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The Florida District Court of Appeal ruled that a homebuyer’s fraudulent inducement claim fell within the scope of an arbitration clause in the sales contract.
In Beazer Homes Corp. v. Bailey, No. 5D05-2229, 2006 WL 2570564 (Fla. Dist. Ct. App. Sep. 8, 2006), Beazer built and sold a home abutting a golf course to Bailey. The sales contract provided for arbitration of all disputes “aris[ing] out of” the contract.
When the golf course planted trees that obstructed Bailey’s view, he sued Beazer, seeking damages for fraudulent inducement. Beazer moved to compel arbitration pursuant to the sales contract. The trial court denied the motion.
On appeal, Bailey cited Siefert v. U.S. Home Corporation, 750 So.2d 633 (Fla. 1999) in arguing that the arbitration clause did not apply to his claim for fraudulent inducement because fraudulent inducement is a tort that does not “arise out of” the contract. The Court rejected this argument for two reasons. First, the Court distinguished the case from Siefert on the ground that “the duties and relationships of the parties were created only by the sales contract.” Second, the Court cited Florida case law holding that various torts, including fraudulent inducement, fell within arbitration clauses similar in scope.
The Court also cited Prima Paint Corp v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967), in which the Supreme Court held that an arbitrator should resolve fraudulent inducement claims relating to the contract as a whole and not to the arbitration clause itself. Curiously, the Court failed to cite Buckeye Check Cashing, Inc. v. Cardegna, No. 04-1264, 2006 WL 386362 (2006) and even invoked the void/voidable distinction that Cardegna categorically rejected.
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