The old adage “be careful what you wish for, it might come true” is applicable to many areas of life, but nowhere more so than where the parties have made those wishes clear in a binding contract. Florida’s courts interpret contracts the way they are written and in many instances are not required—or are contractually prohibited—from considering matters outside the plain terms of the contract.
Florida’s Fifth District Court of Appeals recently addressed this issue in the context of an arbitration provision. In Royal Palms Senior Apartments Limited Partnership v. Construction Enterprises, Inc. of Tennessee, the owner of an apartment complex sued its general contractor alleging negligence, vicarious liability, breach of contract, and breach of the applicable building codes. The general contractor moved to compel alternative dispute resolution (mediation and arbitration) based on the language of the contract between the parties.
In relevant part, the contract stated as follows:
the “exclusive procedure” for resolving claims arising before final payment is due is to submit such claims to the Architect for a final binding decision. If the parties are not satisfied with the Architect’s decision, they may mediate the claim. If mediation is unsuccessful, the only remaining option is to arbitrate the claim.
The contract between the parties was silent as to the procedure for resolving claims arising after final payment, and therefore could not require arbitration of those claims. Based on these contract terms, the trial court granted the general contractor’s motion and compelled the parties to mediation, then arbitration.
On appeal, the Fifth District Court of Appeal affirmed the trial court’s determination that the parties had agreed to arbitrate at least certain claims between them. But the appellate court reversed the trial court’s order compelling arbitration pending a determination as to whether the claims arose before final payment or after.
The takeaway from this case is that just because a contract contains an arbitration (or mediation, or other alternative dispute resolution provision) does not mean that it will encompass all claims. Here, the court is clear the claims arising before final payment are subject to arbitration, while those arising after final payment are not. If the parties wanted arbitration in all cases, they should have made that more clear in their contract.