VON ENGINEERING COMPANY, A FLORIDA CORPORATION, APPELLANT,
v.
R.W. ROBERTS CONSTRUCTION CO., INC., A FLORIDA CORPORATION, AND THE AMERICAN INSURANCE COMPANY, A NEW JERSEY CORPORATION, APPELLEES
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The court held that common law indemnity principles, which bind a surety with notice to a judgment against the principal, apply to arbitration awards. Therefore, dismissal of the complaint was error.
[1] A motion to dismiss tests the legal sufficiency of the facts alleged in a complaint to state a cause of action, requiring the court to accept all well-pleaded allegations…
[2] When a surety has notice of a suit against the principal and an opportunity to defend, a judgment rendered without fraud or collusion is conclusive against the surety on…
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Join FLexlaw to unlock all legal intelligenceVon Engineering obtained an arbitration award against Roberts Construction Company, the principal contractor. Von Engineering sued American Insurance …
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FRANK D. UPCHURCH, Jr., Judge.
Von Engineering Company appeals from a final order dismissing its amended complaint against The American Insurance Company. Von Engineering filed a complaint against R.W. Roberts Construction Company, Inc. and The American Insurance Company, seeking confirmation of an arbitration award pursuant to Chapter 682, Florida Statutes. The complaint alleged that in June, 1979, Von Engineering and Roberts executed a subcontract whereby Von Engineering agreed to provide steel products for the construction of a building. Roberts was the general contractor on the project. American was surety on a performance/payment bond.
Von Engineering claimed Roberts had not paid for all labor and material it furnished and sued Roberts and American. Roberts and American, represented by the same attorney, moved to compel arbitration. The court granted the motion and directed the parties to proceed with arbitration.
Von Engineering then filed a demand for arbitration naming Roberts as the party upon whom the demand was being made and sent the demand to the attorney. Roberts filed an answer and counterclaimed, but American did not participate. The arbitrator ruled for Von Engineering, but Roberts failed to pay the $18,376.36 awarded by the arbitrator. American moved to dismiss Von Engineering’s present action for confirmation, claiming it was not a party to the arbitration proceedings and the arbitration award was entered solely against Roberts. An amended complaint was filed alleging that American had notice of the arbitration proceedings and elected not to participate. The sole question is whether the trial court erred in dismissing this amended complaint.
The purpose of a motion to dismiss a complaint is to raise as a question of law the sufficiency of the facts alleged to state a cause of action. Raney v. Jimmie Diesel Corp., 362 So. 2d 997 (Fla. 3d DCA 1978). In considering such a motion, the trial court is required to accept all well pleaded allegations in the complaint as true. Id.
Principles of indemnity law hold that when a surety has notice of a suit against the principal and is afforded an opportunity -to appear and defend, a judgment rendered without fraud or collusion is conclusive against the surety as to all material questions therein determined. MacArthur v. Gaines, 286 So. 2d 608 (Fla. 3d DCA 1973). See also Lake County v. Massachusetts Bonding & Ins. Co., 75 F. 2d 6 (5th Cir.1935). A corollary to this principle is that where it is not made to appear that the surety knew of and had an opportunity to defend the suit, then the judgment is prima facie evidence that the surety is liable, sufficient to support a verdict unless it is rebutted by proof that it was obtained through fraud or collusion or that the loss of liability created by the judgment arose from acts other than those indemnified against under the conditions of the bond. Heritage Ins. Co. v. Foster Elec. Co., 393 So. 2d 28 (Fla. 3d DCA 1981). See also Lake County v. Massachusetts Bonding. In this case, Von Engineering alleged that American had actual knowledge of the arbitration proceeding and was afforded an opportunity to defend but chose not to do so. Under MacArthur and Lake County, the arbitration award would be conclusive against American if such allegations were proved and it was error for the lower court to dismiss the complaint.
American argues that none of the cases above involved application of the common law indemnity principles to arbitration proceedings or awards where the surety was not a party. American claims that under principles governing arbitration proceedings, the arbitration award cannot be enforced against it since it was not a party to the proceeding. See, e.g., Solon v. Jones & Laughlin Steel Corp., 53 App.Div.2d 964, 385 N.Y.S.2d 837 (1976); Overseas Distributors Exch. v. Benedict Bros. & Co., 5 App.Div.2d 498, 173 N.Y.S.2d 110 (1958) and Hosek Mfg.-Overland Foundry Co. v. Teats, 107 Colo. 200, 110 P. 2d 976 (1941), which stand for the proposition that an arbitration award cannot be enforced against one who was not a party to the arbitration proceeding.
It is true, as American asserts, that in arbitration proceedings, persons whose rights are affected have a right to be heard and to present evidence after reasonable notice. Cassara v. Wofford, 55 So. 2d 102, 106 (Fla.1951). See also Tassinari v. Layer, 189 So. 2d 651 (Fla. 2d DCA 1966); § 682.06 Fla.Stat. (1983). However, this same principle of due process applies in all judicial proceedings. See Cassara, 55 So. 2d at 106. The common law nevertheless recognizes that in certain situations such as where indemnity agreements are involved, a judgment against the indemni-tee or principal may be conclusive (or even prima facie evidence) against the indemnitor or surety even though the latter did not participate in the earlier proceedings. American proffers no argument as to why such common law principles comport with due process in a judicial setting but would violate due process if applied to an arbitration award and we can think of none.
REVERSED.
COBB, C.J., and ORFINGER, J., concur.
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Fewox v. McMERIT Constr. Co., 556 So. 2d 419 (Fla. 2d DCA 1989)…d in its favor, not only as against the principal but also against the surety. Kidder Electrical of Florida, Inc. v. United States Fidelity & Guaranty Co., 530 So. 2d 475 (Fla. 5th DCA 1988). See Von Engineering Co. v. R.W. Roberts Construction Co., 457 So. 2d 1080 (Fla. 5th DCA 1984) (where a surety has notice of a suit against the principal and is afforded an opportunity to appear and defend, a judgment rendered without fraud and collusion is conclusive against the surety as to all material questions therein…
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Price v. RLI Ins. Co., 914 So. 2d 1010 (Fla. 5th DCA 2005)…rgue the final default judgment against First Choice is pri-ma facie evidence that RLI is liable for First Choice’s failure to comply with the conditions of the installment sales contract, citing Von Engineering Co. v. R.W. Roberts Const. Co., Inc., 457 So. 2d 1080 (Fla. 5th DCA 1984). The Prices contend that RLI has not rebutted that prima facie showing and thus they are entitled to relief. In Von Engineering, this court explained: [*1013] Principles of indemnity -law hold that when a surety has notice of a…
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Graham Contracting, Inc. v. Flagler Cnty., 458 So. 2d 418 (Fla. 5th DCA 1984)…ed. We grant the writ and order the proceedings stayed until arbitration is completed. Post Tensioned Engineering Corporation v. Fairways Plaza Associates, 429 So. 2d 1212 (Fla. 3d DCA 1983); Von Engineering Company v. R.W. Roberts Construction Co., 457 So. 2d 1080 (Fla. 5th DCA 1984). FRANK D. UPCHURCH, Jr. and CO-WART, JJ., concur.…
Previewing 3 of 7 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Cassara v. Wofford, 55 So. 2d 102 (Fla. 1951)
- Lake Cnty. v. Mass. Bonding & Ins. Co., 75 F.2d 6 (5th Cir. 1935)
- MacARTHUR v. Gaines, 286 So. 2d 608 (Fla. 3d DCA 1973)
- Tassinari v. Valery J. Loyer, 189 So. 2d 651 (Fla. 2d DCA 1966)
- Raney v. Jimmie Diesel Corp., 362 So. 2d 997 (Fla. 3d DCA 1978)
- Heritage Ins. Co. OF Am. v. Foster Elec. Co., Inc., 393 So. 2d 28 (Fla. 3d DCA 1981)