E. Mabry Rogers, J. David Pugh and Amandeep S. Kahlon | Buildsmart
On June 24, 2020, in Sayers Constr., LLC v. Timberline Constr., Inc., et al., a Florida District Court of Appeal affirmed a trial court’s denial of a contractor’s motion to dismiss. The contractor moved to dismiss for lack of personal jurisdiction in a dispute with a subcontractor over confirmation of an arbitration award. The appellate court found the subcontractor sufficiently pled personal jurisdiction in accordance with Florida’s long-arm statute and that the contractor’s consent to arbitrate in Florida subjected it to personal jurisdiction in a lawsuit to enforce the award in Florida.
The contractor, Sayers Construction, a Texas corporation, entered into multiple contracts with Florida Power & Light to provide construction services in South Florida. Sayers subcontracted with Timberline, a South Dakota corporation, under a master agreement to perform much of this work. When Sayers defaulted on its payment obligations, Timberline initiated arbitration under the American Arbitration Association (AAA) Construction Rules pursuant to the parties’ agreement. The agreement did not specify a locale for the arbitration, so the locale was governed by the AAA Rules. Under such circumstances, the AAA Rules provided for arbitration in a locale agreed to by the parties or in the city nearest to the site of the project. The parties agreed to arbitrate in Coral Gables, which is located in Miami-Dade County, Florida.
The arbitrator entered an award in favor of Timberline, and Timberline filed a complaint to enforce the award in the circuit court of Miami-Dade County. Timberline’s complaint made a number of factual allegations to support personal jurisdiction over Sayers in Florida, including that Sayers was registered as a contractor in Florida, maintained an office in the state, entered into and breached a contract for services in the state, and consented to arbitration in the state. Sayers moved to dismiss for lack of personal jurisdiction. The trial court denied the motion “finding that personal jurisdiction was sufficiently factually alleged” and “that by consenting to arbitrate in Florida, Sayers agreed to jurisdiction in Florida for confirming an award.” Sayers appealed, and the District Court of Appeal affirmed the trial court’s ruling.
The appellate court used a two-part analysis to determine whether personal jurisdiction over Sayers was appropriate: (1) Did the complaint allege sufficient jurisdictional facts to bring the action within Florida’s long-arm statute, and (2) did Timberline demonstrate sufficient minimum contacts between Sayers and Florida to satisfy due process requirements? With respect to the first prong of this analysis, the appellate court determined that Timberline pled sufficient jurisdictional facts and that Sayers’ affidavit supporting its motion to dismiss “failed to specifically refute the allegations made by Timberline…or contest the trial court’s jurisdiction.”
Next, the appellate court concluded that the trial court’s findings that Sayers carried out business in the state, held a Florida contractor’s license, maintained an office in the state, employed personnel in the state, breached a Florida contract, and arbitrated the dispute in Florida created sufficient minimum contacts to satisfy due process. The appellate court also agreed with the trial court that, regardless of whether Timberline satisfied Florida’s two-prong inquiry for personal jurisdiction over Sayers, Sayers’ consent to arbitrate the dispute in Florida made Florida an appropriate jurisdiction to confirm the award.
Lessons from Sayers
Where arbitration is the dispute resolution mechanism in a contract, parties can specify the court (federal, state, or local) that has jurisdiction over actions to enforce any arbitration award. There are advantages and disadvantages to this approach. For Timberline, a contractual provision agreeing to jurisdiction in Florida — thereby eliminating the need to satisfy the long-arm statute requirements — may have helped it avoid the expense and time to litigate Sayers’ motion to dismiss.
Although not discussed in the present case, a prevailing party attorneys’ fees provision in the master agreement may also have helped Timberline avoid, or at least reduce the expense of, this personal jurisdiction dispute. The risk of an additional fee award on top of an already unfavorable arbitration award may have deterred Sayers’ determined pursuit of its motion to dismiss and subsequent appeal.