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KYUNG IN LEE v. PACIFIC BULLION

April 13, 1992

KYUNG IN LEE, Plaintiff, -aginst- PACIFIC BULLION (NEW YORK) INC., Defendant.


The opinion of the court was delivered by: I. LEO GLASSER

MEMORANDUM AND ORDER

 GLASSER, United States District Judge:

 Plaintiff Kyung In Lee filed this diversity action in the aftermath of a series of financial transactions with defendant Pacific Bullion ("Pacific"). Lee alleges that defendant, a commodity brokerage specializing in precious metals and foreign currency, fraudulently induced her to invest money and caused her to sustain losses as a result. Lee also asserts that defendant fraudulently caused her to execute a written agreement governing their relationship.

 Specifically, plaintiff alleges that on May 28, 1991, she went to Pacific's offices in response to an advertisement in a Korean-language newspaper. Lee Aff. Exh. B. Lee states that an account executive advised her that if she invested with Pacific, her money would be guaranteed and she would be assured a profit of 1O-2O% per month. These discussions took place entirely in Korean, as Lee allegedly neither reads nor speaks more than a bare minimum of English.

 Plaintiff also claims that on May 28 she was asked in Korean to sign documents which Pacific's representative allegedly stated were "simply documents necessary for defendant to deposit my monies and open an account." Lee Aff. P6. Despite the fact that the documents were in English and plaintiff speaks only Korean, plaintiff signed the documents without having them translated. The "documents" in question are Pacific's standard "Customer's Agreement & Rules For Trading" form ("the Agreement"). In addition to a prominent risk disclosure statement, the Agreement includes the following provision:

 In the period after May 28, plaintiff suffered losses to her account as a result of trades executed by Pacific. Plaintiff opted to change her account executive thereafter, apparently as a result of those losses, and executed new copies of the Agreement on June 17 and July 12. During the period from May through July 1991, plaintiff invested approximately $ 270,000 with Pacific, and incurred losses in excess of $ 85,000.

 Pacific now seeks to exercise its prerogative under the Agreement to arbitrate this dispute, and moves for an order dismissing the action and compelling arbitration.

 DISCUSSION

 Title 9, section 2 of the United States Code reads in pertinent part:

 A written provision in any . . . contract evidencing a transaction in commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

 Section 3 of Title 9 provides that

 If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court . shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement. . . .

 In this case, there is a written provision within the meaning of section 2. Moreover, defendant Pacific has made a proper application as required by section 3. Accordingly, the resolution of this motion must turn on the validity of the ...


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