Court Opinion

ID: 931457
Source: CourtListenerOpinion
Date Created: 2013-06-25 00:15:30.796263+00
Date Added: 2024-06-11T11:19:41.322898
License: Public Domain

STATE OF WEST VIRGINIA

                          SUPREME COURT OF APPEALS

Dan Salamie, an individual,                                                       FILED
Plaintiff Below, Petitioner                                                       June 24, 2013
                                                                             RORY L. PERRY II, CLERK
                                                                           SUPREME COURT OF APPEALS
vs) No. 12-0634 (Kanawha County 11-C-2095)                                     OF WEST VIRGINIA

TD Ameritrade, Inc., a
New York corporation,
Defendant Below, Respondent

                              MEMORANDUM DECISION
       Petitioner Dan Salamie, by counsel Dana F. Eddy, appeals the Circuit Court of Kanawha
County’s order, entered April 12, 2012, granting Respondent TD Ameritrade, Inc.’s motion to
dismiss an action seeking vacatur of an arbitration award. Respondent appears by counsel
Mychal S. Schulz and Jennifer J. Hicks.

       This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate
Procedure.

       Petitioner filed a complaint in the Circuit Court of Kanawha County on November 23,
2011, seeking vacatur of an arbitration award made by the Financial Industry Regulatory
Authority’s (“FINRA”) Division of Dispute Resolution on January 11, 2011. The sole defendant
was TD Ameritrade. Petitioner did not serve respondent with the circuit court complaint until
December 30, 2011.

        Petitioner’s claims at arbitration were based in the asserted loss of $835,000 on October
10, 2010, through his investments with respondent. Petitioner claimed that he gave Bruce
Conrad, a financial advisor with respondent, explicit instructions about his investment portfolio
during a telephone conversation three years earlier, and that Mr. Conrad acted contrary to those
instructions. Petitioner further claimed that Mr. Conrad did not have an errors and omissions
policy of insurance, though respondent required its financial advisors to have such a policy, and
that respondent failed to ensure that Mr. Conrad had a policy.

        On June 22, 2010, after concluding the first hearing session, the arbitration panel granted
respondent’s motion to dismiss for reasons unspecified in the record on appeal, but Mr. Conrad
remained a party to that arbitration. While the arbitration proceedings were ongoing, petitioner
filed a complaint in the United States District Court for the Southern District of West Virginia

                                                1

seeking to vacate the arbitration panel’s dismissal of TD Ameritrade from the arbitration
proceedings. Soon thereafter, on January 11, 2011, the arbitration panel filed its final award. The
district court later granted, on August 19, 2011, motions to dismiss by TD Ameritrade and
FINRA, motions to which petitioner had not responded. The federal district court noted that the
arbitration panel had not entered a final award and it therefore lacked authority to consider the
plaintiff’s claims under the Federal Arbitration Act.

        By order entered April 12, 2012, the Circuit Court of Kanawha County granted
respondent’s motion to dismiss the complaint that petitioner filed on November 23, 2011,
because the complaint was not timely served. Petitioner filed his notice of appeal with this Court
on May 11, 2012. He argues, first, that the time for his filing of a complaint to vacate the
arbitration award was tolled by the pendency of his action in federal district court. Petitioner next
argues that he acted with due diligence, substantially complied with the Federal Arbitration Act,
and that respondent was not prejudiced by his delayed filing. This Court has previously held that
we consider a circuit court's order granting a motion to dismiss under a de novo standard of
review. Syl. Pt. 2, State ex rel. McGraw v. Scott Runyan Pontiac–Buick, Inc., 194 W.Va. 770,
461 S.E.2d 516 (1995).

        Under the Federal Arbitration Act, notice of a motion to vacate or modify an arbitration
award must be served upon the adverse party “within three months after the award is filed or
delivered.” 9 U.S.C. § 12. In this case, the award was filed on January 11, 2011. Petitioner
therefore had until April 11, 2011, to file and serve his motion to vacate the award. However, he
did not file his complaint until November 23, 2011, and did not serve that complaint on
respondent until December 30, 2011.

      The United States Fourth Circuit Court of Appeals has explained the effect of the three-
month period for filing:

       We adopt the rule embraced by the Second Circuit in Florasynth, Inc. v. Pickholz,
       750 F.2d 171 (2d Cir.1984), where that court held that once the three-month
       period has expired, an attempt to vacate an arbitration award could not be made
       even in opposition to a later motion to confirm. 750 F.2d at 174–75. A
       confirmation proceeding under 9 U.S.C. § 9 is intended to be summary:
       confirmation can only be denied if an award has been corrected, vacated, or
       modified in accordance with the Federal Arbitration Act. Under the Act, vacation
       of an award is obtainable by serving a motion to vacate within three months of the
       rendering of the award. 9 U.S.C. § 12. Because [appellant] did not move for
       confirmation until April 10, 1985, almost seven months after the award was filed,
       [appellee] would be prevented from seeking a vacatur of the award unless there
       was pending in the district court a timely-filed motion to vacate or unless a tolling
       or due diligence exception operated to excuse his failure to make a timely motion.

       We also conclude, however, that the district court erred in holding that
       [appellant’s] failure to make a motion to vacate within three months of the filing
       of the award was excused by due diligence or tolling. The existence of any such
       exceptions to § 12 is questionable, for they are not implicit in the language of the

                                                 2

       statute, and cannot be described as common-law exceptions because there was no
       common-law analogue to enforcement of an arbitration award. See Florasynth,
       750 F.2d at 174–77 (three-month limit is absolute); Piccolo v. Dain, Kalman &
       Quail, Inc., 641 F.2d 598, 601 (8th Cir.1981) (due diligence exception
       questionable, but due diligence did not appear on facts of this case).

Taylor v. Nelson, 788 F.2d 220, 225 (4th Cir. 1986) (footnote omitted). In footnote two of Taylor,
the court explained that “[u]nder the Act, a party seeking confirmation of an award may petition
for confirmation within one year of the date the award is made. 9 U.S.C. § 9 (1982). We note that
if a party opposing confirmation were always permitted to seek a vacatur in opposition to a
petition to confirm, the three-month limit would have little practical effect.” Id. at 225 n. 2.

         We need not consider whether pendency of the related federal action tolled the time for
the filing of the motion to vacate the arbitration award, because even if it did, the petitioner did
not serve his complaint on respondent until December 30, 2011, more than four months after the
federal district court’s dismissal of its action. In addition, petitioner failed to respond to the
motions to dismiss in the federal action, did not file the final arbitration award with the federal
court when the final award was entered, and did not otherwise bring the final award to the
attention of the federal court. Thus, we do not find that petitioner “substantially complied” with
the Federal Arbitration Act. The requirements of 9 U.S.C. § 12 are mandatory and unambiguous,
and as in Taylor, due diligence did not appear in the facts of this case, and petitioner was not
prevented by the pendency of any other action from seeking vacatur. The circuit court therefore
did not err in dismissing petitioner’s complaint.

       For the foregoing reasons, we affirm.

                                                                                         Affirmed.

ISSUED: June 24, 2013

CONCURRED IN BY:

Chief Justice Brent D. Benjamin
Justice Robin Jean Davis
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Allen H. Loughry II

                                                 3