STEVEN GRAHAM AND GRAHAM FLOORING, INC., APPELLANT,
v.
FRIENDLY FORD, INC., ET AL., APPELLEES
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The court modified an arbitration order to require prior judicial determination of fraud and failure of consideration claims before compelling arbitration of an indemnity claim, because the validity of the underlying lease containing the arbitration clause must first be established.
An indemnity claim cannot be arbitrated until the underlying lease containing the arbitration clause has been judicially determined to be valid and not fraudulently induced or lacking in consideration.
[1] An arbitration clause in a lease cannot compel arbitration of claims challenging the lease's validity based on fraud in the inducement or failure of consideration until t…
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Join FLexlaw to unlock all legal intelligenceSteven Graham and Graham Flooring, Inc. entered into a lease with Friendly Ford, Inc. and provided a guaranty of that lease. The third-party plaintiff…
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PER CURIAM.
This is an appeal by the third-party plaintiffs Steven Graham and Graham Flooring, Inc. from an order directing that their indemnity claim against the third-party defendant Friendly Ford, Inc. be sent to arbitration on all issues, save for the issues of (1) whether the lease entered into by the parties and the underlying guaranty of that lease was procured by fraud, and (2) whether the consideration for the lease and guaranty failed.
The third-party plaintiffs’ primary contention on appeal is that they should not be required to arbitrate their indemnity claim until their claims of fraud in the inducement and failure of consideration, as contained in their third-party complaint and counterclaim in the main actions, are determined. We agree and accordingly modify the order under review to require a prior judicial determination on the above-stated two reserved issues before the parties are required to proceed to arbitration on the indemnity claim. We reach this result because the indemnity claim herein cannot be arbitrated at all until the underlying lease which contains the subject arbitration clause has been judicially determined to be valid and not fraudulently induced or supported by failed consideration, as the third-party plaintiffs assert below. Bardinella Designs, Inc. v. Spirit Constr., Inc., 524 So. 2d 703 (Fla. 4th DCA 1988).
Affirmed as modified.
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JDC (America) Corp. v. Brickell Station Towers, Inc., 561 So. 2d 475 (Fla. 3d DCA 1990)…PER CURIAM. Affirmed. Graham v. Friendly Ford, Inc., 552 So. 2d 1165 (Fla. 3d DCA 1989).…
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JDC (America) Corp. v. Amerifirst Fla. Tr. Co., 736 F. Supp. 1121 (S.D. Fla. 1990)
Authorities Cited
- Carson H. Bowen v. State, 524 So. 2d 703 (Fla. 1st DCA 1988)