All-South Subcontractors, Inc. Inc. v. Amerigas Propane, Inc. and Amerigas Propane, L.P.

Citations: 206 So. 3d 77; 2016 Fla. App. LEXIS 12135Docket: 15-5862

Court: District Court of Appeal of Florida; August 15, 2016; Florida; State Appellate Court

Original Court Document: View Document

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The District Court of Appeal for the First District of Florida reviewed the trial court’s order that dismissed Appellant All-South Subcontractors, Inc.’s amended complaint with prejudice, citing a lack of subject matter jurisdiction and granting the Appellees’ motion to compel arbitration. The central issue was the retroactive applicability of an arbitration clause from a 2012 bulk mailer sent by Appellees to a business transaction finalized in 2010. The court determined that the arbitration clause did not apply retroactively, leading to a reversal of the trial court's decision.

Appellant had filed an amended class action complaint against Appellees Amerigas Propane, Inc. and Amerigas Propane, L.P., alleging that their practice of charging 'Fuel Recovery Fees' violated the Florida Deceptive and Unfair Trade Practices Act and constituted unjust enrichment. Appellant, a small roofing business, purchased propane from Appellees in 2010 for a project at the National Flight Academy. In response, Appellees moved to dismiss the complaint, asserting that an arbitration agreement governed the dispute and required arbitration of claims.

Appellees supported their motion with an affidavit from James Armstrong, which detailed the mailing of the General Terms and Conditions to customers, including All-South, in December 2012. The mailer included a clause mandating arbitration for disputes arising from the agreement. The court, however, found that the arbitration clause did not apply to the earlier transaction, thus reversing the dismissal and allowing the case to proceed.

Neither Company nor Customer can arbitrate claims as part of a class action. Customers have a thirty-day period to opt out of the arbitration provision by sending certified mail to the Company. A bulk mailer dated August 20, 2012, indicated that these Terms and Conditions would be effective 30 days after that date. Affidavits from Appellees’ district manager and legal department confirm that Appellant did not respond to the opt-out provision. Appellees argued that the Terms and Conditions, available on their website since before December 2010 and updated monthly, governed their relationship with customers, asserting that continuing service constituted acceptance of the Terms. However, Appellant contended that the Terms from 2010 were not presented to the trial court and questioned the Company’s ability to retroactively impose an arbitration clause. The trial court found the arbitration provision enforceable based on the assumption that Appellant had assented to it. In contrast, it is concluded that Appellant did not agree to arbitrate the 2010 claims. The appellate court reviews the trial court’s construction of the arbitration provision de novo, focusing on whether an agreement to arbitrate exists, as established by the U.S. Supreme Court in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.

The Florida Supreme Court in Seifert v. U.S. Home Corp. identified three essential elements for courts to consider when ruling on a motion to compel arbitration: 1) the existence of a valid written agreement to arbitrate, 2) the presence of an arbitrable issue, and 3) whether the right to arbitration has been waived. In subsequent cases, including Shotts v. OP Winter Haven, Inc., challenges to arbitration agreements primarily focus on the validity of the written agreement. The court emphasized that arbitration provisions are contractual, and their interpretation follows contract law principles, that the determination of whether a dispute is subject to arbitration relies on the parties' intent, and that no party should be compelled to arbitrate unless they agreed to do so.

The appellant argues that mutual assent is necessary for contract formation, asserting that the bulk mailer, which contained the arbitration clause, was invalid as the terms were not disclosed to them prior to receiving the mailer. The appellant's complaint relates to a transaction finalized in 2010, which did not reference arbitration in its invoice. The appellees contend that the 2012 Terms and Conditions retroactively apply to the 2010 transaction due to an ongoing relationship and the appellant's lack of notice to opt out. However, the court rejects this claim, concluding that without the appellant's assent to arbitration regarding the 2010 dispute, there are no grounds to compel arbitration. This finding is supported by the case CarePlus Health Plans, Inc. v. Interamerican Medical Center Group, LLC, which dealt with similar issues relating to arbitration clauses in agreements.

The Third District determined that the 2010 agreement did not warrant arbitration, citing a lack of significant connection between the 2010 Agreement and claims from the 2004 Agreement, which invalidated CarePlus's motion to compel arbitration. The court referenced the second prong of the Seifert test, emphasizing that a significant relationship must exist between the claim and the arbitration agreement. Although the resolution primarily focused on whether a valid arbitration agreement was present, the court noted that the earlier agreement lacked an intent to arbitrate disputes. The Third District also drew parallels with Citigroup, Inc. v. Boles, where the court found no requirement for arbitration due to the unrelated nature of the claims to the agreement.

Furthermore, it was highlighted that the 'Terms and Conditions' document was sent two years after the 2010 invoice for the rental of a propane tank, indicating no nexus between the 2010 invoiced transaction and the 2012 'Terms and Conditions,' thus no assent to arbitrate disputes from the 2010 invoice. The court found support in Eighth and Eleventh Circuit precedents, particularly Gedimex, S.A. v. Nidera, which reiterated that arbitration cannot be imposed if the parties did not agree to arbitrate disputes arising from separate contracts. The Eleventh Circuit maintained that disputes unrelated to the contract's performance do not fall under arbitration clauses, affirming that the arbitration clauses in previous contracts did not encompass claims related to a subsequent oral agreement.

Nidera's dispute is deemed not subject to arbitration, as it does not stem directly from the rice purchase contracts, following the precedent set by Telecom Italia. The Eighth Circuit's ruling in Dakota Foundry, Inc. v. Tromley Industrial Holdings, Inc. illustrates the complexities of incorporating arbitration clauses into agreements. In this case, Dakota Foundry purchased equipment from Kloster Foundry, which included a binding arbitration clause in its 'Standard Terms and Conditions of Sale.' However, the initial quotes provided to Dakota did not include these terms, although they contained a note emphasizing their importance. The subsequent quotes and invoices exchanged between Dakota and Tromley also omitted the 'Standard Terms and Conditions.' An addendum with binding terms from Tromley's sister companies was later provided, but Dakota's officer did not consider them applicable to the original agreement. After dissatisfaction with the equipment led Dakota to file a lawsuit, Tromley sought to compel arbitration based on the arbitration clause. The district court denied this request, leading the Eighth Circuit to affirm the decision. The court determined the key issue was whether the arbitration clause was incorporated into the agreement, reiterating that a court must first ascertain if the parties agreed to arbitrate before enforcing arbitration. If no agreement exists, the court lacks the authority to mandate arbitration.

Under South Dakota contract law, which aligns with Florida's, mutual assent on all essential contract terms is required. The Eighth Circuit highlighted that Tromley had the burden to prove that its Standard Terms and Conditions of Sale were part of the agreement. The court noted that the December 2009 and April 2010 quotes did not include the Standard Terms, despite referencing an attached copy, which only included 'STANDARD PAYMENT TERMS' without an arbitration clause. It determined that Dakota was unaware of the arbitration provision and thus did not have a reasonable opportunity to reject it, concluding that Dakota could not be bound by a clause it did not possess. The Eighth Circuit found it reasonable for Dakota to disregard the Standard Terms since they seemed irrelevant to its business dealings.

The Eleventh Circuit's analysis in Gedimex supports the argument that Appellees' 2012 'Terms and Conditions' should not retroactively apply to Appellant based on the 2010 invoice, which did not include these terms. The Eighth Circuit’s reasoning in Dakota Foundry is deemed more persuasive, as the 2010 invoice lacked the Terms and Conditions, indicating Appellant did not assent to them by leasing the propane tank. Additionally, merely receiving the Terms and Conditions in 2012 did not reflect a mutual intent for retroactive application. The summary also references several cases affirming that without clear mutual agreement or awareness of arbitration clauses, parties cannot be bound by them, emphasizing the importance of contract clarity and mutual consent.

In Int’l Ambassador Programs, Inc. v. Archexpo, the Ninth Circuit ruled that an arbitration clause in a prior agreement did not apply to a subsequent agreement. The court contrasted this case with Simula, Inc. v. Autoliv, where claims were found arbitrable despite being based on prior conduct because they fell under existing agreements. Appellees referred to two federal district court cases, Sanders and Dorward, to support their position, but the court found these cases distinguishable. In Sanders, the court required a determination of whether plaintiffs could be bound to arbitration despite claiming no agreement existed, noting that continued service usage implied consent. However, the current case involved a single transaction from two years prior to the arbitration notice, where no contract requiring arbitration existed. The court emphasized that without a signed agreement, the existence of a binding arbitration clause was questioned. The distinctions made in Sanders and Dorward, where ongoing relationships implied assent to arbitration, did not apply here. Consequently, the court rejected the Appellees’ motion to compel arbitration, stating there was no valid written agreement to arbitrate, and reversed and remanded the trial court's dismissal of the complaint.