5D08-4286 Eppinger v. Sealy

SUPREME COURT CASES

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State: Florida

Court: Florida Fifth District Court

Docket No: 5D08-4286

Case Date: 12/14/2009

Preview:IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT JULY TERM 2009 ANN R. EPPINGER, Appellant, v. DOUGLAS J. SEALY AND PRAGER, SEALY & CO. LLC, Appellees. ________________________________/ Opinion filed December 18, 2009 Non-Final Appeal from the Circuit Court for Orange County, Maura T. Smith, Judge. T. Todd Pittenger and Kristopher Kest, of Lowndes, Drosdick, Doster, Kantor & Reed, P.A., Orlando, for Appellant. No Appearance for Appellee, Douglas J. Sealy. Carlos J. Burruezo and Juan C. LopezCampillo, and Ashley L. Gay, of Littler Mendelson, P.C., Orlando, Julissa Rodriguez and Kerri L. McNulty, of Greenberg & Traurig, P.A., Miami, and I. William Spivey, II, of Greenberg Traurig, P.A., Orlando, for Appellee, Prager, Sealy & Co. LLC. GRIFFIN, J. Ann R. Eppinger ["Eppinger"] appeals the trial court's non-final order granting Prager, Sealy & Co. LLC's ["Prager Sealy"] motion to compel arbitration. Eppinger argues that the trial court erred by granting Prager Sealy's motion to compel arbitration. Case No. 5D08-4286

We agree that the allegations in her complaint do not raise an arbitrable issue and reverse. Eppinger and Douglas J. Sealy ["Sealy"] joined Prager Sealy's predecessor in 1991, opening the company's Orlando office and serving as managing directors. In 1993, Eppinger and Sealy married each other. Both continued their work at the

company, but Eppinger decreased her workload and responsibilities with the birth of each of their two children. Eppinger's and Sealy's marriage ended in 2006 with a

mediated settlement agreement ["MSA"] being incorporated into the final judgment of dissolution. Included in the MSA was a provision that Eppinger would remain an

employee of Prager Sealy for a specified term. Eppinger was later terminated from Prager Sealy after Prager Sealy unsuccessfully attempted to have Eppinger enter into a Separation Agreement and General Release. In June of 2008, Eppinger filed a five-count complaint against Sealy and Prager Sealy to enforce Sealy's and Prager Sealy's obligations under the MSA. Eppinger

alleged that Sealy and Prager Sealy were obligated to pay her sums as provided for under paragraph 7 of the MSA: 7. Employment by Prager, Sealy and Company:

Ms. Eppinger shall continue as an employee with Prager, Sealy & Company, LLC for a five year period commencing with the execution of this agreement, with a salary of $120,000.00 per year, payable monthly. Ms. Eppinger shall continue to be the lead banker for Villages of Lake-Sumter, Inc., or its successors and will receive 70% of all gross revenues generated from any such bond issues, payable at the same time as other bonuses are paid by the Company. Mr. Sealy guarantees that Ms. Eppinger will be paid a bonus of at least $650,000 annually regardless of whether Villages produces revenues or not. The above payments are to be made by February 15th of the

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succeeding year for the prior year, subject to regulatory requirements and February 15th of each year thereafter. This guarantee shall be null and void if Ms. Eppinger remarries within the five year period, but all other provisions shall remain in effect. Ms. Eppinger shall also enjoy health insurance benefits as provided to employees as well as participate in all other similar benefits available through Prager, Sealy & Company, LLC, with its employees. Eppinger alleged that, even though Sealy and Prager Sealy operated under the MSA for more than one year, they failed to fully perform. Sealy told her that neither he nor Prager Sealy was required to pay her the "salary" and "bonuses" called for under the MSA because he was not, at the time he executed the MSA, authorized to bind Prager Sealy and Prager Sealy never did accept its obligations under the MSA. Sealy answered Eppinger's complaint and asserted affirmative defenses and counterclaims. Prager Sealy filed a motion to dismiss, to compel arbitration and to stay discovery. In its motion, Prager Sealy alleged that Eppinger executed a Form U-4 "[a]t the start of her employment in 1991, . . . which requires her to arbitrate any dispute, claim or controversy that might arise" and that she subsequently executed a Predispute Arbitration Clause, which related to the Form U-4, in both 2003 and 2006. The Form U-4 attached to the motion is entitled "UNIFORM APPLICATION FOR SECURITIES INDUSTRY REGISTRATION OR TRANSFER" and contains the following arbitration clause: "I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the organization indicated in Item 10 as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgement [sic] in any court of competent jurisdiction." Eppinger's signature appears on the form.

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The Predispute Arbitration Clause provides: In accordance with the NASD Conduct Rules, the following disclosure is being provided to you in connection with your Form U-4 application or Form U-4 amendment(s): The Form U-4 contains a predispute arbitration clause. It is in item 5 on page 4 of the Form U-4. You should read that clause now. Before signing the Form U-4, you should understand the following: (1.) You are agreeing to arbitrate any dispute, claim or controversy that may arise between you and your firm or a customer, or any other person, that is required to be arbitrated under the rules of the self-regulatory organizations with which you are registering. This means that you are giving up the right to sue a member, customer, or another associated person 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. (2.) A claim alleging employment discrimination, including a sexual harassment claim, in violation of a statute is not required to be arbitrated under NASD rules. Such a claim may be arbitrated at the NASD only if the parties have agreed to arbitrate it, either before or after the dispute arose. The rules of other arbitration forums may be different .... Sealy responded to Prager Sealy's motion, asserting: 5. In sum, [Prager Sealy's] Motion to Compel Arbitration is limited, by its own terms, to arbitration of claims between [Prager Sealy] and Eppinger; [Prager Sealy] has not cited or invoked an agreement to compel Sealy to arbitrate the claims Eppinger has asserted against [Prager Sealy]; and Eppinger and Sealy have committed their separable claims against one another to the jurisdiction of this Court. Accordingly, Sealy submits that [Prager Sealy's] Motion to Compel Arbitration should be Granted, insofar as it is limited to compelling arbitration of claims Eppinger has asserted against [Prager Sealy].

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Eppinger filed a memorandum in opposition to Prager Sealy's motion. She attached a BrokerCheck Report to her memorandum showing that Eppinger held FINRA1 registration with Prager Sealy from May of 1993 through March of 2008. The trial court conducted a hearing and entered an order granting Prager Sealy's motion to dismiss and compel arbitration, and to stay discovery. Eppinger's central argument on appeal is that her claims and the facts on which they are based as alleged in her complaint do not give rise to an arbitrable issue and that the trial court erred in granting Prager Sealy's motion to compel arbitration. Prager Sealy counters that, although Eppinger relies upon the terms of the MSA in bringing her claims, her claims are "grounded on her employment relationship with the company." Prager Sealy contends that, under the rules of arbitration applicable to FINRA, arbitration was required because the dispute arose out of her employment or termination of employment. Therefore, the question becomes whether the rules of

arbitration applicable to FINRA require arbitration of the instant dispute. At the time the instant dispute arose, the NASD Code of Arbitration Procedure for Industry Disputes ["NASD Arbitration Code"] constituted the rules of arbitration applicable to FINRA.2 pertinent part: Section 13200 of the NASD Arbitration Code provides in

In July of 2007, NASD's name was changed to FINRA "in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation." Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1 Thereto Relating to Proposed Amendments to Rule 600, 72 Fed. Reg. 45077-02 n.7 (Aug. 10, 2007). See FINRA, Industry Professionals, Regulation, Notices, 2008, Information Notice - December 8, 2008, Continuing Application of NASD Rules and Incorporated NYSE Rules, http://www.finra.org/Industry/Regulation/Notices/2008/P117507. 5
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Required Arbitration (a) Generally Except as otherwise provided in the Code, a dispute must be arbitrated under the Code if the dispute arises out of the business activities of a member or an associated person and is between or among: Members; Members and Associated Persons; or Associated Persons.3

Based upon the language of section 13200(a), the dispute between Eppinger and Prager Sealy must be arbitrated if it arose out of the "business activities" of either Eppinger or Prager Sealy. Relying upon Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999), Eppinger contends that the dispute did not arise out of her or Prager Sealy's "business activities" because the allegations in her complaint do not suggest a nexus between the dispute and the agreement containing the arbitration clause, namely the Form U-4. In Seifert, the Florida Supreme Court addressed "whether the terms of an arbitration provision in a contract for the sale and purchase of a house require[d] [a] wrongful death action to be arbitrated." Id. at 635. The arbitration provision required arbitration of "[a]ny controversy or claim arising under or related to" the purchase and sale agreement. Id. The Florida Supreme Court analyzed "the governing principles surrounding the determination of whether a particular claim is subject to arbitration" and

NASD Code of Arbitration Procedure for Industry Disputes

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