In Arrasola v. MGP Motor Holdings, LLC, 3D15-381, 40 Fla. L. Weekly D1837b (Fla. 3d DCA August 5, 2015) the Florida Third District Court of Appeal was asked to resolve whether a court or an arbitrator should decide if an automobile purchase agreement containing an arbitration provision was abandoned or terminated by the parties and/or whether or not the arbitration provision itself was unconscionable. While it has become common place for arbitration agreements themselves to contain provisions which give questions of enforceability and arbitrability to the arbitrator, the contract in question contained no such provisions.
It should be noted that in this case, despite all the allegations of fraud (the substance of which the auto dealer, Kendall Mitsubishi, largely admitted in a letter of apology) the Arrasola’s admitted entering into the contract which contained the arbitration provision. They did not contend that the fraud induced them to enter into either the contract itself, or the arbitration provision therein. Therefore, the Third DCA properly held that the arbitration provision was presumptively valid.
The only issue before the Court was whether the contract was later abandoned or terminated and/or whether or not the arbitration provision itself was unconscionable. However, the Court held this was not for a court, relying not on the terms of the arbitration agreement itself, but rather Fla. Stat. 682.02(3), which provides that “[a]n arbitrator shall decide whether a contract containing a valid agreement to arbitrate is enforceable.” Many litigants have argued that Fla. Stat. 682.02(2) which provides, “[t]he court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate,” subjected issues of unconscionability to determination by a court. However, the Third DCA held that ” claims of unconscionability, like the claims of abandonment or termination, may be presented to the arbitrator for determination.”
This case is instructive on enforcing arbitration agreements in Florida, even under difficult circumstances like those presented in the Arrasola case. Anyone tasked with authoring arbitration agreements would do well to include language in the arbitration agreement itself which delegates questions of enforceability to the arbitrator, to permit application of the United States Supreme Court’s opinion in Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 63, 130 S. Ct. 2772, 2774, 177 L. Ed. 2d 403 (2010). However, at least in Florida, the absence of such language will simply trigger the application of Fla. Stat. 682.02(3) which itself delegates questions of enforceability to the arbitrator.