The Florida Supreme Court today issued a potential game-changing opinion for subsequent purchasers of homes today in the case of Mendez v. Hampton Court Nursing Center, LLC, 41 Fla. L. Weekly S394a (September 22, 2016). Until now, the law has largely been believed to be that those who are not original homeowners are still bound by arbitration clauses in the original contracts because a “benefit” was bestowed upon them in the form of a limited warranty. While many attorneys argued against this inequity in construction defect cases, most courts have compelled subsequent purchasers to arbitration, holding that subsequent purchasers were effectively bound by the original contracting parties because of the warranty “benefits” they received.
In Mendez, the Court emphatically struck down such a notion. While Mendez was a nursing home case, its impact should have far-reaching implications, including construction defect cases. The language in Mendez is unequivocal that a non-contracting party (i.e., a subsequent purchaser) is the party who gets to enforce a benefit, not the other way around.
“Critically, the third party beneficiary doctrine enables a non-contracting party to enforce a contract against a contracting party — not the other way around. See, e.g., Espinosa v. Sparber, Shevin, Shapo, Rosen & Heilbronner, 612 So. 2d 1378, 1380 (Fla. 1993); Shingleton v. Bussey, 223 So. 2d 713, 715 (Fla. 1969). The third-party beneficiary doctrine does not permit two parties to bind a third — without the third party’s agreement — merely by conferring a benefit on the third party.”
Undoubtedly, there will be arguments raised that Mendez does not apply to construction defect cases, but such an argument does not appear to have much support based on the plain language of the Court’s opinion. In sum, it seems that subsequent purchasers are no longer bound to the original contract unless they want to be and they can proceed to litigate their cases in front of a jury if they so desire.
A full copy of the opinion can be found on the Florida Supreme Court website.