VISITING NURSE ASSOCIATION OF FLORIDA, INC., Petitioner, vs. JUPITER MEDICAL CENTER, INC. Respondent.
No. SC11-2468
Supreme Court of Florida
[November 6, 2014]
LABARGA, C.J.
REVISED OPINION
Visiting Nurse Association of Florida, Inc., seeks review of the decision of the Fourth District Court of Appeal in Jupiter Medical Center, Inc. v. Visiting Nurse Ass‘n of Florida, Inc., 72 So. 3d 184 (Fla. 4th DCA 2011), on the ground that it expressly and directly conflicts with a decision of the Fifth District Court of Appeal in Commercial Interiors Corp. of Boca Raton v. Pinkerton & Laws, Inc., 19 So. 3d 1062 (Fla. 5th DCA 2009), on a question of law. We have jurisdiction. See
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Overview
After the conclusion of an arbitration proceeding resolving a contract dispute between Visiting Nurse Association, Inc. (VNA), a home health care agency, and Jupiter Medical Center, Inc. (JMC), a hospital, involving agreed-upon discharge planning procedures and VNA‘s lease of office space in JMC‘s hospital, the arbitration panel issued an “interim award,” granting VNA damages, prejudgment interest on a portion of the damages, and reserving jurisdiction to consider attorney‘s fees and costs. In a “Final Award of Arbitrators,” the arbitration panel granted VNA attorney‘s fees, administrative filing fees and expenses, and arbitrators’ fees and expenses.
After the “interim award” was issued, JMC filed a motion for reconsideration and a motion to reopen the hearing, alleging that the arbitration panel construed the contract and the discharge planning procedures in violation of federal and state health care laws prohibiting kickbacks for referrals of Medicare patients. The panel summarily denied the motion by e-mail stating that it had already considered those arguments. Jupiter Medical Center subsequently filed a motion to vacate the arbitration award in the Circuit Court of the Fifteenth Judicial
On appeal, the Fourth District noted that the trial court did not address the issue of the contract‘s legality prior to dismissing the action. The Fourth District ultimately reversed the dismissal of the motion to vacate the award and remanded for the trial court to consider the legality of the contract because “a Florida court cannot enforce an illegal contract” and must make that determination prior to enforcing an award based thereon. Visiting Nurse Association then filed a petition to invoke this Court‘s discretionary jurisdiction, and we granted review. The circumstances leading to the contractual dispute, the arbitration award, and this Court‘s review of Jupiter Medical Center are more fully set forth below.
B. Contractual Relationship and Breach
This action arises from the February 2005 purchase of a hospital-based home health care agency (HHA) by VNA from JMC. In 2004, VNA approached JMC to
1. For any patient requiring home health services post discharge, [JMC] will include in the discharge plan a list of home health agencies that are available to the patient, that are participating in the Medicare program and that serve the geographic area in which the patient resides, consistent with the requirements of 42 CFR 42.43, [JMC] will update its list at least annually and include home health agencies which have requested to be listed by [JMC] and which meet the requirements stated herein.
2. For patients enrolled in managed care organizations, [JMC] indicates the availability of home health agencies to individuals and entities that have a contract with the managed care organization.
3. [JMC] will document in the patient‘s medical record that the list was presented to the patient or to an individual acting on the patient‘s behalf.
4. [JMC] will inform the patient or the patient‘s family of their freedom to choose among participating Medicare home health agencies and will, when possible, respect patient and family preferences, when they are expressed to [JMC]. [JMC] will not specify or otherwise limit the qualified providers that are available to the patient.
5. If, after following the foregoing procedures, the patient expresses no preference, [JMC] will inform the patient of its relationship with the VNA. The purpose of establishing a working relationship with the VNA is to facilitate the smooth transfer of patients into post-hospital care and thereby reduce the average length of stay for hospitalization.
(Some emphasis added).
Around November 2006, VNA suspected that a rotation system was being used where each patient who did not express a preference for a particular HHA was simply assigned to the next HHA on JMC‘s HHA list. Jupiter Medical Center denied there was a rotation system in place. At the evidentiary hearing, however, a
On September 10, 2007, Dr. Ketterhagen informed VNA that due to a shortage of office space, VNA could not continue to maintain office space in the hospital. In this notice, Dr. Ketterhagen also informed VNA that JMC would no longer notify patients of its relationship with VNA. In September 2007, in accordance with its previous notice to JMC, VNA did not make a rent payment for the Jupiter Farms office space. Jupiter Medical Center filed suit in circuit court and VNA instituted arbitration proceedings on November 1, 2007. Neither party argued that the contractual arrangement itself was illegal during the arbitration proceedings.
The arbitration panel issued an “interim award” in which the panel found that JMC breached the contract in two material respects. First, JMC never made its staff aware of the discharge planning procedures outlined in Exhibit “D” of the agreement; the closest JMC ever came to complying with provision 5 of Exhibit “D” was informing former patients of JMC‘s HHA that VNA had purchased the HHA. Further, the facts demonstrated that JMC continued its use of a rotation system, which deprived VNA of “what it had paid $639,000 for: the ability to subtly ‘nudge’ JMC‘s patients to select its agency from among a host of choices.”2 Notably, the panel did not conclude that JMC breached the agreement by failing to refer patients, but only for failing to follow the discharge procedures. The panel also found that even if JMC‘s equivocation in following the discharge procedures was not a breach of contract, the September 10, 2007, letter from JMC to VNA terminating the in-house lease agreement and announcing its intention to cease explaining its relationship with VNA to patients did constitute a breach.
Second, JMC breached the agreement by terminating VNA‘s lease agreement that provided VNA with office space inside JMC and access to the
Regarding damages, the panel noted that calculation of damages was difficult because the evidence presented showed a drop in Medicare referrals, increased competition from other HHAs, and that VNA‘s business plan failed to account for loss of referrals due to patient choice or doctor referral to a competitor. Further, the evidence showed that VNA lost a substantial amount of business because of referrals by two surgeons to a competing HHA and the termination of a popular admissions coordinator, which upset many doctors. The panel also recognized that VNA failed to account for the work it would take to establish the relationships that JMC‘s HHA had acquired with hospital staff over the course of twenty years. Moreover, VNA experienced a similar decline in revenue at another hospital and did not demonstrate that JMC itself would not have experienced the same drop in referrals had it not sold the HHA to VNA. Thus, based on the above, the arbitration panel concluded that VNA‘s damages should be reduced from VNA‘s projected revenue of $1.5 million per year to $1.125 million due to the historical 25% drop in Medicare census that would have occurred even if VNA received all of the Medicare referrals. Further, the damages were reduced by the
Shortly thereafter the panel issued a “Final Award of Arbitrators” in which it granted VNA $214,047.50 in attorney‘s fees; $16,550 in administrative filing fees and expenses; and $71,780.07 in arbitrators’ fees and expenses to be borne entirely by JMC. Jupiter Medical Center was also required to reimburse VNA $49,890.05 for fees and expenses previously incurred by VNA. The arbitration panel later issued an order clarifying the final award to adopt and incorporate the “interim award.”
After the “interim award,” JMC filed a motion for reconsideration arguing that the arbitration panel did not have a factual basis to reach its decision and did not base its conclusions on the four corners of the agreement. Jupiter Medical Center then filed a formal application and request to reopen the arbitration hearing contending that the proceeding needed to be reopened to allow for testimony and evidence concerning the illegality and serious regulatory concerns resulting from the panel‘s proposed construction and interpretation of the contract. Specifically, JMC argued that the arbitration panel issued the award based on an erroneous construction of the parties’ purchase agreement as an unlawful agreement to make, influence, and steer future patient referrals to VNA in exchange for remuneration in direct violation of multiple state and federal healthcare laws and regulations, including Florida‘s Anti-Kickback Statutes (
Jupiter Medical Center then filed a motion to vacate the arbitration award in the United States District Court for the Southern District of Florida asserting that the award should be vacated because the award impermissibly construed the parties’ contract in a manner that violated multiple federal laws, regulations, and specific, well-defined public policy; and the panel exceeded its powers by contravening the express contractual limitations imposed by the parties’ contract and by issuing an award in violation of federal laws, rules, and regulations. The federal district court issued an order granting VNA‘s motion to dismiss for lack of subject matter jurisdiction, in which the court noted that JMC‘s right to relief was not dependent on resolution of federal law, but rather only whether the panel properly interpreted and construed the agreement.
While the motion was pending in federal court and before the panel issued the “Final Award of Arbitrators” and the subsequent clarification order, JMC filed a motion to vacate the arbitration award in the Fifteenth Judicial Circuit Court in and for Palm Beach County. Shortly thereafter JMC filed an amended motion to
On appeal, the Fourth District began its analysis by noting that illegality of a contract is a compelling reason not to enforce a contract, citing several cases from Florida courts indicating a refusal to enforce illegal contracts. The district court then acknowledged that
E. CONFLICT
In Commercial Interiors, an arbitrator presided over a dispute involving two subcontracts between Commercial Interiors Corporation of Boca Raton (Commercial Interiors) and Pinkerton & Laws, Inc. (Pinkerton). Commercial Interiors, 19 So. 3d at 1063. As part of the subcontracts, which contained an arbitration provision, Commercial Interiors agreed to provide interior painting and other extra work on a hotel being constructed by Pinkerton. Id. Commercial Interiors eventually brought suit claiming that Pinkerton had failed to pay it $51,209 for work done according to the subcontracts. Pinkerton filed a motion to compel arbitration and the case moved to arbitration. Id.
Once the arbitration proceedings were initiated, Pinkerton filed a motion to dismiss the claim alleging that Commercial Interiors was not entitled to payment because the subcontracts were illegal—Commercial Interiors did not have a contractor‘s license. The arbitrator ruled that although Commercial Interiors may have violated a local ordinance, it had not violated
On appeal, the Fifth District stated that the issue presented was limited to the standard a trial court should use in reviewing an arbitrator‘s ruling on illegality. Id. at 1064. The Fifth District then noted that if a party failed to establish one of the five grounds for vacating an award provided in
Visiting Nurse Association argues before this Court that the Fourth District erred in holding that the trial court must determine whether a contract is legal prior to enforcement of an arbitration award because
II. ANALYSIS
A. Standard of Review
Visiting Nurse Association contends that it is the arbitrator‘s role to decide the legality of the contract; JMC, however, contends that a court must decide whether a contract is legal prior to enforcement of an arbitral award. Further, JMC contends that the arbitrators exceeded their powers within the meaning of
B. Federal Arbitration Act
Neither party noted whether the Federal Arbitration Act (FAA) or the Florida Arbitration Code (FAC) applied to this case. Although the FAA controls when a transaction involves interstate commerce, “[i]n Florida, an arbitration clause in a contract involving interstate commerce is subject to the [FAC], to the extent the FAC is not in conflict with the FAA.”8 See Shotts, 86 So. 3d at 463-64. An arbitration clause in a contract not involving interstate commerce is subject to the FAC. O‘Keefe Architects, Inc. v. CED Constr. Partners, Ltd., 944 So. 2d 181, 184 (Fla. 2006).
To determine if a transaction involved interstate commerce, courts look to whether the transaction in fact involved interstate commerce, even if the parties did not contemplate an interstate commerce connection. Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 281 (1995). Here, both parties to the contract are Florida companies; the purchase agreement involved a home health care agency
1. Whether a Court Can Consider the Claim that a Contract Containing an Arbitration Provision is Void for Illegality
The United States Supreme Court has repeatedly observed that “Congress enacted the FAA to replace judicial indisposition to arbitration with a ‘national policy favoring [it] and plac[ing] arbitration agreements on equal footing with all other contracts.‘” Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581 (2008) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443-44 (2006)). Section 2 of the FAA “makes contracts to arbitrate ‘valid, irrevocable, and enforceable,’ so long as their subject involves ‘commerce.‘” Id. at 582 (citing
In Buckeye, the respondents entered into various deferred-payment transactions with the petitioner, in which they received cash in exchange for a personal check in the amount of the cash plus a finance charge. For each separate transaction they signed a “Deferred Deposit and Disclosure Agreement” (Agreement), which included arbitration provisions. Id.. The respondents brought a putative class action, alleging that the petitioner charged usurious interest rates and that the agreement violated various Florida lending and consumer-protection laws, rendering it criminal on its face. The petitioner moved to compel arbitration. The trial court denied the motion, holding that a court rather than an arbitrator should resolve a claim that a contract is illegal and void ab initio. The Fourth District Court of Appeal reversed, holding that because the respondents did not challenge the arbitration provision itself, but instead claimed that the entire contract was void, the agreement to arbitrate was enforceable, and the question of
The Supreme Court began its analysis by noting that Congress enacted the FAA to overcome judicial resistance to arbitration. Id. It then observed that challenges to the validity of arbitration agreements can be divided into two types: challenges to the validity of the agreement to arbitrate within the contract; and challenges to the contract as a whole, either on a ground that directly affects the entire agreement, or on the ground that a provision is illegal, which renders the whole contract invalid. Id.
The claim brought by the respondents was identified as one of the second type of challenges. The Supreme Court noted that it previously addressed the question of “who—court or arbitrator—decides these two types of challenges” in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967), where it held that federal courts are not permitted to consider challenges to the contract as a whole. Buckeye, 546 U.S. at 444. Further, in Southland Corp. v.
Jupiter Medical Center, however, argues that the Supreme Court‘s use of the phrase “in the first instance” indicates that it anticipated a subsequent proceeding by a court to decide the claim that a contract containing an arbitration provision is void for illegality.9 We disagree. In Buckeye, the issue presented was whether a court or arbitrator decides if a contract is void for illegality, not which tribunal has
Although the question is a narrow one, it has a certain practical importance. That is because a party who has not agreed to arbitrate will normally have a right to a court‘s decision about the merits of its dispute (say, as here, its obligation under a contract). But, where the party has agreed to arbitrate, he or she, in effect, has relinquished much of that right‘s practical value. The party still can ask a court to review the arbitrator‘s decision, but the court will set that decision aside only in very unusual circumstances. See, e.g.,
9 U.S.C. § 10 (award procured by corruption, fraud, or undue means; arbitrator exceeded his powers); Wilko v. Swan, 346 U.S. 427, 436-437 (1953) (parties bound by arbitrator‘s decision not in “manifest disregard” of the law), overruled on other grounds, Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989).
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (1995) (emphasis added). As First Options makes clear, the Supreme Court‘s determination that an arbitrator “should consider the claim that a contract containing an arbitration provision is void for illegality” limits a party‘s right to the circumscribed court review provided in
Despite this apparent legislative limitation on the authority of the courts to vacate an arbitral award, JMC argues that a court cannot enforce an arbitration panel‘s interpretation of a contract if it results in the violation of some well-defined, dominant public policy that is to be ascertained by “reference to the laws and legal precedents and not from general considerations of supposed public interests,” citing to authority from various federal courts and the Supreme Court of Connecticut. See United Paperworkers Int‘l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 42 (1987) (explaining that “[a] court‘s refusal to enforce an arbitrator‘s award . . . because it is contrary to public policy is a specific application of the more general doctrine, rooted in common law, that a court may refuse to enforce contracts that violate law“); W.R. Grace & Co. v. Local Union 759, Int‘l Union of the United Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 766 (1983) (“If the contract as interpreted by [the arbitrator] violates some explicit public policy, we are obliged to refrain from enforcing it.“); Delta Air Lines, Inc. v. Air Line Pilots Ass‘n, Int‘l, 861 F.2d 665 (11th Cir. 1988); Mercy Hosp., Inc. v. Mass. Nurses Ass‘n., 429 F.3d 338, 343 (1st Cir. 2005) (noting that an exception to the general rule that the arbitrator has the “last word” is that courts may refuse to enforce illegal contracts); I.U.B.A.C. Local Union No. 31 v. Anastasi Bros. Corp., 600 F. Supp. 92, 94-95 (S.D. Fla. 1984) (“While there are sound reasons for requiring parties to adhere to the procedures governing arbitration, it is also well-established that a court may not enforce a contract that is illegal or contrary to public policy . . . the legality of the contract clause at issue here must be determined before the arbitration award can be enforced.“); State v. AFSCME, Council 4, Local 2663, 777 A.2d 169, 178 (Conn. 2001) (explaining that Connecticut recognizes a public policy exception to
In Hall Street, petitioner Hall Street Associates, L.L.C., and respondent Mattel, Inc., initiated litigation in the United States District Court for the District of Oregon, but soon reached an impasse on the parties’ indemnification portion of the
Arbitration proceedings took place and the arbitrator ruled that Mattel was not obligated to indemnify Hall Street. Hall Street subsequently filed a motion to vacate, modify, or correct the arbitration decision on the ground that the arbitrator‘s decision constituted legal error. The District Court vacated the award based on the standard of review provided in the parties’ contractual agreement. Id. at 580. After the arbitration decision was revised on remand, each party sought modification in the District Court, which largely upheld the award pursuant to the same standard of review provided in the parties’ agreement.
On appeal to the Ninth Circuit Court of Appeals, Mattel argued that the arbitration agreement‘s provision for judicial review of legal error was unenforceable. The Ninth Circuit reversed in favor of Mattel, instructing the District Court to consider the original decision of the arbitrator pursuant to the grounds allowable under
Title
In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
And Title
In either of the following cases the United States court in and for the district wherein the award was made may make an order modifying or correcting the award upon the application of any party to the arbitration—
(a) Where there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award. (b) Where the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted.
(c) Where the award is imperfect in matter of form not affecting the merits of the controversy.
The order may modify and correct the award, so as to effect the intent thereof and promote justice between the parties.
Hall St., 552 U.S. at 582 n.4.
The Supreme Court began its analysis by recognizing that “[t]he Courts of Appeals have split over the exclusiveness of these statutory grounds when parties take the
The Supreme Court then discussed “whether the
text compels a reading of the
§§ 10 and11 categories as exclusive. To begin with, even if we assumed§§ 10 and11 could be supplemented to some extent, it would stretch basic interpretive principles to expand the stated grounds to the point of evidentiary and legal review generally. Sections10 and11 , after all, address egregious departures from the parties’ agreed-upon arbitration: “corruption,” “fraud,” “evident partiality,” “misconduct,” “misbehavior,” “exceed[ing] powers,” “evident material miscalculation,” “evident material mistake,” “award[s] upon a matter not submitted“; the only ground with any softer focus is “imperfect[ions],” and a court may correct those only if they go to “[a] matter of form not affecting the merits.”
The Supreme Court‘s decision in Hall Street, which addressed the parties’ ability to expand the statutory bases for vacating an award by contract, but focused on the exclusivity of the categories listed, has led to a federal circuit court split regarding whether Hall Street prohibits all extra-statutory grounds for vacating an award, including judicially created grounds.
In Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349, 350 (5th Cir. 2009), the Fifth Circuit Court of Appeals concluded that Hall Street restricts the grounds for vacating an award to those set forth in
judicial gloss.‘”12 Wachovia Sec., LLC v. Brand, 671 F.3d 472, 483 (4th Cir. 2012).
Like the Fifth, Seventh, Eighth, and Eleventh Circuit Courts of Appeals, we are of the view that the
claim that an arbitrator‘s construction of a contract renders it illegal. We now turn to JMC‘s argument that the arbitrators exceeded their powers.
2. Whether the Arbitrators Exceeded their Powers
In Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013), the question presented was whether an arbitrator “exceeded [his] powers” pursuant to
The Supreme Court also determined whether an arbitrator exceeded his powers in Stolt-Nielsen. There, it found that an arbitrator did exceed his powers by ordering a party to submit to class arbitration. The Supreme Court reasoned that the parties had entered into a stipulation stating that they had never reached an agreement on class arbitration, which made clear that the panel‘s decision could not have been based on the parties’ intent. Stolt-Nielsen at 673 n.4, 676 (“Th[e] stipulation left no room for an inquiry regarding the parties’ intent.“). The Supreme Court concluded that “the panel simply imposed its own conception of sound policy” and thus exceeded its powers. Id. at 675, 677.
Here, JMC argues that the arbitrators exceeded their powers because the panel interpreted the purchase agreement in a manner that would violate state and federal laws, regulations, and rules resulting in both civil and criminal penalties.
Based on the foregoing, JMC‘s claim that the arbitration panel construed the contract to be an unlawful agreement is not grounds for review pursuant to
1. Whether a Court Can Consider the Claim that a Contract Containing an Arbitration Provision is Void for Illegality
“When construing a statute, this Court attempts to give effect to the Legislature‘s intent, looking first to the actual language used in the statute and its plain meaning.” Trinidad v. Fla. Peninsula Ins. Co., 121 So. 3d 433, 439 (Fla. 2013) (citing Daniels v. Fla. Dep‘t of Health, 898 So. 2d 61, 64 (Fla. 2005)). “‘Where the statute‘s language is clear or unambiguous, courts need not employ principles of statutory construction to determine and effectuate legislative intent.’ ” Trinidad, 121 So. 3d at 439 (quoting Fla. Dep‘t of Children & Family Servs. v. P.E., 14 So. 3d 228, 234 (Fla. 2009)).
(1) Upon application of a party, the court shall vacate an award when:
(a) The award was procured by corruption, fraud or other undue means.
(b) There was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or umpire or misconduct prejudicing the rights of any party.
(c) The arbitrators or the umpire in the course of her or his jurisdiction exceeded their powers.
(d) The arbitrators or the umpire in the course of her or his jurisdiction refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of s. 682.06, as to prejudice substantially the rights of a party.
(e) There was no agreement or provision for arbitration subject to this law, unless the matter was determined in proceedings under s. 682.03 and unless the party participated in the arbitration hearing without raising the objection. But the fact that the relief was such that it could not or would not be granted by a court of law or equity is not ground for vacating or refusing to confirm the award.
In Schnurmacher, 542 So. 2d at 1328, a commercial lessor filed a motion to vacate an arbitrator‘s award finding that the commercial lessor rather than the lessee was obligated to pay sales tax on rental payments. The circuit court confirmed the award and the Third District Court of Appeal reversed. This Court
Jupiter Medical Center, however, argues that there is a public policy exception to the statute. We decline to adopt a public policy exception to the statute. In reaching this conclusion, we are mindful of the hypothetical possibility that an arbitration panel could erroneously determine that an agreement is lawful and not void for illegality. Indeed, it was this concern in part that led us to determine in Cardegna v. Buckeye Check Cashing, Inc., 894 So. 2d 860 (Fla. 2005) rev‘d and remanded, 546 U.S. 440 (2006) and opinion withdrawn, 930 So. 2d 610 (Fla. 2006), that a claim that a contract was void for illegality should be decided by the courts and not arbitrators. See Cardegna, 894 So. 2d at 862 (quoting Party Yards, Inc. v. Templeton, 751 So. 2d 121, 123 (Fla. 5th DCA 2000) (indicating a concern with submitting a claim that a contract is void for illegality to arbitration because it “could breathe life into a contract that not only violates state law, but also is criminal in nature“)).
Parties to an agreement containing an arbitration provision, however, specifically bargained for an arbitrator‘s construction and interpretation of the agreement as an alternative to litigation in the courts system, as opposed to an additional step in the process. See B.L. Harbert Int‘l, LLC v. Hercules Steel Co., 441 F.3d 905, 907 (11th Cir. 2006) (noting that the “laudatory goals of [arbitration]
The reasons underlying the need for finality of arbitration awards were expressed in Johnson v. Wells, 72 Fla. 290, 297; 73 So. 188, 190-91 (1916):
The reason for the high degree of conclusiveness which attaches to an award made by arbitrators is that the parties have by agreement substituted a tribunal of their own choosing for the one provided and established by law, to the end that the expense usually incurred by litigation may be avoided and the cause speedily and finally determined. To permit the dissatisfied party to set aside the award and invoke the judgment of the court upon the merits of the cause would be to render it merely a step in the settlement of the controversy, instead of a final determination of it.
These reasons, articulated by this Court over seventy years ago, remain relevant under today‘s arbitration legislation. As petitioner notes, the finality and enforceable nature of an arbitration award is a characteristic of arbitration that distinguishes it from other forms of alternative dispute resolution. To allow judicial review of the merits of an arbitration award for any reasons other than those stated in
section 682.13(1) would undermine the purpose of settling disputes through arbitration. We find it incumbent to adhere to the long-standing principle of finality of arbitration awards in order to preserve the integrity of the arbitration process as a means of alternative dispute resolution.
Schnurmacher, 542 So. 2d at 1328-29 (emphasis added). Here, the parties to the agreement received the benefit of their bargain—arbitral construction of the
Likewise, we find that the circumstances presented here do not merit relief pursuant to
2. Whether the Arbitration Panel Exceeded its Powers
As noted above, JMC argues that the arbitrators exceeded their powers because the panel interpreted the purchase agreement in a manner that would violate state and federal laws, regulations, and rules resulting in both civil and criminal penalties. Because the phrase “exceeded their powers” in
Section 682.13(1)(c) declares that an arbitration award may be vacated if it is shown that the arbitrator exceeded his or her power. Respondent now urges us to interpret subsection (c) to include that if an arbitrator departs from the accepted rule of law, then the arbitrator‘s award can be vacated on the ground that the arbitrator exceeded his or her power. However, our view is that an arbitrator exceeds his or her power under subsection (c) when he or she goes beyond the authority granted by the parties or the operative documents and decides an issue not pertinent to the resolution of the issue submitted to arbitration. See International Medical Centers, Inc. v. Sabates, 498 So. 2d 1292 (Fla. 3d DCA), review denied, 508 So. 2d 14 (Fla. 1987); Broward County Paraprofessional Ass‘n v. McComb, 394 So. 2d 471 (Fla. 4th DCA 1981); Dubbin v. Equitable Life Assurance Society of the United States, 234 So. 2d 693 (Fla. 4th DCA), cert. denied, 238 So. 2d 423 (Fla. 1970).
Schnurmacher, 542 So. 2d at 1329 (emphasis added); see also Nucci v. Storm Football Partners, 82 So. 3d 180, 183 (Fla. 2d DCA 2012) (noting that an arbitrator exceeds his power only when he exceeds the authority the parties granted him in their agreement to arbitrate and stating that an arbitrator may very well exceed his authority when he decides an issue that is not pertinent to resolving the issue submitted to arbitration).
The 2009 version of the statute, applicable here, provides that a court shall vacate an award when “[t]he arbitrators or the umpire in the course of her or his
In Soler v. Secondary Holdings, Inc., 832 So. 2d 893 (Fla. 3d DCA 2002), the Third District considered the appellant‘s claim that an arbitrator exceeded the scope of his jurisdiction, which was limited to a determination of whether a joint venture existed between the parties. Id. at 894. In holding that the arbitrator exceeded his authority because both the arbitration agreement and the trial court‘s
In Edstrom Industries, the Seventh Circuit Court of Appeals held that “the arbitrator cannot disregard the lawful directions the parties have given them. If they tell him to apply Wisconsin law, he cannot apply New York law.” Edstrom Indus., 516 F.3d at 552 (holding that manifest disregard of the law is not a ground on which a court may reject an arbitrator‘s award under the
Here, the parties’ arbitration clause authorized the arbitration panel to preside over “[a]ny dispute, controversy or claim arising out of or related to this Agreement or the breach hereof“—the clause did not contain any other limiting language of authority. The arbitration panel presided over a claim for breach of the agreement, awarding damages and attorney‘s fees and costs. Thus, by awarding damages based on a breach of contract, the arbitration panel “did what the parties
III. CONCLUSION
Based on the foregoing, the claim that an arbitration panel construed a contract containing an arbitration provision to be an unlawful agreement is an insufficient basis to vacate an arbitrator‘s decision pursuant to the
It is so ordered.
PARIENTE, LEWIS, QUINCE, and PERRY, JJ., concur.
CANADY and POLSTON, JJ., concur in result.
Application for Review of the Decision of the District Court of Appeal – Direct Conflict of Decisions
Fourth District – Case No. 4D10-1803
(Palm Beach)
David B. Earle, Thomas K. Gallagher, and John P. Carrigan of Ross Earle & Bonan, P.A., Stuart, Florida,
for Petitioner
Michael G. Austin and Matthew D. Grosack of DLA Piper LLP (US), Miami, Florida,
for Respondent