Ainsworth v. Skurnick
| Decision Date | 17 August 1990 |
| Docket Number | No. 89-5701,89-5701 |
| Parties | Al AINSWORTH, Plaintiff-Appellee, v. Sam SKURNICK, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Sam Skurnick, Stamford, Conn., pro se.
Russell L. Forkey, James F. Falco, Deerfield Beach, Fla., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Florida.
Before KRAVITCH, Circuit Judge, RONEY * and ALDISERT **, Senior Circuit Judges.
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF
FLORIDA PURSUANT TO ARTICLE 5, SECTION
3(b)(6) OF THE FLORIDA CONSTITUTION.
TO THE SUPREME COURT OF FLORIDA AND THE HONORABLE JUSTICES THEREOF:
It appears to the United States Court of Appeals for the Eleventh Circuit that this case involves an important question of Florida law which is determinative of the outcome of the cause, for which there is no clear precedent in the decisions of the courts of Florida. The question involves an interpretation of Fla.Stat. Sec. 517.12, specifically the determination of when a sale of securities is considered to have been made in Florida so as to trigger the application of the automatic damage provisions of Fla.Stat. Sec. 517.211.
The style of the case in which this certification is made is Al Ainsworth, plaintiff-appellee, versus Sam Skurnick, defendant-appellant, Case No. 89-5701, United States Court of Appeals for the Eleventh Circuit, on appeal from the United States District Court for the Southern District of Florida.
This is an appeal from a district court order granting a petition to vacate an arbitration award of the National Association of Securities Dealers and entering judgment for $54,108.78 against the defendant securities broker for violating section 517.12, Florida Statutes (1989), which requires a broker selling securities to be registered in Florida.
The district court's Order Vacating Arbitration Award and Entering Judgment for Petitioner, from which this appeal was taken, is attached hereto as Appendix 1.
Following is a brief statement of the facts, as may be more fully amplified by the district court's order, the briefs and the record on appeal.
Plaintiff Al Ainsworth is a Florida resident. After reading a 1976 article related to defendant Sam Skurnick's success with small market speculators, Ainsworth solicited Skurnick's services by mail. Mailing funds to New York where Skurnick is a registered broker, Ainsworth made a net investment of $1,100 which approximated $12,000 in 1985 when Ainsworth chose to terminate Skurnick's discretionary authority over the securities account.
Ainsworth claimed damages against Skurnick, asserting first: that Skurnick sold securities to him by mail without complying with the registration requirements of Florida's securities statutes, and second: that Skurnick committed common law breach of fiduciary duty, fraud, deceit, and negligence in the management of Ainsworth's securities account.
Ainsworth's claim against Skurnick went before a National Association of Securities Dealers, Inc. (NASD) arbitration panel which found for the claimant, but assessed no damages. Finding the arbitrators' order vague and cursory, the district court vacated and remanded for interpretation. When an arbitration award can be interpreted in a variety of ways, it is normal to remand for clarification. San Antonio Newspaper Guild Local 25 v. San Antonio Light Div., 481 F.2d 821, 824-25 (5th Cir.1973).
The arbitrators explained that although Skurnick was found negligent, the claimant sustained no damages and proof of statutory violations were not established. On review, the district court affirmed the decision of the arbitrator, insofar as it denied damages on the common law negligence claims, but found a statutory violation in Skurnick's failure to register in Florida. The district court held that mandatory damages were required, stating that one who sells securities by mail to a person located in Florida is selling securities in Florida and must be registered in accord with Fla.Stat. Sec. 517.12. 1 A violation of Sec. 517.12 automatically triggers damages under Fla.Stat. Sec. 517.211, 2 which gives the purchaser the option of voiding the sale and instituting an action for rescission if he still owns the security, or permits an action for damages if the security has been sold. After Ainsworth produced evidence of $54,108.78 in damages, judgment was entered against Skurnick in that amount. There appears to be no doubt that Skurnick acted as a securities dealer for Ainsworth within the meaning of Fla.Stat. Sec. 517.021(9). 3 It is clear under Sec. 517.12 that one who is not registered may not sell securities in this state to persons of this state from offices outside this state, by mail or otherwise, 4 but unless the sale is deemed to take place within the state, there can be no statutory liability.
The district court had no difficulty with the issues in this case, nor do we, until confronting the issue of whether the subject sales were made in Florida. As to this the district court said:
Unless Skurnick actually sold securities in Florida within the meaning of Fla.Stat. Sec. 517.12, no liability may be found pursuant to that section. This Court has found no cases directly under Sec. 517.12 which explain what it means to sell a security in Florida.
The briefs of the parties and our own independent research have failed to disclose any cases which would control this issue of Florida law. The district court approached the question by analogy to Florida's long-arm statute. In this regard we have detailed the activities of Skurnick, insofar as they might relate to this approach, and attach them here as Appendix 2. There is no guidance under the decided cases in Florida, however, as to how the Florida courts would deal with this issue. Since the decision has the potential of effecting cases beyond the boundaries of the present controversy, it seems appropriate to have the Supreme Court of Florida make the determination as to whether, under the facts of this case, securities were sold in Florida so that the seller would be required to register under Florida law.
Whether, under the undisputed facts of this case, the transactions between the parties constituted a sale of securities in Florida within the meaning of Fla.Stat. Sec. 517.12.
Our statement of the question is not designed to limit the Supreme Court of Florida in its consideration of the problems posed by this entire case. In order to assist consideration of the case, the entire record, along with the briefs of the parties, shall be transmitted to the Supreme Court of Florida.
QUESTION CERTIFIED.
APPENDIX 1
United States District Court Southern District of Florida.
In the Matter of Arbitration Between: Al Ainsworth, Petitioner,
and
Sam Skurnick, Respondent.
No. 87-6464-CIV-PAINE.
June 19, 1989.
This cause comes before the Court upon Petitioner Al Ainsworth's Renewed Petition to Vacate Arbitration Award (DE 23).
Ainsworth's original claim was submitted to arbitration before a panel of the National Association of Securities Dealers, Inc., ("NASD"). Ainsworth asserted claims against Skurnick alleging violations of Fla Ainsworth moved this Court to vacate the arbitration award on grounds of evident partiality and manifest disregard of the law. Florida Statutes, Chapter 517 contains a built-in provision for damages, but despite a finding for Ainsworth, no damages were awarded. This Court's Order of Remand (DE 21) stated:
The arbitration award rendered by the arbitration panel does not specifically state that Respondent violated Fla.Stat. Sec. 517.12, a statutory provision which triggers the application of the mandatory damages provision, Fla.Stat. Sec. 517.211. The award is vague and cursory. It fails to adequately explain how the conclusion was reached. This Court is disturbed by the arbitration panel's conduct. As a matter of fairness, the parties are entitled to know the specifics of the decision and the rationale. In essence, the vagueness invites speculation and emasculates effective judicial review.
As it stands, the Court's role in review of arbitration awards is limited. It is not the function of the Court to review the merits or construe the meaning of the award. American Federation of State, County and Municipal Employees, Local Lodge No. 1803 v. Walker County Medical Center, 715 F.2d 1517, 1519 (11th Cir.1983). In that case there was a question as to the meaning of the term "suitable position" in an employment dispute arbitration award. The Appellate Court, Eleventh Circuit, remanded the case with further instructions to the original arbitrator for clarification since the term was capable of two very different interpretations.
Similarly, since the arbitration award below (# 86-1021) is capable of two very different interpretations, the proper course under these circumstances is to allow the arbitrators to resolve the ambiguity. If a statutory violation is found, damages should be awarded. However, if the liability was for a common law violation, rather than a statutory violation, then an award of damages is not mandatory. Without engaging in speculation, it is impossible for this Court to properly assess whether the arbitrators imposed statutory liability on Sam Skurnick. Until such a clarification is made, Petitioner cannot begin to prove nor can this Court determine whether the arbitration panel was evidently partial or acting in manifest disregard of the law in not awarding Al Ainsworth damages.
(DE 21 at 2-3). The arbitration panel was instructed to clarify which of the five counts Sam Skurnick had violated.
On or about March 4, 1988 the arbitration reconvened for deliberation on the issues raised by...
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Ainsworth v. Skurnick, 89-5701
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