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.
