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A Florida federal district court held that challenges to enforcement of a contract based on rescission do not raise a question as to the contract’s existence and, as such, must be resolved by the arbitrator under Buckeye Check Cashing, Inc. v. Cardegna.
In DePaoli v. Exotic Motorcars & Jewelry, Inc., No. 08-80544-CIV, 2008 WL 4279645 (S.D. Fla. Sept. 16, 2008), DePaoli sued Exotic, alleging breach of contract from improper delivery of an automobile. Exotic asserted that the transaction was subject to a retail buyer’s contract that contained an arbitration agreement. Accordingly, Exotic moved to compel arbitration of DePaoli’s claims. DePaoli argued that no agreement existed because the retail buyer’s contract was rescinded after delivery was rejected.
The Court held that the claims were arbitrable, and ordered the dispute to arbitration. The Court found that a challenge to a contract based on rescission was arbitrable under Florida law. The Court observed that rescission challenges did not fall within the narrow exception to arbitrability carved out by the United States Supreme Court in Buckeye, for disputes over the very existence of the underlying contract. 546 U.S. 440, 444 n. 1 (2006). According to the Court, rescission challenges address the enforceability rather than the existence of the contract, and therefore do not fall within the footnote 1 exception to the severability rule enunciated in Buckeye.
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