MERRILL LYNCH PIERCE FENNER & SMITH INC., and Brian Sheen, Petitioners, v. Helen MELAMED, Respondent.
No. 81-1227.
District Court of Appeal of Florida, Fourth District.
November 12, 1981.
405 So. 2d 790
HURLEY, Judge.
Merrill Lynch Pierce Fenner & Smith Inc. (Merrill Lynch) and its employee Brian Sheen petitioned this court to review a non-final order which denied a motion to compel arbitration. We have certiorari jurisdiction. Lapidus v. Arlen Beach Condominium Association, 394 So. 2d 1102, 1103 (Fla. 3d DCA 1981);
The issue before us is whether the United States Arbitration Act (Federal Arbitration Act),
The present litigation arises out of a contractual relationship between the respondent, Helen Melamed, and the petitioners. In May, 1980, Ms. Melamed placed cash and securities, including stocks listed on a national stock exchange, with Merrill Lynch to be maintained in a cash management account. Ms. Melamed opened this account through Brian Sheen, an account executive employed by Merrill Lynch.
A dispute ensued and Ms. Melamed filed suit in the Circuit Court of Palm Beach County. In response the petitioners filed a motion to compel arbitration pursuant to the Federal Arbitration Act. They asserted that Ms. Melamed had signed a contract requiring the parties to submit all disputes arising out of the relationship to arbitration. The contract contained a clause incorporating the laws of New York. (At oral argument Ms. Melamed conceded that the contract involves interstate commerce within the meaning of the Federal Arbitration Act).
Next, the petitioners filed an answer which asserted as an affirmative defense the right to arbitration. They also attached a second motion to compel arbitration. The trial court denied both motions on the
Under the supremacy clause of the
Section 2 of the Federal Arbitration Act makes an arbitration provision in an agreement involving interstate commerce “valid, irrevocable, and enforceable” unless the agreement would be revocable for a reason at law or equity.1
The supremacy clause requires us to resolve any inconsistency between the two laws in favor of the federally created right, and to subordinate Florida law to the supreme law of the land. We therefore hold that Florida courts must recognize and apply the Federal Arbitration Act and that arbitration agreements which are valid and enforceable under the federal law are also valid and enforceable in Florida courts.
We are aware that some courts have held that the Federal Arbitration Act applies only in federal courts. See, e.g., Pullman, Inc. v. Phoenix Steel Corp., 304 A.2d 334 (Del. Super. Ct. 1973). But most courts have held that the Act applies in both federal and state courts. See, e.g., Allison v. Medicab International, Inc., 92 Wash.2d 199, 597 P.2d 380 (1979) (en banc); Fite and Warmath Construction Co. v. MYS Corp., 559 S.W.2d 729 (Ky. 1977); West Point-Pepperell, Inc. v. Multi-Line Industries, Inc., 231 Ga. 329, 201 S.E.2d 452 (1973); Main v. Merrill Lynch Pierce Fenner & Smith Inc., 67 Cal. App. 3d 19, 136 Cal. Rptr. 378 (1977).
Our view of the ambit of the supremacy clause coupled with the sound judicial policy of discouraging unfair forum shopping compel us to adopt the majority rather than the minority rule. Under the minority rule,
We also hold that the provisions of Section 3 of the Federal Arbitration Act apply to Florida state courts. Section 3 generally requires “courts of the United States” to stay judicial proceedings upon a showing that the disputes are subject to a valid and enforceable arbitration agreement.3
We feel compelled to interpret the somewhat ambiguous expression “courts of the United States” to include Florida courts in order to protect the rights created by the Federal Arbitration Act. A litigant must often rely on the state courts to enforce his rights under the Federal Arbitration Act. Under the Act, petitions in federal court to compel arbitration must allege an independent basis of subject matter jurisdiction.
Fairness, logic, and constitutional constraints require us to enforce federal rights in state courts whenever Congress allows. Congress has allowed state courts to enforce federal arbitration rights, and has made state courts the exclusive forum for vindication of those rights except in those instances when the litigant can invoke federal jurisdiction on some independent ground. We should not and cannot make the substance of a federal right depend on the fortuity of the existence of an independent ground of federal jurisdiction.
To summarize, we hold that the Federal Arbitration Act is a national substantive law that supplants inconsistent state laws and that Florida courts are bound by the Act. We quash the order denying the petitioners motion to compel arbitration, and instruct the trial judge to reconsider the motion in light of this opinion.
DOWNEY and GLICKSTEIN, JJ., concur.
NOTES
Notes
Notes
Section 2 of the Act provides as follows:
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
Section 682.02 of the Florida Arbitration Code provides as follows:
Two or more parties may agree in writing to submit to arbitration any controversy existing between them at the time of the agreement, or they may include in a written contract a provision for the settlement by arbitration of any controversy thereafter arising between them relating to such contract or the failure or refusal to perform the whole or any part thereof. Such agreement or provision shall be valid, enforceable, and irrevocable without regard to the justiciable character of the controversy; provided that this law shall not apply to any such agreement or provision to arbitrate in which it is stipulated that this law shall not apply or to any arbitration or award thereunder.
Section 3 of the Act provides as follows:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.