Perdido Key Island Resort Development, L.L.P. v. Regions Bank
102 So. 3d 1
| Fla. Dist. Ct. App. | 2012Background
- Perdido Key Island Resort Development, L.L.P. and Cattar and Holyfield executed a $4.5 million promissory note to Regions Bank on Jan 16, 2008 to secure a real estate development loan; H&C Developers Louisiana was the managing partner.
- Cattar and Holyfield signed personal guarantees for all obligations of the borrowers; mortgage and security agreement were executed concurrently; the mortgage incorporated the note by reference but contained no arbitration provision.
- The note contains a narrow arbitration clause requiring disputes related to the note to be resolved by AAA arbitration; foreclosure of collateral is not a waiver of the arbitration clause.
- The mortgage does not include an arbitration provision but explicitly incorporates all terms of the note; the guarantees lack arbitration clauses and do not incorporate the note; guarantors signed in their individual capacities, not as borrowers.
- The borrowers defaulted on the balloon payment on Oct 27, 2009; Regions Bank filed foreclosure and other relief on May 19, 2010; arbitration was sought for the note, but the trial court denied arbitration for mortgage foreclosure and guarantees.
- The trial court granted arbitration as to the note but denied it for mortgage foreclosure and guarantees; appellate review is de novo on arbitrability; Florida law favors arbitration but requires intent and agreement to arbitrate; the court ultimately held the note’s arbitration provision narrow.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the mortgage foreclosure and guarantees subject to arbitration? | Regions: mortgage incorporates note; arbitration should apply to mortgage. | Perdido Key: note arbitration is narrow and does not extend to mortgage/guarantees. | Mortgage foreclosure is arbitrable due to incorporation; guarantees not arbitrable. |
| Are the personal guarantees subject to arbitration? | Regions may rely on equitable estoppel to compel arbitration. | No equitable estoppel; guarantees not signatories to note arbitration; no concerted conduct. | Equitable estoppel does not apply; guarantees not arbitrable. |
| Does equitable estoppel apply to bind non-signatories to the note? | Non-signatories (Cattar/Holyfield) should be bound by terms if interdependent. | No concerted conduct or interdependence shown; estoppel not warranted. | Equitable estoppel does not compel arbitration of the guarantees. |
Key Cases Cited
- Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla. 1999) (three-prong test for arbitrability: existence of a valid agreement, arbitrable issue, and waiver of arbitration rights.)
- World Rentals and Sales, LLC v. Volvo Constr. Equip. Rents, Inc., 517 F.3d 1240 (11th Cir. 2008) (arbitration can be invoked through incorporation; choice of law considerations noted.)
- Armas v. Prudential Secs., Inc., 842 So.2d 210 (Fla. 3d DCA 2003) (non-signatory may compel arbitration under equitable estoppel when conduct is concerted.)
- Beaver Coaches, Inc. v. Revels Nationwide R.V. Sales, Inc., 543 So.2d 359 (Fla. 1st DCA 1989) (arbitration clause covering disputes arising out of or relating to agreement is broad in scope.)
- Nestler-Poletto Realty, Inc. v. Kassin, 780 So.2d 324 (Fla. 4th DCA 1999) (arbitration favored; reasonable breadth of clause matters.)
- Taylor v. Taylor, 1 So.3d 348 (Fla. 1st DCA 2009) (actual language controls when unambiguous; contract language clarifies intent.)