Joyner v. RAYMOND JAMES FINANCIAL SERVICES, A04A0133.

CourtUnited States Court of Appeals (Georgia)
Writing for the CourtELLINGTON.
Citation602 S.E.2d 871,268 Ga. App. 835
PartiesJOYNER v. RAYMOND JAMES FINANCIAL SERVICES, INC.
Docket NumberNo. A04A0133.,A04A0133.
Decision Date30 July 2004

602 S.E.2d 871
268 Ga.
App. 835

JOYNER
v.
RAYMOND JAMES FINANCIAL SERVICES, INC

No. A04A0133.

Court of Appeals of Georgia.

July 30, 2004.


602 S.E.2d 873
Shapiro, Fussell, Wedge & Smotherman, Daniel I. MacIntyre IV, Robert M. Sommers, for appellant

Hunton & Williams, Scott M. Ratchick, for appellee.

ELLINGTON, Judge.

This litigation began when John C. Joyner, as guardian of the property of an incapacitated adult, Fredna M. Cottingham, filed a claim with the National Association of Securities Dealers, Inc. ("NASD") against Raymond James Financial Services, Inc. ("Raymond James") and two of its brokers. After a hearing, the arbitration panel issued an award in favor of Joyner. Raymond James filed a petition in the Superior Court of Fulton County to vacate or modify the arbitration award, specifically challenging the award of attorney fees pursuant to OCGA § 13-6-11. Joyner filed a corresponding petition to confirm the award. The trial court denied Joyner's petition to confirm the award and granted Raymond James' petition to vacate the portion of the arbitration award awarding Joyner attorney fees. Joyner appeals, contending the trial court made several errors of law.1 For the reasons which follow, we reverse.

The record shows the following undisputed facts. Pursuant to a general power of attorney, Cottingham's son opened an investment account with Raymond James, a registered broker/dealer. The power of attorney required prior approval by Cottingham's attorney at law for any transaction involving $5,000 or more. In his claim before the NASD tribunal, Joyner alleged that Raymond James, through its employees, violated the power of attorney by conducting transactions greater than $5,000 without Cottingham's attorney's approval, churned Cottingham's account,2 violated federal and state securities law, violated NASD conduct rules regarding unsuitability and excessive concentration, and breached its fiduciary duty to Cottingham. Joyner sought to recover "well-managed account damages"3 and improperly assessed commissions. In addition, Joyner sought "reasonable attorney's fees," generally, as well as "reasonable attorneys fees pursuant to OCGA § 10-5-14 for the ... violations of the Georgia Securities Act."

The arbitration panel found Raymond James and the two individual brokers liable under the claims of negligence, breach of fiduciary duty, breach of contract, and violation of the NASD rules. The panel found the individual brokers were negligent in failing to ensure that they acted consistently with the power of attorney. The panel assigned "the bulk of the responsibility" for the misconduct to the firm. Of the actual damages awarded Joyner, the panel assessed the vast majority against Raymond James, and the panel also found the firm liable for "[Joyner's] attorneys' fees in the sum of $50,000.00 pursuant to OCGA § 13-6-11."

In its order vacating the award, the trial court noted "despite Joyner's failure to seek

602 S.E.2d 874
attorneys' fees pursuant to OCGA § 13-6-11, the Arbitration Award awarded Joyner attorneys' fees in the sum of $50,000.00 expressly pursuant to OCGA § 13-6-11." The trial court then vacated the award of attorney fees without identifying a specific federal or state law basis for doing so

The trial court found that the transaction at issue involved interstate commerce, and Joyner does not challenge this finding. Therefore, federal substantive law governed the arbitration, the superior court's review, and our review. Galindo v. Lanier Worldwide, 241 Ga.App. 78, 80(1), 526 S.E.2d 141 (1999). See 9 USC § 1 et seq. (Federal Arbitration Act). Under that body of law, an appellate court reviewing a lower court's decision confirming or vacating an arbitration award should accept findings of fact that are not "clearly erroneous" but decide questions of law de novo. First Options of Chicago v. Kaplan, 514 U.S. 938, 947-948(III), 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995); Gianelli Money Purchase Plan & Trust v. ADM Investor Svcs., 146 F.3d 1309, 1311(II) (11th Cir.1998). See also Galindo v. Lanier Worldwide, 241 Ga.App. at 80(1), 526 S.E.2d 141.

1. Joyner contends the trial court erred in applying federal arbitration law as he did not file his petition to vacate in federal court. As noted above, it is undisputed that the transaction involved interstate commerce. See 9 USC § 1 (for purposes of the Federal Arbitration Act, "commerce" means, inter alia, "commerce among the several States").

Where ... a transaction [out of which an arbitration arises] involves commerce within the meaning of the Federal Arbitration Statute, the state law and policy with respect thereto must yield to the paramount federal law.... [Further,] the Federal Arbitration Act creates a body of federal substantive law.... Since the Federal Arbitration Act created a body of substantive federal law, if a state court has jurisdiction to vacate an award, federal law rather than state law governs the vacation of the award.

(Citations and punctuation omitted.) Hilton Constr. Co. v. Martin Mechanical Contractors, 251 Ga. 701, 703, 308 S.E.2d 830 (1983). "Under the federal statute, both state and federal courts have subject-matter jurisdiction to give force and effect to the federal arbitration code." (Citation omitted.) Tampa Motel Mgmt. Co. v. Stratton of Florida, 186 Ga.App. 135, 139(3), 366 S.E.2d 804 (1988) (physical precedent only). Accordingly, the trial court correctly applied federal law.

2. Joyner contends the trial court misconstrued federal arbitration law. Specifically, Joyner argues Raymond James failed to show any of the statutory4 or...

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