Decicco v. Colombo
| Decision Date | 27 November 2002 |
| Docket Number | No. 02 CV.1539(VM).,02 CV.1539(VM). |
| Citation | 234 F.Supp.2d 320 |
| Parties | Bartholomew A. DECICCO, Richard F. Fletcher, Robert J. Figliozzi, Gabriel M. Bernaschina, and Vincent R. Dorhan, Plaintiffs, v. Elizabeth and Francis COLOMBO, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Dan A. Druz, Manasquan, NJ, for Bartholomew A. Decicco, Richard F. Fletcher, Robert J. Figliozzi, Gabriel M. Bernaschina, Vincent R. Drohan, petitioners.
DECISION AND ORDER
Plaintiffs Bartholomew A. Decicco, Richard F. Fletcher, Robert J. Figliozzi, Gabriel M. Bernaschina, and Vincent R. Dorhan (collectively, "Plaintiffs") filed an Application and Notice to Vacate Arbitration Award (the "Notice") requesting that an award made by a panel of arbitrators to Elizabeth and Francis Colombo ("Defendants") be vacated because such award was in manifest disregard of federal law. Defendants opposed this Notice. For the reasons set forth below, the motion is DENIED.
Plaintiffs were licensed individuals associated with a now defunct broker-dealer, The Stamford Company ("Stamford"). Defendants had originally opened an account with another brokerage house in 1985. Due to the representations and actions of Paul Garafalo ("Garafalo"), a Stamford broker who became Defendants' investment advisor, Defendants had their account transferred to Stamford, where it remained until 1993. At that time Defendants discovered, as they alleged in their arbitration claim, that Garaflo was fraudulently handling their money by entering into unauthorized trades that were inconsistent with Defendants' investment objectives. Defendants further alleged that Plaintiffs fraudulently induced Defendants to trade their account; breached Plaintiffs' fiduciary duty; breached their contractual obligations and professional duties; engaged in excessive, unauthorized and discretionary trades; committed common law fraud; violated Federal and State Securities laws; misrepresented and omitted material facts; failed to supervise Garafalo; were liable as control persons; committed mail fraud, wire fraud and violated RICO laws; and violated the Rules and Regulations of the NASD, Inc., the New York Stock Exchange, and the Chicago Board Options Exchange.
Defendants filed their claim before an arbitration panel run by NASD Dispute Resolution, Inc. (the "Panel") on September 29, 1999. Over the next two years, the Panel read motion papers, held hearings and heard arguments from both parties on the matter. However, Garafalo died prior to the start of the hearings, and consequently did not participate and was not a respondent. On November 28, 2001, the Panel issued a decision finding Plaintiffs liable and awarding Defendants compensatory damages totaling approximately $75,000 plus filing fees and administrative costs. Plaintiffs then filed the Notice now before this Court.
Under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 6, a party seeking to vacate an arbitration award must proceed by motion to the court. See Johnson v. American Arbitration Ass'n, No. 98 CIV 6314, 1999 WL 223154, at *2 (S.D.N.Y. April 16, 1999). Under the FAA's motion procedure, the Court may consider an arbitration action by summary proceeding on the basis of the fully briefed motion papers and without the requirement of a hearing. See Rocket Jewelry Box, Inc. v. Noble Gift Packaging, Inc., 157 F.3d 174, 175 (2d Cir.1998). Consistent with the general federal policy favoring arbitration as embodied in the FAA, absent a compelling reason or some manifest disregard of law, the court must confirm an arbitration award. See 9 U.S.C. § 9; Pompano-Windy City Partners Ltd. v. Bear Stearns & Co., Inc., 794 F.Supp. 1265, 1272 (S.D.N.Y.1992). The party moving to set aside the award has the burden of proof. See Rocket Jewelry, 157 F.3d at 175.
In the instant case, Plaintiffs allege that the Panel's decision was rendered in manifest disregard of the law because: (1) the Panel's finding of control person liability was made without a finding against the controlled person; (2) the Panel ignored the requirement for proof of control person liability set by Rochez Bros. Inc. v. Rhoades, 527 F.2d 880, 884-85 (3d Cir. 1975); (3) the Defendants' claims were barred by the statute of limitations for such claims under the Securities Exchange Act of 1934 (the "Exchange Act"); and (4) the Defendants' claim of breach of fiduciary duty was time-barred by New York law's three-year statute of limitations.
In Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 202 (2d Cir.1998), the Second Circuit defined "manifest disregard of law" to require:
both that (1) the arbitrators knew of a governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrators was well defined, explicit and clearly applicable to the case.
see also W.K. Webster & Co. v. American President Lines, Ltd., 32 F.3d 665, 669 (2d Cir.1994) (); Duferco S.A. v. Ocean Wide Shipping Corp., 210 F.Supp.2d 256, 262 (S.D.N.Y. 2001) () (internal quotations and citations omitted).
Plaintiffs have failed to make a case that meets this high standard. First, Plaintiffs claim that the Panel failed to find the stockbroker who committed the fraudulent acts liable, which Plaintiffs allege is necessary before they can be considered controlling persons in the fraud. Moreover, Plaintiffs claim that the Panel ignored the requirement for proof of control person liability set by Rochez Bros. While the record of what the Panel heard is not before this Court, it self-evident to the Court that if the Panel, which was composed of three experienced arbitrators, found the Plaintiffs liable as...
To continue reading
Request your trial
-
M.J. Woods, Inc. v. Conopco, Inc.
...compelling reason or some manifest disregard of law, the Court must confirm an arbitration award. See 9 U.S.C. § 9; Decicco v. Colombo, 234 F.Supp.2d 320, 322 (S.D.N.Y. 2002). MJW offers no such reasons to oppose the Award, and in fact did not seek to modify, vacate or correct the Award wit......