In the case of RAYMOND JAMES FINANCIAL SERVICES, INC. v. PHILLIPS, 36 Fla. L. Weekly D2479a (Fla. 2d DCA Nov. 16, 2011), the Second District Court of Appeals held that arbitration claims are not civil actions or proceedings for purposes of section 95.011, Florida Statutes (2005), and that as a result, Florida statutes of limitations are not applicable to arbitration where the arbitration agreement does not expressly provide for their application.
Facts of Case
Account Holders executed client agreements with Raymond James for investment purposes. Pursuant to the provisions of the client agreements, the Account Holders were required to submit any disputes with Raymond James to the National Association of Securities Dealers, Inc. ("NASD"), for arbitration. Section 10304, the applicable NASD Code of Arbitration Procedure, provides a time limit upon submissions for arbitration. It states in pertinent part:
"(a) No dispute, claim, or controversy shall be eligible for submission to arbitration under this Code where six (6) years have elapsed from the occurrence or event giving rise to the . . . claim.
. . . .
(b) This Rule shall not extend applicable statutes of limitations; nor shall the six-year time limit . . . apply to any claim that is directed to arbitration by the court."
The client agreement also provided:
"(d) Nothing in this agreement shall be deemed to limit or waive the application of any relevant state or federal statute of limitation, repose or other time bar. Any claim made by either party to this agreement which is time barred for any reason shall not be eligible for arbitration. The determination of whether any such claim was timely filed shall be by a court having jurisdiction, upon application by either party."
In November 2005, the Account Holders filed arbitration claims with NASD. The Account Holders' grievances were for claims of negligence; misconduct, including breaches of fiduciary duty; and state and federal securities violations. In response to the Account Holders' claims, Raymond James filed a motion to dismiss, asserting that the Account Holders' claims were barred by the limitations periods in chapter 95, Florida Statutes (2005). The Account Holders then invoked the provision in the arbitration agreement which stated that timeliness issues would be decided by the court, and they filed an action in the circuit court of Collier County seeking a declaratory judgment. The Account Holders argued that Florida's statutes of limitations do not apply to arbitration proceedings. The circuit court agreed and issued a final declaratory judgment stating that Florida's statutes of limitations were not applicable to the Account Holders' arbitration claims as a matter of law.
Reasoning
The court reasoned that the provision of agreement that it will not “limit or waive the application of any relevant state or federal statute of limitations,” does not affirmatively incorporate Florida statutes of limitations into the agreement. The court noted that because neither the actual language of the statute nor the dictionary definition include the term "arbitration", the meaning of the words “civil action” or “proceeding” do not convey a clear and definite meaning, and we must resort to the principles of statutory construction.
The court proceeded to review the statute in question and held that if the legislature had intended for the term “proceeding” to apply to arbitration, it could have defined “proceeding” to include an arbitration or it could have expressly included the word arbitration within section 95.011. The court noted that the Florida Arbitration Code was enacted in 1957, which is prior to the enactment of section 95.011. Thus, the legislature was aware of arbitration and could have expressly included the term if it intended for Florida's statutes of limitation to apply to arbitration. The court then found that absent a more specific reference to arbitrations in section 95.011, and without a clear indication of legislative intent otherwise or case law which interprets this issue, it is too much of a stretch to conclude that the legislature was motivated by a desire to extend our state's limitations periods to such “proceedings.”
Conclusion
In summary, the court found that Raymond James did not expressly include the Florida statutes of limitations in the contract in question. Since the contract is construed against the drafter and since the language of the statute does not state that it applies to arbitration, the court held that Florida's statutes of limitations do not apply to arbitrations where the arbitration agreement does not expressly provide for their application.
Nevertheless, the court certified the following question, citing "great public importance":
"DOES SECTION 95.011, FLORIDA STATUTES, APPLY TO ARBITRATION WHEN THE PARTIES HAVE NOT EXPRESSLY INCLUDED A PROVISION IN THEIR ARBITRATION AGREEMENT STATING THAT IT IS APPLICABLE?"
Thus, watch this space to see how the Florida Supreme Court chooses to rule on this issue.
If you are interested in receiving a complete copy of this decision or are interested in reaching me, please contact me at miamipandi@comcast.net.
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