183 So. 3d 1099
Fla. Dist. Ct. App.2015Background
- Bank of America appeals from orders denying arbitration in two consolidated cases arising from the Rothstein Ponzi scheme.
- The loan agreements contained a broad arbitration clause, with the Fifth Amendment including an identical provision, and provided that arbitrators decide arbitrability.
- Signatories to the loan agreement included Von Allmen and D&L Partners; Beverly and other Kretschmar plaintiffs were non-signatories.
- Beverly alleges the bank’s failed advisement contributed to investors’ participation in Rothstein’s scheme; Kretschmar alleges the bank induced Von Allmen to invest in Banyon Fund.
- The trial court denied arbitration for all plaintiffs, relying on Seifert v. United States Home Corp.; the court later held non-signatories were not bound.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are signatories bound to arbitrate under the clause? | Kretschmar argues signatories must arbitrate. | Bank argues signatories and related claims must arbitrate. | Arbitrability for signatories to be decided by arbitrator; reverse for signatories. |
| Are non-signatories bound by the arbitration clause? | Beverly contends non-signatories are not bound. | Bank asserts non-signatories may be bound due to related claims. | Non-signatories are not bound by the arbitration clause. |
| Who decides arbitrability when the agreement provides for arbitration of arbitrability? | Arbitrability should be decided by the arbitrator only for signatories. | Arbitrability should be determined by the arbitrator as provided in the agreement. | Arbitrator determines arbitrability; court improperly decided for signatories. |
| Should the signatory claims be arbitrated and non-signatories stayed or severed? | Arbitration should proceed for signatories; non-signatories remain in court. | Arbitration should proceed broadly if allowed; otherwise stay necessary. | Claims of signatories to arbitration should proceed; non-signatories denied arbitration; remand for potential stay considerations. |
| Is the trial court’s denial of arbitration proper as to the Kretschmar and Beverly plaintiffs? | Arbitration should be compelled for signatories; non-signatories not bound. | Court properly denied arbitration as to non-signatories. | Reversed in part (signatories arbitrable); affirmed in part (non-signatories not bound). |
Key Cases Cited
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (arbitrability decision often for arbitrator when agreement so provides)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (arbitrability issue preconditions and arbitrator authority)
- Mercedes Homes, Inc. v. Colon, 966 So.2d 10 (Fla. 5th DCA 2007) (arbitrability determined by arbitrator when clause broad)
- Seifert v. United States Home Corp., 750 So.2d 633 (Fla. 1999) (three-issue framework; arbitrability is judicially determined unless contract provides otherwise)
- Morgan Stanley DW Inc. v. Halliday, 873 So.2d 400 (Fla. 4th DCA 2004) (non-signatories generally not bound absent specific agreement)
- Accardi v. Hillsboro Shores Imp. Ass’n, 944 So.2d 1008 (Fla. 4th DCA 2005) (res judicata/collateral estoppel identity requirements and related principles)