Florida Supreme Court Rules Statute of Limitations Applies to Arbitration
By Kluger, Kaplan, Silverman, Katzen & Levine, P.L. May 20, 2013
By Alan J. Kluger
Yesterday, the Florida Supreme Court answered a question certified by the Second Circuit in the case of Raymond James Financial Services, Inc. v. Phillips: Does Florida’s Statute of Limitations apply to arbitration?
The plaintiffs in the case filed a claim for arbitration with the NASD, pursuant to the terms of the investment agreement with Raymond James. Raymond James moved to dismiss, arguing that the claims were barred by the statutes of limitations applying to securities violations and negligence actions, because the claims were filed more than six years after the first unsuitable investment was made and more than four years after all of the allegedly unsuitable purchases were made.Prior to arbitration, the plaintiffs filed an action in state court seeking a declaratory judgment that their claims were timely. The trial court agreed. On appeal, the Second District certified the question to the Florida Supreme Court.
On its face, there is little about this opinion that shocks me. Arbitration is a “proceeding,” falling under the purview of Section 95.011, Florida Statutes. Justice Pariente succinctly summed it up in her opinion: “To exclude arbitration is contrary to the very purpose of the statute of limitations to discourage stale claims. Moreover, this interpretation would mean that the statute of limitations does not apply to the exact situation where parties have contractuallyagreed to pursue arbitration in order to resolve disputes efficiently, quickly, and inexpensively. Interpreting the statute in this manner would permit parties to wait to bring an arbitration claim until documents or witnesses are difficult to locate—a situation that would significantly increase the time, effort, and expense to resolve a dispute.”
But this opinion should serve as a reminder to those of us who litigate disputes in front of administrative or regulatory bodies, such as the NASD, that the statute of limitations will apply to those proceedings. So treat those proceedings as you would any other commercial dispute and keep an eye on the clock.