Using Arbitration Agreements To Resolve Civil Disputes In Florida
The prospect of contract litigation is often daunting for Florida business owners. One way to help insure against the risk of potentially lengthy litigation is to include binding arbitration clauses in business contracts. Federal law provides strong protections for such arbitration agreements, which can help provide for a quicker, less costly resolution should a dispute arise.
Typically, an arbitration agreement requires an arbitrator–not a court–to decide any challenges to the validity of the underlying contract. However, a judge may still be called upon to determine any challenge to the existence of the contract. That is to say, a court must first decide if a valid agreement to arbitrate exists, and if it does, then the arbitrator must decide if the contract is invalid for some other reason.
Federal Court Finds “Mutual Rescission” Rendered Arbitration Agreement Null and Void
This seemingly technical distinction can have a significant impact on the outcome of a dispute. A recent decision from the U.S. 11th Circuit Court of Appeals, Reiterman v. Abid, provides a useful illustration. This case actually revolved around a settlement agreement signed as the result of a prior civil lawsuit.
The plaintiff worked as a teacher for a test preparation company. The defendant was one of his students. The plaintiff and the defendant also had a brief dating relationship. The defendant subsequently accused the plaintiff of sexual assault.
After the police declined to charge the plaintiff, the defendant published a series of anonymous blog posts to the Internet accusing the plaintiff of “sexually assaulting multiple women.” The defendant posed as several different women to lend her allegations the appearance of credibility. Apparently, her campaign proved successful in affecting the plaintiff’s reputation and later attempts to find employment as an attorney.
Eventually, the plaintiff sued the defendant for defamation in Florida. The parties eventually reached a negotiated settlement agreement. The plaintiff actually agreed to make monthly payments to the defendant. The parties also agreed that any disputes arising from the settlement agreement itself would be resolved by arbitration.
Sometime later, the plaintiff learned that the defendant had made false statements during the settlement negotiations regarding her role in the anonymous posts. The defendant also apparently continued publishing new posts after the agreement was reached. The plaintiff therefore informed the defendant he considered the agreement “null and void.” The defendant replied in-kind, stating that since she was no longer bound by the agreement, she planned to continue publishing her allegations against the plaintiff.
The defendant then asked a federal judge to compel arbitration under the original settlement agreement. The judge declined to do so and the 11th Circuit affirmed. As the appellate court explained, since both parties “rescinded” their consent to the settlement agreement, the included arbitration clause was also rescinded. In other words, a valid contract between the parties no longer existed, so there were no grounds to compel arbitration.
Speak with a Florida Business and Contract Litigation Attorney Today
Most civil litigation is resolved through negotiations. But even when an agreement is signed, issues may still come up that require additional legal action. If you need advice or representation from an experienced Bradenton civil litigation lawyer, contact Moran, Sanchy & Associates today.