February 10, 2016

Firm Obtains Reversal Of Order Compelling Mediation and Arbitration

MuniCommerce, LLC v. Navidor, LTD, Case 4D15-169 (Fla. 4th DCA, Feb. 3, 2016)*

In a recent appeal, Bresky Law represented a company that offers merchant accounts and payment solutions for merchants. The company appealed from a non-final order compelling mediation and arbitration with a former independent sales agent, with whom the company terminated its contract after determining that the sales agent had engaged in unsound business practices.

The agreement included a provision for mediation and arbitration, except in cases where the company terminates the agreement for specified reasons such as unsound business practices of the sales agent. After terminating the contract, the company sued the former sales agent for breach of contract, equitable relief, injunction, unjust enrichment, tortious interference, and punitive damages.

The former sales agent asked the trial court to compel mediation and arbitration, arguing that the exceptions to mediation and arbitration in the agreement were inapplicable, unenforceable, and unconscionable. The trial court ruled that the waiver did not apply if the agent alleged a breach first. It also concluded that the waiver provision was unenforceable and unconscionable because it would allow the company to avoid arbitration by terminating the contract any time the agent declared a breach.

On appeal, we argued that the sales agent had knowingly waived mediation and arbitration by willingly signing the agreement, and the company could not be compelled to mediate or arbitrate a matter contrary to the plain language of the agreement that made an exception for cases of termination for unsound business practices. We also showed that the agreement was not unconscionable.

The Fourth District Court of Appeal agreed that the trial court had failed to apply the plain language of the agreement, by which the agent had waived mediation and/or arbitration any case where the company terminates the agreement due to unsound business practices. There was no agreement to mediate or arbitrate these grounds for termination.

Further, the appellate court held that there was no basis for the trial court’s finding that the waiver of arbitration and mediation did not apply if the sales agent alleged a breach by the company before the company terminated the contract. The trial court could not rewrite the contract to suit the former agent. The appellate court also held that the waiver provision was not unconscionable. The waiver is not unfair and does not allow the company to terminate as a pretext for unilaterally avoiding mediation and arbitration.

The Fourth District Court of Appeal reversed the order compelling mediation and arbitration. Thus, our client will be able to pursue its complaint in the court of law as the agreement intended.

*Not final until disposition of a timely filed motion for rehearing, if any.