Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-05391/USCOURTS-cand-4_09-cv-05391-2/pdf.json

Parties Involved:
Mark David Gandossy
Defendant
Legacy Financial Services, Inc.
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN THE MATTER OF THE ARBITRATION

BETWEEN:

LEGACY FINANCIAL SERVICES, INC.,

Petitioner,

 v.

MARK DAVID GANDOSSY,

Respondent. /

No. C-09-5391-PJH (EDL)

REPORT AND RECOMMENDATION ON

PLAINTIFF’S MOTION FOR ORDER

CONFIRMING ARBITRATION AWARD

AND FOR DEFAULT JUDGMENT

Petitioner Legacy Financial Services (“Legacy”) filed a Petition to Confirm Arbitration

Award against Respondent Mark David Gandossy, a resident of the State of North Carolina. Mr.

Gandossy was served with the Petition on December 3, 2009 and failed to answer or otherwise

respond. Default was entered against Mr. Gandossy on February 16, 2010. Thereafter Legacy filed

this Motion for an Order Confirming Arbitration Award and For Entry of Judgment By Default. 

Legacy’s motions were referred to this Court by Judge Phyllis Hamilton on March 11, 2010 for a

Report and Recommendation. A hearing on the motions was set for April 20, 2010. However, on

April 14, 2010, Petitioner filed a “Declaration of Darvy Mack Cohan Re: Notice of Consent to Order

Confirming Arbitration Award and Judgment Thereon.” Attached to this declaration are: (1) a

Consent Order Confirming Arbitration Award, and (2) a Consent Judgment, both signed by counsel

for Petitioner as well as Respondent Mr. Gandossy. Petitioner requests that the district court enter

Case 4:09-cv-05391-PJH Document 25 Filed 04/15/10 Page 1 of 5
United States District Court

For the Northern District of California

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these consent orders. For the following reasons and because both parties now consent, the Court

hereby recommends that Legacy’s Motion for an Order Confirming Arbitration Award and Motion

For Entry of Judgment By Default be GRANTED, and the District Court enter the consent orders

filed by Petitioner on April 14.

On March 8, 2000, Petitioner and Respondent entered into a Registered Representative

Agreement for the marketing of securities products. Petition Ex. A (appended on 3/26/10 by

Petitioner’s Correction of Errata). In the Agreement, the parties agreed to submit any dispute or

disagreement arising in connection with any interpretation of the Agreement and its performance or

nonperformance to arbitration in Petluma, California and that the findings of fact issued by the

arbitrator would be “binding on them in any subsequent arbitration, litigation, or other proceeding.” 

Id.§ 7. The Agreement also provided for an award of attorney’s fees and costs to the prevailing

party in any action or arbitration to enforce any provision of the Agreement. Id. § 10. Finally, the

Agreement provided that judgment upon the arbitrator’s award “may be entered by any court having

jurisdiction,” and that Respondent expressly submitted to the jurisdiction and venue of the United

States District Court for the Northern District of California. Id. 

A dispute arose as to Respondent’s liability for indemnity under the Agreement, and

Petitioner brought a third-party indemnity claim against Respondent in an ongoing Financial

Industry Regulatory Authority (“FINRA”) arbitration between Legacy and another individual. 

Petition ¶ 10-12; Declaration of Darvy Mack Cohan (“Cohan Decl.”) Ex. A. Both parties were

represented by counsel throughout the arbitration and each submitted proof in favor of their

respective positions. Petition ¶ 15. A three-member arbitration panel conducted a one-day

evidentiary hearing, and on September 4, 2009, the panel made a written award in favor of Petitioner

in the amount of $75,000 in compensatory damages and $37,542.36 in costs and fees. See Cohan

Decl. Ex. A. Respondent has failed to voluntarily satisfy the arbitration award, and has not moved

to vacate, modify, or amend the award. Petition ¶ 17. Therefore, Petitioner filed this action pursuant

to the Federal Arbitration Act, 9 U.S.C. § 9, seeking confirmation of the award. Respondent has not

opposed confirmation of the award or otherwise responded to the petition, and has recently signed a

Consent Order Confirming Arbitration Award. See Cohan Decl. Re: Notice of Consent, Ex. A. 

Case 4:09-cv-05391-PJH Document 25 Filed 04/15/10 Page 2 of 5
United States District Court

For the Northern District of California

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The Federal Arbitration Act does not create an independent basis for jurisdiction. See

General Atomic Co. v. United Nuclear Corp., 655 F.2d 968, 969 (9th Cir. 1981). However, the

petition properly alleges diversity jurisdiction, and the underlying Registered Representative

Agreement on which the arbitration award was based provides for jurisdiction and venue in this

District. See Petition at ¶¶3, 5. Therefore the District Court has jurisdiction over the matter. The

Federal Arbitration Act proceeding to confirm an arbitration award is intended to be summary. See,

e.g., Northrop Corp. v. Triad Int'l Marketing S.A., 842 F.2d 1154, 1157, n. 7 (9th Cir. 1988). The

district court must grant a timely motion to confirm an arbitration award: (1) if the parties have

agreed that a court judgment shall be entered on the award; and (2) unless the arbitration award is

vacated, modified, or corrected. See 9 U.S.C. § 9 (“If the parties in their agreement have agreed that

a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall

specify the court, then at any time within one year after the award is made any party to the

arbitration may apply to the court so specified for an order confirming the award, and thereupon the

court must grant such an order unless the award is vacated, modified or corrected as prescribed in

sections 10 and 11 of this title.”). 

Here, the parties agreed not only that an arbitrator’s findings would be binding in any

subsequent litigation, but also that judgment upon the arbitrator’s award “may be entered in any

court having jurisdiction.” This language shows that the parties agreed to the application of the

Federal Arbitration Act and to entry of judgment on the award. See, e.g., Ono Pharmaceutical Co.,

Ltd. v. Cortech, Inc., 2003 WL 22481379 (S.D.N.Y. Nov. 3, 2003); see also PVI, Inc. v. Ratiopharm

GMBH, 135 F.3d 1252, 1254 (8th Cir. 1998) (citing In re I/S Stavborg v. National Metal Converters,

Inc., 500 F.2d 424, 426-27 (2nd Cir. 1974) (“One purpose of this provision [regarding consent to

entry of judgment] is to ensure that the parties have affirmatively agreed to the application of the

federal substantive law contemplated by the Act to the interpretation of the arbitration agreement

into which they have entered.”). In addition, there is no indication that the award is or should be

vacated, modified, or corrected, nor is there any motion to change the award. Instead, Respondent

has consent to an order confirming the award. For the foregoing reasons, it is hereby recommended

that Petitioner’s Motion For An Order Confirming Arbitration Award be GRANTED.

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United States District Court

For the Northern District of California

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Petitioner also seeks an order of default judgment against Petitioner, and makes a claim for

costs and fees incurred in connection with enforcing the arbitration award, as well as interest on the

arbitration award. Federal Rule of Civil Procedure 55(b)(2) authorizes the Court to enter judgment

against a defendant against whom a default has been entered, assuming that defendant is not an

infant, is not incompetent or in military service. Upon entry of default, the factual allegations of the

complaint are taken as true, except for those relating to damages. See Televideo Systems, Inc. v.

Heidenthal, 826 F.2d 915, 917 (9th Cir.1987). Petitioner has established that Respondent is not an

unrepresented minor, incompetent person or in military service. See Cohan Decl. ¶ 4. Petitioner has

also established that the arbitrator awarded it $75,000 in compensatory damages and $37,542.36 in

costs and fees. See Cohan Decl. Ex. A. Petitioner has also shown that the underlying Agreement

provides for an award of attorney’s fees and costs to the prevailing party. Petition Ex. A at §10. 

Petitioner has established by declaration that it has expended $6,200 in attorney’s fees and $350.00

in costs in enforcing the arbitration award. See Cohan Decl. ¶¶ 9-11. Respondent has signed a

Consent Judgment including these costs and fees. See Cohan Decl. Re: Notice of Consent, Ex. B. 

Therefore, judgment in the amount of $112,542.36, as well as $6,550.10 in costs and fees incurred in

enforcing the award, is appropriate.

Petitioner also claims that it is entitled to interest of ten percent per annum on the arbitration

award, which currently totals $6,475.04. Though Petitioner has not pointed to anything in the

underlying agreement establishing 10% per annum as the appropriate rate for interest, Respondent

has consented to a judgment including a 10% prejudgment interest rate. See Cohan Decl. Re: Notice

of Consent, Ex. B. For the foregoing reasons, it is hereby recommended that Petitioner’s Motion For

Default Judgment be GRANTED.

Conclusion

For the following reasons, the Court hereby recommends that Legacy’s Motion for an Order

Confirming Arbitration Award be GRANTED, and Motion For Entry of Judgment By Default be

GRANTED, and that the District Court enter the consent orders filed by Petitioner on April 14,

2010. Any party may serve and file specific written objections to this recommendation within ten

(10) days after being served with a copy. See 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b); Civil

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United States District Court

For the Northern District of California

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Local Rule 72-3. Failure to file objections within the specified time may waive the right to appeal

the District Court's order. 

 IT IS SO RECOMMENDED. 

Dated: April 15, 2010 

ELIZABETH D. LAPORTE

United States Magistrate Judge

Case 4:09-cv-05391-PJH Document 25 Filed 04/15/10 Page 5 of 5