By Carolina Bolado- Law360 Newswire
Florida appeals court sent a cigar retailer and a tobacco importer to arbitration
Wednesday after ruling that an arbitrator, not the court, should determine
whether the retailer waived its right to arbitrate by withholding payments
under a licensing agreement.
Florida’s Third District Court of Appeal said whether the failure of Yam Export & Import LLC to make payments to Nicaragua Tobacco Imports Inc. waived the arbitration clause in their contract is itself an arbitrable issue.
“The ‘condition precedent’ raised by Nicaragua Tobacco in the proceedings below is the allegation that the otherwise-applicable right to arbitration as the exclusive forum was waived because Yam committed a financial default under the agreement,” the Third District said. “Our precedent recognizes, however, that the statute applies, and that the arbitrator or panel is the ‘gatekeeper’ for issues of this kind.”
Under state law, the trial court’s role is to determine whether an agreement to arbitrate exists, according to the opinion. The appeals court said that in this case, it does.
Nicaragua Tobacco, which imports and sells cigars under the brand name “Cuban Crafters,” signed an agreement in January 2016 to lease commercial space to Yam and give Yam a license to produce and sell Nicaragua Tobacco’s branded products for five years. Under the terms of the agreement, Yam had to pay monthly rent and license royalties to Nicaragua Tobacco, according to the opinion.
The agreement included a waiver of a right to a jury trial in any proceeding stemming from the agreement. It also included a detailed arbitration procedure requiring the parties to resolve disputes through final and binding arbitration in Miami-Dade County, Florida, under the Commercial Arbitration Rules of the American Arbitration Association, according to the opinion.
The contract also included two provisions that waive all rights to arbitrate or sue in the event of a financial default by Yam, the opinion noted.
Relations between the parties broke down in early 2019, and in February of that year, Yam filed a claim against Nicaragua Tobacco with the AAA office in Miami, according to the opinion. On the same day that claim was filed, Nicaragua Tobacco filed a complaint in circuit court asking for an emergency temporary injunction regarding products that had been delivered to Yam under the agreement.
The trial court denied Yam’s motion to dismiss Nicaragua Tobacco’s suit and compel arbitration, the opinion said.
Robert Becerra, who represents Yam, said the Third District’s decision “reaffirms Florida law’s strong preference for arbitration for dispute resolution when parties have entered into contracts with arbitration clauses.”
An attorney for Nicaragua Tobacco could not be reached for comment Thursday.
Judges Vance E. Salter, Edwin A. Scales III and Fleur J. Lobree sat for the Third District.
Yam Export is represented by Robert J. Becerra of Becerra Law PA.
Nicaragua Tobacco is represented by Luis Diz of Pena Garcia & Diz PLLC.
The case is Yam Export & Import LLC v. Nicaragua Tobacco Imports Inc. et al., case number 3D19-1083, in the Third District Court of Appeal of Florida.