Florida real estate developers have been warned by a state appeals court ruling that arbitration agreements will not be enforced for claims that are not directly related to the buying and selling of homes .
A Fourth District Court of Appeal ruling ruled that arbitration agreements would not apply if the alleged damages were unrelated to the sale of the house.
The problem arose in a case where Linda Dewees, a resident of a private community, signed a purchase contract containing dispute resolution procedures.
The contract mentioned how post-closing claims, disputes and controversies between buyer and seller will be resolved by binding arbitration. Exceptions have been made for claims under Sections G.5 and G.6., Which state that a buyer is prohibited from directly or indirectly interfering with the sale or construction of private homes.
The Florida Fourth District Court of Appeals overturned the lower court because the claims in the contract did not suggest contractual responsibilities, but duties to the public.
Managing partner Howard Grossman of Grossman Attorneys at Law in Boca Raton, who represented the appellant at the fourth DCA, said this was a recurring problem with real estate developers because they don’t finish the roadway until all the houses in the community are sold and built. .
âSo, this can become a significant hazard to homeowners who walk or cycle or push cars along the edge of the paved road surface where it meets the elevated elevator of the drainage pan,â Grossman said.
Lawyers Elliot B. Kula and William D. Mueller of Kula & Associates in Miami, and Eric J. Neuman of Neuman Law in Boca Raton, who represented the respondents Don Allen Johnson, GL Building Corp., Boynton Beach Associates XXII LLLP and Boynton Beach XXII Corp. did not respond at press time.
Dewees purchased a house in a private residential community named Valencia Bay from the developer under a purchase agreement, which contained the following provision regarding dispute resolution procedures: dispute resolution, sales and construction interference, according to decision.
The housing warranty, contained in section H.22 of the purchase contract, provided for a one-year warranty on manufacturing defects and two years on systems and a warranty on structural defects.
After 18 months of signing the purchase contract, Dewees said she suffered injuries while cycling in the Bay of Valencia community to visit their warranty office.
The roads were reportedly under construction by the developer, throughout the community there was a lack of asphalt that needed to be leveled. The unfinished road construction caused an elevation change, the decision said. The uneven road developed a ledge on the pavement that was eventually struck by the front wheel of Dewees’ bike, causing him to lose control and tumble off his bike.
After the appellant’s incident, Dewees filed an 11-count suit against the developer, GL Building Corp. who was the company hired to build the road, Don Johnson, who was the general contractor, and Boynton Beach XXII Corp. The complaint involved three counts. against the developer.
According to the complaint, the respondents were negligent in failing to ensure the safety of all the traffic lanes that pedestrians and cyclists could use. They did not protect residents by warning them of any danger or any construction going on on the road.
On the basis of the terms of the purchase contract and the housing guarantee, the developer would have requested arbitration and the end of the dispute. The developer believed the reason for Dewees’ downfall was to go to the warranty office to report a home warranty claim, each claim against him falling under the arbitration provision of the purchase contract.
The developer insisted that Dewees’ claims related to the purchase contract, the housing contract and the developer’s obligations to build, guarantee and sell the house.
Dewees countered that the arbitration provision in the purchase contract only applied to disputes relating to the purchase and sale of his home, not tort claims.
Fourth DCA judges Spencer Levine, Judge Mark Klingensmith and Jeffrey Kuntz overturned the trial court’s decision.
They concluded that the arbitration agreement contained in the contract of purchase and sale of the Dewees house, and in the guarantee of the house, had no connection with the indelible obligation of the landowner which arose out of the common law, as well as statutory regulations concerning improvements to the land.
Ultimately, since Dewees’ negligence and breach of duty claims had no significant connection to the purchase contract containing the arbitration clause, the claims were not referred to arbitration. The court overturned and remanded for proceedings in accordance with the notice.
âLandowners who put in overly broad arbitration clauses and argue that just about anything that comes out of buying and selling the house despite the injuries being absolutely unrelated to the same thing, should be challenged by plaintiffs when the defendant raises a motion to force arbitration, âGrossman mentioned.