Securities Law News Update, From the Securities Law Home Page

   

]]> Home | Message Board Home Search Arbitration Investors Brokers Finance Law Compliance Archives Arbitration Agreement Does Not Cover All Future Dealings
Court applies standard analysis to determine coverage of agreement

Raspet v. Buck, 2001 N.C. App. LEXIS 1055 (N.C. App., 11/6/01): Pre-existing agreement to arbitrate does not convert disputes over all future dealings between the parties into arbitrable controversies.

Operating individually as investment representatives, plaintiff and defendant created Plan First, LLC, in order to cover their planned joint handling of certain customer accounts. In connection with Plan First, they signed an Operating Agreement, containing an arbitration clause. Later, both became registered with Select Capital, where plaintiff acted as defendant’s supervisor. They handled some accounts jointly for a time, but when defendant was dismissed by Select, the joint accounts “were changed to reflect that plaintiff had become the sole representative for those accounts.”

Defendant filed an arbitration, in reliance on the Plan First Operating Agreement, alleging an oral buy-out agreement relating to the accounts the parties had managed jointly. Plaintiff turned to state court, where she opposed arbitration and filed her own claims against Mr. Buck.

In this Opinion, the Court applies a two-pronged test for arbitrability, in affirming the stay of arbitration below: (1) that the parties have a valid arbitration agreement; and, (2) that the dispute is within the scope of the agreement to arbitrate.

Defendant failed to satisfy the second prong. He failed to show that the dispute concerned the “affairs, conduct, operation or management” of the LLC, as provided in the arbitration clause. Moreover, the LLC had never commenced operations, had never become licensed to sell securities, had no customers, revenues or income.(SLC Ref. No. 2001-49-03)


Copyright 2000-2002 Securities Arbitration Commentator, Inc. P.O. Box 112, Maplewood, NJ 07040; t: 973-761-5880 f: 973-761-1504. Materials denoted with a SAC Reference No. (e.g. SAC Ref. No. 99-01-001) are on hand at SAC and may be obtained by calling the Securities Arbitration Commentator, or by email to help@sacarbitration.com. The Securities Arbitration Commentator is the leading publication for securities arbitration news and information, and maintains the most complete database of arbitration awards availalble anywhere. For more information regarding their services, visit their website at www.sacarbitration.com

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article. 


Return to The Securities Law Home Page 

Visit Beam & Astarita, LLC, securities arbitration, regulation and litigation attorneys

]]> ]]>