Florida Appellate Court: Challenge to the Existence of a Contract with an Arbitration Provision To Be Decided by the Court, Not the Arbitrator

The Florida District Court of Appeal held that the court, rather than the arbitrator, should decide a challenge to the existence of a contract containing an arbitration provision.

In Rowe Enterprises LLC v. International Systems & Electronics Corp., No. 1D06-557, 2006 WL 1697633 (Fla. Dist. Ct. App. June 22, 2006), Rowe Enterprises (“RE”) sued International Systems & Electronics Corp. (“ISE”) for breach of contract. ISE moved to compel arbitration pursuant to a document entitled “Uniform Sales, Service and Support Agreement” (“the Agreement”). Ralph Rowe, RE’s principal, supposedly signed the last page of the Agreement.

In opposing ISE’s motion to compel arbitration, RE alleged that Rowe’s signature was forged and requested “an evidentiary hearing to establish a lack of genuineness.” ISE argued that an arbitrator should decide whether the signature was genuine since RE was challenging the validity of the Agreement as a whole, rather than just the arbitration provision. The trial court refused to hold an evidentiary hearing and granted the motion to compel arbitration.

On appeal, the Court determined that RE was entitled to an expedited evidentiary hearing. In Buckeye Check Cashing, Inc. v. Cardegna, 126 S.Ct. 1204 (2006), the Supreme Court identified three types of challenges to arbitration agreements: (1) a challenge to the validity of the arbitration agreement itself; (2) a challenge to the validity of the contract as a whole; and (3) a challenge to whether an agreement was actually concluded.

Applying that framework, the Court determined that RE’s challenge belonged to the third category. As the Court noted, in Cardegna, the Supreme Court declined to address whether the court or arbitrator should decide the third category of challenges.