United States District Court, S.D. New York
January 15, 2015
MANOR HOUSE CAPITAL, LLC, Petitioner,
ROBERT PRITSKER, Respondent
For Manor House Capital, LLC, Petitioner: Christopher Passavia, Joseph Patrick Dever, Jr, LEAD ATTORNEYS, Cozen O'Connor, New York, NY.
For AIG Capital Services, Inc., Intervenor Plaintiff: Michael Anthony Valerio, Natalie Ann Napierala, LEAD ATTORNEYS, Carlton Fields Jorden Burt, P.A., Hartford, CT.
MEMORANDUM DECISION AND ORDER
GEORGE B. DANIELS, United States District Judge.
This case arises out of a May 30, 2014 arbitration award issued by a three-member panel of the Financial Industry Regulatory Authority (" FINRA"). The panel dismissed all claims against Petitioner Manor House Capital, LLC (" Manor House") and Proposed Intervenor AIG Capital Services, Inc. (" AGESC"),  and recommended expungement of all reference of the arbitration from non-party Samuel Jacob's registration record maintained by the Central Registration Depository (" CRD"). Manor House petitions this Court to confirm the arbitration award pursuant to Section 9 of the Federal Arbitration Act (" FAA"). AGESC moves to intervene in this case as a petitioner and seeks to confirm the arbitration award pursuant to Section 9 the FAA. Respondent Robert Pritsker opposes confirmation of the arbitration award.
Manor House's Petition to Confirm Arbitration Award is GRANTED. AGESC's Motion to Intervene is GRANTED, and its Petition to Confirm Arbitration Award is GRANTED.
Manor House and AGESC are securities broker-dealer firms registered with the U.S. Securities and Exchange Commission and FINRA. Manor House's Pet. ¶ 1; AGESC's Pet. ¶ 1. In January of 2008, Respondent Pritsker retained Manor House as the servicing agent for an annuity contract he purchased from AIG Life Insurance Company. Manor House's Pet. ¶ 8. Later that year, Pritsker's annuity contract decreased in value during the 2008 financial crisis. Id. ¶ 10.
On May 10, 2012, Pritsker initiated an arbitration proceeding against Manor House and AGESC, seeking compensation for losses under the annuity contract. Id. ¶ 11. Pritsker alleged several claims against Manor House and AGESC, and requested as relief compensatory damages in the amount of $770, 000, punitive damages, attorneys' fees, costs, and interest, Id.; Ex. Award (" Award") at 2. Manor House and AGESC filed separate Answers and Affirmative Defenses against Pritsker's claims, and requested as relief reasonable attorneys' fees, and costs. Manor House's Pet. ¶ 12; AGESC's Pet. ¶ 10. Manor House also requested expungement of all reference of the arbitration from Samuel Jacobs'--the principal of Manor House--CRD record. Manor House's Pet. ¶ 13.
On April 30, 2014, after convening for fourteen sessions, the panel issued a written order dismissing all claims against Manor House and AGESC. Id. ¶ 18; Award at 3. However, the panel reserved its ruling for the expungement of Mr. Jacobs' CRD record. Award at 3.
On May 30, 2014, the arbitration panel served on all the parties a copy of its order recommending expungement of all reference of the arbitration from Mr. Jacobs' CRD record. Manor House's Pet. ¶ 22; Award at 3. The arbitration panel's Rule 2080 finding was that " [t]he claim, allegation, or information [was] false."  Award at 3. To support its Rule 2080 finding, the panel provided the following brief explanation:
The Panel decided this application based on the proofs presented by the Claimant [Pritsker] at the hearings. This evidence demonstrated that all the trades made by Samuel Jacobs for the Claimant were initiated by the Claimant. No proof was presented that Samuel Jacobs had any influence or involvement in the Claimant's decision to make these trades. To the contrary, the evidence presented by the Claimant demonstrated that the Claimant had already determined what investments to make when he contacted Samuel Jacobs merely to place the orders.
Additionally, the Claimant presented no proof to support his claims of unsuitability or that Samuel Jacobs breached any fiduciary duty or made any misrepresentations to Claimant. No evidence was presented at the hearings that Samuel Jacobs violated any FINRA regulations or any state or federal statute or law.
II. AGESC's Motion to Intervene
Before considering the merits of Manor House's petition to confirm the arbitration award, AGESC's motion to intervene in this case is granted.
Under Federal Rule of Civil Procedure 24(a), a court must permit a non-party to intervene (also known as intervention by right) if the non-party " claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest. . . "
Bridgeport Guardians, Inc. v. Delmonte. 602 F.3d 469, 473 (2d Cir. 2010) (internal quotation marks omitted). The proposed intervenor must " (1) timely file an application, (2) show an interest in the action, (3) demonstrate that the interest may be impaired by the disposition of the action, and (4) show that the interest is not protected adequately by the parties to the action." Catanzano v. Wing, 103 F.3d 223, 232 (2d Cir. 1996) (internal quotation marks omitted).
AGESC's motion to intervene satisfies all four requirements. First, the motion was timely filed. Second, AGESC has a direct interest in confirming the arbitration award because the arbitration award dismisses all claims filed against it. Third, AGESC's interest in confirming the arbitration award may be impaired by a disposition of the action. If Manor House is unable to confirm the arbitration award, this disposition would greatly prejudice AGESC's ability to confirm the arbitration award. Fourth, there is a risk that Manor House may not adequately represent AGESC's interest. Although Manor House and AGESC share a similar interest in confirming the arbitration award to dismiss Pritsker's claims, Manor House seeks additional relief involving expungement of its principal's CRD record. There is a risk, however slight, that AGESC's interests will not be adequately represented in this case. Thus, AGESC's intervention in this case is appropriate.
III. Manor House's and AGESC's Petitions to Confirm Arbitration Award
Under Section 9 of the FAA, confirmation of an arbitral award is generally " a summary proceeding that merely makes what is already a final arbitration award a judgment of the court, and the court 'must grant' the award 'unless the award is vacated, modified, or corrected." ' D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006) (citation omitted) (internal quotation marks omitted); see 9 U.S.C. § 9 (2012). Courts should confirm an arbitration award when it can be discerned that there is even a " 'barely colorable justification for the outcome reached.'" Nutrition 21, Inc. v. Wertheim, 150 F.App'x 108, 109 (2d Cir. 2005) (quoting Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255, 260 (2d Cir. 2003)). " The showing required to avoid summary confirmation of an arbitration award is high, and a party moving to vacate the award has the burden of proof." Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997) (citation omitted).
Manor House and AGESC filed timely petitions to confirm the arbitration award, and Respondent Pritsker does not move to vacate, modify or correct the award. Nevertheless, Pritsker objects to confirmation of the award, arguing that the arbitration panel failed to provide facts from the case to support its recommendation of expungement, and that the panel's findings were conclusory. Def.'s Am. Mem. Opp. to Manor House's Pet. ¶ 4-6. Pritsker also argues that the panel's finding that the claim was " false" is not demonstrated by the record. Id. ¶ 7. Rather, Pritsker urges this Court to review the " full facts" before confirming expungement. Id. ¶ 11.
Pritsker's opposition is without merit. Typically, " [a]rbitrator[s'] rationale for an award need not be explained . . . ."
D.H. Blair & Co., Inc., 462 F.3d at 110. However, the panel did in fact explain its recommendation of expungement. See Award at 3; infra p. 3. Although Pritsker may disagree with the sufficiency of these findings, the arbitrators need only make a " colorable justification for the outcome reached."
D.H. Blair & Co., Inc., 462 F.3d at 110 (internal quotation marks omitted).
Based on the findings provided, confirmation and expungement are appropriate. Any reference of this arbitration should be removed from Mr. Jacobs' CRD record. Accordingly, the Award is CONFIRMED in its entirety.
Manor House's Petition to Confirm Arbitration Award is GRANTED. AGESC's Motion to Intervene is GRANTED, and AGESC's Petition to Confirm Arbitration Award is GRANTED.
The Clerk of Court is directed to close the motion at ECF No. 10.