LUDE HENDERSON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, APPELLANT,
v.
CORAL SPRINGS NISSAN, INC., A FLORIDA CORPORATION, APPELLEE
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Henderson purchased a vehicle from Coral Springs Nissan under a contract containing an arbitration clause, but the dealership rescinded the contract the next day. The trial court compelled arbitration of Henderson's FDUTPA claim despite the contract's rescission. The court reversed, holding that when a contract is rescinded, the arbitration clause within it becomes unenforceable because rescission voids the contract from its inception.
The court held that when a contract is rescinded, the arbitration clause becomes unenforceable because rescission renders the contract void from its inception. Therefore, the trial court had no basis to compel arbitration and the arbitration order was erroneous.
[1] A contract rescinded prior to a motion to compel arbitration renders the arbitration clause within that contract unenforceable.
[2] Rescission of a contract renders it abrogated and of no force and effect from the beginning, meaning no arbitration clause can survive.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“The effect of rescission is to render the contract abrogated and of no force and effect from the beginning. If there is no contract, there can be no arbitration clause 'of the contract.'”
Establishes the fundamental principle that rescission voids the entire contract from inception, eliminating any enforceable arbitration clause
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Join FLexlaw to unlock all legal intelligenceHenderson entered into a contract with Coral Springs Nissan to purchase an Altima with a $1,000 down payment. The next day, Coral Springs Nissan deman…
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PER CURIAM.
Appellant Lude Henderson, plaintiff below, filed this non-final, appeal of an order compelling her to arbitrate her Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) claim against Coral Springs Nissan, Inc. Finding that the trial court erred in concluding her claim was subject to arbitration, we reverse.
Henderson filed a class action complaint seeking monetary and equitable relief pursuant to the FDUTPA, sections 501.201-213, Florida Statutes. Her complaint alleged that she entered into a contract with Coral Springs Nissan to purchase an Alti-ma and made a $1000 down payment, and that a day later, Coral Springs Nissan demanded an. additional down payment of $1000, which she refused to make. Coral Springs Nissan then unilaterally rescinded the contract and repossessed the Altima. Attached to the complaint is a Vehicle Buyer’s Order, which contains a broad arbitration clause providing that “any controversy or claim arising out of or relating to this contract or breach thereof shall be settled by arbitration.”
Coral Springs Nissan filed a motion to stay the circuit court proceedings and compel arbitration of Henderson’s FDUT-PA claim. At the hearing on the motion, Henderson argued that since the contract was rescinded, the arbitration clause did not survive. Nevertheless, the trial court ruled that the dispute would be submitted to arbitration. Henderson now appeals.
Neither party cites a case involving the exact factual scenario presented in this case. The case of Hymowitz v. Drath, 567 So. 2d 540 (Fla. 4th DCA 1990), however, leads us to reverse the arbitration order. In Hymowitz, this Court held that arbitrators exceeded their powers by cancelling the very agreement that contained the arbitration clause from which the arbitrators derive their authority. Id. In arriving at this conclusion, this Court determined that cancellation of the agreement was tantamount to rescission and stated, “The effect of rescission is to render the contract abrogated and of no force and effect from the beginning. If there is no contract, there can be no arbitration clause ‘of the contract.’ ” Id. at 542 (quoting Borck v. Holewinski, 459 So. 2d 405 (Fla. 4th DCA 1984)).
If there is no enforceable arbitration clause when arbitrators cancel a contract during arbitration, then there is no enforceable arbitration clause when a contract is rescinded prior to a motion to compel arbitration. Here, the arbitration clause became unenforceable when Coral Springs Nissan rescinded the contract containing the arbitration clause. As such, the trial court had no basis upon which to require the parties to arbitrate their dispute.
This case is distinguishable from the fraudulent inducement cases upon which Coral Springs Nissan relies. See Berman v. Alamo Rent A Car, Inc., 717 So. 2d 165 (Fla. 4th DCA 1998); Passerrello v. Robert L. Lipton, Inc., 690 So. 2d 610 (Fla. 4th DCA 1997). In those cases, the contracts were valid on their face, whereas here, the contract no longer existed at the time the motion to compel arbitration was made. This case is also distinguishable from Milbar Medical Company v. Medicis Pharmaceutical Corp., 741 So. 2d 1198 (Fla. 4th DCA 1999), in which this Court determined that based on federal law, an arbitration clause survived the termination of a licensing agreement. Milbar involved termination of a contract, whereas the instant case involves rescission, which makes a contract void in its inception as though it never existed. See, e.g., Hymowitz, 567 So. 2d at 542.
Because the trial court had no basis upon which to require the parties to submit to arbitration, its arbitration order is erroneous. Accordingly, we reverse the arbitration order and remand for further proceedings.
REVERSED AND REMANDED.
WARNER, C.J., GUNTHER and STEVENSON, JJ., concur.
Cases With Similar Vibessemantic neighbors from the corpus
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Stacy David, Inc. v. Consuegra, 845 So. 2d 303 (Fla. 2d DCA 2003)…holding that arbitration could not be compelled where plaintiff sought only rescission, and there was “no claim for damages in any of the five counts of the complaint”). This case is also distinguishable from Henderson v. Coral Springs Nissan, Inc., 757 So. 2d 577 (Fla. 4th DCA 2000), in which the dealership sought to enforce an arbitration clause after it had rescinded the contract and repossessed the car. The Consuegras point out that the retail order was not signed by Brandon Mitsubishi; however, the docu…
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Sami Qubty v. Rasiklal Nagda, 817 So. 2d 952 (Fla. 5th DCA 2002)…rise under the first of two loan agreements. . In cases in which rescission has been found to preclude arbitration, rescission was not sought as a remedy in the action, but occurred prior to suit. See, e.g., Henderson v. Coral Springs Nissan, Inc., 757 So. 2d 577 (Fla. 4th DCA 2000). . Qubty does not appear to be entitled, however, to enforce the arbitration provision against the Nagdas under principles of equitable estoppel. See In re Humana, Inc. Managed Care Litigation, 285 F. 3d 971 (11th Cir.2002). .…
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Fla. Title Loans, Inc. v. Christie, 770 So. 2d 750 (Fla. 1st DCA 2000)…de novo. Powertel, Inc. v. Bexley, 743 So. 2d 570 (Fla. 1st DCA 1999). We agree that the arbitration clause in the parties’ original loan agreement is inapplicable to the complaint filed by the borrower. See Henderson v. Coral Springs Nissan, Inc., 757 So. 2d 577 (Fla. 4th DCA 2000) (reversing an order to compel arbitration and holding that an arbitration clause becomes unenforceable when one party unilaterally rescinds the contract); cf. Borck v. Holewinski, 459 So. 2d 405 (Fla. 4th DCA 1984) (affirming a s…
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
- Borck v. Holewinski, 459 So. 2d 405 (Fla. 4th DCA 1984)
- Jacques Valcin v. State, 690 So. 2d 610 (Fla. 3d DCA 1997)
- Milbar Med. Co., Inc. v. Medicis Pharm. Corp., 741 So. 2d 1198 (Fla. 4th DCA 1999)
- Hymowitz v. Drath, 567 So. 2d 540 (Fla. 4th DCA 1990)
- Schimpf v. State, 717 So. 2d 165 (Fla. 4th DCA 1998)
- Berman v. Alamo Rent A CAR, Inc., 717 So. 2d 165 (Fla. 4th DCA 1998)