Shakespeare Foundation, Inc. v. Jackson
61 So. 3d 1194
Fla. Dist. Ct. App.2011Background
- Contract contains broad arbitration clause requiring arbitration for disputes arising out of or relating to the transaction or contract.
- After closing, buyers discovered wetlands comprising ~26% of the property; initial MLS claim stated wetlands were absent.
- Plaintiffs filed fraud in the inducement claim alleging advertisement was knowingly false regarding wetlands.
- Trial court dismissed, ruling the contract governed the dispute and required arbitration.
- Florida law governs contract interpretation; FAA applicability is contested because the dispute is intrastate real estate transaction.
- Court reverses, holding fraud claim not significantly related to the contract and FAA does not apply in this intrastate real estate sale.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the fraud claim subject to arbitration under the contract? | Appellants—fraud claim arises from advertisement and contract matters; contract should not bar fraud claim. | Appellees—broad arbitration clause covers all disputes arising from or relating to the transaction. | No; fraud claim not significantly related to the contract and not within arbitration. |
| Does the Federal Arbitration Act apply in this state court case? | FAA applies when interstate commerce is affected. | Transaction may involve interstate aspects; FAA governs. | FAA not applicable; the sale of real estate is intrastate. |
| Whether the claim has a significant relationship to the contract to be arbitrable under Seifert | There is a nexus: misrepresentation tied to land use and contract provisions. | Claim does not require contract interpretation; independent tort. | Not significantly related; contract incidental. |
| Does the contract language about remedies limit arbitrability of fraud claims? | Remedies limitation shows intent to place arbitration scope on contract matters. | Remedial limitations do not bar arbitrability of fraud claim. | Remedies provision does not foreclose arbitration of fraud claim. |
| Should the Maguire v. King interpretation be adopted or distinguished? | Maguire supports arbitration of claims tied to contractual obligations. | Maguire is distinguishable on facts; contract-based claims may be arbitrated. | Conflict certified; Maguire distinguishable for this case. |
Key Cases Cited
- Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla. 1999) (test for arbitrability under broad clause; nexus required with contract)
- Maguire v. King, 917 So.2d 263 (Fla. 5th DCA 2005) (torts arising from contract duties may be arbitrable; caution on distinguishing from direct contract breach)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (FAA requires courts to address fraud in inducement separately from arbitration validity)
- Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S. 1995) (commerce nexus test for FAA applicability)
- Am. Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88 (4th Cir. 1996) (broader arbitration clause scope; significant relationship test)