Anderson v. Taylor Morrison of Florida, Inc. , 223 So. 3d 1088 ( 2017 )

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
REGINALD ANDERSON and MICHELLE )
ANDERSON, )
)
Appellants, )
)
v. ) Case No. 2D16-314
)
TAYLOR MORRISON OF FLORIDA, INC., )
)
Appellee. )
___________________________________ )
Opinion filed May 31, 2017.
Appeal Pursuant to Fla. R. App. P. 9.130
from the Circuit Court for Hillsborough
County; Cheryl K. Thomas, Judge.
Matthew L. Wilson and Joshua E. Burnett
of Burnett Wilson Reeder, Tampa, for
Appellants.
J. Carlton Mitchel and Neal A. Sivyer of
Sivyer Barlow & Watson, P.A., Tampa,
for Appellee.
SILBERMAN, Judge.
Reginald and Michelle Anderson appeal a nonfinal order that stays
proceedings in the trial court and compels arbitration in this action against their home
builder, Taylor Morrison of Florida, Inc. (the Builder). Because the arbitration provision
contained in the limited warranty (the Warranty) that the Builder provided to the
Andersons limits their statutory remedies, we conclude that the provision is void as
against public policy. Therefore, we reverse the trial court's order and remand for
further proceedings. Based on this disposition, we do not reach the remaining issue the
Andersons raise of unconscionability.
In April 2009, the Andersons entered into a sales agreement with the
Builder to purchase a home. The Andersons took possession of the home in November
2009. In June 2015, the Andersons provided notice to the Builder pursuant to section
558.004, Florida Statutes (2015), of construction defects based on building code
violations. The notice referred to an attached engineering report and stated that the
report found "construction defects associated with the application of the exterior stucco
system to [the Andersons'] home." The report specified that the installation failed to
meet the applicable building code provisions and that at multiple locations the cladding
material had an inadequate thickness.
Unable to resolve the matter, the Andersons filed a three-count complaint
in September 2015 alleging (1) violation of the Florida Building Code under 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 Andersons alleged that the Builder violated the building code "by
inadequately and improperly installing the stucco system on" their home. They claimed
that the code violations were latent and not readily observable or known to them "until
damages began to manifest themselves in the form of cracking to the exterior stucco
years after construction ended." They also alleged that the Builder knew or should have
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known that the building code was violated during the construction of the home and that
the violations caused damages to them.
The Builder sought to compel arbitration on the basis of a provision in the
Warranty provided with the purchase of the home. The Andersons argued that the
arbitration provision was void as against public policy because it barred recovery of all
statutory and contractual claims and that it was unconscionable. After a hearing, the
trial court granted the motion to compel arbitration and found the arbitration provision
valid. In doing so, the trial court appeared to implicitly reject the argument that the
provision was void as against public policy. The Andersons now challenge the order
compelling arbitration, focusing on the statutory remedy for the alleged building code
violations.
The sales agreement between the parties states that the Builder will
provide the Andersons with a warranty in place of all other warranties, including those
arising under state law. After closing, the Builder's sole responsibility "is to cover items
under warranty." The Builder provided a copy of the three-page Warranty with the sales
agreement. The Andersons signed an acknowledgement that they had received the
copy, reviewed it, and agreed to its terms and conditions. The Warranty includes a one-
year warranty providing that materials and workmanship in the home will be in
compliance with the review criteria that are contained in "the Customer Care
Guidelines," a separate document. The Warranty also includes a ten-year warranty for
"Major Structural Issues" as defined in the document.
Based on the definition of major structural defect in the Warranty, which
includes items such as foundation systems, load-bearing beams, and bearing walls, the
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inadequate application of exterior stucco does not appear to fall within the coverage of
the ten-year limited warranty. The one-year limited warranty addresses stucco finishes
by reference to the review criteria, which provides that small cracks are common and
that cracks that exceed one-eighth inch in width "are considered excessive" and are
covered. The warranty does not otherwise address the proper application of stucco,
including any required thickness. The complaint and notice allege violations of the
building code based on improper application of stucco but do not specifically address
whether the cracks in the home fall within the one-year warranty's definition of
excessive. Rather, the Andersons asserted that the building code violations were not
readily observable or known until the cracking appeared well after the one-year
warranty expired.
With respect to arbitration, the Warranty contains an arbitration provision
on the third page in a section titled Dispute Settlement. That section provides as
follows:
Dispute Settlement
This Dispute Settlement provision sets forth the exclusive
remedy for all disputes, claims or controversies arising out
of, or in any manner related to, this Warranty or any alleged
issues in your home or property. All disputes, claims or
controversies which cannot be resolved between TM [the
Builder] and you shall be submitted by you, not later than
ninety (90) days after the expiration of the applicable
warranty period, to the American Arbitration Association
("Arbitrator") for resolution in accordance with the rules and
regulations of the Arbitrator. The final decision of the
Arbitrator shall be binding on all parties and shall include
final decisions relating to enforcement of the terms and
provisions of this Warranty.
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In addition, at the top of page one a statement in all capitals advises that the Warranty
contains a binding arbitration provision, that the consumer should read the document in
its entirety, and that the document contains exclusions.
The Warranty also contains a lengthy disclaimer of liability provision
before the dispute settlement section. At the end of the disclaimer provision it states as
follows:
BUYER AGREES THAT THIS LIMITED WARRANTY
SHALL BE THE EXCLUSIVE REMEDY FOR ANY ISSUES
IN DESIGN, MATERIALS OR WORKMANSHIP. BUYER
HERBY [sic] ASSUMES THE RISK OF ALL OTHER LOSS
RESULTING FROM SUCH ISSUES, INCLUDING ANY
CLAIMS FOR PROPERTY DAMAGE OR PERSONAL
INJURY, AND WAIVE [sic] ALL OTHER CLAIMS,
WHETHER IN CONTRACT, TORT OR OTHERWISE.
The Andersons contend that the arbitration provision, particularly when viewed in
context with the limitation of remedies contained in the disclaimer provision, is void as
against public policy because it prohibits any remedy, whether in tort, contract, or by
statute, apart from items covered by the Warranty.
It is for the court, not the arbitrator, to determine whether a valid arbitration
agreement exists. Shotts v. OP Winter Haven, Inc., 86 So. 3d 456, 459 (Fla. 2011).
Our review of the validity of an arbitration agreement on the challenge that it violates
public policy is a question of law subject to de novo review. Id. at 471. If an arbitration
agreement violates public policy, then no valid agreement exists. Id. at 465; Global
Travel Mktg., Inc. v. Shea, 908 So. 2d 392, 398 (Fla. 2005) ("No valid agreement exists
if the arbitration clause is unenforceable on public policy grounds.").
An arbitration agreement is unenforceable for public policy reasons when
it defeats the remedial purpose of a statute or prohibits the plaintiff from obtaining
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meaningful relief under the statutory scheme. S.D.S. Autos, Inc. v. Chrzanowski, 976
So. 2d 600, 606 (Fla. 1st DCA 2007) (dealing with FDUTPA). "A remedial statute is one
which confers or changes a remedy." Shotts, 86 So. 3d at 473 (quoting Blankfeld v.
Richmond Health Care, Inc., 902 So. 2d 296, 298 (Fla. 4th DCA 2005)) (dealing with
Nursing Home Residents' Rights Act). Section 553.84 is a remedial statute because it
provides relief for a person whose home has been built in violation of the building code,
"[n]othwithstanding any other remedies available."
The Builder contends that if the challenge is to the agreement as a whole
but not specifically to the arbitration provision, the issue of the validity of the agreement
is for the arbitrator to decide. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440, 444, 449 (2006) (stating that the borrowers contended that the contract as a whole
was invalid based on a usurious finance charge); Kaplan v. Divosta Homes, L.P., 983
So. 2d 1208, 1210 (Fla. 2d DCA 2008) (stating that the purchasers contended that the
entire sales contract was void due to fraud); Hound Mounds, Inc. v. Finch, 153 So. 3d
368, 371 (Fla. 4th DCA 2014) (stating that the franchisee alleged the invalidity of the
entire franchise agreement and did not specifically attack the arbitration provision).
Here, though, the Andersons do not challenge the Warranty as a whole or the sales
agreement pursuant to which it was issued. Rather, they challenge the arbitration
provision because while it "sets forth the exclusive remedy for all disputes" arising from
or related to the Warranty and all issues with the home or property, it precludes their
ability to pursue their statutory claim.
The Builder also cites to Pulte Home Corp. v. Bay at Cypress Creek
Homeowners' Ass'n, 118 So. 3d 957, 958 (Fla. 2d DCA 2013), in which this court
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recognized that statutory claims for violation of a building code can be subject to
arbitration. But there the arbitration agreement applied to claims for breach of warranty
and statutory claims. Id.
Here, the sales agreement specifies that the Builder's responsibility after
closing is only as to items that are covered by the Warranty, and the disclaimer
provision precludes any claims that are not covered by the Warranty, "whether in
contract, tort or otherwise." The arbitration provision states that "[t]his Dispute
Settlement provision sets forth the exclusive remedy for all disputes, claims or
controversies arising out of" or related to the Warranty or issues with the home or
property. The next sentence states that all unresolved "disputes, claims or
controversies" must be submitted to arbitration. These provisions establish that the only
remedy afforded to the Andersons through arbitration is for specified Warranty claims
and that all other claims, including the Andersons' statutory claims, are precluded.
Yet the Builder insists that despite the language in the documents, a non-
warranty claim could be brought and must be arbitrated. We cannot agree. As this
court stated in a case involving similar stucco claims, arbitration cannot be compelled
where "the parties did not agree to arbitrate claims such as those presented here."
Nunez v. Westfield Homes of Fla., Inc., 925 So. 2d 1108, 1109 (Fla. 2d DCA 2006).
In Nunez, the homeowners brought a claim alleging that the builder
violated the building code by misapplying the exterior stucco. The builder moved to
compel arbitration in accordance with its limited home warranty that required arbitration
of unresolved warranty issues. Id. The court observed that the limited warranty did not
obligate the builder to conform the home to the applicable building codes. Id. at 1110.
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Moreover, while the warranty required the builder to repair exterior cracks in stucco that
exceeded one-eighth of an inch in width, the homeowners' claim was not based on that
condition. Id. The warranty in Nunez extended only to specified circumstances, not
including building code violations, and the builder "chose to limit the scope of disputes
subject to arbitration." Id.
Here, the language of the arbitration provision is seemingly broader than
the arbitration language discussed in Nunez. The arbitration provision in the Warranty
indicates that all issues related to the Warranty, the home, or the property are to be
arbitrated. But read in context with other provisions in the Warranty, particularly the
disclaimer provision, it is evident that the alleged building code violations cannot be
remedied through arbitration because the claims are not covered by the Warranty and
all non-Warranty claims are waived. As the Florida Supreme Court stated in Shotts,
"any arbitration agreement that substantially diminishes or circumvents these [statutory]
remedies stands in violation of the public policy of the State of Florida and is
unenforceable." 86 So. 3d at 474. Simply put, the arbitration provision here effectively
limits the Andersons' remedies to Warranty claims, as defined in the documents, and
does not just substantially diminish the Andersons' statutory remedy for a violation of
the building code but totally eliminates it.
Moreover, contrary to the Builder's argument this is not a situation where
the challenge is to the validity of the limited warranty contract as a whole. The
Andersons do not allege that the contract is usurious or was entered into based on
fraud. See Buckeye Check Cashing, 546 U.S. at 444; Kaplan, 983 So. 2d at 1210.
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Instead, they specifically challenged the arbitration provision because it precludes
enforcement of a statutory remedy that is available to them.
Because the arbitration provision limited the Andersons to warranty claims
and prevents their assertion of a statutory claim, the arbitration provision violates public
policy and is unenforceable. See Shotts, 86 So. 3d at 474-75. Accordingly, we reverse
the order compelling arbitration and remand to the trial court for further proceedings on
the Andersons' complaint.
Reversed and remanded.
KELLY and BLACK, JJ., Concur.
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