United States District Court, E.D. New York
DR. VICTOR CHEHEBAR and DONNA CHEHEBAR, Plaintiffs,
OAK FINANCIAL GROUP, INC. and NEIL D. HACKMAN, Defendants.
HOCK & HAMROFF LLP BY: David A. Schrader, Esq. Attorney
GIBBONS P.C. BY: William M. Moran Esq. Attorneys for
MEMORANDUM & ORDER
LEONARD D. WEXLER UNITED STATES DISTRICT JUDGE
before the Court is Plaintiffs' motion to compel
arbitration pursuant to the Federal Arbitration Act
("FAA"), 9 U.S.C. § 1 et seq., and an
agreement between the parties. See Motion, Docket
Entry ("DE") . Plaintiffs further seek a stay
of this matter pending the completion of arbitration.
Defendants have opposed the motion. For the reasons set forth
herein, the motion to compel arbitration is granted, and the
case is stayed.
following facts, taken from the complaint, are considered
true for purposes of this motion. Additional facts are drawn
from the agreement that governed the relationship between the
Oak Financial is an investment advisory firm, and defendant
Hackman is an investment advisor at Oak Financial as well as
an owner and principal of the firm. Complaint
("Compl.") ¶4, DE [1-2]. Plaintiffs Victor and
Donna Chehebar are married to one another and are the owners
of several investment accounts that were handled by
defendants. Id. ¶2. In brief, plaintiffs allege
that defendants were tasked, via specific instructions, with
implementing an aggressive trading strategy, that defendants
ignored those instructions, and that as a result, plaintiffs
lost profits of no less than $981,268.66 over the nine month
period from February to November 2009.
parties executed a written agreement in February and March
2009 that governed their relationship. See Oak
Financial Group, Inc. Advisory Agreement (the
"Agreement"), Declaration of David A. Schrader, Ex.
B, DE [24-2]. The Agreement contains an Arbitration clause
that provides in its entirety as follows:
Any controversy or claim, including but not limited to,
errors and omissions arising out of, or relating to, this
Agreement or the breach thereof, shall be settled by
arbitration in Connecticut in accordance with the securities
arbitration rules then in effect with the National
Association of Securities Dealers, and judgment upon the
award rendered by the arbitrators) may be entered in any
court having jurisdiction thereof. Client understands that
this agreement to arbitrate does not constitute a waiver of
the right to seek a judicial forum where such waiver would be
void under the federal securities laws. Arbitration is final
and binding on the parties.
claim in their motion papers that they filed an arbitration
with the Financial Industry Regulatory Authority
("FINRA") on March 13, 2013. Plaintiffs
further assert that FINRA allegedly rejected the claim
because defendants are not broker-dealers, but would have
accepted the claim if defendants had consented to FINRA's
jurisdiction. Plaintiffs contend that they asked defendants
to consent, but that defendants refused to sign the form.
Defendants vigorously dispute this contention, claiming that
prior to the filing of the complaint in April 2014, they were
unaware of any attempt by plaintiffs to commence an
arbitration proceeding with FINRA. Moreover, defendants claim
that they were never approached with a request to consent to
a proceeding before FINRA.
April 1, 2014, Plaintiffs filed a complaint in New York State
Supreme Court, Nassau County, containing causes of action for
breach of contract, breach of fiduciary duty, and negligence.
Defendants filed their answer on May 5, 2014, and
subsequently removed the case to this Court by Notice dated
May 12, 2014.
removal, the first action taken by either party was the
plaintiffs' filing of a letter on June 18, 2014. In that
letter, plaintiffs requested a pre-motion conference for
leave to file a motion to stay this action and to compel
arbitration. On June 25, 2014, Defendants sought leave to
file a motion for judgment on the pleadings pursuant to Rule
12(c) of the Federal Rules of Civil Procedure. Ultimately,
defendants were given ...