### IN THE UNI TED STATES COURT OFAPPEALS FOR THE FIF TH CIRCUIT

No. 11-30161

CHARLES GRANT; ET AL,
Plaintiffs
v. KEVIN HOUSER; ET AL,
Defendants

------------------------ ------------------------ ------------------------ ------------------------ ------------ MITCH BERGER, Plaintiff - Appellee
v. KEVIN HOUSER; SECURITIES AMERICA, INCORPORATED; AMERICAN INTERNATIONAL SPECIALTIES LINES INSURANCE COMPANY, Defendants - Appellants

Appeals from the United States District Court for the Eastern District of Louisiana USDC No. 2:10-CV-805

Before BARKSDALE, GARZA, and ELROD, Circuit Judges. PER CURIAM: * U n i te d S ta te s C o u rt o f A p p ea l s F i ft h C i rc u i t 

### F I L E D March 23 , 20 12 Lyle W . Cayce Clerk

Purs uant to 5th Cir. R. 47.5 , the court has det erm ined that this op i n i o n s hould not * be publish ed and is not pr ece dent excep t unde r the lim ite d cir cum st ance s se t forth in 5th Cir. R. 47.5 .4. Case: 11-30161 Document: 00511798444 Page: 1 Date Filed: 03/23/2012No. 11-30161

Before us are two interlocutory appeals from denials of motions to compel arbitration in this action. Primarily at issue is: whether the district court had jurisdiction to rule on the second motion after the appeal of the first denial; and whether sufficient evidence supports the assignment of a contract containing an arbitration clause. In challenging those denials, Kevin Houser, Securities America Inc., and American International Specialties Lines In s urance Co. (Appellants) contend the district court: lacked jurisdiction to rule on their second motion, pending the interlocutory appeal from the denial of their first motion; and, in the alternativ e , erred by concluding the evidence in support of arbitration was insufficient and, in the further alternative, by faili n g t o apply equitable estoppel. In a d dition, they maintain all of Mitch Berger’s claims are covered by the arbitration agreement. VACATED and REMANDED. I. On 1 January 2004, Berger opened a securities brokerage account with Bre c e k & Young Advisors, Inc. (BYA). Houser, Berger’s New Orleans Saints teammate and financial advis o r , was BYA’s registered representative for the account. In op e ni n g it , B erger filled out a “New Account Form”, which he and Houser signed. This form contained an arbitration clause, located immediately above the signature lines, which stated, inter alia :

It is agreed that any controversy between [Be r ge r] and BYA, or its registered representatives , employees, or agents, including but not limited to those arising out of or relating to my account, transactions with or f or me, investments, or this agreement, shall b e res olved by arbitration in accordance with the rules, then applying, of the [National Association of Securities Dealers]. (Emphasis added.) That same day, Berg e r and Houser also signed a form entitled “Asset Based Brokerage Services (ABBS): Agreement and Disclosure”, which likewise included an expansive arbitration clause.

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In 2008, Houser advised Berger to invest in Louisiana Film Studios, LLC (LFS). Houser represented that the investment was backed by Louisiana tax credits and the land improvements upon which the studio was situated. Based

on those representations, Berger provided a check for $250,000 to Houser, with LFS as payee. In late 2008, Secu rities America acquired BYA. In early 2009, BYA assigned all of its assets and accounts, including Berger’s, to Securities America. As reflected in the subsequent account statements pro vided to Berger by Securities America in it s n ame, it maintained Berger’s account and employed Houser as its registered representative. Alleging his funds invested in LFS were “wasted”, Berger filed this action in 2010 against Houser, S e c u rities America, and American International (Securities America’s insurer), stating claims for: violations of Louisiana Civil Code art. 1997 (bad-faith breach of contract), Louisiana Revised Statute 51:1401 et seq. (unfair trade practices a n d c o n sumer protection law), Louisiana Civil Code art. 1967 (breach of promise that induced detrimental reliance), 15 U.S.C. § 7 8j (b ) (the Exchange Act of 1934), and Rule 10b-5; breach of contractual , professional, and f

i duciary duty; unjust enrichment; respondeat superior; liability on the part of Securities America; and liability-coverage from American International for damages caused by Houser. In October 201 0 , Appellants moved to compel arbitration, based on: the arbitration agreement signed by Berger, claiming the rights un d e r it were assigned to Securities America; and, in the alternative, equitable estoppel because Berger relies on an agreement with Securities America for his claims. In support, they provided a declaration by Kevi n Miller (Miller Declaration), Vice President, Chief Compliance Officer, and Deputy General C o u nsel at Securities America, which stated, inter alia : based on his personal knowledge, in acquiring BYA, Securities America inherited all contr a ctual rights and

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obligations assoc i ated with BYA’s accounts, including Berger’s and the rights bestowed by the arbitration agreement contained in his account’s contract. Berger’s motion to strike the Miller Declaration was denied in November 2010. The declaration is uncontroverted. In January 2011, through an order and reasons, the district court denied the motion to compel arbitration because: Appellants did not provide sufficient evidence that BYA assigned the New Account Form, with its arbitration clause, to Securities America; and, in the alternative, equitable estoppel did not apply. Charles Grant, et al v. Kevin Houser, et al , No. 2:10-CV-805 (E.D. L a . 1 0 J a n. 2011) (First Order). The first of the two interlocutory appeals at issue was filed in February 2011. The district court did not stay this action pending that appeal. Between the motion to compel’s being filed and denied, Berger had been permitted to file a second amended complaint, adding claims for negligent training a nd supervision and “selling away” (an investment professional inappropriately selling securities not offered by the brokerage firm with which he is associated). In December 2010, prior to denial of the first motion to compel arbitration, Appellants filed a similar second motion, re g ar di n g these new claims. The first order (Janu ary 2011) did not address this second motion. Instead, after the notice of appeal from the first order was filed, thi s s e c o nd

m o tion was denied on 9 March 2011, based on the reasoning of the first order , and also because the court ruled no evidence had been offered showing the two claims added by the second amended complaint fell within the arbitration agreement. Grant , No. 2:10-CV-805 (E.D. L a . 9 Mar. 2011) (Second Order). Accordingly, the second of the two interlocutory appeals at issue was filed that month, concerning the second order and reasons. II. Th e Fe der al Arb itr ation Act (FAA) applies to contracts involvin g inter s t ate

commerce that contain or are s ubj e c t to a written agreement to arbitrate. 9

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U.S.C. §§ 1-2. The statute provides for “the enf o rc ement of arbitration agreements within the full reach of the C o m m e rce Clause”, and reaches more transaction s than those actually “within the flow of interstate commerce”. Citizens Bank v. Alafabco, Inc. , 539 U.S. 52, 56 (2003) (internal quotation marks omitted). Berger’s contracts constitute interstate commerce under the FAA, beca u s e the sale of securities has a substantial effect on interstate commerce. See id. at 56-57. The arbitration agreeme nt at i s s ue satisfies the FAA’s “agreement in writing” requirem e nt, 9 U.S.C. § 2, because it is in writing and signed by Berger. Therefore, the terms of the FAA apply. The FAA permits an interlocutory appeal from the denial of a motion to compel arbitration. 9 U.S.C. § 16(a)(1)(C). Appellants contend the district court: lacked jurisdi c ti o n t o rule on the

s e c o n d m otion to compel; and, in the alternative, erred by concluding the evidence was insufficient to show BYA assigned its rights to Securities America and, in the further alternative, by concluding equitable estoppel does not apply. (As discussed below, the Miller Declaration provides sufficient evidence; therefore, we need not reach equit able estoppel.) They also maintain the arbitration agreement covers all of Berger’s claims. A. We first address district-court jurisdiction vel n o n to rule on the second motion to compel arbitration. After the briefs were filed, our court held that an interlocutory appeal from denial of a motion to compel arbitration does not divest the district court of jurisdiction to proce e d t o the merits. Weingarten Realty Investors v. Miller , 661 F.3d 904, 908–09 (5th Cir. 2011). Relying on the Supreme Court’s holding in Griggs v. Provident Cons u m e r D is co u n t Co. , 459 U.S. 56 (1982), our court exp l aine d th at “[a]lthough appeals transfer jurisdiction from the district court to the appellate court conc e rning ‘those aspects of the case involved in the appeal,’ the district court is nonetheless free to adjudicate

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matters that are not involved in that appeal.” Weinga r t e n , 661 F.3d at 908 (quoting Griggs , 459 U.S. at 58). Weingarten further explained that “[a]n issue i s g enerally an aspect of the case on appeal if it results in the district c o u rt ’ s deciding an issue that the appellate court is deciding at the same time.” Id. at 909. The court concluded that “because answering the question of arbitrability does not determine the merits of the c a s e , th e m e rits are not an aspect of the case that is involved in the appeal on arbitrability.” Id. at 908. Here, unlike in Weingarten , the first interlocutory appeal div e s t e d the district court of jurisdiction to decide the second motion to compel. That motion raised arbitrability issues that are “an aspect of the case on appeal,” id. at 909, because it required the distric t c o u rt to address the same arbitrability issues involved in the first interlocutory appeal for the same purpose, i. e . , d e c i ding whether to compel arbitration of Berger’s claims. In other words, by deciding the second motion to compel, the district court decided arbitrability issues that this court was deciding at the same time, such as whether the Miller Declaration constitutes sufficient evidence of an assignment of contractual rights for
purposes of a motion to compel arbitration. Because the distric t c ourt lacked jurisdiction to decide the second motion to compel, the Second Order is vacated and our review is limited to the arbitrability of the claims covered by the First Order. B. D e ni al o f a motion to compel arbitration is reviewed de novo . E.g. , Webb

v. Investacorp, Inc. , 89 F.3d 252, 257 (5th Cir. 199 6) (p e r c uriam); Banks v. Mitsubishi Motors Credit of Am., Inc. , 156 F. App’x 710, 711 (5th Cir. 2005) (per curiam) (unpublished) (sufficiency of evidence of existence of arb itration agreement reviewed de novo). When considering a motion to compel arbitration, the court must determine: (1) whether a valid agreement to arbitrate exists between the parties, and (2) whether the dispute at issue falls within the scope
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of that agreement. Webb , 89 F.3d at 2 5 8

. B e r g e r does not contend there is no agreement; nor, as discussed infra , does he contend the disputes at issue are outside the scope of that agreement. 1. Therefore, primarily at issue is whether the right to arbitrate, provided by that agreement, was assigned to Securities America. It is undisputed that, if it
was, Securities America can enforce it under California law (the law controlling the agreement), despite Securities America’s not being a signatory to the agreement. Prograph Int’l Inc. v. Barhydt , 928 F. Supp. 983, 991 (N.D. Cal. 1996). I n d e nying application of the arbitration agreement, the district court concluded: While Securities America argues that it i s entitled to

enforce th e ter m s of the Arb itr ation Agreement between BYA and Berger as BYA’s assignee, the Court agrees with [Berger] and finds that [Securities America has] not suppl i e d s ufficient evidence to support [its] claims about the e xtent of any such contractual assignment. [Securities America has] only suppli e d a generic affidavit that claims that BYA assigned all of its contracts to Securities America, without supplying do c u mentary evidence of such a transactio n . I n a d dition , the Court finds that the principle of equitable estoppel does not apply in this case. (Emphasis added.) Review of the district court’s rejection of the Miller Declaration is not for abuse of discretion, because that rejection was not a ruling on the admissibility vel non of that evidence; instead, it was a ruling on the merits–the sufficiency vel

non of that evidence. The ruling at issue is that the Miller Declaration was insufficient to show BYA assigned its rights to Securities America. The district court erred in so ruling.

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In Doddy v. Oxy USA, Inc. , 101 F.3d 448 (5th Cir. 1996), our court held an

af f i davit in which a corporate officer attested to the fact that the corporation acquired its predecessor’s assets b u t n o t its liabilities, without attaching the contract o f sale evidencing the acquisition, was sufficient summary-judgment evidence when the statements in the affidavit were based on personal knowle dge and did not reference the contract of sale. Id. at 463. Likewi s e, the Miller Declaration was based on personal knowledge and did not reference the contract of sale. Moreover, there is a strong presumption in favor of arbitration under the FAA. See 9 U.S.C. § 2; see also M o s es H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24 (1983). Accordingly , f o r ruling on a motion to compel arbitration, the FAA requires “an expeditious and summary hearing, with only restricted inquiry into factual issues”. Moses H. Cone Mem’l Hosp. , 460 U.S. at 22. The party seeking to compel arbitration need only prove the existence of an agreement to arb itr ate by a preponderance of the evidence. See Banks , 156 F. App’x at 712. Given this strong presumption favoring arbitration, the summary nature of a motion to compel arbitration, and our precedent in Doddy , the Miller Declaration is sufficient evidence–in this motion-to-compel setting–to establish the assignment of BYA’s rights to Securities America by a preponderance of the evidence. See id. (uncontroverte d af fidavit sufficient to show existence of agreement by preponderance). 2. Because of the strong presumption in favor of arbitration, th e b urden

shif t s to the party opposing arbitration to demonstrate either that th e a gre e m e nt is invalid or, at a minimum, to allege the dispute is outside of the agreement’s
scope. Carter v. Countrywide Credit Indus., Inc. , 362 F. 3 d 2 9 4, 297 (5th Cir. 2004); see also Banks , 156 F. App ’ x at 7 12 (claims within scope because

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nonmoving party did not allege claims were outside it). In this regard, the Miller Declaration is uncontroverted; no oth e r bases in opposition to arbitration are raised. In other words, Berger does not as s ert his claims are not covered by the arbitration agreement. In any event, they fall within its scope. As the district co urt f ound, this agreement is a “broadly worded” agree m e nt

. A broad arbitration agreement is “capable of expansive reach”, intended to cover “all aspects of the relationship”; a dispute th en need only “touch matters covered” by the agreement in order to compel arbitration. Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd. , 139 F.3d 1061, 1067-68 (5th Cir. 1998). Furthermore, our court ha s held that a broadly worded

arb itration agreement covers claims related to private inve s t m e nt s out si de of th e brokerage firm. See Downer v. Siegel , 489 F.3d 623, 627 (5th Cir. 200 7). This agreement c overs “any controversy” between the parties or its registered agents. In the light of this, and similar, language in the agreement,

our precedent, and the federal-law preference for arbitration, all of Berger’s

c l ai ms over which we have jurisdiction fall within the scope of the arbitration agreement. 1 III. For the foregoing reasons, the distri c t court’s 10 January 2011 order is VACATED, the dis trict court’s 9 March 2011 order is VACATED for lack of jurisdiction, and this matter is REMANDED for further proceedings consistent with this opinion.

Becaus e the dis tri ct court lack ed juris dic tio n to ente r its Sec o n d Or der , Berger ’s 1 negligent training and sup ervi s i o n and “s ellin g aw ay” clai ms addres se d ther ein are not pr ope rly bef

ore us and we expr es s no opi nion regar ding wh ethe r or not they are cover ed by the arbit ration agree me nt. That is a qu es tio n f or the dis tri ct court in the fir stin st ance . 9 Case: 11-30161 Document: 00511798444 Page: 9 Date Filed: 03/23/2012No. 11-30161

RHESA HAWKINS BARKSDALE, Circuit Judge, dissenting in part. I respectfully dissent f r om the majority’s holding in part II.A. at 6 that “the district court lacked jurisdiction to decide the second motion to compel”, which concerned Berger’s second amended complaint, pending resolution of the

a p p e al from the earlier denial of the first motion to compel, which concern e d Berger’s amended complaint. As discussed in the majority opinion at 4, the second amended complaint

was filed after the first motion to compel was filed, but before the First Order, which denied that motion. Except for new para graphs 40-43, which added two

new claims, the second a m e n d e d complaint was identical to the amended complaint. “[A]n amended complaint ordinarily supersedes the [preceding complaint] and renders it of no l egal effect, unless the amended complaint specifically refers to or adopts the earlier pleading”. Boelens v. Redman Homes, Inc. , 759 F.2d 504, 508 (5th Cir. 1985). Because the second amended complaint did neither, it superseded the amended complaint. As such, the first motion to compel, and resulting First Order, concerned

a complaint that carried “no legal effect” when that order was issued. See id

. On the other hand, the second motion to compel and corresponding Second Order (issued after the notice of appeal from the First Order was filed), addressed the

new claims in the second amended complaint, which was the operative, or “live”, complaint and included all of Berger’s claims, new and old. The reasoning and ruling in the Second Order were a continuation and validation of those in the First Order. Therefore, the di s trict court had jurisdiction to enter the Second Order insofar as it brought completion and legal effect to th e arb itrability determination. In any event, pursuant to Weingarten Realty Investors v. Miller , 661 F.3d 904 (5th Cir. 2011), and contrary to the majority’s analysis, the district court had

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jurisdiction to issue the Second Order. Weingarten held an interlocutory appeal from denial of a motion to compel arbitration does not automatically divest the district court of jurisdiction to proceed with other issues in that acti o n . I d

. at 908. Instead, the district court maintains jurisdiction over matters not involved in the appeal. Id. ; see also Alice L. v. Dusek , 492 F.3d 563, 564-65 (5th Cir. 2007). Consistent with that, the district court did not stay this action pending the appeal from the First Order. “A narrow interpretation is normally appropriate” when a court addresses how broadly to define the aspects of an appeal. Weingarten , 661 F.3d at 908. The aspects of Appellants’ first appeal, when narrowly interpreted, can be defined as the arbitrability vel non of the claims stated in Berger’s amended complaint and addressed in Appellants’ first motion to compel. As discussed, Berger’s second amended complaint raised two new claims not addressed in that first motion to compel. As such, Appellants’ second motion to compel, and the resulting Second Order, only addressed claims not included in the First Order. This framing of the “as p e c t s o n appeal” is supported by precedent. In Griggs v. Providen t Co n s u mer Discount Co. , 459 U.S. 56, 58 (1982), the Court held jurisdiction was divested when a notice of appeal challenging a judgment

was filed while a motion to amend that judgment was pending. See Weingarten , 661 F.3d at 909 (summarizing Griggs). On the other hand, in Alaska Electrical Pension Fund v. Flowserve Corp. , 572 F.3d 221 ( 5 th Cir. 2009), our court held jurisdicti o n was not divested when an appeal was filed on a matter (denial of class certification) distinct from that being addressed in a m o ti o n i n district court (loss-causation on the merits), despite the fact that “the two issues [were] practically identical”. Id

. at 233; see also Weingarten , 661 F.3d at 909 (discussing Alaska Electrical). In the action at hand, the second motion to compel addressed distinct/new claims from those on appeal. Therefore, a stay pending appeal not having been

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imposed by the district court, it had juri s dic ti on to rule on the second motion, despite the dispositive issue in each (arbitrability vel n o n) being identical. To hold otherwise impermissibly exalts form over substance, resulting in unnecessary delay in resolution of this action, waste of scarce judicial resources, and needless expense for the parties. Accordingly, under either basis, the district court had jurisdiction to rule

on the second motion to compel arbitration, resultin g i n the appeal from the denial of that motion being properly before our co u rt f o r resolution now. Therefore, I respectfully dissent from the majority’s holding the district court lacked such jurisdiction.

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