Florida Complex Litigation Update: Raymond James Financial Services, Inc. v. Phillips: Florida Supreme Court rules that statute of limitations applies to arbitration

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Resolving a matter of first impression in Florida, the Florida Supreme Court recently issued its decision in Raymond James Financial Services, Inc. v. Phillips, Case No. SC11-2513 (Fla. May 16, 2013), concluding that Florida’s statute of limitations applies to arbitration.

The landmark decision in Raymond James affects arbitration provisions in every type of agreement or business contract in Florida and elsewhere governed by Florida law.

Specifically, in Raymond James, a financial services investment firm, like Florida businesses in many other commercial contexts, required its clients to sign an agreement to arbitrate all disputes arising under the agreement. After the clients’ investments subsequently lost significant value, the disappointed investors filed a joint claim for arbitration against the investment firm, asserting numerous commercial-based claims, including breach of contract, negligence, breaches of fiduciary duty, and various state and federal violations. The investment firm moved to dismiss the claims, maintaining that all of the claims were time-barred by Florida’s statute of limitations.

An arbitration panel was appointed, and a hearing on the motion to dismiss was scheduled.

However, before the hearing, the investors filed a separate lawsuit in state trial court, seeking a declaratory judgment that, in relevant part, Florida’s statue of limitations does not apply to arbitrations, but applies only to judicial actions. See Fla. Stat. § 95.011 (limiting the applicability of Florida’s statute of limitations to a “civil action or proceeding”), available here.

The trial court agreed with the investors. On appeal, Florida’s Second District Court of Appeals disagreed with the trial court, but certified the question as to the applicability of Florida’s statute of limitations to arbitration agreements to be of great public importance.

The Florida Supreme Court in Raymond James began its substantive analysis with the actual language of Florida’s statute of limitations, noting that the statue is limited to a “civil action or proceeding.” The Court then turned to the “ordinary” definition of those terms and concluded that the “broad” terms do include an arbitration proceeding. The Court in Raymond James also noted as a matter of statutory construction that, while “civil actions” may be limited to court cases, the term “proceeding” in the statute is clearly broader in scope. Thus, the Court concluded that limiting the term “proceeding” to apply to only judicial proceedings would construe the term in a manner inconsistent to the language of the statute of limitations and the Florida Legislature’s intent in drafting such language.

The Florida Supreme Court in Raymond James also found that any contrary interpretation would defeat the purpose of a related statute, section 95.03, Florida Statutes, which renders void any contract provision attempting to shorten the applicable limitations period. See Fla. Stat. § 95.03, available here.

Further, the Court in Raymond James deemed its interpretation of Florida’s statute of limitations to be consistent with the interpretation of the term “arbitration” in other statutory provisions, including the Florida Arbitration Code, set forth in chapter 682, Florida Statutes, referring to arbitration in various provisions as an “arbitration proceeding.” The Court likewise observed that its broad interpretation of the terms “action or proceeding” to include arbitration was consistent with the history of the statute of limitations and the purpose behind its enactment, i.e., to discourage stale claims and to avoid parties waiting to bring claims until documents or witnesses are difficult to locate.

A slip copy of the Florida Supreme Court’s opinion in Raymond James Financial Services, Inc. v. Phillips is available here.

At bottom, the recent opinion affects the claims and defenses available to every individual or corporation in a Florida civil action or proceeding, including FINRA and other arbitration proceedings, that conducts business in Florida and/or enters into contracts governed by Florida law containing arbitration provisions. Accordingly, business owners and decision makers with commercial operations in Florida would be well advised to review the arbitration provisions in existing agreements so as to better understand rights and obligations in light of Raymond James, and to tailor all future agreements as necessary.

The attorneys at Fuerst Ittleman David & Joseph have extensive experience in all areas of complex civil and criminal litigation, including international and domestic business matters and contract disputes. Please contact us by email at contact@fuerstlaw.com or telephone at 305.350.5690 with any questions.

Topics:  Arbitration, Complex Litigation, Statute of Limitations

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, General Business Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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