Raymond James Financial Services, Inc. v. Phillips Decision Could Impact Your Ability to Successfully Defend Claims Under the Florida Statutes of Limitation
March 28, 2012
By Kathy Klock and Thomas Streit
A recent appellate decision in Florida may impact your ability to defend claims that would otherwise be time-barred under the Florida statutes of limitation. This decision affects arbitration provisions in all contracts in Florida, including real estate and other purchase and sales contracts, construction agreements, loan documents, leases, broker-dealer customer agreements, and finance agreements, to name just a few. We recommend that you evaluate the language in your arbitration provisions to determine if revisions are necessary to preserve your ability to assert this important defense.
Raymond James Financial Services, Inc. v. Phillips
The Second Court of Appeal of Florida has held that the Florida statutes of limitation do not apply in arbitrations in the absence of language that states that they apply to the arbitration. Raymond James Financial Services, Inc. v. Phillips, No. 2D10-2144 (Fla. 2d DCA Nov. 16, 2011) The decision is grounded on the Court's interpretation of the words "action" and "proceeding" in the statute. The Court opined in a 2-1 decision that the arbitrations are not actions or proceedings under the statute, and therefore the limitations do not apply to arbitrations.
The excerpt of the Court's opinion that states this conclusion (and rule of law) follows:
In sum, Raymond James did not expressly include the Florida statutes of limitations in the contract. Since the contract is construed against the drafter and since the language of the statute does not state that it applies to arbitration, we hold that Florida's statutes of limitations do not apply to arbitrations where the arbitration agreement does not expressly provide for their application. Thus, the trial court correctly determined that Florida's statutes of limitation do not bar the Account Holders' claims. However, pursuant to Florida Rule of Appellate Procedure 9.030(a)(2)(A)(v), we certify to the Florida Supreme Court the following question, which we believe to be of great public importance:
Does section 95.011, Florida Statutes, apply to arbitration when the parties have not expressly included a provision in their arbitration agreement stating that it is applicable?
The full decision is available here.
The Florida Supreme Court has accepted jurisdiction to review the Second District Court of Appeal of Florida's decisions an issue of great public importance. The Securities Industry and Financial Markets Association (SIFMA) and the Florida Securities Dealers Association will be filing amicus briefs in the appeal. The initial brief is currently due to be filed on April 9, 2012. The briefing should be completed by late June, and the Court will schedule oral argument after all of the briefs are filed.
While we are hopeful that the Florida Supreme Court will reverse the decision, there is a risk that the Court will not. A legislative change may be the ultimate resolution and, for that reason, our Public Policy practice group is evaluating a legislative change strategy, the projected cost of the work, and whether the costs can be shared among interested clients.
In the meantime, we recommend that you consider whether it is advisable to revise the arbitration provisions in your agreements to include language that specifically provides that the statutes of limitation under the governing state law applies to any disputes arising out of the agreement. The language will vary depending upon the particular agreement, but we provide the following examples of language for your consideration:
This Akerman Practice Update is intended to inform firm clients and friends about legal developments, including recent decisions of various courts and administrative bodies. Nothing in this Practice Update should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this Practice Update without seeking the advice of legal counsel. Prior results do not guarantee a similar outcome.
A recent appellate decision in Florida may impact your ability to defend claims that would otherwise be time-barred under the Florida statutes of limitation. This decision affects arbitration provisions in all contracts in Florida, including real estate and other purchase and sales contracts, construction agreements, loan documents, leases, broker-dealer customer agreements, and finance agreements, to name just a few. We recommend that you evaluate the language in your arbitration provisions to determine if revisions are necessary to preserve your ability to assert this important defense.
Raymond James Financial Services, Inc. v. Phillips
The Second Court of Appeal of Florida has held that the Florida statutes of limitation do not apply in arbitrations in the absence of language that states that they apply to the arbitration. Raymond James Financial Services, Inc. v. Phillips, No. 2D10-2144 (Fla. 2d DCA Nov. 16, 2011) The decision is grounded on the Court's interpretation of the words "action" and "proceeding" in the statute. The Court opined in a 2-1 decision that the arbitrations are not actions or proceedings under the statute, and therefore the limitations do not apply to arbitrations.
The excerpt of the Court's opinion that states this conclusion (and rule of law) follows:
In sum, Raymond James did not expressly include the Florida statutes of limitations in the contract. Since the contract is construed against the drafter and since the language of the statute does not state that it applies to arbitration, we hold that Florida's statutes of limitations do not apply to arbitrations where the arbitration agreement does not expressly provide for their application. Thus, the trial court correctly determined that Florida's statutes of limitation do not bar the Account Holders' claims. However, pursuant to Florida Rule of Appellate Procedure 9.030(a)(2)(A)(v), we certify to the Florida Supreme Court the following question, which we believe to be of great public importance:
Does section 95.011, Florida Statutes, apply to arbitration when the parties have not expressly included a provision in their arbitration agreement stating that it is applicable?
The full decision is available here.
The Florida Supreme Court has accepted jurisdiction to review the Second District Court of Appeal of Florida's decisions an issue of great public importance. The Securities Industry and Financial Markets Association (SIFMA) and the Florida Securities Dealers Association will be filing amicus briefs in the appeal. The initial brief is currently due to be filed on April 9, 2012. The briefing should be completed by late June, and the Court will schedule oral argument after all of the briefs are filed.
While we are hopeful that the Florida Supreme Court will reverse the decision, there is a risk that the Court will not. A legislative change may be the ultimate resolution and, for that reason, our Public Policy practice group is evaluating a legislative change strategy, the projected cost of the work, and whether the costs can be shared among interested clients.
In the meantime, we recommend that you consider whether it is advisable to revise the arbitration provisions in your agreements to include language that specifically provides that the statutes of limitation under the governing state law applies to any disputes arising out of the agreement. The language will vary depending upon the particular agreement, but we provide the following examples of language for your consideration:
- Example A, supplemental language to address the Raymond James case for agreements that are governed by Florida law:
- Example B, supplemental language to address the Raymond James case for agreements that are not governed by Florida law:
- Example C, arbitration:
This Akerman Practice Update is intended to inform firm clients and friends about legal developments, including recent decisions of various courts and administrative bodies. Nothing in this Practice Update should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this Practice Update without seeking the advice of legal counsel. Prior results do not guarantee a similar outcome.
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©2013 Akerman Senterfitt, Akerman Senterfitt LLP. Attorney Advertising.
©2013 Akerman Senterfitt, Akerman Senterfitt LLP. Attorney Advertising.