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Memorandum to Clients
May 2005
Vol. XV No. 5
ARBITRATION: UNSTATED
FILING FEES CHILL RIGHT TO ENFORCE
IMPORTANT CONTRACT RIGHTS
What happens when your community gets into a dispute with a
landscaper, security firm or other vendor? If your contract contains
an arbitration provision, you may be forced to arbitrate your dispute.
You may find out that the costs to arbitrate are so high, that valid
claims are not worth pursuing.
In a recent case involving Florida’s Deceptive and Unfair Trade
Practices Act, a Florida appellate court ordered arbitration where the
arbitration clause in a contract provided that arbitration be
conducted according to the "Commercial Arbitration Rules of the
American Arbitration Association." In Chapman v. King Motor
Company of South Florida, 30 Fla. L. Weekly D672 (Fla. 4th
DCA, March 9, 2005), an appellate Judge pointed out the pitfall of the
fees charged by the American Arbitration Association
("AAA"), depending on whether the arbitration is bound by
the "commercial" or "consumer" rules.
The Judge explained that under the consumer rules, the business
must pay the filing fee. The amount of the arbitrator’s actual fee
and the consumer’s portion of the fee is limited. The consumer’s
expense for claims under $10,000 is limited to $125 and the consumer’s
expense for claims up to $75,000 is limited to $375. The commercial
rules apply to claims over $75,000.
In Chapman, the court determined that the commercial rules
applied; thus, the consumer had to pay a filing fee of $3,250, a case
service fee of $1,250, arbitrators’ fees and hearing room rental.
The court noted arbitrator fees range from $500 to $4,000 per day. A
$10,000 claim may face arbitration fees in excess of the claim, not
even counting attorney’s fees.
In his concurring opinion, Judge Gross pointed out the problem with
AAA filing fees. "When cases involve consumer statutes such as
the Florida’s Deceptive and Unfair Trade Practices Act, the
application of the Association’s commercial rules may have a
chilling effect by drastically limiting access to a dispute resolution
forum," Judge Gross wrote.
Many contracts provide for arbitration. Arbitration provisions
often require compliance with the AAA rules. Because arbitration fees
can be extremely high, meritorious claims are discouraged. The bottom
line is, read and understand your contracts before you
sign.
TORTS: FAILURE TO WARN OF RIP CURRENTS MAY LEAD TO
LIABILITY FOR DROWNING
Is your community located on the ocean or on the
intracoastal waterway? Are there lakes in your community? If so, and
if your community has done anything to lead people to think that they
can swim in the water, then your community may have a duty to warn
people of any potential dangers.
Recently, the Florida Supreme Court ruled in Breaux
v. City of Miami Beach, 30 Fla. L. Weekly S176 (Fla., March 24,
2005), that the City of Miami Beach owed a duty to warn swimmers who
used a beach area that did not contain a lifeguard station of the
danger of rip currents. In 1997, while staying at the Saxony Hotel in
Miami Beach, Eugenie Poleyeff and her husband walked three blocks to
the beach area behind another hotel and rented a beach chair and
umbrella from a concessionaire. Ms. Poleyeff was caught in a rip
current while swimming in the Atlantic Ocean. Zachary Breaux attempted
to save her. Both Ms. Poleyeff and Mr. Breaux drowned.
The City knew the public was using the beach area
for swimming. The City provided public restrooms with showers, water
fountains, telephones and picnic tables at the beach area.
Additionally, the City allowed a concessionaire to operate on the
beach area. Nonetheless, the City did not have a lifeguard station at
the beach area. On the day of the accident, the lifeguard station
located eight blocks from the beach area posted a rip current warning;
thus, the City knew of the danger.
The estates of Ms. Poleyeff and Mr. Breaux sued the
City of Miami Beach alleging the City was negligent in failing to warn
swimmers of the danger of rip currents. The City argued it could not
be sued because it was entitled to sovereign immunity. The trial court
found the City immune from the lawsuit and granted summary judgment to
the City.
On appeal, after concluding that the City did control the beach
area, the Supreme Court of Florida addressed whether the City was
operating a public swimming area when the accident occurred. If the
City held the beach area out to the public as a swimming area
or led the
public to believe the beach area was a designated swimming area,
then the City owed a duty of care to those people who used the beach
area for swimming.
Looking at the totality of circumstances, the Supreme Court
concluded that the City was operating a public swimming area. The
Court held when a Florida city operates a public beach as a swimming
area by having public restrooms, showers, water fountains, parking,
and a beach concessionaire, the city has a duty to exercise reasonable
care to those foreseeable users of that swimming area. The Court
specifically did not rule on the question as to whether the City of
Miami Beach was negligent, leaving it up to the jury to decide whether
the City knew or should have known of the dangerous rip currents at
the beach area on the day of the accident.
Communities which are located next to a body of water should be
aware that they too may have a responsibility to protect people who
swim in the water. If the Association undertakes any action to lead
others to believe that the water is a swimming area, then the
Association may have a duty to warn swimmers of any dangers. Remember,
we live in an area with sharks and alligators, as well as rip
currents!
FIRM NEWS
The firm’s offices will be closed Monday, May 30,
2005 in honor of Memorial Day.
This information is provided for general
information purposes only, may no be relied upon and is provided
without obligation or fee. It is distributed to the firm's association
clients to provide a general comment of recent legal changes. This
information is not legal advice, representation counsel or opinion.
The changes in the law may not have been reviewed by Florida courts
and may be subject to further challenge. Before taking any action you
are urged to consult with counsel to ensure that your legal rights are
protected.
8 2005
by Gelfand & Arpe, P.A..
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