GREAT WESTERN FINANCIAL SECURITIES CORPORATION, APPELLANT,
v.
ZACHARIAH GRANDISON AND OLIVIA GRANDISON, APPELLEES
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Great Western Financial Securities Corporation appeals a trial court's denial of its motion to compel arbitration based on an arbitration clause in a client agreement. The court reversed, holding that fraud allegations directed at the underlying contract rather than the arbitration clause itself do not void the arbitration agreement and must be submitted to arbitration.
The court held that disputes must be arbitrated where allegations of fraud concern the entire contract rather than specifically attacking the arbitration clause. The Grandisons' complaint, which did not challenge the arbitration clause's validity, must be submitted to arbitration.
[1] A party who alleges fraudulent inducement to enter a contract may elect to affirm the contract and seek damages for breach, rather than seeking rescission.
[2] A complaint seeking damages for breach of contract, even if based on fraudulent inducement, does not put the making of the contract in issue for purposes of avoiding an a…
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Join FLexlaw to unlock all legal intelligence“It is well established that a dispute must be arbitrated where a complaint alleges fraud or some other ground for avoiding or invalidating a contract as to the entire agreement rather than as to the arbitration clause contained within the agreement.”
Establishes the primary legal rule that fraud in the underlying contract does not void arbitration unless it specifically targets the arbitration clause.
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Join FLexlaw to unlock all legal intelligenceGreat Western and the Grandisons executed a client agreement containing an arbitration clause when the Grandisons purchased securities from Great West…
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DAUKSCH, Judge.
Great Western Financial Securities Corporation appeals a nonfinal order denying its motion to compel arbitration and to stay state court action.
The dispute in this case arose out of a client agreement between Great Western and Zacharia and Olivia Grandison which the Grandisons executed when buying securities from Great Western. The client agreement contained an arbitration clause which provided that all controversies between the parties would be submitted to arbitration. After signing the agreement, the Grandisons filed an amended complaint against Great Western for fraud, civil theft, failure to provide a prospectus, as required by section 517.075, Florida Statutes (1995) and rescission, as set forth in section 517.211, Florida Statutes (1995). Great Western filed a motion to compel arbitration and to stay based on the arbitration clause in the client agreement. The trial court denied its motion on the ground that the Grandisons’ complaint alleged fraud in the inducement which voided the arbitration proceedings. We reverse.
It is well established that a dispute must be arbitrated where a complaint alleges fraud or some other ground for avoiding or invalidating a contract as to the entire agreement rather than as to the arbitration clause contained within the agreement. Medident Construction, Inc. v. Chappell, 632 So. 2d 194 (Fla. 3d DCA 1994); Alphagraphics Franchising, Inc. v. Stebbins, 617 So. 2d 463 (Fla. 4th DCA 1993); Ronbeck Construction Co., Inc. v. Savanna Club Corp., 592 So. 2d 344 (Fla. 4th DCA 1992); Manning v. Interfuture Trading, Inc., 578 So. 2d 842 (Fla. 4th DCA 1991); Beaver Coaches, Inc. v. Revels Nationwide R.V. Sales, Inc., 543 So. 2d 359 (Fla. 1st DCA 1989). It is only where the complaint specifically challenges the arbitration clause that a trial court is permitted to determine the issue before submitting the remainder of the dispute to arbitration. Chappell, 632 So. 2d at 195.
In this case, the Grandisons’ complaint is devoid of any allegation challenging the validity of the arbitration clause. Instead, their claims are directed at Great Western’s fraudulent misrepresentations preceding their purchase of the securities, their remedies and their damages. Accordingly, the parties’ dispute is subject to arbitration. We therefore reverse the trial court’s order denying Great Western’s motion to compel arbitration and for stay and remand the cause to the trial court with directions to allow arbitration and stay state court proceedings during the pendency of the arbitration proceeding.
REVERSED AND REMANDED.
PETERSON and THOMPSON, JJ., concur.
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Sami Qubty v. Rasiklal Nagda, 817 So. 2d 952 (Fla. 5th DCA 2002)…ith respect to arbitration sought under both the Florida and Federal Arbitration Acts. See, e.g., Prima [*957] Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Great Western Fin. Secs. Corp. v. Grandison, 701 So. 2d 1202 (Fla. 5th DCA 1997); Ronbeck Const. v. Savanna Club Corp., 592 So. 2d 344 (Fla. 4th DCA 1992); Manning v. Interfuture Trading, Inc., 578 So. 2d 842 (Fla. 4th DCA 1991).2 The Nagdas’ contention that the order denying defendants’ request for arbitrat…
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Aztec Med. Servs., Inc. v. Robert Burger, M.D., 792 So. 2d 617 (Fla. 4th DCA 2001)…follow that the mere fact that the FDUTPA creates a statutory claim that such a claim is not subject to arbitration. Arbitration clauses have repeatedly been held to apply to statutory claims. See, e.g., Great Western Fin. Sec., Corp. v. Grandison, 701 So. 2d 1202 (Fla. 5th DCA 1997)(reversing the trial court’s order denying appellants’ motion to compel arbitration of statutory civil theft claim); Ronbeck Constr. Co. v. Savanna Club Corp., 592 So. 2d 344 (Fla. 4th DCA 1992)(same); Beaver Coaches, Inc. v. Reve…
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Maguire v. William C. King for the W. Ray King Tr., 917 So. 2d 263 (Fla. 5th DCA 2005)…ng Qubty, 817 So. 2d at 952). It is well settled that where the agreement is alleged to have been fraudulently induced, rather than the arbitration agreement itself, the matter is to be resolved by arbitration. Great W. Fin. Sec. Corp. v. Grandison, 701 So. 2d 1202, 1203 (Fla. 5th DCA 1997); Simpson v. Cohen, 812 So. 2d 588, 590 (Fla. 4th DCA 2002); Passerrello v. Robert L. Lipton, Inc., 690 So. 2d 610, 611 (Fla. 4th DCA 1997). This remains so even where the alleged fraudulent misrepresentation preceded the pu…
Previewing 3 of 6 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Ronbeck Constr. Co., Inc. v. Savanna Club Corp. & Savanna Club Realty Inc., 592 So. 2d 344 (Fla. 4th DCA 1992)
- Vance Lamar Larsen v. State, 543 So. 2d 359 (Fla. 1st DCA 1989)
- Manning v. Interfuture Trading, Inc., 578 So. 2d 842 (Fla. 4th DCA 1991)
- Medident Constr., Inc. v. Chappell, 632 So. 2d 194 (Fla. 3d DCA 1994)
- Fla. Power & Light Co. v. Gardner, 617 So. 2d 463 (Fla. 4th DCA 1993)
- Alphagraphics Franchising, Inc. v. Stebbins, 617 So. 2d 463 (Fla. 4th DCA 1993)