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Anderson v. Taylor Morrison of Florida, Inc.

Florida Court of Appeals, Second District

May 31, 2017

REGINALD ANDERSON and MICHELLE ANDERSON, Appellants,
v.
TAYLOR MORRISON OF FLORIDA, INC., Appellee.

         NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED

         Appeal Pursuant to Fla. R. App. P. 9.130 from the Circuit Court for Hillsborough County; Cheryl K. Thomas, Judge.

          Matthew L. Wilson and Joshua E. Burnett of Burnett Wilson Reeder, Tampa, for Appellants.

          J. Carlton Mitchel and Neal A. Sivyer of Sivyer Barlow & Watson, P.A., Tampa, for Appellee.

          SILBERMAN, Judge.

         Reginald and Michelle Anderson appeal a nonfinal order that stays proceedings in the trial court and compels arbitration in this action against their home builder, Taylor Morrison of Florida, Inc. (the Builder). Because the arbitration provision contained in the limited warranty (the Warranty) that the Builder provided to the Andersons limits their statutory remedies, we conclude that the provision is void as against public policy. Therefore, we reverse the trial court's order and remand for further proceedings. Based on this disposition, we do not reach the remaining issue the Andersons raise of unconscionability.

         In April 2009, the Andersons entered into a sales agreement with the Builder to purchase a home. The Andersons took possession of the home in November 2009. In June 2015, the Andersons provided notice to the Builder pursuant to section 558.004, Florida Statutes (2015), of construction defects based on building code violations. The notice referred to an attached engineering report and stated that the report found "construction defects associated with the application of the exterior stucco system to [the Andersons'] home." The report specified that the installation failed to meet the applicable building code provisions and that at multiple locations the cladding material had an inadequate thickness.

         Unable to resolve the matter, the Andersons filed a three-count complaint in September 2015 alleging (1) violation of the Florida Building Code under section 553.84, Florida Statutes (2009); (2) breach of contract; and (3) violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), §§ 501.201-.213, Fla. Stat. (2009). The Andersons alleged that the Builder violated the building code "by inadequately and improperly installing the stucco system on" their home. They claimed that the code violations were latent and not readily observable or known to them "until damages began to manifest themselves in the form of cracking to the exterior stucco years after construction ended." They also alleged that the Builder knew or should have known that the building code was violated during the construction of the home and that the violations caused damages to them.

         The Builder sought to compel arbitration on the basis of a provision in the Warranty provided with the purchase of the home. The Andersons argued that the arbitration provision was void as against public policy because it barred recovery of all statutory and contractual claims and that it was unconscionable. After a hearing, the trial court granted the motion to compel arbitration and found the arbitration provision valid. In doing so, the trial court appeared to implicitly reject the argument that the provision was void as against public policy. The Andersons now challenge the order compelling arbitration, focusing on the statutory remedy for the alleged building code violations.

         The sales agreement between the parties states that the Builder will provide the Andersons with a warranty in place of all other warranties, including those arising under state law. After closing, the Builder's sole responsibility "is to cover items under warranty." The Builder provided a copy of the three-page Warranty with the sales agreement. The Andersons signed an acknowledgement that they had received the copy, reviewed it, and agreed to its terms and conditions. The Warranty includes a one-year warranty providing that materials and workmanship in the home will be in compliance with the review criteria that are contained in "the Customer Care Guidelines, " a separate document. The Warranty also includes a ten-year warranty for "Major Structural Issues" as defined in the document.

         Based on the definition of major structural defect in the Warranty, which includes items such as foundation systems, load-bearing beams, and bearing walls, the inadequate application of exterior stucco does not appear to fall within the coverage of the ten-year limited warranty. The one-year limited warranty addresses stucco finishes by reference to the review criteria, which provides that small cracks are common and that cracks that exceed one-eighth inch in width "are considered excessive" and are covered. The warranty does not otherwise address the proper application of stucco, including any required thickness. The complaint and notice allege violations of the building code based on improper application of stucco but do not specifically address whether the cracks in the home fall within the one-year warranty's definition of excessive. Rather, the Andersons asserted that the building code violations were not readily observable or known until the cracking appeared well after the one-year warranty expired.

         With respect to arbitration, the Warranty contains an arbitration provision on the third page in a section titled Dispute Settlement. That section provides as follows:

Dispute Settlement
This Dispute Settlement provision sets forth the exclusive remedy for all disputes, claims or controversies arising out of, or in any manner related to, this Warranty or any alleged issues in your home or property. All disputes, claims or controversies which cannot be resolved between TM [the Builder] and you shall be submitted by you, not later than ninety (90) days after the expiration of the applicable warranty period, to the American Arbitration Association ("Arbitrator") for resolution in accordance with the rules and regulations of the Arbitrator. The final decision of the ...

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