The Second District Court of Appeal recently held that where an arbitration
clause attempts defeat the remedial purpose of a statute or prohibit a
party from obtaining meaningful relief under the statutory scheme, it
is void as against public policy.
In 2009, the Andersons entered into a sales agreement with a homebuilder
to purchase a home. After taking possession of the home, the Andersons
provided notice to the home builder under Fla. Stat. § 558.004 of
construction defects resulting from building code violations. After being
unable to resolve the dispute, the Anderson’s filed a three (3)
count complaint against in the home builder – (1) violation of the
Florida Building Code under Fla. Stat. § 553.84; (2) breach of contract;
and (3) violation of the Florida Deceptive and Unfair Trade Practices.
In response, the home builder sought to compel arbitration based on the
arbitration clause contained in the limited warranty entered into by the
Andersons during the purchase of the home. However, the Andersons argued
that the arbitration provision was void as against public policy because
it barred recovery of all statutory and contractual claims and accordingly,
the provision was unconscionable.
The trial court granted the motion to compel arbitration and found the
arbitration clause to be valid. The Andersons appealed the decision arguing
that the arbitration provision was void because it precludes enforcement
of a statutory remedy that is available to them. The Second District Court
of Appeals agreed with the Andersons, finding that an arbitration agreement
is unenforceable for public policy reasons when it defeats the remedial
purpose of a statute or prohibits a party from obtaining meaningful relied
under a statutory scheme.
Accordingly, the Second District Court of Appeal makes clear that parties
must be very careful when drafting arbitration provisions which attempt
to limit a parties statutory remedies as it is likely that the arbitration
provision will be found to be unenforceable and void as against public policy.