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Beres v. Wilbanks Securities, Inc.

United States District Court, D. Colorado

September 19, 2018

HARRY BERES, Petitioner,



         This matter is before the Court on Petitioner's Petition to Confirm Arbitration Award [#1][1] (the “Petition”) and Respondent's Opposition to Confirm Arbitration Award and Cross-Motion to Vacate Arbitration Award [#12-1] (the “Cross-Motion”).[2] Petitioner filed a combined Response [#15] in opposition to the Cross-Motion [#12-1] and Reply [#15] in support of his Petition [#1]. Respondent also filed a Reply [#13] in support of its Cross-Motion [#12-1]. The Court has carefully considered these briefs, the entire case file, and the applicable case law. For the following reasons, the Petition [#1] is GRANTED in part and DENIED in part, and the Cross-Motion [#12-1] is DENIED.[3]

         I. Background

         On September 22, 2008, Petitioner signed a New Account Form with Respondent's then-registered representative, John Stevens (“Stevens”). See Petition, Ex. 1 [#1-1]. The New Account Form signed by Petitioner and Mr. Stevens (on behalf of Respondent) contained an arbitration provision pursuant to which “[a]ll parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.” Id. The arbitration provision contained a number of agreed guidelines for the arbitration, including that “the arbitrators do not have to explain the reason(s) for their award.” Id.

         In addition to the arbitration provision, the New Account Form also included a separate provision titled “Governing Law.” Id. This section of the agreement stated that the “agreement shall be governed by the laws of the State of Oklahoma, exclusive of that state's choice-of-law provisions.” Id. The Governing Law section also included a sentence stating:

[t]he provisions of this Agreement shall be continuous and cover individually and collectively all accounts which the undersigned may open or reopen with you and shall inure to the benefit of yourselves, your successors and assigns and shall be binding upon the undersigned and/or the estate, executors, administrators and assigns of the undersigned.


         Based on the record, at some point in 2012, Petitioner received an overall return on investment of almost 4.9%, which was short of the 7% promised by Mr. Stevens. Pre- Hearing Brief [#7-10] at 4. On February 2, 2016, Petitioner initiated arbitration against Respondent by filing a Statement of Claim (the “Claim”). Cross-Motion [#12-1] at 3. The arbitration was conducted before a Financial Industry Regulation Authority (“FINRA”) panel of three arbitrators (the “Panel”). Id. Respondent denied the allegations in its Response [#7-2] to the Claim on April 5, 2016, later amended on April 28, 2016.

         During the arbitration, Respondent filed a Motion to Dismiss [#7-3] arguing that Petitioner's claims were barred by FINRA's six-year statute of limitations. Although Respondent here represents that the Motion to Dismiss [#7-3] “laid the groundwork for [the statute of limitations] arguments, ” the Motion to Dismiss did not reference state statutes of limitations, but instead relied exclusively on FINRA Rule 12206. Cross-Motion [#12-1] at 11.

         On December 3, 2016, Respondent's counsel, John Gibson (“Gibson”), stated via affidavit that he experienced a condition known as spinal stenosis and that he had been scheduled for emergency surgery on December 6, 2016. Aff. of Gibson [#7-4] at 1. Mr. Gibson's affidavit stated that, in the best case scenario, he could “return to light work as early as January and may be able to travel towards the end of February or March.” Id. at 2-3. Mr. Gibson underwent heart surgery on December 19, 2016, and underwent spinal surgery on December 26, 2016. Cross-Motion [#12-1] at 4.

         On December 7, 2016, the Panel held a telephonic hearing to rule on Respondent's request for a continuance of the hearing on the Motion to Dismiss [#7-3]. Id. at 5. The Panel continued the evidentiary hearing and rescheduled it for January 24, 2017. Id. On January 17, 2017, one week before the evidentiary hearing, Respondent filed a motion pro se to adjourn both the January 24, 2017 evidentiary and Motion to Dismiss [#7-3] hearings. See [#7-6]. On January 18, 2017, the Panel granted Respondent's request to postpone the hearings. Order [#10-2].

         On January 24, 2017, the Panel held a conference call to discuss Mr. Gibson's health and to reschedule the evidentiary and Motion to Dismiss [#7-3] hearings. Order [#10-3]. Mr. Gibson participated in the conference call, and the evidentiary hearing was rescheduled for April 10, 2017. Id. The Motion to Dismiss [#7-3] hearing was held on February 7, 2017, with Mr. Gibson again participating. Order [#10-4]. The Panel denied Respondent's Motion to Dismiss [#7-3]. Id. On March 8, 2017, Mr. Gibson withdrew from representing Respondent. Award [#7-11] at 3.

         Prior to the final evidentiary hearing, Respondent raised “Standing Objections” in its Pre-Hearing Brief. See Pre-Hearing Brief [#7-10] at 9. Specifically, the objections are:

Respondent is without its attorney who cannot physically conduct his duties and objects to these proceedings on the grounds that it violates the National Arbitration Act and is a deprivation of the right to be represented by counsel. Respondent incorporates all previous filings in this case from December 1st, 2016 forward as if included herein to document this objection.
Claimant is time barred under FINA Rule 12206 from bringing her [sic] claims and as a result FINA Arbitration has no ...

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