Opinion
No. CV-09-5032114
March 23, 2010
MEMORANDUM OF DECISION ON MOTION TO DISMISS
The defendants, Lester H. Butnick ("Butnick") and Ameriprise Financial Services, Inc. ("Ameriprise"), have moved to dismiss, or in the alternative, to stay this matter, on the grounds that a binding arbitration agreement exists between the parties.
Allegations of the Complaint
The plaintiff has alleged that she executed an American Express Strategic Portfolio Service Advantage Non-Qualified Account Application for Ameriprise Financial Account No. 08267752. She further alleges that on one page of that Application, page 22, her signature was forged on an authorization which allowed Ameriprise to deduct fees from her account without her permission. The plaintiff claims to have been injured by the deduction of these fees and alleges civil fraud and a violation of the Connecticut Unfair Trade Practices Act, Connecticut General Statutes § 42-110a, et seq.
Contracts between the Parties
The plaintiff started her relationship with the defendants over ten years ago when the plaintiff executed an Investment Management Account Application on July 20, 1999. That document contains the following language, in bold type, on the page signed by the plaintiff and Butnick:
I acknowledge I have received the American Express Financial Advisors client agreements and agree to abide by their terms as currently in effect or as they may be amended from time to time. This account is governed by a predispute arbitration clause which is found in Section 6 of the client agreement. I acknowledge receipt of the predispute arbitration clause.
Emphasis added.
The Investment Management Account Application, as amended as of December 2002, provides, in bold type:
6. Arbitration.
(i) Arbitration is final and binding on the parties
(ii) The parties are waiving their right to seek remedies in court, including the right to a jury trial.
****
Any controversy arising out of, or relating to, my accounts, to transactions with you or your agents and/or employees for me or to this agreement or the breach thereof, shall be settled by arbitration and conducted pursuant to the Federal Arbitration Act, before the American Arbitration Association or the National Association of Securities Dealers Inc., Chicago Stock Exchange, Inc., the New York Stock Exchange, the American Stock Exchange to the extent you may be a member of such exchange or the Municipal Securities Rulemaking Board or the independent nonindustry arbitration forum as I may elect . . .
Emphasis added.
The "IRA Brokerage Application," executed by the plaintiff on July 21, 1999, contains the following language, in bold type, on the page above the signatures of the plaintiff and Butnick:
I acknowledge I have received the American Express Financial Advisors Inc. client agreements and agree to abide by their terms as currently in effect or as they may be amended from time to time. This account is governed by a predispute arbitration clause which is found on page 1 in Section 13 of the client agreement. I acknowledge receipt of the predispute arbitration clause.
Emphasis added.
The predispute arbitration clause referred to above provides as follows, in bold type:
13. I acknowledge I have received the American Express Financial Advisors Inc. client agreements and agree to abide by their terms as currently in effect or as they may be amended from time to time. This account is governed by a predispute arbitration clause which is found on page 1 in Section 13 of the client agreement. I acknowledge receipt of the predispute arbitration clause.
****
Any controversy arising out of, or relating to, my accounts, to transactions with you or your agents and/or employees for me or to this agreement or the breach thereof, shall be settled by arbitration and conducted pursuant to the Federal Arbitration Act, before the American Arbitration Association or the National Association of Securities Dealers Inc., Chicago Stock Exchange, Inc., the New York Stock Exchange, the American Stock Exchange to the extent you may be a member of such exchange or the Municipal Securities Rulemaking Board or the independent nonindustry arbitration forum as I may elect.
Emphasis added.
The "American Express Financial Advisory Service: Agreement, signed by the plaintiff on November 8, 2002, contains the following language:
Section 7 — Arbitration
Any controversy or claim arising out of or relating to this contract or the breach thereof, shall be settled by arbitration in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof . . .
The "Investment Application" signed by the plaintiff on January 17, 2003, contained the following language on page 3 above the plaintiff's signature, in bold type:
I acknowledge I have received and read the American Express Client Agreements and/or prospectuses and agree to abide by their terms as currently in effect or as they may be amended from time to time. I hereby consent to all the terms and conditions with full knowledge and understanding of the information contained in the Agreement. This account is governed by a predispute arbitration clause which is found in Section 6 of the client agreement. I acknowledge receipt of the predispute arbitration clause.
Emphasis added.
Section 6 of the Client Agreement referred to above reads as follows:
6. Arbitration.
(i) Arbitration is final and binding on the parties
(ii) The parties are waiving their right to seek remedies in court, including the right to a jury trial.
****
Any controversy arising out of, or relating to, my accounts, to transactions with you or your agents and/or employees for me or to this agreement or the breach thereof, shall be settled by arbitration and conducted pursuant to the Federal Arbitration Act, before the American Arbitration Association or the National Association of Securities Dealers Inc., Chicago Stock Exchange, Inc., the New York Stock Exchange, the American Stock Exchange to the extent you may be a member of such exchange or the Municipal Securities Rulemaking Board or the independent nonindustry arbitration forum as I may elect . . .
Emphasis added.
The plaintiff does not dispute that she signed SPS Application upon which she bases her complaint. That document contains the following language in bold type:
I acknowledge I have received the American Express SPS Advantage Service Agreement and agree to abide by its terms as currently in effect or as they may be amended from time to time. This account is governed by a predispute arbitration clause which is found in Section 13 of the SPS Advantage Service Agreement. I acknowledge receipt of the predispute arbitration clause.
Emphasis added.
Section 13 of the SPS Advantage Service Agreement provides the following in bold type:
13. Arbitration.
a) Client understands and agrees that
(i) Arbitration is final and binding on the parties
(ii) The parties waive their right to seek remedies in court, including the right to a jury trial.
b) Any controversy arising out of, or relating to, Client's Service accounts, to transactions with Sponsor or Sponsor's agents and/or employees, or to this Agreement or the breach thereof, shall be settled by arbitration and conducted pursuant to the Federal Arbitration Act, before the National Association of Securities Dealers Inc., the Midwest Stock Exchange, the New York Stock Exchange, the American Stock Exchange, or the Municipal Securities Rulemaking Board as Client may elect . . .
Emphasis added.
On July 26, 2006, the plaintiff signed the "Ameriprise Financial Services, Inc. Financial Advisory Services Agreement." That agreement also contains an arbitration provision:
Section 11 — About Arbitration
Any controversy or claim arising out of or relating to this contract or the breach thereof, shall be settled solely by arbitration in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Unless agreed to by all of the parties to the arbitration . . . the American Arbitration Association shall be the sole venue for resolving claims arising out of or relating to this Agreement, and all of the parties to the arbitration . . . irrevocably waive trial by jury in any action, proceeding or counterclaim, whether at law or in equity.
The defendants have presented evidence that they are ready and willing to proceed with an arbitration of the plaintiff's claims.
Discussion of the Law and Ruling
Both the Federal Arbitration Act ("FAA") and Connecticut General Statutes 52-408 reflect a public policy which strongly favors arbitration. In enacting the FAA, Congress intended to create a "liberal federal policy favoring arbitration agreements," and to require that the courts "rigorously enforce agreements to arbitrate." Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983). The courts of Connecticut favor arbitration as a method of settling disputes. Garrity v. McCaskey, 223 Conn. 1, 4-5, 612 A.2d 742 (1992).
Connecticut General Statutes § 52-408 provides that:
An agreement in any written contract, or in a separate writing executed by the parties to any written contract, to settle by arbitration any controversy thereafter arising out of such contract shall be valid, irrevocable and enforceable, except when there exists sufficient cause at law or in equity for the avoidance of written contracts generally.
"Arbitration is a creature of contract. It is the province of the parties to set the limits of the authority of the arbitrators, and the parties will be bound by the limits they have fixed." Success Centers, Inc. v. Huntington Learning Centers, Inc., 223 Conn. 671, 772 (1992).
This court has also stated that "[b]ecause we favor arbitration, we will defer to this alternative method of dispute resolution if the contractual arbitration provisions fall within the grey area of arbitrability, employing the positive assurance test as set out in United Steelworkers of America v. Warrior Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). Under this test, judicial inquiry . . . must be strictly confined to the question whether the reluctant party did agree to arbitrate the grievance . . . An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage."(Internal quotation marks omitted.) Board of Education v. Wallingford Education Assn., 271 Conn. 634, 639, 858 A.2d 762 (2004); accord Quigley-Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 246, 772 A.2d 577 (2001).
State of Connecticut v. Philip Morris, Inc., 279 Conn. 785, 797, n. 10 (2006).
The Court in Hottle v. BDO Seidman, LLP, 74 Conn.App. 271, 277-78, 811 A.2d 745 (2002) stated:
According to the federal policy favoring arbitration, arbitration agreements should be construed as broadly as possible. Oldroyd v. Elmira Savings Bank, FSB, 134 F.3d 72, 76 (2d Cir. 1998). Any doubt concerning the scope of arbitrable issues is to be resolved in favor of arbitration. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., supra, 460 U.S. 24-25. "[T]he existence of a broad agreement to arbitrate creates a presumption of arbitrability which is only overcome if it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that [it] covers the asserted dispute." (Emphasis in original; internal quotation marks omitted.) Oldroyd v. Elmira Savings Bank, FSB, supra, 76.
So-called "broad" arbitration clauses commonly used the words "arising out of" or "relating to," which words are present in all of the arbitration clauses in this case. See Collins Airman Products, Correction. v. Building Systems, 58 F.3d 16, 20 (2d Cir. 1995).
As set forth above, prior to the time she signed the SPS Application at issue in the complaint, the plaintiff signed at least three documents set forth above, which all contained broad arbitration clauses. While the plaintiff disputes the authenticity of her signature on page 22 of the SPS Application, she does not dispute the authenticity of her signatures as they appear on pages 9 and 13 of the SPS Application. Page 13 provides:
I acknowledge I have received the American Express SPS Advantage Service Agreement and agree to abide by its terms as currently in effect or as they may be amended from time to time. This account is governed by a predispute arbitration clause which is found in Section 13 of the SPS Advantage Service Agreement. I acknowledge receipt of the predispute arbitration clause.
Emphasis added.
Section 13 referred to above contains a broad arbitration provision which encompasses "[a]ny controversy arising out of, or relating to, Client's Service accounts, to transactions with Sponsor or Sponsor's agents and/or employees, or to this Agreement or the breach thereof . . ."
As with the other agreements discussed above, Section 13 of the SPS Advantage Service Agreement provides that "[a]rbitration is final and binding on the parties" and that "[t]he parties waive their right to seek remedies in court, including the right to a jury trial."
The plaintiff argues that the defendants have not produced every page of every agreement between the parties and, therefore, the court is interpreting incomplete contracts. However, the plaintiff bears the burden of proving subject matter jurisdiction. Fort Trumbull Conservancy, LLC v. Alves, 265 Conn. 423, 430 n. 12 (2003). The plaintiff could have produced any missing portions of the many agreements she signed with the defendants. She has failed to do so and does not carry her burden of proving jurisdiction by speculating that those missing pages might contradict the arbitration clauses.
The defendants argue that the case should be dismissed, not merely stayed, because the parties have agreed that arbitration will be final and binding and have expressly waived their right to court remedies.
"Whether an agreement makes arbitration a condition precedent to an action in court depends on the language of the arbitration clause." Multi-service Contractors, Inc. v. Vernon, 181 Conn. 445, 447 (1980). While a mere agreement to arbitrate, standing alone, will not give rise to a determination that arbitration is a condition precedent to litigation, Kantrowitz v. Perlman, supra, 156 Conn. 228-29, the parties may, through the express language of the arbitration agreement, so stipulate. In the present case, the arbitration clause of the contract between the parties expressly provides that arbitration is a condition precedent to any right of action under the contract, and even then, the scope of the right to litigate after arbitration is extremely limited.
In their arbitration clause, the parties specifically contracted that "[b]y signing this agreement, you and we agree that neither of us can file a lawsuit or resort to court process regarding our disputes with each other except to the extent that California law provides for judicial review of the arbitration proceedings." This language is about as clear as it can possibly be. It unambiguously provides that arbitration is a condition precedent to the bringing of any action, and it specifically mandates that the only legal action that may be brought is for judicial review of the arbitration proceedings under California law. The parties' agreement to proceed with arbitration prior to instituting any action must therefore be enforced. Kantrowitz v. Perlman, supra, 156 Conn. 227. See also Hartford Accident and Indemnity Company et al. v. Ace American Reinsurance Company et al., Docket No. X02-CV-03-0178122 S, Superior Court, Complex Litigation Docket at Waterbury (September 23, 2003) (Alander, J.); Mcintosh v. Oxford Health Plans, Superior Court, complex litigation docket at Waterbury, Docket No. X01CV010165663S (Nov. 30, 2001) (Hodgson, J.), and Gavalis v. Wheeler, Superior Court, judicial district of Hartford at Hartford, Docket No. CV98-0584866 (January 13, 1999) (Fineberg, J.).
Zymol Enterprises, Inc. v. Sheppard, Mullin, Richter Hampton, LLP, 2003 Ct.Sup. 14429, 14431, 36 CLR 282 (Silbert, J.).
In this case there is no question that arbitration is a condition precedent to the institution of legal proceedings. Under the applicable agreements, the parties repeatedly agreed broadly to resolve any controversies arising out of or relating to the plaintiff's accounts with Butnick and Ameriprise by "final and binding" arbitration and expressly waived their right to seek remedies in court.
For the foregoing reasons, the motion to dismiss is granted.