Lennar Homes, Inc. v. DEPART. OF BUSIN. AND PROF.

888 So. 2d 50, 2004 WL 2146986
CourtDistrict Court of Appeal of Florida
DecidedSeptember 27, 2004
Docket1D03-3020
StatusPublished
Cited by5 cases

This text of 888 So. 2d 50 (Lennar Homes, Inc. v. DEPART. OF BUSIN. AND PROF.) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lennar Homes, Inc. v. DEPART. OF BUSIN. AND PROF., 888 So. 2d 50, 2004 WL 2146986 (Fla. Ct. App. 2004).

Opinion

888 So.2d 50 (2004)

LENNAR HOMES, INC., Appellant,
v.
DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES, Appellee.

No. 1D03-3020.

District Court of Appeal of Florida, First District.

September 27, 2004.

*51 William P. McCaughan and Jeffrey P. Margolis of Duane Morris LLP, Miami, for Appellant.

Karl M. Scheuerman, Staff Counsel, Department of Business and Professional Regulation, Tallahassee, for Appellee.

VAN NORTWICK, J.

Lennar Homes, Inc. (Lennar), appeals a declaratory statement issued by the Department of Business and Professional Regulation, Division of Land Sales, Condominiums and Mobile Homes (Division), ruling that a mandatory arbitration provision in a condominium purchase and sale agreement is prohibited by sections 718.111(3), 718.303 and 718.506, Florida Statutes (2002), and that the arbitration language in Lennar's agreement is void as against public policy. For the reasons that follow, we hold that the Division was without authority to interpret and declare void Lennar's contractual arbitration provision in a declaratory statement proceeding under section 120.565 and to announce a general policy of far-reaching applicability against arbitration provisions in a declaratory statement proceeding. Accordingly, we reverse.

Section 120.565(1) provides:

Any substantially affected person may seek a declaratory statement regarding an agency's opinion as to the applicability of a statutory provision, or of any rule or order of the agency, as it applies to the petitioner's particular set of circumstances.

Lennar is a builder and developer of residential condominiums. The purchase and sale agreement utilized by Lennar in selling condominiums includes a provision requiring that disputes between Lennar and a condominium purchaser be resolved by binding arbitration.[1] Pursuant to section *52 120.565(1), Lennar filed a petition for declaratory statement seeking the opinion of the Division

as to whether §§ 718.111(3), 718.303, and 718.506, Florida Statutes, or any other provision of Chapter 718, Florida Statutes, prohibit a mandatory and binding arbitration provision requiring mandatory and binding mediation and arbitration of disputes between a purchaser and condominium developer in a purchase agreement for a condominium unit ...

The Division found that such an arbitration provision is prohibited. After reviewing the disputed binding arbitration language in Lennar's purchase contract, the Division ruled that it exceeded and contradicted the prescribed statutory remedies and was void as against public policy.

Generally, sections 718.111(3), 718.303 and 718.506 grant a condominium purchaser causes of action for rescission or damages against a developer for the publication of false and misleading disclosures in any sales materials, authorize the condominium association or unit owner to file actions for damages or for injunctive relief or both, and grant the associations the power to bring an action on behalf of unit owners concerning matters of common interest. Further, sections 718.303(1) and 718.506(2) provide that the prevailing party in such actions is entitled to recover reasonable attorney's fees. Although none of these statutes mention arbitration or provide for exclusive jurisdiction in courts of law, the Division reasoned that by expressly granting specific remedies and procedures, the legislature intended that condominium contract disputes be brought solely in a court of law. See Aztec Medical Services, Inc. v. Burger, 792 So.2d 617, 621 (Fla. 4th DCA 2001)(recognizing that to rule the legislature intended to preclude the submission of a dispute to arbitration, "the legislature would have to state such a requirement in unambiguous text," quoting Sharpe v. Lytal & Reiter, Clark, Sharpe, Roca, Fountain, Williams, 702 So.2d 622, 624 (Fla. 4th DCA 1997)).

On appeal, Lennar asserts that these transactions involve interstate commerce.[2] Lennar argues that, as a result, these statutes cannot be construed as precluding arbitration of disputes arising out of the sale of its condominiums because the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, applies and preempts any state statute that prohibits arbitration. See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Thus, under the FAA, their arbitration provision must be enforceable.

The FAA also provides that

[a] written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2 (emphasis added). Therefore, an arbitration provision may be challenged "based upon any state-law contract defense." Gainesville Health Care Center v. Weston, 857 So.2d 278, 283 (Fla. 1st DCA 2003); see also Allied-Bruce Terminix, 513 U.S. at 281, 115 S.Ct. 834. Seizing upon this principle, the Division argues that, under Florida law, Lennar's contract *53 is both procedurally and substantively unconscionable. See generally Powertel, Inc. v. Bexley, 743 So.2d 570 (Fla. 1st DCA 1999).

"A declaratory statement by a state administrative agency is subject to judicial review by appeal ... under Section 120.68(1)...." Chiles v. Department of State, Division of Elections, 711 So.2d 151, 155 (Fla. 1st DCA 1998). However, unlike our ability to review the agency's interpretation of the statute in Chiles, this court cannot engage in meaningful review of the declaratory statement appealed because the issues raised on appeal were not expressly raised in the declaratory statement proceedings.

Intertwined with the issue of statutory preclusion of arbitration is the constitutional issue of FAA preemption. Southland Corp. v. Keating, 465 U.S. 1, 15-16, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). However, this issue was not addressed below; nor could it have been since an agency does not possess the authority to determine the constitutionality of statutes. See Palm Harbor Special Fire Control District v. Kelly, 516 So.2d 249, 250 (Fla.1987).[3] Similarly, although the Division found Lennar's arbitration provision void as against public policy, the issue of the unconscionability of Lennar's arbitration provision was not expressly raised below. Further, the determination of unconscionability of a contract is fact-driven and generally requires an evidentiary hearing, see Stewart Agency, Inc. v. Robinson, 855 So.2d 726, 727 (Fla. 4th DCA 2003), which is not accorded in a declaratory statement proceeding. Florida Optometric Association v. Department of Professional Regulation, Board of Opticianry, 567 So.2d 928, 936 (Fla. 1st DCA 1990).

The authority of the Division to issue declaratory statements is limited by section 120.565 to a determination "as to the applicability of a statutory provision ... to the petitioner's particular set of circumstances."

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
888 So. 2d 50, 2004 WL 2146986, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lennar-homes-inc-v-depart-of-busin-and-prof-fladistctapp-2004.