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Court Rules that Arbitration Clause Which Limits Statutory Remedies Void as Against Public Policy

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.

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