Berkowitz, Dick, Pollack & Bryant v. Smith
49 So. 3d 309
Fla. Dist. Ct. App.2010Background
- Berkowitz challenges the trial court's denial of its motion to compel arbitration of a professional malpractice claim arising from tax advice allegedly related to intercompany loans.
- Smith owned Hopper Radio of Florida, Inc. and Memcorp Asia Limited; Hopper’s tax liabilities flowed to Smith's individual return as a S-corp.
- IRS audits in 2002 and 2005 involved intercompany loans, with 2005 audit increasing tax liability; Smith contends Berkowitz failed to advise on tax consequences.
- Berkowitz argued three 2005 contracts with Hopper/Memcorp contained arbitration clauses; Smith argued he signed as corporate representative, not individually, and an earlier 1997 agreement with no arbitration.
- Trial court denied arbitration; Berkowitz appealed, arguing there is a valid arbitration agreement covering the claims.
- On appeal, the court held no valid written arbitration agreement existed to cover the 2004–2005 tax-advice claims, as relevant contracts were signed after the disputed transactions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid written arbitration agreement exists | Berkowitz | Smith | No valid agreement covers the claims |
| Whether arbitration clauses in 2005 contracts cover pre-2004 tax advice | Berkowitz | Smith | Clauses cannot cover pre-2004 advice |
| Whether Smith, as corporate representative, is bound personally by arbitration | Berkowitz | Smith | Not bound personally given no applicable agreement |
Key Cases Cited
- DFC Homes of Fla. v. Lawrence, 8 So. 3d 1281 (Fla. 4th DCA 2009) (arbitration denial reviewed de novo; contract interpretation matters)
- United HealthCare of Fla., Inc. v. Brown, 984 So. 2d 583 (Fla. 4th DCA 2008) (competent substantial evidence required for factual findings)
- Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla.1999) (three-factor test for arbitrability and contract interpretation)
- Powertel, Inc. v. Bexley, 743 So. 2d 570 (Fla. 1st DCA 1999) (arbitration clause scope and contractual intent)
- Seaboard Coast Line R.R. v. Trailer Train Co., 690 F.2d 1343 (11th Cir.1982) (intent of the parties governs arbitration clause application)