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Noting both the narrow language of the arbitration clause and the specialized skill set required of the arbitrator, a Florida state court ruled that breach of contract claims were beyond the scope of the issues that the parties had agreed to arbitrate.
In Florida Environmental Services, Inc. v. Rentoumis, No. 4D06-2358, 2007 WL 517667 (Fla. Dist. Ct. App. Feb. 21, 2007), Florida Environmental Services ("FES") agreed to buy a company from Rentoumis. The purchase agreement contained an arbitration agreement covering disputes over purchase price adjustments and named an accounting firm to act as arbitrator.
After closing on the purchase, FES realized that Rentoumis had greatly misrepresented the value of the company and failed to mention that the company was violating environmental laws, which subsequently cost FES its license to do business. As a result, FES brought breach of contract claims against Rentoumis.
Noting that the language of the arbitration agreement focused specifically upon accounting determinations used to calculate adjustments to the purchase price, the Court refused to compel arbitration of the breach of contract claims. Additionally, the Court noted that the fact that an accounting firm was to be chosen as arbitrator showed the limited type of disputes that the parties intended to resolve through arbitration.
Though recognizing that arbitration is favored in the law, the Court noted that the construction of such agreements is subject to the requirements of contract law. In this case, the parties clearly intended to limit the scope of arbitrable issues to price adjustments.
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