CFC of Delaware LLC v. Santalucia, 91 So. 3d 899

CFC of Delaware LLC appeals a trial court order denying its motion to compel arbitration by Santalucia and her daughter.
The arbitration clause is in a loan agreement financing premiums for two $10 million life insurance policies intended to pay Santalucia's estate taxes.
Santalucia executed a trust naming BNC National Bank as trustee, with the trust (not Santalucia) as borrower and policies ultimately to be managed through foreclosure if the loan defaulted.
CFC foreclosed the loans after default and acquired the policies; Santalucia sued CFC, the life insurance company, BNC, and its CEO for multiple tort and contract claims.
The trial court denied arbitration based on fraud, ruled the clause not substantively unconscionable, and held some arguments moot; the court also stated findings regarding enforceability would not apply to later disputes.
On appeal, the court reverses the fraud-based denial, affirms non-substantive unconscionability, and remands for reconsideration of the scope, FAA applicability, and enforceability against Santalucia’s daughter.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether fraud invalidates the arbitration clause	Santalucia argues fraud in the overall contract invalidates arbitration.	CFC contends fraud goes to contract formation, not the arbitration clause itself.	Fraud ruling reversed; arbitration clause not unenforceable for fraud.
Whether the arbitration clause is substantively unconscionable	Santalucia challenges substantive unconscionability of the clause.	CFC contends clause is not substantively unconscionable.	Arbitration clause not substantively unconscionable.
Whether the scope of the arbitration clause and FAA applicability should be considered	Santalucia argues broader scope and FAA applicability affect enforcement.	CFC argues scope/FAA issues are moot if fraud invalidates the clause.	Remanded for consideration of scope and FAA applicability.
Whether the arbitration clause is enforceable against co-plaintiff Santalucia’s daughter	Daughter may not be bound if arbitration clause unenforceable against her.	CFC seeks enforcement against all co-plaintiffs.	Remanded to address enforceability against daughter; not resolved.

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (arbitration clauses are separable; fraud in making clause may go to arbitrator)
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (contract validity objections go to arbitrator unless to the clause itself)
Simpson, 812 So.2d 588 (Fla. 4th DCA 2002) (fraud in the inducement of the contract vs. arbitration clause; separation principle)
Beazer Homes Corp. v. Bailey, 940 So.2d 453 (Fla. 5th DCA 2006) (fraud in inducement cases followed the general rule re arbitration)
Bombardier Capital Inc. v. Progressive Mktg. Group, Inc., 801 So.2d 131 (Fla. 4th DCA 2001) (fraud related to arbitration clause; clause may be void if fraud related to inclusion)
Golden Palm Hospitality, Inc. v. Steams Bank Nat’l Ass’n, 874 So.2d 1231 (Fla. 5th DCA 2004) (fraud related to clause inclusion; related to arbitration validity)
Chapman v. King Motor Co. of S. Fla., 833 So.2d 820 (Fla. 4th DCA 2002) (standard for trial court review of arbitration clause validity de novo with competent evidence)
Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla.1999) (three elements for motion to compel arbitration: valid agreement, arbitrable issue, waiver)
Raymond James Fin. Servs., Inc. v. Saldukas, 896 So.2d 707 (Fla.2005) (FAA and Florida Code applicability to arbitration analysis)
McKenzie v. Betts, 55 So.3d 615 (Fla. 4th DCA 2011) (standard for appellate review of trial court findings on arbitration)