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January 30, 1996

W.J. Nolan & Co., Inc., William Nolan and Matthew Gershon, Petitioners,
Midway Federal Credit Union, Respondent.

The opinion of the court was delivered by: MOTLEY

 I. Introduction

 On or about July of 1991, respondent Midway Federal Credit Union ("Midway") opened an account with petitioners W.J. Nolan & Co. ("W.J. Nolan"), a small New York bond brokerage firm, William Nolan, W.J. Nolan's president, and Matthew Gershon, a registered representative employed by W.J. Nolan. W.J. Nolan was essentially enlisted as an introducing broker, to perform a series of securities transactions for respondent. Prudential Securities Incorporated ("Prudential"), which is not a party to this action, acted as the clearing firm for these transactions. All respondent's orders were handled by petitioners, and all commissions and fees were charged by petitioners. All trades were cleared through Prudential.

 In keeping with Prudential's policy, a Client Opening Account Agreement (the "Customer Agreement") was executed which provided that disputes arising between the parties would be arbitrated; however this agreement was on Prudential letterhead and signed only by respondent. A conflict then developed between respondent and petitioners regarding petitioners' purchase, on respondent's behalf, of higher yield United States Government securities that did not meet the National Credit Union Association's stress test.

 As a result of this dispute, on June 22, 1995 respondent commenced an action against petitioners in the Loudoun County Circuit Court in Virginia. Respondent charged petitioners with breaching the Virginia Securities Act, breach of fiduciary duty, and constructive fraud, alleging that petitioners had traded unsuitable securities to respondent. Petitioners requested an extension until August 31, 1995 to answer in state court, which was agreed to by respondent.

 On August 21, 1995, without filing an answer in state court or providing notice to respondent, petitioners sought an ex parte temporary restraining order in the Southern District of New York to (1) compel arbitration pursuant to The Federal Arbitration Act, 9 U.S.C. sec. 1, et seq. (the "FAA"), and (2) stay the Virginia action pursuant to 28 U.S.C. sec. 2283. Following a brief telephonic hearing with petitioners and respondent, Judge Kaplan denied this motion because petitioners had failed to demonstrate irreparable harm.

 On September 22, 1995, respondent filed its opposition to the petition and a cross motion to dismiss based upon the Colorado River doctrine and venue. *fn1" In the alternative, respondent requested a transfer of this petition to the Eastern District of Virginia.

 The state action which predates the federal action remains pending. On or about the same time that petitioners filed their petition in this court, they also moved the Virginia court to stay the Virginia action. Petitioners did not, however, move the Loudoun County Circuit Court to compel arbitration. Then on October 19, 1995, before this court had decided petitioners' motion, the Loudoun County Circuit Court granted petitioners' motion to stay the Virginia action.

 Accordingly, the Virginia action has been voluntarily stayed by the Loudoun County Circuit Court "until the issue of arbitrability has been determined by the federal court." Petitioners' motion to stay the Virginia action made in this court has thus been disposed of by the Virginia court's decision, and will not be addressed here. Petitioners' motion to compel arbitration and respondent's motion to dismiss or transfer this action, on the other hand, remain before this court for determination.

 For the reasons set forth below, this court concludes that no exceptional circumstances warrant the surrender of this court's proper jurisdiction over this action, and grants the instant petition to compel arbitration.

 II. The Colorado River Doctrine

 Respondent has moved to dismiss this action under the so-called Colorado River doctrine. In Colorado River, the Supreme Court affirmed the district court's dismissal of a case adjudicating water rights where a duplicative suit was pending in state court. Colorado River Water Conservation District v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976). The Court held that, in exceptional circumstances, a district court could dismiss an action if "considerations of wise judicial administration" warranted it. Id. at 817-818. Emphasizing the "virtually unflagging obligation" of the district courts to exercise the jurisdiction given them, the Court enumerated three factors for a federal court to consider in assessing the appropriateness of dismissal where concurrent jurisdiction exists: (1) the inconvenience of the federal forum, (2) the desirability of avoiding piecemeal litigation, and (3) the order in which jurisdiction was obtained by the concurrent forums. Id. at 818; see also Moses H. Cone Memorial Hosp. v. Mercury Construction Corp., 460 U.S. 1, 15-16, 74 L. Ed. 2d 765, 103 S. Ct. 927 (denying motion to stay petition to compel arbitration made pursuant to the Colorado River doctrine).

 a. Inconvenience of the Federal Forum

 In this case, the inconvenience of the federal forum is a relative matter. Petitioners are located in New York; respondent is not. Therefore the Southern District of New York is no more inconvenient for respondent than Loudoun County Virginia is for petitioners. Further, the documents, records and witnesses that possess information about the trade orders placed by petitioners, which are crucial to the underlying dispute, are in petitioners' possession in New York. For these reasons, this court cannot conclude that the inconvenience of the federal forum favors dismissal.

 b. Desirability of Avoiding Piecemeal Litigation

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