Opinion
Case No. 5D05-248.
Opinion filed December 30, 2005.
Appeal from the Circuit Court for Orange County, Renee A. Roche, Judge.
Robert Dyer of Allen, Dyer, Doppelt, Milbrath Gilchrist, Orlando, for Appellant.
Ronald E. Crescenzo and Patricia M. Christiansen of Boose Casey Ciklin Lubitz Martens McBane O'Connell, West Palm Beach, for Appellee.
The Episcopal Diocese of Central Florida, ("Diocese"), appeals a trial court order confirming an arbitration award and entering final judgment. The Diocese claims that the trial court erred in ordering this case to arbitration.
In 1992, Prudential Securities, ("Prudential"), hired John B. Trumbo, ("Trumbo"), as a broker after he was fired by another brokerage firm for mismanaging client funds. In May 1999, the Diocese established four investment accounts with Prudential, with Trumbo serving as broker on each account. The Diocese signed an application, a "Command Account Agreement," and a "Client's Opening Cash Agreement" for each account. The former contained the following arbitration provision:
Command Account Agreement
I agree that all controversies which may arise between us concerning any transaction (whether executed or to be executed within or outside of the United States), my account or this or any other agreement between us, whether entered into prior, on, or subsequent to the date indicated on the signature page, shall be determined by arbitration.
The latter contained the following arbitration provision:
Cash Agreement
The undersigned agrees, and by carrying an account for the undersigned you agree, all controversies which may arise between us concerning any transaction or the construction, performance or breach of this or any other agreement between us, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration.
The Diocese later received a welcome letter from Prudential that accurately listed the Diocese's primary investment objective as "Income" and its risk tolerance as "Conservative."
Trumbo managed the accounts until he was "permitted to resign" from Prudential on July 21, 2000, for what it described as a "loss of confidence regarding business practices." Sometime in late August or early September 2000, Trumbo informed the Diocese that he was changing brokerage firms and obtained consent to move all four accounts to his new firm, Continental Broker Dealer, Inc., ("Continental"). Prudential sent a letter to the Diocese acknowledging the transfer of the funds to Continental, but the letter did not allege any improprieties or indicate that Trumbo had been fired. The transfer of funds was completed on or about October 2, 2000. Over the next year the funds lost a combined $775,113 in value.
The Diocese filed an initial complaint on July 22, 2002, alleging that Prudential (1) breached a duty to supervise Trumbo's management of the Diocese's accounts, despite knowledge that Trumbo had an extensive regulatory history of mismanaging client accounts; (2) breached a fiduciary duty by failing to warn the Diocese, before transferring its accounts to Continental, that Trumbo's trading at Prudential was inconsistent with the Diocese's investment objectives; and (3) breached a fiduciary duty by failing to warn the Diocese that Trumbo had a significant regulatory history. In essence, the Diocese asserted that if Prudential had informed it of Trumbo's alleged improper actions, the Diocese never would have allowed him to manage the funds or transfer the funds to Continental and would not have suffered losses.
Prudential filed a motion to compel arbitration. On September 23, 2002, the trial court granted the motion. The Diocese filed an untimely notice of appeal of that order, which was dismissed sua sponte by this court for lack of jurisdiction. Following a five-day arbitration hearing, the panel entered an amended award dismissing or denying each claim raised by the Diocese.
A non-final order compelling arbitration may be appealed. See, e.g., Tropical Ford, Inc. v. Major, 882 So. 2d 476, 478 (Fla. 5th DCA 2004); Fla. R. App. Proc. 9.130(a)(3)(C)(iv). Notwithstanding, having failed to take a non-final appeal, the appellant is permitted to pursue a final appeal after arbitration is completed. See, e.g., Lidsky Vaccaro Montes, P.A. v. Morejon, 813 So. 2d 146 (Fla. 3d DCA 2002); Investors Associates, Inc. v. Moss, 441 So. 2d 1144 (Fla. 3d DCA 1983); Saul v. Basse, 399 So. 2d 130 (Fla. 2d DCA 1981).
The Diocese then filed another complaint, challenging the jurisdiction of the arbitration panel and seeking to vacate the amended award. The new complaint sought to reinstate the original complaint on the ground that the Prudential contracts did not require arbitration on the issue of the Diocese's damages caused by Trumbo while he was with Continental. The new complaint alleged that the cause of action stemmed from account losses at Continental rather than at Prudential. The Diocese moved for judgment on the pleadings. Prudential answered and moved to confirm the amended arbitration award and for an order of expungement. On December 3, 2004, the trial court denied the Diocese's motion and entered its Order Confirming Arbitration Award, Entry of Final Judgment in Conformity Therewith, and Order of Expungement. The Diocese filed this appeal.
The issue presented in this appeal is whether the trial court erred in compelling the parties to arbitration. Absent one of the statutory grounds for vacating an arbitration award, neither a trial court nor an intermediate appellate court may overturn an arbitration award. See, e.g., Schnurmacher Holding v. Noriega, 542 So. 2d 1327 (Fla. 1989); § 682.13, Fla. Stat. (2005). A court must consider three elements in considering a motion to compel arbitration: (1) whether a valid written agreement to arbitrate exists, (2) whether an arbitrable issue exists, and (3) whether the right to arbitration was waived. See, e.g., Qubty v. Nagda, 817 So. 2d 952 (Fla. 5th DCA 2002). The issue here relates to the first prong — whether the written agreements between Prudential and the Diocese require the Diocese's claim for damages to be arbitrated.
The Diocese alleges that Prudential had a duty to warn it that Trumbo had a significant regulatory history, that he was terminated for cause, and that Prudential failed to properly supervise Trumbo's trading activities. The Diocese argues that this activity and lack of supervision gave rise to a fiduciary duty to warn the Diocese about the possibility or likelihood of harm when it moved its accounts to Continental, and that Prudential's failure to warn resulted in damages when the accounts incurred losses at Continental. For the reasons stated below, we agree.
Whether an arbitration clause requires arbitration of a particular dispute is determined by the intent of the parties, which is discerned from the language used in their agreement. See, e.g., Citigroup, Inc. v. Amodio, 894 So. 2d 296 (Fla. 4th DCA 2005), rev. den., Citigroup, Inc. v. Amocio, 911 So. 2d 792 (Fla. 2005), relying upon Seifert v. U.S. Home Corporation, 750 So. 2d 633 (Fla. 1999). In Seifert, the court stated that ". . . even in contracts containing broad arbitration provisions, the determination of whether a particular claim must be submitted to arbitration necessarily depends on the existence of some nexus between the dispute and the contract containing the arbitration clause." 750 So. 2d at 638. For a tort claim to be considered as arising out of or relating to an agreement, "it must, at a minimum, raise some issue, the resolution of which requires reference to or construction of some portion of the contract itself." Id. Thus, the court must analyze the dispute to determine if it is one involving a contractually imposed obligation, or whether the breach involves a duty imposed by law outside of the contract. Id. at 639.
The arbitration clauses in the agreements between the Diocese and Prudential do not require arbitration of the Diocese's claim. The cause of action alleged by the Diocese, damages for breach of fiduciary duty, is a tort action which does not arise out of or relate to the contracts. There is no nexus between that claim and the agreements between the Diocese and Prudential, and the resolution of that dispute is not dependent upon the construction of the agreements. The parties intended the arbitration clauses to apply to contractual issues, such as "transactions," "my account," or "this or any other agreement between us," and not to a tortious breach of fiduciary duty. See Citigroup, Inc. v. Boles, 30 Fla. L. Weekly D2307 (Fla. 4th DCA Sept. 28, 2005).
The damages suffered by the Diocese occurred after the contracts with Prudential were terminated and after the accounts were transferred. At the time the accounts were transferred, Prudential owed the Diocese a continuing fiduciary duty of care by virtue of Prudential's prior history of managing the Diocese's accounts. See Greenfield v. Manor Care, Inc., 705 So. 2d 926 (Fla. 4th DCA 1997) (a claim may lie where the plaintiff alleges a fiduciary duty between the parties which arose out of a special relationship independent of the parties' contract). Whether Prudential breached its duty is left to the sound discretion of the trial court.
We reverse the trial court's order compelling arbitration, order confirming arbitration award, and remand this case for further proceedings.
REVERSED and REMANDED for further proceedings.
PLEUS, C.J., and SHARP, W., J., concur.