Stay of Non-Arbitrable Claims is Discretionary Where Arbitrable Claims Exist
Baggesen vs. American Skandia Life Assurance Corp.
Baggesen v. American Skandia Life Assurance Corp. & Securities America, Inc., 2002 U.S. Dist. LEXIS 23411 (D. Mass, 12/5/02). FAA (§ 3) * Agreement to Arbitrate * Stay of Litigation * Scope of Agreement.
Where a case involves both arbitrable and non-arbitrable claims, whether the non-arbitrable claims should be stayed pending resolution of the arbitrable claims is generally discretionary with the court.
Priscilla Baggesen (Plaintiff) filed an eight-count complaint in the United States District Court for the District of Massachusetts against Defendants American Skandia Life Assurance Corporation (American Skandia) and Securities America, Inc. (SAI), alleging, among other things, negligence, fraudulent misrepresentation, breach of fiduciary duty and respondeat superior. American Skandia asserted cross-claims against SAI for declaratory judgment and breach of contract based on indemnity language in American Skandias agreement with SAI.
Plaintiff, who opened a non-brokerage account with SAI, alleged that Todd LaScola (LaScola), a registered agent of SAI, arranged for the sale of securities and annuity contracts and converted more than $100,000 of her funds for his own use and concealed his actions by sending fraudulent income statements and monthly interest checks. The new account form signed by Plaintiff contained an arbitration clause that required all controversies and claims to be determined by arbitration. SAI filed a Motion to Compel Arbitration and for Stay of District Court Proceedings.
In granting SAIs Motion to Compel Arbitration, the Court focuses on the strong public policy in favor of compelling arbitration, where the parties have agreed to do so. In that regard, Section 3 of the Federal Arbitration Act (FAA) provides for the mandatory stay of an action brought in federal court where the action involves an issue intended by the parties to be resolved through arbitration. Plaintiffs claims against American Skandia, while not subject to an agreement to arbitrate, should be stayed pending resolution of the arbitration proceedings between Plaintiff and SAI, the Court holds. The factual and legal underpinnings of Plaintiffs claims against SAI are substantially similar to those alleged against American Skandia and the arbitrators disposition of Plaintiffs claims against SAI may affect the disposition of the claims against American Skandia. (SLC Ref. No. 2003-01-02)
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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.
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