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There remains a split of authority among Florida courts on the issue of whether the court or arbitrator should decide the enforceability of remedial limitations in an arbitration agreement. On the heels of SA-PG-Ocala, LLC v. Stokes, Nos. 5D05-3776, 5D05-3777, 2006 WL 2347369 (Fla. Dist. Ct. App. Aug 11, 2006), another Florida District Court of Appeal decided the enforceability question by ruling that remedial limitations in an assisted living facility’s arbitration agreement were void as contrary to public policy.
In Alterra Healthcare Corp. v. Bryant, No. 4D05-4409, 2006 WL 2612769 (Fla. Dist. Ct. App. Sep. 13, 2006), Bryant, a resident in one of Alterra’s assisted living facilities, sued Alterra, claiming negligence and violations of the Assisted Living Facilities Act (ALFA).
Alterra moved to compel arbitration pursuant to an arbitration clause in the residency agreement. The arbitration agreement disallowed any appeal from arbitration, capped non-economic damages at $250,000, and precluded both punitive damages and fee shifting.
In opposing Alterra’s motion to compel, Bryant argued that the remedial limitations rendered the arbitration agreement unenforceable. The trial court agreed that the remedial limitations were unenforceable, but instead of invalidating the entire arbitration agreement, the trial court severed the offending provisions and ordered the parties to arbitrate.
On appeal, Alterra cited Rollins, Inc. v. Lighthouse Bay Holdings, Ltd., 898 So.2d 86 (Fla. Dist. Ct. App. 2005) in arguing that the enforceability of remedial limitations is a question for the arbitrator, not the court. The Court rejected this argument by stating that “Rollins instructs that a trial court, rather than an arbitrator, may review a limitation of liability where unconscionability is at issue.”
Alterra also cited Bland v. Health Care & Retirement Corp. of America, 927 So.2d 252 (Fla. Dist. Ct. App. 2006) in support of its argument that the arbitrator should decide the enforceability of the remedial limitations. In Bland, the court could “see no reason why the arbitrator, in the first instance, cannot decide whether to enforce the remedial limitations.” The Court found this statement to be dicta “offer[ing] no support to Alterra’s argument because its language is permissive, not mandatory.”
In deciding the question of enforceability, the Court held that the remedial limitations were void as against public policy because they defeated the remedial purpose of the ALFA. The Court found that the preclusion of an appeal from arbitration was similarly unenforceable.
Finally, since the residency agreement included a severability clause, the Court rejected Bryant’s argument that the trial court should have invalidated the arbitration clause rather than sever the offending provisions.
Despite the Court’s attempt to reconcile its decision with Rollins, there is a definite split of authority because Rollins clearly states that “the arbitrator should in the first instance decide the validity of . . . remedial restrictions in [an] arbitration provision.”
This is not the only point of division among Florida courts on issues pertaining to the enforceability of arbitration agreements. See Bland, 927 So.2d at 257 (rejecting another Florida court’s “sliding scale” approach to unconscionability).
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