Full Opinion

DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT OLUROTIMI PHILLIPS and JACQUELINE PHILLIPS, Appellants, v. LYONS HERITAGE TAMPA, LLC, Appellee. No. 2D21-816 June 17, 2022 BY ORDER OF THE COURT: Upon consideration of Appellants Olurotimi and Jacqueline Phillips's motion for the issuance of a written opinion pursuant to Florida Rule of Appellate Procedure 9.330(a)(2)(D), filed on December 6, 2021, IT IS ORDERED that the motion for the issuance of a written opinion is granted to the extent that the opinion dated December 3, 2021, is withdrawn and the attached opinion is substituted therefor. Appellee Lyons Heritage, LLC's opposition to Appellants' motion is noted. I HEREBY CERTIFY THE FOREGOING IS A TRUE COPY OF THE ORIGINAL COURT ORDER. MARY ELIZABETH KUENZEL, CLERK 2 DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT OLUROTIMI PHILLIPS and JACQUELINE PHILLIPS, Appellants, v. LYONS HERITAGE TAMPA, LLC, Appellee. No. 2D21-816 June 17, 2022 Appeal from the Circuit Court for Pinellas County; George M. Jirotka, Judge. James C. Patterson of Harder Law Group, Lutz, for Appellants. Chris K. Ritchie and J. Michael Grimley, Jr., of Galloway, Johnson, Tompkins, Burr & Smith, PLC, Pensacola; and Adam Bild and Tim Brown of Bild Law, Lutz, for Appellee Lyons Heritage Tampa, LLC. ROTHSTEIN-YOUAKIM, Judge. Olurotimi and Jacqueline Phillips appeal the trial court's order granting Lyons Heritage Tampa, LLC's motion to compel arbitration. Because the racial discrimination claims in the Phillipses' fifth amended complaint are subject to arbitration pursuant to the contract between the parties ("the Building Agreement"), we affirm. Background The Phillipses contracted with Lyons Heritage to build their home. The Building Agreement included a dispute resolution clause ("the arbitration clause"), which provided, in pertinent part: 16. Resolving Disputes: Controversies, claims or disputes arising out of, from or relating to this Agreement (including any claims under the Limited Warranty), shall be settled by binding arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association ("AAA") and the Federal Arbitration Act (Title 9 of United States Code), using a single arbitrator and judgment rendered by the arbitrator may be confirmed, entered and enforced by the Circuit Court of the Thirteenth Judicial Circuit, Hillsborough County, Florida, the court having exclusive jurisdiction. Each party shall bear its own costs and legal fees for the arbitration. Exclusive venue for such arbitration proceedings shall be in Tampa, Florida. Florida law shall apply when construing this Agreement and in connection with the resolution of any dispute between the parties. A dispute did, in fact, arise, and the Phillipses sued Lyons Heritage in state court, alleging violations of §§ 1981 (providing that "[a]ll persons" have "the same right . . . to make and enforce contracts. . . as is enjoyed by white citizens") and 1982 (providing that "[a]ll citizens" have the "right . . . to inherit, purchase, lease, 2 sell, hold, and convey real and personal property") of Title 42 of the United States Code. In Count I of the operative fifth amended complaint, the Phillipses sought damages for Lyons Heritage's allegedly racially motivated refusal to complete construction of the home. The Phillipses alleged: The delay of over three and one-half years in the home construction suffered by the Phillips[es] cannot be entirely construction related and must, therefore, be attributed at least, in no small part, to the fact that Lyons [Heritage] simply did not wish to finish the Phillips[es]' home and have a mixed race couple move into the area. The complaint included general allegations that one of Lyons Heritage's project managers had told the Phillipses, "We do not like doing business with people like you . . . you people just want handouts" and that Lyons Heritage's president had stated that the Phillipses were not like the company's "usual customers." In Count II, the Phillipses alleged that racial discrimination also motivated Lyons Heritage to take certain measures to block the Phillipses from accessing their property. The Phillipses alleged that they had initiated arbitration with respect to the denial of access to the property and that an arbitrator had ordered Lyons Heritage to return access to the Phillipses. The Phillipses alleged that by the 3 time Lyons Heritage had blocked their access to their property, they had already paid $500,000 pursuant to the Building Agreement. They also alleged that Lyons Heritage had continued to block their access to the property in violation of an arbitration award. After unsuccessfully moving to dismiss the complaint, Lyons Heritage moved for an extension of time to file an answer, which the trial court granted. Rather than filing an answer, however, Lyons Heritage moved to compel arbitration, arguing that the Phillipses' racial discrimination claims were subject to arbitration pursuant to the arbitration clause in the Building Agreement. The trial court granted the motion, and the Phillipses timely appealed the order. Analysis We review de novo the order compelling arbitration. Stacy David, Inc. v. Consuegra, 845 So. 2d 303, 306 (Fla. 2d DCA 2003). "In determining whether a dispute is subject to arbitration, courts consider at least three issues: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived." Id. (citing Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999)). 4 The Phillipses argue that no valid written agreement to arbitrate exists because a requirement that they arbitrate their claims would violate public policy. Specifically, they argue that it would improperly require them to forfeit their rights to (1) a jury trial, (2) punitive damages, and (3) attorney's fees and costs. As our sister court has observed, however, "All arbitration agreements waive the parties' right to a jury trial as a means of dispute resolution." See Hobby Lobby Stores, Inc. v. Cole, 287 So. 3d 1272, 1276 (Fla. 5th DCA 2020) (citing Fi-Evergreen Woods, LLC v. Est. of Robinson, 172 So. 3d 493, 497 (Fla. 5th DCA 2015)). That the right to a jury trial in this case arises out of federal law renders it no less subject to knowing and voluntary waiver, and there is no dispute that the Phillipses knowingly and voluntarily agreed to arbitrate all disputes arising out of or relating to the Building Agreement. Moreover, the Phillipses will not forfeit any rights to punitive damages and attorney's fees and costs in arbitration. As an initial matter, the fifth amended complaint does not make any claim for punitive damages, and in any event, the Phillipses do not point to any provision in the arbitration clause that limits their right to such 5 a recovery. Instead, their argument that they will forfeit the right to recover punitive damages appears to be based solely on an assumption that resolving their dispute through arbitration will somehow eliminate that right. But when a party agrees to arbitrate a statutory claim, it "does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)). To the extent that the Phillipses may be entitled to punitive damages against Lyons Heritage, nothing would prevent an arbitrator from awarding such relief. See id.; see also § 682.11(1), Fla. Stat. (2021) ("An arbitrator may award punitive damages or other exemplary relief if such an award is authorized by law in a civil action involving the same claim and the evidence produced at the hearing justifies the award under the legal standards otherwise applicable to the claim."). The Phillipses argue further that the requirement that each party bear its own costs and legal fees for the arbitration is in derogation of their statutory right to prevailing party fees in their §§ 6 1981 and 1982 actions. See 42 U.S.C. § 1988(b) (2022) (granting courts discretion to award a reasonable attorney's fee to a party that prevails in any action seeking to enforce §§ 1981 and 1982). And Lyons Heritage correctly acknowledges that a fees provision that eliminates the statutory right to prevailing party attorney's fees violates public policy. See Hochbaum v. Palm Garden of Winter Haven, LLC, 201 So. 3d 218, 221 (Fla. 2d DCA 2016) ("[A]n arbitration agreement that limits the statutory remedy of attorneys' fees violates public policy."); see also Flyer Printing Co. v. Hill, 805 So. 2d 829, 833 (Fla. 2d DCA 2001) (affirming the circuit court's refusal to compel arbitration pursuant to the parties' agreement because the arbitration agreement required the appellee to bear half the fees and costs associated with the arbitration in contravention of her statutory right to seek a full award of fees and costs under certain civil rights statutes). Lyons Heritage argues, however, that the fee provision is severable from the rest of the arbitration clause and, therefore, requiring arbitration of the claims pursuant to the arbitration clause would not violate public policy. We agree. First, the Building Agreement as a whole includes a severability clause, which 7 states: "Should any term or provision of this document be ruled invalid or unenforceable by an arbitrator or a court of competent jurisdiction, the remainder of this document shall nonetheless stand in full force and effect."1 Moreover, both the Building Agreement as a whole and the arbitration clause in particular specifically provide that Florida law applies. And under Florida law, an invalid or unenforceable provision is severable from an agreement so long as the provision does not strike at the heart, or the essence, of the agreement. See Shotts v. OP Winter Haven, Inc., 86 So. 3d 456, 459 (Fla. 2011). Here, the attorney's fees and costs provision is severable from the rest of the arbitration agreement because it does not go to the essence of that agreement. See 4927 Voorhees Rd., LLC v. Tesoriero, 291 So. 3d 668, 671 (Fla. 2d DCA 2020) (rejecting the plaintiff's argument that the parties' arbitration agreement violated public policy because its fees and costs provision eliminated the plaintiff's statutory right to prevailing party fees and holding that 1 The severability clause is included in the "Mold and Chemical Disclosure and Disclaimer," which by its terms has been "appended to and made a part of the Building Agreement or Home Purchase Agreement." 8 the provision was severable because it did not go to the essence of the arbitration agreement, which was the "selection of a forum in which to resolve disputes as an alternative to litigation in court"), review denied, No. SC20-528, 2021 WL 50180 (Fla. Jan. 6, 2021); see also Hochbaum, 201 So. 3d at 223 ("Here, the offending provision deals only with attorneys' fees. The provision does not require the arbitration to be conducted in accordance with certain rules, and it does not limit the compensatory or punitive damages that Hochbaum may recover in arbitration."). In addition, Florida law permits arbitrators to grant attorney's fees when authorized by law. See § 682.11(2) ("An arbitrator may award reasonable attorney fees and other reasonable expenses of arbitration if such an award is authorized by law in a civil action involving the same claim or by the agreement of the parties to the arbitration proceeding."). We therefore conclude that the Building Agreement includes a valid written agreement to arbitrate because the offending provision that eliminates the Phillipses' statutory rights to prevailing party fees is severable from the rest of the arbitration clause. Because that provision is severable, the trial court on remand shall strike it from the arbitration clause. See Hochbaum, 201 So. 3d at 223 9 (affirming order compelling arbitration but remanding with instructions to strike the provision that requires the parties to bear their own attorney's fees because such a provision violated the statutory right to prevailing party fees under section 415.1111, Florida Statutes). Next, the Phillipses argue that an arbitrable issue does not exist because their §§ 1981 and 1982 claims fall outside the scope of the arbitration clause. That clause, however, extends to any disputes "arising out of, from, or relating to [the Building] Agreement." (Emphasis added.) The words "relating to" indicate that the clause is intended to be broad in scope and "include those claims that are described as having a 'significant relationship' to the contract—regardless of whether the claim is founded in tort or contract law." See Jackson v. Shakespeare Found., Inc., 108 So. 3d 587, 593 (Fla. 2013) (citing Seifert, 750 So. 2d at 637–38). A claim has a significant relationship to the contract if it "presents circumstances in which the resolution of the disputed issue requires either reference to, or construction of, a portion of the contract." Id. (citing Seifert, 750 So. 2d at 638). 10 The Phillipses argue that Count I does not present an arbitrable issue because a racial discrimination claim has nothing to do with the construction of their home. But the label assigned to the claim does not matter; what matters is the claim's relation to the contract. See Seifert, 750 So. 2d at 637–38. In Count I, the Phillipses alleged that Lyons Heritage did not complete construction because it did not want a "mixed-race couple to live in the area." Count I also included allegations that Lyons Heritage's construction delays were motivated by racial discrimination. We agree with the trial court's conclusion that the claim in Count I relates to the contract, i.e., the Building Agreement. Because the conduct underlying the claim is inextricably linked to the performance of the Building Agreement, resolution of the claim necessarily requires reference to it. Although the Phillipses allege that various Lyons Heritage employees made racially insensitive remarks—the resolution of which, standing alone, would not require reference to the Building Agreement—their claim is grounded upon allegations that Lyons Heritage's construction delays and its failure to complete construction were motivated by 11 racial discrimination. And those allegations raise issues that require reference to and construction of the Building Agreement. Indeed, the very issue of whether a construction delay even occurred requires reference to the Building Agreement. That agreement, for example, provides that the builder will use its best efforts to complete construction of the custom home within 330 days from the start of construction. It also envisions some construction delays if certain events occur—for example, if the buyer requests any changes to the construction plan, such as changing the placement of a door or a window, the agreement provides for a one-month construction delay. The Building Agreement also includes a timeline of completion of construction that is based upon a payment schedule. It states, for example, that a payment of $76,767.30 is due once substantial completion of the foundation is completed. It also states, "Buyer acknowledges that Builder needs to be paid on time and Buyer agrees that if any payment is not made to Builder within the times provided above, Builder shall be entitled to stop all work until payment, including interest, is made." (Emphases added.) In sum, the Building Agreement envisioned that construction delays would result from 12 the occurrence of certain circumstances, and reference to the contractual terms describing those circumstances would be necessary in any claim that is premised upon a construction delay. Our decision in Kaplan v. Kimball Hill Homes Florida, Inc., 915 So. 2d 755 (Fla. 2d DCA 2005), supports our conclusion that the claim in Count I falls within the scope of the Building Agreement's arbitration clause. In Kaplan, we upheld the trial court's conclusion that the Kaplans' claims for fraud and fraudulent inducement relating to a home construction contract were subject to arbitration. Id. at 760. Just as in this case, the parties' home construction contract in Kaplan included a broad arbitration clause that required arbitration of any disputes "relating to" the contract. Id. at 759. The fraudulent inducement claim relied upon allegations that the home builder had made misrepresentations about its ability to complete construction on time. Id. at 757. The fraud claim included allegations that the home builder had failed to disclose facts concerning the water runoff and drainage from an adjacent property and the obstruction of a golf course view from the home. Id. at 758. 13 In concluding that the trial court correctly ordered arbitration on the fraud and fraudulent inducement claims, we observed that "[t]he very issues which gave rise to the dispute are specifically mentioned in the contract," id. at 759, and we recited the provisions of the home construction contract that dealt with each issue, id. at 759–60. Because resolution of the fraud and fraudulent inducement claims required reference to the home construction contract, we concluded that the claims were within the scope of the arbitration clause. Id. Based on that same reasoning, we also concluded that the trial court had erred in refusing to compel arbitration of a claim of intentional infliction of emotional distress that was premised on the same underlying conduct. Id. at 760. Just as in Kaplan, the claim here is subject to arbitration because resolution of those claims requires reference to the contract. The Phillipses argue that Seifert mandates reversal, but Seifert is inapposite. In that case, the supreme court concluded that an arbitration clause in an agreement for the sale of a home did not require arbitration of a wrongful death claim. See Seifert, 750 So. 2d at 642. The incident underlying the claim occurred after the Seiferts moved into a home that U.S. Home Corporation had 14 constructed pursuant to the sales agreement between them. Id. at 635. Mr. Seifert died following an incident in which carbon monoxide emissions from a car in the garage of the home were distributed into the house. Id. As the personal representative of his estate, Mrs. Seifert sued U.S. Home for negligence. Id. In concluding that the wrongful death claim was not subject to arbitration, the supreme court reasoned that the resolution of the claim did not require reference to the sales agreement. Id. at 642. It reasoned that the claim did not have "a 'significant relationship' to the contract because none of the allegations in the complaint refer to or mention the sales agreement between the Seiferts and U.S. Home." Id. at 642. This case is distinguishable from Seifert because the claim in Count I requires reference to the Building Agreement. The claim is that Lyons Heritage's performance of the Building Agreement—its construction delays and its failure to complete construction altogether—was motivated by racial discrimination rather than by the occurrence of other circumstances described in the Building Agreement. Therefore, the resolution of the claim inevitably requires reference to the Building Agreement. Indeed, that 15 resolution of the claim requires reference to the Building Agreement is further supported by the complaint's repeated references to it. For the same reason, the trial court correctly compelled arbitration of the Phillipses' § 1982 claim in Count II. Resolution of the claim likewise requires reference to the Building Agreement, including its provisions governing the payment schedule and the completion of construction timeline. And again, that this claim is arbitrable is further supported by the Phillipses' repeated references to the Building Agreement in its complaint as well as to the previous arbitration award entered in connection with this issue. Finally, the Phillipses argue that even if their claims are arbitrable, Lyons Heritage waived its right to arbitrate by requesting an extension of time to file an answer to the complaint. "It is well settled that a party waives its right to arbitration by inconsistent conduct." Balboa Ins. Co. v. W.G. Mills, Inc., 403 So. 2d 1149, 1150 (Fla. 2d DCA 1981) (citing Seville Condo. #1, Inc. v. Clearwater Dev. Corp., 340 So. 2d 1243, 1245 (Fla. 2d DCA 1976)); see also Gettles v. Com. Bank at Winter Park, 276 So. 2d 837, 839–40 (Fla. 4th DCA 1973) (holding that a party had waived its contractual right to arbitration by filing suit and by moving to dismiss a counterclaim 16 before moving to compel arbitration). But although Lyons Heritage's motion for extension of time to file an answer delayed its subsequent demand for arbitration, its filing of the motion was not inconsistent with that demand. See Audio Visual Innovations, Inc. v. Spiessbach, 119 So. 3d 522, 527 (Fla. 2d DCA 2013) ("Whether there is a '[w]aiver of the right [to arbitrate] does not necessarily depend on the timing of the motion to compel arbitration, but rather on the prior taking of an inconsistent position by the party [demanding arbitration].' " (quoting Miller & Solomon Gen. Contractors, Inc. v. Brennan's Glass Co., 824 So. 2d 288, 290 (Fla. 4th DCA 2002))). The request for an extension to file an answer does not constitute a waiver "because it 'is not a substantive attack on the merits.' " Id. (quoting Miller & Solomon Gen. Contractors, Inc., 824 So. 2d at 291). And because Lyons Heritage did not otherwise take any action inconsistent with its right to arbitrate, it did not waive such right. Conclusion Because the claims alleged in Counts I and II of the Phillipses' fifth amended complaint "relate to" the Building Agreement, they fall within the scope of the valid, broad arbitration clause included 17 in that agreement. Moreover, requiring arbitration of those claims will not require the Phillipses to forego any substantive rights to which they are statutorily entitled. Although the provision requiring the parties to bear their own attorney's fees offends public policy because it contravenes the Phillipses' statutory right to prevailing party fees, the provision is severable. Accordingly, we affirm the order compelling arbitration but remand with instructions to strike the attorneys' fees provision from the arbitration clause in the Building Agreement. Affirmed; remanded with instructions. NORTHCUTT and VILLANTI, JJ., Concur. Opinion subject to revision prior to official publication. 18