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Raymond James Financial Services, Inc. v. Phillips, 2011 WL 5555691 (Fla. 2d DCA Nov. 16, 2011).
Florida’s Second District Court of Appeal ruled that the statutory limitations period to bring an action did not apply to arbitration claims where the agreement to arbitrate did not expressly state that the statute was applicable. The question was certified to Florida’s Supreme Court as an issue of great public importance.
Certain Account Holders executed client agreements with Raymond James Financial Services (Raymond James) for investment purposes. The agreements provided that the Account Holders were required to submit for arbitration all disputes with Raymond James to the National Association of Securities Dealers, Inc. (NASD). The applicable NASD Code of Arbitration Procedures provides a time limit upon submissions for arbitration.
The Account Holders filed arbitration claims with NASD against Raymond James and then invoked the provision that allowed them to file an action in Collier County Circuit Court, seeking a declaratory judgment. In response, Raymond James filed a motion to dismiss, asserting that the claims were barred by the limitations periods in Chapter 95, Florida Statutes (2005).
The court issued a final declaratory judgment, stating that Florida’s statute of limitations was inapplicable to the Account Holders’ arbitration claims as a matter of law because the statute of limitations applies only to a “civil action or proceeding” and an arbitration is not a “civil action or proceeding” within the meaning of the statute. Raymond James appealed to the Second District Court of Appeals. +
In reaching its decision, the court noted the contract at issue did not expressly state that Florida’s statute of limitations would apply to arbitration claims. Instead, the language in the contract stated that it would not “limit or waive the application of any relevant state or federal statute of limitation.” The court found this phrase did not affirmatively incorporate Florida’s statute of limitations into the agreement.
The court then performed a statutory construction analysis to determine whether Florida’s statute of limitations applied to arbitration claims. The court found Chapter 95 failed to define the terms “civil action” or “proceeding,” and thus it resorted to case law to interpret those terms. The court examined the Florida Supreme Court’s decision in Miele v. Prudential-Bache Securities, Inc., 656 So. 2d 470 (Fla. 1995), on which the trial court based its ruling, and agreed that the term “civil action” was limited to proceedings “filed in court” and did not include arbitration. Moreover, in Miele, the Supreme Court concluded that arbitration is “an alternative to the court system.” Miele, at 472.
The Second District found the phrase “civil action or proceeding” used in section 95.011, Florida Statutes, meant a court proceeding and not arbitration. Moreover, if the legislature intended the term “proceeding” to apply to arbitration, it could have defined “proceeding” to include arbitration, or it could have expressly included the term within section 95.011.
The Second District noted that the issue of whether arbitrations are “actions” or “proceedings” for purposes of section 95.011, Florida Statutes, was one of the first impression in Florida.
The Second District held that because contracts are construed against the drafter, and because the language of the statute does not state that it applies to arbitration, Florida’s statute of limitations does not apply to arbitrations where the arbitration agreement does not expressly provide for such application.