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BISNOFF v. KING

July 5, 2001

IN THE MATTER OF THE ARBITRATION BETWEEN GEORGE BISNOFF, PETITIONER,
v.
TAYLOR KING, RESPONDENT,



The opinion of the court was delivered by: Batts, District Judge.

  MEMORANDUM & ORDER

Petitioner brought this action to vacate an arbitration award granted by the National Association of Securities Dealers, Inc. ("NASD"). Petitioner asserts that pursuant to N.Y. CPLR § 7511(b)(1) the award should be vacated. Petitioner argues the Panel engaged in misconduct by failing to grant his request for postponement of the arbitration hearing, thereby substantially and irreparably prejudicing him by foreclosing him from presenting material and pertinent evidence at the hearing. (Pet. to Vacate ¶ 28.) In addition, Petitioner also alleges that the award should be vacated in accordance with Section 10(a)(3) of the Federal Arbitration Act, 9 U.S.C. § 10 ("the Act"). Respondent opposes Petitioner's application for vacatur and seeks "such additional and other relief as the Court may deem just, proper and equitable." Resp. Mem. Law at 13.

For the reasons set forth below, the Court DENIES Petitioner's Application for Vacatur and CONFIRMS the award in its entirety.

I. BACKGROUND

Petitioner, George O. Bisnoff is a resident of Nassau County, New York. (Pet. to Vacate ¶ 1.) During the time period relevant to this proceeding, he was employed by Whale Securities Co., L.P. ("Whale") as a registered representative for the transaction of business in Whale's New York County Office. (Pet. to Vacate ¶ 1.) Respondent, Taylor King, is the widower of Mary Lou King and the Executor of the decedent's estate. (Pet. to Vacate ¶¶ 2-6.)

During September 1995, Mary Lou King opened a brokerage account at Whale ("the Account"). The account was located in New York County. (Pet. to Vacate ¶ 5.) Petitioner was the registered representative at Whale for the account.

At all times relevant to the issues before this Court, Mary Lou King resided in North Carolina. (Resp. Opp. to Pet. at 2.) According to Petitioner, Mary Lou King signed a customer agreement with Whale providing that disputes between her and Whale would be submitted to arbitration and that New York law would govern the substantive aspects of such disputes. (Pet. to Vacate ¶ 2.)

During May 1999, Taylor King commenced an arbitration proceeding before a NASD Arbitration Panel ("the Panel") against Bisnoff, Whale, and its officers. Taylor King alleged that Bisnoff and Whale had wrongfully engaged in the securities business in North Carolina without having been licensed there and effectuated improper, unsuitable, and excessive transactions in the account of the decedent resulting in losses. Specifically, Bisnoff was personally alleged to have effectuated approximately 321 improper, unsuitable and excessive transactions in the account of the decedent, resulting in losses of approximately $385,000. King also alleged that Bisnoff made material misrepresentations of fact to the decedent upon which she reasonably relied. In addition, King alleged that Bisnoff improperly received, directly from the decedent, approximately $95,000 in cash and wrongfully named himself as the sole beneficiary of the decedent's SEP-IRA account ("IRA account") transferring approximately $137,000 of Mary Lou King's assets out of the IRA account into his own name. (Resp. Opp. to Pet. at 2.) This allegedly led to estate tax liabilities in the approximate amount of $14,555. (Award at 2.) Petitioner denies each allegation. (Pet. to Vacate ¶ 9.) Claimant requested an award of $631,555 for compensatory damages and $1,700 punitive and other damages. (Award at 2.)

On October 18, all parties participated in a pre-hearing telephone conference in which the Panel scheduled the arbitration hearings for February 13-18, 2000 in Raleigh, North Carolina.*fn1 (Pet. to Vacate ¶ 10.) During the conference, Petitioner did not mention any physical ailments that might conflict with his ability to testify. (Pet. to Vacate ¶ 15.)

However, in late January 2000, Petitioner alleged he began to experience symptoms stemming from a heart attack he had suffered in September 1999. On January 27, 2000, two and one-half weeks before the scheduled hearing, Petitioner submitted a request to the Panel for "a postponement of the hearing because his cardiologist had advised him not to travel and to avoid physical and emotional stress." (Pet. to Vacate ¶ 11.) Bisnoff then informed the Panel that he had suffered a heart attack in September 1999, undergone two angioplasties, and recently suffered recurring symptoms. He explained that his cardiologist had advised him that his medical condition made him physically unfit to travel to or testify at the hearing or participate in any questioning that would cause him stress. (Id.) He submitted letters from his cardiologist documenting his claims, although these letters were not accompanied by any medical records explaining Bisnoff's condition or supporting the doctor's contentions. (Resp. Opp. to Pet., Ex 5 at 2).

Respondent King notified the Panel that he opposed Bisnoff's request for a postponement. (Pet. to Vacate ¶ 5.) In particular, Respondent opposed the postponement because Petitioner did not properly request it according to NASD Arbitration Rule 10319(b), which requires a deposit of a fee equal to the initial deposit of the hearing to be submitted along with the request for adjournment. (Id.) In addition, Respondent opposed the award because he anticipated that Petitioner would seek to postpone the hearing in a "last minute tactic of delay." (Id.).

On February 4, 2000, the Panel denied Petitioner's first request for a postponement, but allowed him to schedule and appear for a videotaped deposition, which the Panel would use as Petitioner's testimony. One week prior to the hearing, the Panel also ordered Petitioner to be available via telephone during the week of February 14-18 to answer any questions the Panel might have. (Pet. to Vacate ¶ 18.)

On February 7, one week before the scheduled hearing, Bisnoff requested in writing that the Panel reconsider its decision to deny postponement. On February 10, the Panel invited Petitioner to respond to certain questions in connection with his motion for reconsideration.*fn2

On February 11, after receiving and reviewing Petitioner's responses, the Panel again denied Petitioner's request. (Pet to Vacate, Ex L at 1.) The Panel stated that its decision was partially based upon learning that, despite his illness, Bisnoff had been working approximately 30 hours per week as a stockbroker — a stressful occupation — and was therefore fit to participate in, at least, a videotaped deposition or provide telephonic testimony. (Id.)

Despite the Panel's presentation of alternatives, Petitioner advised the Panel, via letter, of his intention not to testify under any circumstances. Neither, Bisnoff, nor his attorney appeared at the hearing. (Resp. Opp. to Pet. ¶ 5.) Thus, the hearing proceeded without the participation or testimony of Bisnoff, the sole living witness with any personal knowledge regarding many of the issues before the Panel. (Pet. Mem. of Law. ¶ 26-30.)

On March 30, 2000 the Panel awarded Respondent $134,180 for which Whale Securities and Bisnoff are jointly responsible and an additional $224,017 for which ...


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