Aberdeen Golf & Country Club v. Bliss Construction, Inc.
Annotate this Case
Download PDF
DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
July Term 2005
ABERDEEN GOLF & COUNTRY CLUB,
Appellant,
v.
BLISS CONSTRUCTION, INC.,
Appellee.
No. 4D04-2545
[September 7, 2005]
A MENDED OPINION
FARMER, J.
We have a nonfinal order refusing to compel arbitration. The dispute
arose from an aborted contract for the construction of a new $2 million
facility at a private club. The contract between the owner of the club and
the general contractor (GC) contained an alternative dispute r
esolution
(ADR) provision that included arbitration. When the owner terminated
the contract before completion, the GC commenced litigation and alleged
that the owner’s premature termination caused damages. The owner
responded with a demand for arbitration. The trial judge found that the
owner had forfeited any right to arbitration by its conduct leading up to
the GC’s suit. We affirm.
Like all contracts, each arbitration agreement is unique. Although it
may employ some standard terms, the contract must be construed and
understood in light of its whole text, context, structure and purpose. As
with all contracts, the entire undertaking must be considered.
Some arbitration provisions are intended to operate as an irrevocable
substitute for litigation in court. These survive full performance by one
party, leaving only the other party’s covenant for future dispute. For
example, an arbitration provision in the purchase of a product, say an
automobile, may be intended to apply even after the buyer has fully
performed by payment and all that remains is the seller’s warranty. In
that instance arbitration may be intended as a complete alternative to
proceedings in a court on warranty claims surviving the closing.
In other contracts, however, performance may involve many tasks
over a long duration toward a single defined goal. One example is the
construction of a commercial building. It is impossible to build anything
substantial overnight or all alone. The complexity of a substantial
commercial edifice requires multiple vendors completing an interrelated
series of dependent tasks. The participation of many must be carefully
coordinated, because the work of one hinges on the finished work of
another. Yet there are a thousand ways in this relay of goods and
services for time to be stolen. Here arbitration may have a different use :
it may instead be intended as a means of postponing—even if not
ultimately avoiding—litigation in court while the parties make progress
toward their contractual goal. T
he issue is whether this case involves
this latter kind instead of the former.
It is unlikely that many $2 million commercial construction projects
have been finished without conflicts during progress. The owner of real
property and a GC share two primary concerns. Time and money.1
Disputes arising during construction may result in lost time. They
structure their contract so the whole job does not come crashing to a
halt with every dispute. They aim to keep the project going and to avoid
wasting time and money in litigation to resolve disputes about individual
parts of the plan or the specific tasks. Litigation is ill-suited to resolve
them because courts spend time in ways horrifying commercial parties.
This is not a criticism, for we are deliberative institutions bound by
procedures allowing parties to make their cases fully.
So in a
construction contract, the parties may choose an ADR system whose real
purpose is for construction to continue through the dispute.
The ADR provision in this agreeme nt may be briefly outlined. It starts
with an umpire of sorts, the architect 2 and, if a party disagrees with his
In a sense they are a single concern. Time is money. The owner will
probably have a construction loan, the ultimate cost of which is tied to the
duration of construction. The GC may also be working off an operating capital
loan to advance the costs of material and labor. The more the GC pays in
interest on the loan, the less its profit. Even without an operating capital loan,
the longer the GC’s money is tied up in material and labor, its earnings are
diminished. Consequently their agreement seeks to reduce the cost of money.
2 “Claims … shall be referred initially to the Architect for decision. An initial
decision by the Architect shall be required as a condition precedent to
mediation, arbitration or litigation of all Claims between the Contractor and
Owner arising prior to the date final payment is due, unless 30 days have
1
-2-
decision, then to mediation3 and, if nothing works to the satisfaction of
all, to arbitration.4
Notably this ADR provision does not specify
anywhere that arbitration, as such, is a condition precedent to litigation.
That this ADR provision was meant to function during the progress of
the contract is seen in certain key provisions, all of which must be read
as part of a single piece. One section requires any dispute to be initiated
by notice to the architect within 21 days after it has occurred and, in any
event, not later than 30 days before the final payment. This is obviously
meant to insure that all disputes will be resolved before completion, or
laid on the table when it comes time for the owner to make the final
payment on the contract price, perhaps with an adjustment for any
unresolved dispute. Another section emphasizes that “
[p]ending final
resolution of a claim … the Contractor shall proceed diligently with
performance of the Contract and the Owner shall continue to make
payments in accordance with the Contract documents.” [e.s.] In short,
the contract requires both sides to continue to perform through disputes,
with the goal that most things will be resolved as they arise or with the
final payment. Critically, another section of the contract expressly limits
the grounds for either party terminating the entire contract before
completion. Essentially the GC may terminate if the owner fails to make
a draw payment certified as due by the architect. The owner may
terminate if the GC and the subs fail to carry on construction diligently.
Significantly the contract specifies that, after notice from the
complaining party, an initial decision by the architect is a condition
precedent “to mediation, arbitration or litigation of all Claims.” [e.s.] If
the parties meant for arbitration to supplant all litigation—even after a
termination before full completion—they would not have inserted
passed after the Claim has been referred to the Architect with no decision
having been rendered by the Architect.” Art. 4.4.1 (AIA form 1997).
3 “Any Claim arising out of or related to the Contract, except Claims relating
to aesthetic effect and except those waived as provided for in Subparagraphs
4.3.10, 9.10.4 and 9.10.5, shall, after initial decision by the Architect or 30
days after submission of the Claim to the Architect, be subject to mediation as
a condition precedent to arbitration or the institution of legal proceedings by
either party.” Art. 4.5.1.
4 “Any Claim arising out of or related to the Contract, except Claims relating
to aesthetic effect and except those waived as provided for in Subparagraphs
4.3.10, 9.10.4 and 9.10.5, shall, after decision by the Architect or 30 days after
submission of the Claim to the Architect, be subject to arbitration. Prior to
arbitration the parties shall endeavor to resolve disputes by mediation in
accordance with the provisions of Paragraph 4.5.” Art. 4.6.1.
-3-
litigation, the emphasized word, because their intent then would have
been to eliminate litigation entirely. Again, the arbitration clause does
not state that it is a precondition to litigation. In fact, nothing in the
contract specifies that the arbitration provision is irrevocable and
replaces all litigation in court. Altogether, these specific provisions and
omissions make clear that this ADR system was meant to function in
place of the courts while progress was being made on the contract.
From this whole text, context and structure, the only reasonable
construction is that the ADR provision was not meant to survive an
absolute termination of the contract before completion.
Any total
termination of the contract before the clubhouse was built would
obviously be the utter negation of the very purpose of the contract in the
first place, and thus also the rationale behind an ADR provision designed
to speed dispute resolutions during construction in order to bring about
a successful completion of the contract. If either party terminated, all
bets would be off and either could have its day in court.
The dispute that ended in the utter destruction of the agreement
began with the GC’s discovery of mold in part of the old clubhouse being
rebuilt. As the contract requires, the GC gave notice to the architect and
claimed that the presence of the mold should change the approved
schedule and increase the contract price for successful completion of the
clubhouse. The architect confirmed the mold and agreed that it had
caused delays that could affect the price.
If the owner disagreed with the architect’s decision on mold, the
owner was required under the contract to initiate mediation and, that
failing, an arbitration proceeding to resolve the issue while the whole
project carried on. The contract also specified that arbitration must be
initiated by filing the claim with the American Arbitration Association.
But meanwhile the owner was barred by the contract from withholding
any draw payments already certified as due.
The owner decided not to follow the contract’s ADR provisions. 5 It
rolled out the ultimate weapon—a refusal to pay draws then certified as
The evidentiary record we have been given is limited to the proceedings on
the motion to compel arbitration. Our decision relates only to the issue of
arbitration. Nothing we say in resolving this appeal should be taken as the law
of the case on any issue involved in the merits of the pending claims or
defenses. Any collateral estoppel effects of facts established in the course of
deciding the motion to compel arbitration are for the trial judge to decide in the
first instance.
5
-4-
due by the architect and declared a termination of the whole deal. The
owner refused further performance entirely, refused to make a draw
payment of nearly a quarter of a million dollars then due, and “fired” the
GC. Although several weeks later the owner wrote the GC that it wanted
arbitration of the dispute, until this litigation was filed even later the
owner had never initiated such proceedings in the manner prescribed by
the contract.
Obviously it is unreasonable to suppose that an arbitration provision
meant to resolve disputes while work continues has any application to a
termination of the entire contract before completion. In short, because of
the owner’s refusal to resort to the ADR and the owner’s termination well
short of any hope of completion, the ADR provision simply failed of its
essential purpose. See Varner v. B.L. Lanier Fruit Co., Inc., 370 So.2d 61
(Fla. 2d DCA 2005) (where circumstances cause a remedy to fail of its
essential purpose, remedy may be had as otherwise provided by law).
To be sure, the issue was framed in the trial court as one of waiver.6
The GC argued that the owner waived arbitration by refusing to follow
the contract’s ADR provision as to the mold issue. The trial court
obviously accepted the GC’s position that the owner’s pre-lawsuit
conduct barred it from claiming arbitration instead of court litigation.
See Raymond James Fin. Servs., Inc. v. Saldukas, 896 So.2d 707 (Fla.
2005) (waiver of the right to arbitrate may consist of conduct implying a
voluntary and intentional relinquishment of a known right).
In Raymond James Financial Services, the supre me court explained
The dissent argues that the GC has never contended that the owner’s
termination of the contract bars it from asserting the ADR provision. It is true
that the GC has not used the words “terminated” or “repudiated”, but it has
definitely argued that before suit was filed the owner “engaged in conduct
inconsistent with the exercise of the right to arbitrate …or properly preserve or
exercise that contractual right.” Appellee’s Brief, at 12. The fact that the GC’s
brief does not specifically argue the theory of breach by anticipatory repudiation
is inconsequential. A trial court’s decision will be upheld on appeal if any legal
theory supports it. Applegate v. Barnett Bank of Tallahassee, 377 So.2d 1150,
1152 (Fla. 1979). Applegate requires us to consider any theory on appeal that
would sustain the trial court’s decision, so long as it is consistent with the facts
on which the decision was based. In this case, the trial court did not state the
actual basis for its decision that the GC was not required to arbitrate the
dispute in place of litigation. Waiver and contract repudiation are simply
corresponding legal theories for similar conduct leading to the same outcome.
There is nothing inconsistent about them in the context of this case.
6
-5-
the waiver of arbitration provisions thus:
“The right to arbitration, like any contract right, can be
waived. The [United States] Supreme Court has made clear
that the ‘strong federal policy in favor of enforcing arbitration
agreements’ is based upon the enforcement of contract, rather
than a preference for arbitration as an alternative dispute
resolution mechanism. Thus, the question of whether there
has been waiver in the arbitration agreement context should
be analyzed in much the same way as in any other
contractual context. The essential question is whether,
under the totality of the circumstances, the defaulting party
has acted inconsistently with the arbitration right.” [e.s.,
c.o.]
896 So.2d at 711; see also E.E.O.C. v. Waffle House Inc., 534 U.S. 279,
289 (2002) (purpose of federal arbitration statute was to place arbitration
agreements on the same footing as any other contract); Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991) (same).
Thus arbitration provisions and their waiver must be construed and
enforced no differently than all contracts are construed and enforced.
We agree that, after the architect’s initial mold decision, the owner’s
refusal to initiate mediation as a precondition to arbitration and to
comply with the duty to make progress payments instead of terminating
the contract could be deemed a voluntary and intentional relinquishment
of the known right to arbitration. The trial court’s decision fits well
within the invocation of traditional contract law principles in Raymond
James Financial Services.
According that decision the initial presumption of correctness, as we
must, we think the trial court’s decision—that the owner refused to
follow the contract ADR after the architect’s initial mold decision—could
also be upheld under a
nother legal theory, a
nother standard contract
principle a
ptly fitting the circumstances. It is settled contract law in
Florida that a breach by anticipatory repudiation allows the
nonbreaching party to terminate his own performance and bring
litigation for damages. In Hospital Mortgage Group v. First Prudential
Development Corp., 411 So.2d 181 (Fla. 1982), the supreme court
adopted the R ESTATEMENT position, saying “the nonbreaching party is
relieved of its duty to tender performance and has an immediate cause of
action against the breaching party.” 411 So.2d at 182; R ESTATEMENT
(SECOND) OF CONTRACTS § 253 (1979); see also Poinsettia Dairy Prods., Inc.
-6-
v. Wessel Co., 166 So. 306 (Fla. 1936) (same). In this case, we should be
clear in understanding that the owner’s firing of the GC effectively ended
the construction contract. Thus the owner “unequivocally terminated”
the entire agreement. The owner’s repudiation empowered the GC to
forego his own performance of the contract’s various provisions—
including an ADR provision designed to ensure full performance by the
owner—and sue for damages in court.
Waiver is certainly an apt characterization when a seller of an auto
with a surviving warranty proceeds to defend on t e merits after the
h
buyer files suit for breach. But here before it terminated the contract
entirely, the owner forswore complying with any of the contract’s ADR
provisions to allow successful completion. The owner rejected mediation,
followed by arbitration, to resolve the architect’s mold decision,
improperly refused to make certified draw payments, and simply called a
halt to the entire contract.7 The ADR provision is just one part of the
contract’s provisions leading to a successful completion, and it does not
specify that it survives a premature termination. Without a survival
clause, the ADR provision went down with the whole.
The contract’s ADR system was like the rifle shot before the nuclear
bomb. If only rifles were being fired, final completion was still possible.
But the owner chose the nuclear option of total war rather than the
contract’s system of less drastic, alternative resolution. Once the nuclear
bomb was dropped, any resolution was not for this contract’s ADR meant
to avoid total war.
The dissent argues that the contract ADR still re quired the GC to seek
arbitration of the mold dispute many months after the owner had fired the GC
and terminated the entire contract. With respect, this is illogical. The GC had
previously and timely submitted the mold dispute to the architect and was
perfectly satisfied with his decision. It was the owner who was unsatisfied with
the architect’s decision. Under the contract the owner had the burden to
initiate mediation and arbitration within 15 days after the architect’s mold
decision. Instead the owner refused payment due and fired the GC. Firing the
GC was a termination of the contract. Many weeks later, the owner wrote the
GC that it wanted arbitration, but by then it was long past contract time for
initiating these procedures. There was nothing left for the GC but to file suit for
damages to recover what it is owed. In effect the dissent would deny the GC’s
right of access to a court on account of the owner’s failure to follow the contract
ADR. The dissent does not explain why an ADR system whose essential
purpose is only to keep the contract from being terminated before completion
has any relevance after the contract has broken down entirely and years have
now gone by.
7
-7-
In repudiating the ADR, the owner should not be heard in litigation to
claim the benefit of an ADR provision it had rejected so clearly and
unequivocally. The owner’s failure to initiate arbitration, its refusal to
make payment due, and its cancellation of the whole agreement, all left
the GC with no choice but to commence litigation to recover any damages
caused by an improper nonpayment and repudiation.
Affirmed.
WARNER, J., concurs.
GUNTHER , J., dissents with opinion.
GUNTHER , J., dissenting.
I respectfully dissent. Neither Aberdeen Golf & Country Club nor
Bliss Construction, Inc. has ever contended, whether in the trial court or
on appeal, that the contract at issue was terminated, destroyed,
repudiated, or otherwise abandoned, so as to prevent the operation of its
dispute resolution procedures. Significantly, not only did Bliss never
assert that Aberdeen could not invoke the dispute resolution procedures
due to the termination of the contract, it has sought to rely on its
interpretation and application of those very dispute resolution
procedures to support its claim that Aberdeen waived its right to
arbitration by failing to first comply with the procedures. Such a
position is fundamentally inconsistent with a contention that the
contract was abandoned so as to prevent the operation of the dispute
resolution procedures.
Additionally, the majority’s conclusion that the contract was
terminated presupposes one of the legal issues to be considered and
resolved by the trial court, namely Bliss’s claim for breach of contract
based on Aberdeen’s termination of Bliss.
Thus, the majority’s
conclusion places Aberdeen in an untenable position at trial. Because
the evidentiary record and decision were limited to the issue of
arbitration, this Court’s opinion also should be so limited.
Aberdeen Golf & Country Club appeals the denial of its Motion to
Dismiss Complaint and Compel Arbitration, contending that it did not
waive its right to arbitration. I would reverse because I find that neither
Aberdeen nor Bliss Construction, Inc. complied with the requirements of
the dispute resolution procedure set forth in the standard-form American
Institute of Architects contract executed by the parties.
-8-
Aberdeen entered into the contract with Bliss for addition and
renovation work on Aberdeen’s clubhouse. After the project had begun,
Bliss discovered that the clubhouse was contaminated by mold, and that
the contamination would result in construction delays and additional
costs.
Pursuant to a provision of the contract, Bliss sought a decision of the
architect finding that the mold contamination was a hidden condition8
allowing for time and cost adjustments to the contract. Article 4.4.1 of
the contract provides:
Claims, including those alleging an error or omission by the
Architect but excluding those arising under Paragraph 10.3
through 10.5, shall be referred initially to the Architect for
decision.
An initial decision by the Architect shall be
required as a condition precedent to mediation, arbitration
or litigation of all Claims between the Contractor and Owner
arising prior to the date final payment is due, unless 30 days
have passed after the Claim has been referred to the
Architect with no decision having been rendered by the
Architect.
The architect determined that the mold was a hidden condition. To
reach the conclusion that the mold was a hidden condition, the architect
necessarily made an implicit finding that Bliss did not cause the mold
problem. This is so because damage that a party causes cannot
reasonably be considered a hidden condition unknown to it, especially
where such damage would not be subsurface in nature or an unusual
physical characteristic of the site. Aberdeen responded to the decision of
the architect by, inter alia, terminating Bliss as its contractor,
purportedly for cause under the contract due to its belief that
substandard construction practices employed by Bliss caused the mold
problem, and ceasing progress payments.
The contract refers to Claims for Concealed or Unknown Conditions in Article
4.3.4, and presumably these conditions are what the parties refer to by the
term hidden condition. Concealed or unknown conditions are defined as: “(1)
subsurface or otherwise concealed physical conditions which differ materially
from those indicated in the Contract Documents or (2) unknown physical
conditions of an unusual nature, which differ materially from those ordinarily
found to exist and generally recognized as inherent in construction activities of
the character provided for in the contract.”
8
-9-
As the dispute escalated, Aberdeen sent a letter to Bliss requesting
mediation and arbitration if mediation was unsuccessful; however,
mediation, at least as contemplated by the contractual dispute resolution
procedures, was never undertaken by the parties. Bliss responded by
filing a complaint in circuit court against Aberdeen. Bliss included
counts for fraudulent misrepresentation, negligent misrepresentation,
rescission, breach of contract, and slander.
The fraudulent
misrepresentation, negligent misrepresentation, and rescission claims
explicitly relate to the mold dispute. The breach of contract claim
addresses the mold dispute by raising Aberdeen’s termination of Bliss
and cessation of progress payments, which resulted from the mold
problem. The slander claim, which was never addressed by the trial
court, focuses on statements allegedly made by Aberdeen in the
aftermath of the mold problem about the quality of Bliss’s work.
Aberdeen responded to Bliss’s lawsuit by filing a demand for
arbitration with the American Arbitration Association (AAA). Aberdeen
raised claims for breach of contract, negligence, and civil conspiracy
against Bliss. The breach of contract claim squarely addresses the mold
problem by discussing the drying-in process, which a prior letter from
Aberdeen to Bliss alleged was improperly completed and was a possible
cause of the mold problem. The negligence claim refers to substandard
work by Bliss just like the breach of contract claim, thereby including the
drying-in process and its possible relationship to the mold problem. The
civil conspiracy claim relates to the architect’s report on the mold
problem as discussed in the letter from Aberdeen to Bliss. Bliss’s
counterclaims are identical to the claims made in its complaint filed in
the circuit court.
Aberdeen also filed a Motion to Dismiss Complaint and Compel
Arbitration based on Articles 4.5 and 4.6 of the contract which require
mediation as a condition precedent to arbitration or litigation and set
forth the mediation and arbitration steps of the contractual dispute
resolution procedure. Article 4.5.1 provides:
Any Claim arising out of or related to the Contract, except
Claims relating to aesthetic effect and except those waived as
provided for in Subparagraphs 4.3.10, 9.10.4 and 9.10.5,
shall, after initial decision by the Architect or 30 days after
submission of the Claim to the Architect, be subject to
mediation as a condition precedent to arbitration or the
institution of legal proceedings by either party.
- 10 -
Article 4.6.1 provides:
Any Claim arising out of or related to the Contract, except
Claims relating to aesthetic effect and except those waived as
provided for in Subparagraphs 4.3.10, 9.10.4 and 9.10.5,
shall, after decision by the Architect or 30 days after
submission of the Claim to the Architect, be subject to
arbitration. Prior to arbitration the parties shall endeavor to
resolve disputes by mediation in accordance with the
provisions of Paragraph 4.5.
It should be noted that the language of Article 4.6.1 does not explicitly
make arbitration a condition precedent to litigation, but that Article 4.6.2
mandates that “[c]laims not resolved by mediation shall be decided by
arbitration.”
Bliss then amended its complaint to include a count for foreclosure of
a construction lien filed in the wake of the mold dispute and filed a
Memorandum in Opposition to Defendant’s Motion to Dismiss Complaint
and Compel Arbitration. Bliss asserted that Aberdeen waived its right to
arbitration by, inter alia , failing to itself seek a decision of the architect
under the dispute resolution procedures of the contract as a means to
resolve the mold dispute.
The trial court held a hearing on the Motion to Dismiss Complaint
and Compel Arbitration, at which Bliss acknowledged that all of its
claims, except possibly the slander claim, were properly subject to
arbitration under the contract. However, Bliss contended that Aberdeen
waived its right to seek arbitration, that it had improperly requested
mediation and arbitration by letter to Bliss rather than by demand to the
AAA, and that it had taken steps inconsistent with the right to arbitrate
so as to further waive that right. The trial court denied the Motion to
Dismiss Complaint and Compel Arbitration.
“[T]he standard of review applicable to the trial court’s construction of
[an] arbitration provision, and to its application of the law to the facts
found, is de novo.” Gainesville Health Care Ctr., Inc. v. Weston, 857 So.
2d 278, 283 (Fla. 1st DCA 2003); see also Stewart Agency v. Robinson,
855 So. 2d 726, 728 (Fla. 4th DCA 2003)(“A trial court’s decision
regarding the validity of an arbitration clause is a matter of contract
interpretation subject to de novo review.”). However, once the arbitration
clause is construed and applied, the question of waiver of the clause is
one of fact, and the trial court’s answer to the question is subject to
- 11 -
review for competent, substantial evidence. See Marine Envt’l Partners,
Inc. v. Johnson, 863 So. 2d 423, 426 (Fla. 4th DCA 2003).
“[T]here are three elements for courts to consider in ruling on a
motion to compel arbitration of a given dispute: (1) whether a valid
written agreement to arbitrate exists; (2) whether an arbitrable issue
exists; and (3) whether the right to arbitration was waived.” Seifert v.
U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999). In the case at bar, the
parties recognize that the contract includes an arbitration provision and
that, with the possible exception of the slander claim, the claims raised
in the complaint are arbitrable issues. As such, the central issue on
appeal is whether Aberdeen waived its right to arbitration.
“[A]ll doubts about the scope of an arbitration agreement, as well as
any questions about waivers thereof, are in favor of arbitration, rather
than against it.” Breckenridge v. Farber, 640 So. 2d 208, 210 (Fla. 4th
DCA 1994); see also Marine Envt’l, 863 So. 2d at 426. However, “no
party may be forced to submit a dispute to arbitration that the party did
not intend and agree to arbitrate.” Steve Owren, Inc. v. Connolly, 877 So.
2d 918, 920 (Fla. 4th DCA 2004).
“Waiver is the intentional or voluntary relinquishment of a known
right or conduct which warrants an inference of the relinquishment of a
known right.” Marine Envt’l, 863 So. 2d at 426. “While arbitration
agreements are favored, a party may waive that right if the party has
knowledge of the right yet takes action inconsistent with the right.”
Breckenridge, 640 So. 2d at 210. “A party claiming waiver of arbitration
must demonstrate: 1) knowledge of an existing right to arbitrate and 2)
active participation in litigation or other acts inconsistent with the right.”
Id. at 211. “A showing of prejudice is not required if waiver is based on
inconsistent acts rather than delay in asserting one’s right.” Id.; see also
Raymond James Fin. Servs., Inc. v. Saldukas, 896 So. 2d 707, 710 (Fla.
2004); Marine Envt’l, 863 So. 2d at 428.
The question in the case at bar is not whether Aberdeen was aware of
the right to arbitrate, but whether Aberdeen waived the right to arbitrate
by engaging in acts inconsistent with that right. Such inconsistent acts
could include failing to obtain a decision of the architect or to endeavor
to resolve the mold dispute by mediation. This question requires
consideration of the dispute resolution procedure provisions of the
contract.
- 12 -
The first step of the contractual dispute resolution process is
submission of a claim to the architect for a decision. Bliss undertook
such a submission. The architect determined that the mold was a
hidden condition. Although Aberdeen did not request a decision of the
architect, the language of the contract does not require that the party
that submitted a claim to the architect is the only one that can submit
the claim to a mediator. The contract merely refers to the submission of
claims to the architect being a condition precedent to the submission of
claims to mediation, without specifying who must submit the claims.
Although Bliss was the initial complainant in the case at bar, the
architect’s decision regarding the mold dispute was adverse to Aberdeen
in that the mold was deemed a hidden condition, and thus, not caused
by Bliss, so that Aberdeen was the party most likely to seek further
review of its claims regarding the mold problem. As such, I cannot
conclude that based on the terms of the contract and the facts of the
case that Aberdeen was required to separately submit the mold dispute
to the architect before undertaking arbitration.
However, Aberdeen was required to endeavor to resolve the mold
dispute by mediation prior to seeking arbitration. This is because
mediation is the second step of the contractual dispute resolution
process and is a condition precedent to both arbitration and litigation
under the contract. But Aberdeen is not the only party in the case at bar
to run afoul of the contractual dispute resolution provisions. Bliss failed
to undertake mediation prior to initiating legal proceedings based on its
continued dissatisfaction with Aberdeen’s response to the mold problem
and the decision of the architect in Bliss’s favor. The claims made to the
architect, to the AAA, and to the circuit court share the common nexus of
the mold dispute, and more specifically, all address the cause of the mold
problem, whether a hidden condition or substandard construction
practices. As a result, to seek continued review of the dispute following
the decision of the architect, whether through arbitration or litigation,
both Aberdeen and Bliss were required to endeavor to resolve the mold
dispute by mediation, a step which neither party took.
Bliss’s argument that Aberdeen waived its right to arbitration is
equitable in nature. See Lewis State Bank v. Advance Mortgage Corp.,
362 So. 2d 406, 410 (Fla. 1st DCA 1978)(waiver is a principle of equity).
Although it is apparent that Aberdeen did not comply with the
contractual dispute resolution procedures, I am unwilling to conclude
that Aberdeen waived its right to arbitration where the party so asserting
was equally remiss in its compliance with the contractual dispute
resolution procedures prior to filing a lawsuit. As such, neither party is
- 13 -
in a position to seek or receive a disposition of this case that is based on
equitable principles. See McMichael v. McMichael, 28 So. 2d 692, 693
(Fla. 1947)(in cases where “both parties are at fault [equitable] relief
should be withheld from both”). Furthermore, because neither Aberdeen
nor Bliss satisfied the conditions precedent to litigation under the
dispute resolution provisions of the contract, the trial court should have
granted the motion to dismiss to allow for continued consideration of the
mold dispute under these provisions. Consequently, I would reverse and
remand for just such further proceedings.
*
*
*
Appeal of a non-final order from the C
ircuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Arthur Wroble, Judge; L.T. Case
No. 502004CA000314MBAG.
Mara Shlackman and Hinda Klein of Conroy, Simberg, Ganon,
Krevans & Abel, P.A., Hollywood, for appellant.
Kenneth G. Spillias and Kevin S. Hennessy of Lewis, Longman &
Walker, P.A., West Palm Beach, for appellee.
Not final until disposition of any timely filed motion for rehearing.
- 14 -
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.