statutory claims in the arbitration.  Arbitration provisions are still a valid and useful tool in many agreements, but contract drafters should be aware not to draft language that interferes with the buyer’s statutory rights to bring valid claims, at least in Florida.