THE AETNA CASUALTY & SURETY COMPANY, APPELLANT,
v.
JELAC CORPORATION, APPELLEE
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Aetna Casualty & Surety Company appealed the denial of its motion to dismiss a bond claim brought by Jelac Corporation, arguing that the arbitration clause in the subcontract between Jelac and Prime Contractors should require arbitration. The Fourth District Court of Appeal affirmed, holding that Aetna, as a surety, lacked standing to enforce the arbitration provision because it was merely an incidental beneficiary, not an intended third-party beneficiary of the subcontract.
The court held that Aetna does not have the right to demand arbitration under the subcontract between Jelac and Prime. Aetna is at most an incidental beneficiary to the contract and therefore has no right to enforce the contract's arbitration provision. The arbitration clause's subparagraph 13.2 specifically precludes Aetna from asserting such contract rights.
[1] A party not signatory to a contract containing an arbitration clause cannot compel arbitration unless they are an intended third-party beneficiary of the contract.
[2] A party is an intended third-party beneficiary, and thus able to enforce contract provisions, only if the parties to the contract intended to primarily and directly benef…
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Join FLexlaw to unlock all legal intelligence“We hold that Aetna does not have the right under the contract between Jelac and Prime to demand arbitration.”
Establishes the core holding that the surety cannot enforce the arbitration provision of a contract to which it is not a party
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Join FLexlaw to unlock all legal intelligenceJelac Corporation, as a subcontractor, entered into a standard A1A subcontract with Prime Contractors, Inc. for work on a Boynton Beach project that c…
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PER CURIAM.
This is a non-final appeal of an order denying Aetna Casualty & Surety Company’s motion to dismiss, to abate and to compel arbitration. This court has jurisdiction pursuant to Rule 9.130(a)(3)(C)(v), Florida Rules of Appellate Procedure.
Jelac Corporation, as subcontractor, entered into a standard A1A subcontract with Prime Contractors, Inc., as contractor, for work on a project in Boynton Beach. Article 13 provides for arbitration of all disputes. Subparagraph 13.2 provides specifically:
13.2 Except by written consent of the person or entity sought to be joined, no arbitration arising out of or relating to the Contract Documents shall include, by consolidation, joinder or in any other manner, any person or entity not a party to the Agreement under which such arbitration arises, unless it is shown at the time the demand for arbitration is filed that (1) such person or entity is substantially involved in a common question of fact or law, (2) the presence of such person or entity is required if complete relief is to be accorded in the arbitration, (3) the interest or responsibility of such person or entity in the matter is not insubstantial, and (4) such person or entity is not the Architect, his employee or his consultant.
(Emphasis added.)
On April 18, 1985, Aetna and Prime executed a dual obligee performance and payment bond covering the Boynton Beach project.
In August, 1986, Jelac filed suit against Aetna to recover on the bond for alleged nonpayment by Prime on their contract. Prime was not joined in the suit. Aetna filed a motion to dismiss claiming the suit should be dismissed for lack of subject matter jurisdiction because of the arbitration clause in the subcontract between Je-lac and Prime.
We hold that Aetna does not have the right under the contract between Jelac and Prime to demand arbitration. We find particularly that subparagraph 13.2 precludes Aetna from asserting any such contract rights. We also believe Aetna is at most an incidental beneficiary to the contract and thus has no right to enforce the contract’s arbitration provision. As stated in Maryland Casualty Co. v. Department of General Services, 489 So. 2d 57, 58 (Pla. 2d DCA 1986):
We affirm the trial court’s order on the ground that Maryland Casualty was merely an incidental beneficiary of the construction contracts, not an intended 'third-party beneficiary and, therefore, has no right to enforce the contracts’ provisions requiring arbitration. A third party is an intended beneficiary, and thus able to sue on a contract, only if the parties to the contract intended to primarily and directly benefit the third party. See Maryland Casualty Co. v. State of Florida Department of General Services, 489 So. 2d 54 (Pla. 1st DCA 1986); Clark & Co. v. Department of Insurance, 436 So. 2d 1013, 1016 (Pla. 1st DCA 1983); Clearwater Key Association-South Beach, Inc. v. Thacker, 431 So. 2d 641, 645 (Fla. 2d DCA 1983); Restatement (Second) of Contracts § 302.
AFFIRMED.
DOWNEY, GLICKSTEIN and DELL, JJ., concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By (14 total)
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Caretta Trucking, Inc. v. Cheoy LEE Shipyards, 647 So. 2d 1028 (Fla. 4th DCA 1994)…nly if the parties to the contract clearly express, or the contract itself expresses, an intent to primarily and directly benefit the third party or a class of persons to which that party claims to belong. Aetna Casualty & Surety Co. v. Jelac Corp., 505 So. 2d 37 (Fla. 4th DCA 1987); Warren; Security Mut. Casualty Ins. Co. v. Pacura, 402 So. 2d 1266 (Fla. 3d DCA 1981). Thus, in order to plead a cause of action for breach of a third party beneficiary contract, the following elements must be set forth: (1) a…
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Tartell v. Chera, 668 So. 2d 1105 (Fla. 4th DCA 1996)…lants are incidental beneficiaries of the contract, not third party beneficiaries which would require that the parties to the contract intended to primarily and directly benefit the appellants. See generally Aetna Casualty & Sur. Co. v. Jelac Corp., 505 So. 2d 37 (Fla. 4th DCA 1987). Reversed and remanded. WARNER, KLEIN and SHAHOOD, JJ., concur.…
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Morgan Stanley DW Inc. v. Halliday, 873 So. 2d 400 (Fla. 4th DCA 2004)…ry which would require that the parties to the agreement (Morgan Stanley and the trustees) intended to primarily and directly benefit the plaintiff. Tartell v. Chera, 668 So. 2d 1105 (Fla. 4th DCA 1996). Also See Aetna Cas. & Sur. Co. v. Jelac Corp. 505 So. 2d 37 (Fla. 4th DCA 1987). A party is an intended beneficiary only if the parties to the contract clearly express, or the contract itself expresses, an intent to primarily and directly benefit the third party. Caretta Trucking Inc. v. Cheoy Lee Shipyards…1 / 2
Previewing 3 of 14 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Md. Cas. Co. v. Dep't OF Gen. Servs., 489 So. 2d 54 (Fla. 1st DCA 1986)
- Clearwater KEY Association-South Beach, Inc. v. Thacker, 431 So. 2d 641 (Fla. 2d DCA 1983)
- Clark & Co., Inc. v. The Dep't OF Ins., 436 So. 2d 1013 (Fla. 1st DCA 1983)
- Md. Cas. Co. v. State of Fla. Dep't OF Gen. Servs. & the Fla. Bd. of Regents, 489 So. 2d 57 (Fla. 2d DCA 1986)