Legal Updates for Construction Litigation
2020 Vision: A New Look at Arbitration and Home Warranties in Florida
In a recent case out of the 1st District Court of Appeal of Florida, the court took a deeper look at the interplay between structural warranties and arbitration, ruling the plain language of the warranty determines which issues are arbitrable.
In Wiener v. Taylor Morrison Services, Inc., et al., 2019 Fla. App. LEXIS 18805 (December 19, 2019), the homeowners filed a complaint against the builder/seller of their home, Taylor Morrison. The homeowners alleged damages to their home due to violations of the Florida Building Code related to the stucco installation. Although Taylor Morrison had provided a 10-year structural warranty on the home, the homeowners did not allege a claim under the structural warranty. Taylor Morrison moved to stay the proceedings and compel arbitration pursuant to the structural warranty, and the trial court granted Taylor Morrison’s motion.
The homeowners then appealed the trial court’s ruling, arguing the structural warranty specifically laid out items that were excluded and were, therefore, not subject to arbitration pursuant to the arbitration provision:
6. This warranty does not apply to non-load-bearing elements which are deemed NOT to have the potential for a Major Structural Defect:
. . .
e) brick, stucco, stone or veneer
Further, the homeowners noted the structural warranty provided a definition of “major structural defect”:
A Major Structural Defect is defined as a defect which causes actual physical damage to the load-bearing elements of your home (described below), which damage is caused by the failure of such load-bearing elements and is sufficiently severe such that your home becomes unsafe or inhabitable.
. . . This warranty covers the catastrophic failure of load-bearing elements home. All parts of the definition of a Major Structural Defect must be present in order for coverage to arise. The ONLY covered load-bearing elements are:
- foundation systems and footings;
- walls and partitions;
- floor systems; and
- roof framing systems.
In response, Taylor Morrison argued the claims fell under the structural warranty and were subject to arbitration, but they failed to provide any support for that claim.
The Appellate Court noted that arbitration provisions are contractual in nature. Therefore, “’The intent of the parties to a contract, as manifested in the plain language of the arbitration provision and contract itself, determines whether a dispute is subject to arbitration. Jackson v. Shakespear Found., Inc., 108 So.3d 587,593 (Fla. 2013) (citing Seifert, 750 So.2d at 636)’.”
The Appellate Court further noted that as the homeowners had not alleged physical damage caused by “load-bearing elements” making the home unsafe or inhabitable, the claims are not arbitrable when the structural warranty is evaluated using the plain meaning of the terms.
In light of this recent case, builders and sellers may be subject to litigation versus arbitration when the plain meaning of their warranties are compared to the claims alleged by homeowners.
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