BREA 3-2 LLC v. Hagshama Florida 8 Sarasota, LLC
The Third District reversed orders compelling arbitration in New York and dismissing usury suits brought by a developer against its funding partners. The court held that an arbitration clause covering "[a]ny dispute under this Agreement" is narrow, not broad, and that statutory usury and related declaratory/injunctive claims lack the required "direct relationship" to the agreement because the duty not to commit usury arises from Florida statute and public policy rather than from the contract. It also held that Buckeye Check Cashing, as clarified by Granite Rock, addresses only severability and does not dispense with the court's threshold duty to determine whether the dispute falls within the arbitration clause's scope.
Key facts
- Developer BREA 3-2 LLC brought usury and declaratory/injunctive claims against funding partners Hagshama Florida 8 Sarasota, LLC in Florida state court, alleging illegal usury in violation of Florida statute.
- The trial court granted the defendants' motion to compel arbitration in New York and dismissed the usury claims based on an arbitration clause stating '[a]ny dispute under this Agreement' and a forum selection clause requiring submission to New York courts.
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Why it matters
This is one of the few Florida opinions to develop the rarely-applied "direct relationship" test governing narrow arbitration clauses, and it supplies a clear roadmap for defeating a motion to compel arbitration where… — full analysis with a trial
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