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Hedden v. Z Oldco, LLC

Florida Court of Appeals, Second District

October 30, 2019

TERRY P. HEDDEN, JR., Appellant,
Z OLDCO, LLC f/k/a ZTS.COM LLC, successor by conversion to ZENO TECHNOLOGY SOLUTIONS, INC. f/k/a HEDDEN ENTERPRISES, INC., Appellee.


          Appeal from the Circuit Court for Hillsborough County; Steven Scott Stephens, Judge.

          Charles A. Samarkos, Charles A. Buford, and Rachael L. Wood of Johnson, Pope, Bokor, Ruppel, & Burns, LLP, Clearwater, for Appellant.

          Steven C. Pratico and Chance Lyman of Buchanan Ingersoll & Rooney PC, Tampa, for Appellee.

          ATKINSON, JUDGE.

         Terry P. Hedden, Jr., appeals the denial of his motion to compel arbitration of a three-count declaratory judgment action filed by Z Oldco, LLC, the successor to the entity to which Hedden sold a business. Because each of Z Oldco's claims arise under the arbitration provision contained in the Compensation Agreement, we reverse.

         In connection with the sale of his business, Hedden agreed to remain on as an employee for one year to assist with the transition and maintain goodwill with clients. On October 1, 2012, he and Z Oldco's predecessor entered into a Compensation Agreement to govern the terms of that relationship. Hedden also signed a Non-Compete Agreement, which restricted his ability to operate a similar business for two years following termination of his employment with Z Oldco's predecessor.

         The Compensation Agreement provides for the payment of a two-million-dollar bonus (the "Exit Bonus"), to be paid out in intervals based on the success of the business, with the balance paid upon termination of Hedden's employment. Payment of this bonus is conditioned upon Hedden's continued compliance with the Non-Compete Agreement.

         The Compensation Agreement contains an arbitration provision, covering "[a]ny dispute, controversy or claim arising out of or relating to this Agreement." The Non-Compete Agreement contains a provision entitled "Governing Law, Jurisdiction and Venue," which provides the following:

This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Florida and venue of any action hereunder shall lie solely with the courts in and for Hillsborough County, Florida, to which jurisdiction each of the parties hereto agrees to submit for the purposes of any litigation involving this Agreement.

         Hedden's employment terminated in October 2013. On May 24, 2018, Hedden's attorney sent Z Oldco a letter demanding payment of the Exit Bonus due under the Compensation Agreement (the Demand Letter). One month later, Z Oldco filed a declaratory judgment action, seeking a determination as to whether: (I) Hedden violated the Non-Compete Agreement; (II) the Exit Bonus is due to Hedden under the Compensation Agreement if he is in violation of the Non-Compete Agreement; and (III) whether the terms of the Compensation Agreement have been fulfilled such that payment of the Exit Bonus is due to Hedden. Hedden moved to compel arbitration pursuant to the arbitration clause of the Compensation Agreement.

         The trial court denied the motion and concluded that Count I "related more closely to the Non-[C]ompete Agreement than to the Compensation Agreement, and thus is subject to adjudication by the court." The trial court reasoned that because Counts II and III were dependent upon the resolution of Count I, it "need not decide whether those counts must be severed and stayed pending arbitration." Hedden filed the instant appeal, claiming that all three counts are arbitrable.

         Our review of this interlocutory order denying the motion to compel arbitration is de novo. See Verizon Wireless Pers. Commc'ns, LP v. Bateman, 264 So.3d 345, 348 (Fla. 2d DCA 2019); Woebse v. Health Care & Ret. Corp. of Am., 977 So.2d 630, 632 (Fla. 2d DCA 2008). "[A] party who timely objects to arbitration should not be compelled to arbitrate a specific claim unless the party demanding arbitration establishes that the scope of the relevant arbitration clause, under an analysis favoring arbitration, is sufficient to encompass such a dispute." CSE, Inc. v. Barron, 620 So.2d 808, 809 (Fla. 2d DCA 1993).

         When ruling on a motion to compel arbitration, the trial court must consider the following: "(1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived." Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla. 1999). Whether an arbitrable issue exists-the question at issue in this case-depends on whether there is a "significant relationship" or "nexus" between the dispute and the contract containing the arbitration provision. Id. at 638 ("[E]ven in contracts containing broad arbitration provisions, the determination of whether a particular claim must be ...

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