Stifel, Nicolaus & Co. Inc. v. Freeman
| Citation | 924 F.2d 157 |
| Decision Date | 28 January 1991 |
| Docket Number | No. 89-2769EM,89-2769EM |
| Parties | Fed. Sec. L. Rep. P 95,779 STIFEL, NICOLAUS & COMPANY INCORPORATED, Appellee, v. Ronald G. FREEMAN; Beverly Freeman Weyhmueller, Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Margaret M. Mooney, St. Louis, Mo., for appellants.
Thomas E. Douglass, St. Louis, Mo., for appellee.
Before FAGG and BEAM, Circuit Judges, and ROY, * District Judge.
In November 1987 Stifel, Nicolaus & Company (Stifel), a securities brokerage firm, brought a diversity action against customers Ronald G. Freeman and Beverly Freeman Weyhmueller to recover outstanding debit balances in their accounts. Freeman and Weyhmueller filed an amended counterclaim in February 1988, asserting Stifel mishandled the accounts in violation of the Securities Act of 1933 (1933 Act), 15 U.S.C. Secs. 77a-77aa (1988), the Securities Exchange Act of 1934 (1934 Act), 15 U.S.C. Secs. 78a-78ll (1988), and Missouri law. Stifel did not assert arbitration as an affirmative defense in its reply to the amended counterclaim. The parties engaged in written discovery. Later, in May 1988, Stifel moved to compel arbitration of the entire lawsuit. See 9 U.S.C. Secs. 3, 4 (1988). The district court granted Stifel's motion and dismissed the action without prejudice. Freeman and Weyhmueller appeal, and we affirm.
Freeman opened two accounts with Stifel: one for himself and one for a general partnership comprised of Freeman, Weyhmueller, and a third person. When Freeman opened the accounts, he signed an options agreement and a customer's agreement for each. The options agreements provide the parties will arbitrate all controversies except those "for which a remedy may exist pursuant to an express or implied right of action under the federal securities laws." The customer's agreements provide the parties will arbitrate all controversies except those for which "waiver of the right to seek a judicial forum ... would be void under the federal securities laws." Freeman and Weyhmueller contend they did not agree to arbitrate their federal securities laws claims.
We agree with the district court that the customer's agreements require arbitration of Freeman and Weyhmueller's federal securities laws claims. See Rodriguez de Quijas v. Shearson/American Express, 490 U.S. 477, 479-84, 109 S.Ct. 1917, 1919-21, 104 L.Ed.2d 526 (1989) (1933 Act); Shearson/American Express v. McMahon, 482 U.S. 220, 234, 238, 107 S.Ct. 2332, 2341, 2343, 96 L.Ed.2d 185 (1987) (1934 Act). We need not decide whether the options agreements exclude arbitration of federal securities laws claims because the customer's agreements provide they supersede any contemporaneously executed agreements to the extent there is a conflict between the instruments. Thus, the parties agreed to arbitrate all their claims, including those based on federal securities laws.
Freeman and Weyhmueller also argue Stifel waived its contractual right to arbitration under the agreements. We review the question of waiver de novo. Ackerberg v. Johnson, 892 F.2d 1328, 1332 (8th Cir.1989). Accordingly, we must determine whether Stifel voluntarily relinquished a known right to arbitration. Id.
To prove Stifel waived its right to arbitration, Freeman and Weyhmueller must show: (1) Stifel knew of an existing right to arbitration; (2) Stifel acted inconsistently with that right; and (3) Stifel's inconsistent acts prejudiced them. Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir.1986); see also Nesslage v. York Sec., Inc., 823 F.2d 231, 234 (8th Cir.1987). When considering these factors, we will "resolve in favor of arbitration 'any doubts concerning ... [the] allegation of waiver.' " Phillips v. Merrill Lynch, Pierce, Fenner & Smith, 795 F.2d 1393, 1397 n. 9 (8th Cir.1986) (quoting Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983)); see also Nesslage, 823 F.2d at 234.
The parties do not dispute that Stifel knew of its existing right to compel arbitration of all claims, including those under the 1933 Act and the 1934 Act. Nevertheless, Freeman and Weyhmueller assert Stifel acted inconsistently with this right to their prejudice when it filed the original lawsuit, engaged in discovery on arbitrable claims, and failed to move to compel arbitration until six months after the suit was filed. We agree that Stifel acted inconsistently with its right to arbitration by...
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