In Lennar Homes, LLC v. Martinique at the Oasis
Neighborhood Association, Inc., No. 3D20-1732, 2021 WL 6057113 (Fla. Dist.
Ct. App. Dec. 22, 2021), the Third District Court of Appeal reversed the trial
court’s decision to deny Lennar Homes, LLC’s (“Lennar Homes”) Motion to Compel
Arbitration. The Court of Appeal held the arbitration provision was enforceable
against Martinique at the Oasis Neighborhood Association, Inc. (“Neighborhood Association”).
Lennar Homes was a building developer for a residential
community named Martinique at the Oasis. The residential community was
comprised of individually owned townhomes. When a townhome sold, Lennar Homes
and the individual purchaser executed a purchase and sale agreement with an arbitration
clause. Each purchaser was also issued a special warranty deed which included an
arbitration clause with identical wording.
In 2018, the Neighborhood Association sued Lennar Homes for alleged
construction defects in the stucco stone cladding on the exterior of the
townhomes. Lennar Homes moved to enforce the arbitration provision in the individual
purchase agreements and special warranty deeds. The trial court denied the Motion
to Compel Arbitration because there was no agreement between the Neighborhood Association
and Lennar Homes. The trial court also held any arbitration provision between
the Neighborhood Association and Lennar Homes would have been null and void as
against public policy because it would have prohibited or restricted the Neighborhood
Association’s right to maintain a lawsuit against Lennar Homes.
On appeal, Lennar Homes argued the Neighborhood Association
should be bound by the arbitration provisions in the purchase agreements and
special warranty deeds because the Neighborhood Association brought the suit in
its representative capacity on behalf of the homeowners. The Court of Appeal
agreed, adopting the holding in Pulte Home Corp. v. Vermillion Homeowners
Ass’n, Inc., 109 So. 3d 233 (Fla. Dist. Ct. App. 2013).
In Pulte, the Second District Court of Appeal held a
homeowners’ association is bound by its members’ individual agreements to
arbitrate when it is suing in a representative capacity. Here, the Court reasoned
the Neighborhood Association was suing Lennar Homes in a representative capacity
because the subject of the lawsuit was the defects in the stucco on each
individual townhome. The lawsuit did not involve property owned by the Neighborhood
Association, so the Neighborhood Association was not the real party in interest.
The Neighborhood Association was bound by the arbitration agreements in the purchase
and sale agreements and special warranty deeds.
The Court also rejected the public policy argument. Florida law states provisions prohibiting or restricting lawsuits in homeowners’ association documents are against public policy. The Court held this law does not apply because the arbitration provision was included in sale agreements and warranty deeds rather than homeowners’ association documents.
