World Invest Corp. v. Breen

684 So.2d 221, 21 Fla. L. Weekly D2476

Judges and Attorneys

District Court of Appeal of Florida, Fourth District.

WORLD INVEST CORPORATION and Henry Tegler, Jr., Appellants/Cross-Appellees,
v.
Anna BREEN, individually and as Trustee, Appellee/Cross-Appellant,
and
James Edwards, Chester Kyle, and Glen Horecky, Appellees.

No. 95-2661.

Nov. 20, 1996.
Clarification Denied Jan. 7, 1997.

Investor petitioned to vacate arbitration award in favor of investment corporation on her claim alleging fraud, negligence, and other misconduct. The Seventeenth Judicial Circuit Court, Broward County, Arthur M. Birken, J., dismissed petition. Investor appealed. The District Court of Appeal, Stevenson, J., held that: (1) trial court, when requested to do so by investor, was required at least to scan transcript of arbitration hearing to determine whether any rational basis existed to support arbitrator's decision, and (2) investor failed to state facts in complaint sufficient to support finding of evident partiality on part of arbitrator.
Reversed and remanded.

West Headnotes


[1] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(H) Review, Conclusiveness, and Enforcement of Award
Key Number Symbol 25Tk360 Impeachment or Vacation
Key Number Symbol 25Tk363 Motion to Set Aside or Vacate
Key Number Symbol 25Tk363(8) k. Affidavits, Evidence, or Record. Most Cited Cases
(Formerly 33k77(6) Arbitration)

Under federal law, when petition to vacate arbitration award alleges facially sufficient grounds for relief, trial court must, at least, hold limited evidentiary hearing to allow movant to submit evidence to establish its claim.
[2] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(H) Review, Conclusiveness, and Enforcement of Award
Key Number Symbol 25Tk360 Impeachment or Vacation
Key Number Symbol 25Tk362 Grounds for Impeachment or Vacation
Key Number Symbol 25Tk362(1) k. In General. Most Cited Cases
(Formerly 33k76(1) Arbitration)

Under federal law, although arbitration awards are accorded great deference, there are several statutory and nonstatutory grounds upon which arbitration award may be vacated. 9 U.S.C.A. § 10(b).
[3] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(G) Award
Key Number Symbol 25Tk324 k. Consistency and Reasonableness; Lack of Evidence. Most Cited Cases
(Formerly 33k61 Arbitration)

Under federal law, arbitration award may be vacated on nonstatutory ground that it is arbitrary and capricious.
[4] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(H) Review, Conclusiveness, and Enforcement of Award
Key Number Symbol 25Tk360 Impeachment or Vacation
Key Number Symbol 25Tk363 Motion to Set Aside or Vacate
Key Number Symbol 25Tk363(8) k. Affidavits, Evidence, or Record. Most Cited Cases
(Formerly 33k77(6) Arbitration)

Under federal law, burden is on party requesting vacatur of arbitration award to refute every rational basis on which arbitrator could have relied.
[5] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(H) Review, Conclusiveness, and Enforcement of Award
Key Number Symbol 25Tk360 Impeachment or Vacation
Key Number Symbol 25Tk363 Motion to Set Aside or Vacate
Key Number Symbol 25Tk363(8) k. Affidavits, Evidence, or Record. Most Cited Cases
(Formerly 33k77(6) Arbitration)

Under federal law, nature and extent of evidence to be taken at hearing to vacate arbitration award is matter resting within sound discretion of trial judge; full-blown trial is not required.
[6] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(I) Exchanges and Dealer Associations
Key Number Symbol 25Tk411 Relations Between Customer-Investors and Broker-Dealers
Key Number Symbol 25Tk415 k. Arbitrators and Proceedings. Most Cited Cases
(Formerly 33k91 Arbitration, 160k11(11.1))

Under federal law, trial court, when requested to do so by investor, was required at least to scan transcript of arbitration hearing to determine whether any rational basis existed to support arbitrator's decision, where investor alleged that arbitrator's decision was arbitrary and capricious in that she presented unrefuted evidence in support of her claims of fraud, negligence, and other misconduct, and yet was denied relief.
[7] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(I) Exchanges and Dealer Associations
Key Number Symbol 25Tk411 Relations Between Customer-Investors and Broker-Dealers
Key Number Symbol 25Tk415 k. Arbitrators and Proceedings. Most Cited Cases
(Formerly 33k91 Arbitration, 160k11(11.1))

Under federal law, investor failed to state facts in complaint sufficient to support finding of evident partiality on part of arbitrator as to investor's claim of fraud, negligence, and other misconduct against investment corporation; investor merely alleged that bias must have existed because arbitrator did not find in her favor.
*222 William S. Scott of The Scott Law Firm, Hollywood, for appellants/cross-appellees.

Russell L. Forkey, P.A., Ft. Lauderdale, for appellee/cross-appellant.

STEVENSON, Judge.


This is an appeal and cross-appeal from an order dismissing a petition to vacate an arbitration award and denying the successful movants' motion for attorney's fees. Because we find that the trial court erred in dismissing the petition, we reverse on the cross-appeal, rendering moot the attorney's fee issue raised on appeal.
Anna Breen, cross-appellant, filed a claim with the National Association of Securities Dealers (NASD) against appellants, World Investment Corporation and Henry Tegler, Jr., alleging fraud, negligence, and other misconduct. Breen alleged that appellants sold her securities that were unsuitable for her investment objectives, did not properly supervise their salespeople, and that certain salespeople were not properly registered. After a hearing on Breen's claim, the arbitration panel concluded that appellants were not liable.
Breen filed a petition in circuit court to vacate the arbitration award alleging that the panel's decision was "arbitrary and capricious" and that there was "evident partiality" on the part of the arbitrators. Breen alleged that there was no support at all in the record for the arbitration panel's decision and that only through bias could the panel have reached its conclusions.
Appellants filed a motion to dismiss the petition and for attorney's fees. As a basis for this motion, appellants claimed that Breen failed to provide any justification for her conclusion that the panel's decision was arbitrary and capricious, or evidenced clear partiality. Appellants sought attorney's fees on the basis that Breen's petition was allegedly filed in bad faith and contrary to her written agreement to abide by the arbitration award. After a hearing on the motion to dismiss, the trial court entered an order dismissing the petition and denying appellants' request for attorney's fees.
[1] Headnote Citing References Because Breen's claim stated a basis upon which relief could be granted, we hold that the trial court erred in dismissing the petition to vacate the arbitration award. When a petition to vacate an arbitration award alleges facially sufficient grounds for relief, the trial court must, at least, hold a limited evidentiary hearing to allow the movant to submit evidence to establish its claim. See O.R. Sec. v. Professional Planning Assocs., 857 F.2d 742 (11th Cir.1988) . FN1

FN1. The parties agree that federal law, not state law, governs evaluation of the substantive aspects of Breen's claims. See Merrill Lynch, Inc. v. Melamed, 405 So.2d 790 (Fla. 4th DCA 1981) (holding that the Federal Arbitration Act supersedes the Florida Arbitration Act where interstate commerce is involved).


[2] Headnote Citing References [3] Headnote Citing References [4] Headnote Citing References Although arbitration awards are accorded great deference, there are several statutory and nonstatutory grounds upon which an arbitration award may be vacated. An arbitration award may be vacated on the non-statutory ground that it is arbitrary and capricious. In Ainsworth v. Skurnick, 960 F.2d 939, 941 (11th Cir.1992) , the court stated that "an award that is arbitrary and capricious is not required to be enforced. An award is arbitrary and capricious only if a ground for the arbitrator's decision cannot be inferred from the facts of the case." The burden is on the party requesting the vacatur *223 to refute every rational basis on which the arbitrator could have relied. See Brown v. Rauscher Pierce Refsnes, Inc., 994 F.2d 775, 779 (11th Cir.1993) . As one of the statutory grounds for vacating an arbitration award, the Federal Arbitration Act at 9 U.S.C. § 10(b) provides that a court may vacate an award "[w]here there was evident partiality or corruption in the arbitrators or either of them." (emphasis added).
[5] Headnote Citing References [6] Headnote Citing References The nature and extent of the evidence to be taken at a hearing to vacate an arbitration award is a matter resting within the sound discretion of the trial judge; a full-blown trial is not required. O.R. Sec., 857 F.2d at 747-48 . Breen alleged that the arbitrators' decision was arbitrary and capricious in that she presented "unrefuted" evidence in support of her claims, yet she was denied relief. If requested to do so by Breen, the trial court will, at least, be required to scan the transcript of the arbitration hearing to determine whether any rational basis exists to support the panel's decision.
[7] Headnote Citing References As for Breen's second claim, we agree with the trial court that Breen failed to allege any facts which could support a finding of "evident partiality." The federal courts have required the party challenging an arbitration award on this basis to allege specific facts indicating improper motives on the part of the arbitrator[s], or at least, specific facts which create a reasonable impression of partiality. See Toyota of Berkeley v. Local 1095, 834 F.2d 751 (9th Cir.1987) ; Park v. First Union Brokerage Servs., 926 F.Supp. 1085, 1088 (M.D.Fla.1996) . Breen's only support for her claim of evident partiality is her belief that bias must have existed because the arbitrators did not find in her favor. Nevertheless on remand, Breen should have at least one more opportunity to amend her petition to state a proper claim, if she can do so in good faith.
Accordingly, we reverse the order dismissing the petition to vacate the arbitration award. The appellants' challenge to the denial of attorney's fees for successfully having the petition dismissed is now moot.
REVERSED and REMANDED for further proceedings consistent with this opinion.

GLICKSTEIN, J., and BROWN, LUCY C., Associate Judge, concur.




Fla.App. 4 Dist.,1996.
World Invest Corp. v. Breen
684 So.2d 221, 21 Fla. L. Weekly D2476


Judges and Attorneys (Back to top) Judges | Attorneys Judges

  • Birken, Hon. Arthur M.

State of Florida Circuit Court, 17th Judicial Circuit Florida Litigation History Report | Judicial Reversal Report | Profiler

  • Glickstein, Hon. Hugh S

State of Florida District Court of Appeal, 4th District Florida Litigation History Report | Judicial Reversal Report | Profiler

  • Stevenson, Hon. W. Matthew

State of Florida District Court of Appeal, 4th District Florida Litigation History Report | Judicial Reversal Report | Judicial Expert Challenge Report | Profiler


Attorneys Attorneys for Appellant

  • Scott, William Sumner

Pittsburgh, Pennsylvania Litigation History Report | Profiler