ARBITRATION PROVISIONS IN CONSTRUCTION CONTRACTS

Are Arbitration Provisions in Construction Contracts Ambiguous Where the Contract Also Contains a Waiver of Jury Trial Provision?

In Bari Builders, Inc. v. Hovstone Properties Florida, LLC, Florida’s Fourth District Court of Appeal answered “No” and ruled in favor of enforcing the arbitration provision.  In Bari Builders, a condominium association sued the developer for construction defects.  The developer brought a third-party complaint against its subcontractors – including Bari Builders.  The subcontract with Bari Builders contained two conflicting provisions:

1. The first provision stated that the parties agreed to binding Arbitration of any controversy or claim arising out of the contract;

2. The second provision stated that in all actions the parties waive the right to jury and agree to determination of all facts by the court.

Hovstone argued that the jury waiver provision rendered the arbitration provision ambiguous and unenforceable.  The Fourth District Court of Appeal disagreed and enforced the arbitration provision.  The court held that under Florida law, arbitration is a preferred method of dispute resolution and all doubt regarding scope of an arbitration clause should be resolved in favor of arbitration.  The Court held that the two provisions could be read together to give meaning to both of them.  The jury waiver provision would be applied in the event the parties chose to waive their right to arbitrate.  Therefore, the arbitration provision was not ambiguous and was enforceable.