“Beware of Pool Contract Arbitration”

Luxury Homes and Estates in Florida

There has been a proliferation of protective strategies employed by various industries in order to safeguard their members. One device has been to adopt an arbitration provision which requires the unwitting customer who signs a contract to participate in binding arbitration with a panel composed of other like-minded industry representatives. For example, used car salesmen, stock brokers and pool contractors have formed their own legal panels to review cases in a binding arbitration arena.

It is true that having arbitrators familiar with the industry can promote efficiencies. However, the appearance of impropriety is also presented.

I recently learned of a pool dispute concerning a local pool contractor. The arbitration clause in the contract required that a panel of three arbitrators be selected from the Florida Swimming Pool Association. The pool of potential arbitrators were composed solely of other local pool contractors.

The facts of the case were quite simple. A pool contract had been signed on November 14, 2003. It was contemplate the pool would be constructed well within a year as the homeowner would be moving into the property in November of 2004. However, a year later the pool was unfinished and the homeowner moved into the residence. In March of 2005(i.e., a full 16 months later), the pool had not been completed. The diamond brite pool surface coating, pool lights, pool filter, pool pumps, child safety fence and heater had not been installed. The owner made continuous demands of the pool contractor to finish its work. However, months went by with no work being performed and the pool contractor simply ignored all phone calls.

The owner had no choice but to hire a substitute pool contractor to finish the work at a substantially higher price.

At the arbitration, the pool contractor conceded that it never installed diamond brite coating or the pool equipment. However, the pool contractor argued that the hurricanes experienced in August and September of 2004 excused its performance.

Moreover, the pool contractor argued that the contractor did not provide for a completion date. In response, the owner argued that the contract certainly assumed a reasonable time for performance and after a year and a half the pool was not completed and the pool contractor abandoned the job.

The panel (composed of three area pool contractors) sided with the pool contractor and awarded the contractor money for work never performed and also ruled that once the contractor received full payment he had no liability for his workmanship or for warranties.

In essence the contractor never performed his contract yet received full payment. Furthermore, the pool contractor escaped any liability for faulty work.

There are two lessons to be learned from this case. First, never sign a contract for pool construction that does not have a date for completion. Second, strike any self serving arbitration provisions especially where the panel will be composed solely of other pool contractors.

As a footnote, the case is on appeal.

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Houston Short grew up in the Central Florida area, and continues to reside in Orlando with his family. He provides representation in arbitration actions for the American Arbitration Association and engages in alternative dispute resolutions including mediation both binding and non-binding arbitration, and settlement negotiations. He is an active member of the American Arbitration Association Panel Review Committee, the Orange County Bar Association, and the Florida Bar. He graduated from Florida State University in 1984 with a bachelors of science degree (cum laude) and received his juris doctor from the University of Florida in 1987 (with honors). Houston co-authored, "The Constitutionality of the Legislatures Mandate to Sever Counterclaims in Mortgage Foreclosure Action," the Real Property, Probate and Trust Law Section, The Florida Bar.