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Old Claims come Alive In Arbitration

Those Claims You Thought Were Dead May Be Alive in Arbitration

Ian T. Kravitz, Esquire

The Second District Court of Appeal in Florida has held that the statute of limitations barring stale claims should not apply to arbitration proceedings brought pursuant to a contract that does not specifically provide for such statute of limitations to apply. In Raymond James Financial Services, Inc. V. Phillips, the account holders executed client agreements with Raymond James for investment purposes. Those agreements provided that all disputes would be resolved by arbitration, and that no disputes would be eligible for arbitration after six years had passed from the occurrence giving rise to the claim. Account holders initiated a demand for arbitration of claims that would have been barred by the applicable statute of limitations, but that fell within the six year limitations set forth in the contract. Raymond James sought a declaration fro the court that such claims were barred. The Court held that such claims were not barred as an arbitration proceeding is not covered by Florida’s statute of limitations. The appeal ensued.

The appellate court analyzed Florida’s statute of limitations found in section 95.011 Florida Statutes. That statue provides that “a civil action or proceeding, called ‘action’ in this chapter, . . . shall be barred unless begun within the time prescribed in this chapter. The appellate court then analyzed the terms civil action and proceeding and held that the legal definitions of those two terms do not clearly encompass an arbitration proceeding. The appellate court found that pursuant to the history of Florida case law, a civil action must include an action filed in court. The court found arbitration to be an alternative to the court system, and as such, an arbitration was not a civil action. Similarly, as far as the use of the word proceeding, the appellate court used a similar analysis to conclude that the term proceeding does not apply to arbitration either. Therefore, the appellate court affirmed the trial court’s ruling and determined that a dispute submitted to arbitration is not bound by Florida’s statute of limitations absent indication in the arbitration agreement to be so bound.

The appellate court has certified the question of whether they in fact resolved this question properly to the Florida Supreme Court, who may or may not resolve the issue in the short term. Absent a reversal by the Florida Supreme Court, this is the law of the land in Florida regarding the timing of a claim being submitted to arbitration. This of course has major implications for the use of arbitration to resolve construction disputes. Until the decision is reviewed by the Florida Supreme Court or another district court, parties to a construction contract could potentially be liable for construction defects indefinitely if their contract calls for arbitration and does not specifically state that Florida’s statute of limitations is applicable. While Your Construction Law Firm at Malka & Kravitz, PA will continue to monitor this issue for you, bear in mind that even stale claims resulting from contracts long forgotten may in fact be actionable in arbitration. You should make sure to have your contracts reviewed to specifically limit the time that you may remain liable for claims arising from your work. Your Construction Law Firm is here to help.

Your Construction Law Firm at Malka & Kravitz, PA is a professional association of Board Certified experts in construction law servicing Florida and specializing as South Florida construction attorneys. We are your Broward construction attorneys, Miami-Dade Construction attorneys and Palm Beach Construction attorneys. Our Board Certified experts in construction law are exceptionally qualified to assist in all of your business and construction needs, from contract drafting, bid compilation, contract negotiation, dispute resolution, construction defects claims and defenses, lien enforcement and defense claims, bond enforcement and defense claims, mediation, arbitration, trial and appeal. Reach out to us today and let Malka & Kravitz, PA become Your Construction Law Firm. TM