Armas v. Prudential Securities, Inc.

• Decision Date: 02 April 2003
• Docket Number: No. 3D02-2214.,3D02-2214.
• Court: Florida District Court of Appeals
• Parties: Serafin Garcia ARMAS and Representaciones Dole, C.A., Appellants, v. PRUDENTIAL SECURITIES, INC., Appellee.

842 So.2d 210

Serafin Garcia ARMAS and Representaciones Dole, C.A., Appellants, v. PRUDENTIAL SECURITIES, INC., Appellee.

No. 3D02-2214.

District Court of Appeal of Florida, Third District.

April 2, 2003.

Sullivan Rivero & Chase, and Andres Rivero, and David R. Chase, and Jorge A. Mestre, for appellants.

Boose Casey Ciklin Lubitz Martens McBane & O'Connell, and Ronald E. Crescenzo (West Palm Beach), for appellee.

Before SCHWARTZ, C.J., and GERSTEN, JJ., and NESBITT, Senior Judge.

PER CURIAM.

Serafin Garcia Armas ("Garcia") appeals the trial court's order denying his motion to compel arbitration. We reverse.

Garcia opened an account with Prudential Securities ("Prudential") in the name of SMJ Corporation ("SMJ"). A large margin deficit occurred in the account due to extensive trading activity. Prudential requested that Garcia deposit additional funds into the account to cover the deficit. To satisfy the outstanding balance, Garcia deposited a check in the amount of $1.1 million dollars into the SMJ account. The check was made payable to Prudential and drawn upon Ocean Bank from an account held by Representaciones Dole, C.A. ("Dole"). Garcia is an officer of both corporations, Dole and SMJ. Ocean Bank refused to honor the check resulting in a debit balance of $701,276.44, in the SMJ Prudential account.

Prudential claimed that the check was improperly dishonored and initiated two proceedings. First, it filed an arbitration proceeding against SMJ and Garcia with the New York Stock Exchange.¹ Second, it filed the underlying action, a four count complaint in state court against Garcia and Dole, alleging a bad check claim against Dole, a civil theft claim against Garcia, an unjust enrichment claim against Garcia and a piercing the corporate veil claim. Garcia and Dole responded by filing a motion to dismiss the complaint and sought to transfer the case to the pending arbitration proceedings between SMJ and Prudential. The trial court denied the motion finding that the arbitration provision did not bind Dole because Dole was not a signatory to the account. We disagree.

The arbitration agreement was entered into and signed by SMJ, Garcia and Prudential. Dole was not a signatory to the arbitration agreement. However, there are several exceptions that permit non-signatories to enforce arbitration agreements. One exception provides that arbitration provisions containing the language, "arising out of or related to," in certain instances can be construed to include non-signatories. See Cuningham Hamilton Quiter, P.A. v. B.L. of Miami, Inc., 776 So.2d 940 (Fla. 3d DCA 2000)

; Vic Potamkin Chevrolet, Inc. v. Bloom, 386 So.2d 286 (Fla. 3d DCA 1980).

The arbitration clause in the present case provides in pertinent part:

Unless enforceable under applicable law, any controversy arising out of or relating to Client's Program Assets, to transactions with Client, for Client or to this Agreement or the breach thereof, shall be settled by arbitration pursuant to the Federal Arbitration Act and in accordance with the rules, then in effect, of the NASD or the Board of Directors of the New York Stock Exchange, Inc. as the client may elect.

This agreement contains the "arising out of or related to" language. The claims against Dole also stem from the same controversy as the claims against SMJ and Garcia in the pending arbitration. Thus we find the breadth and scope of...