Jamieson v. Securities America, Inc.

Background

Robert and Judith Jamieson sued Securities America, Inc.; Securities America Advisors, Inc.; Hector A. May; Vania May Bell; and Executive Compensation Planners, Inc. The plaintiffs brought federal- and state-law claims concerning the handling and oversight of their Securities America brokerage accounts. The plaintiffs alleged that May and Bell diverted money, prepared false account statements, promoted investments outside Securities America, and recommended unsuitable financial products. They claimed losses of about $18 million.

The pending motion was filed by Securities America, which asked the court to stay the lawsuit and compel arbitration. The court applied the Federal Arbitration Act and considered whether the parties agreed to arbitrate, whether the claims fell within those agreements, and whether the proceedings should be stayed while arbitration occurred.

Agreement to Arbitrate

The court found that account applications executed by Robert Jamieson, Judith Jamieson, the Raymond David Jamieson Irrevocable Grandchildren’s Trust, and the Jamieson Family Foundation incorporated arbitration provisions. Those provisions required arbitration of all controversies concerning transactions, performance, or breach of the agreements, including other agreements between the parties.

The plaintiffs argued that Securities America had not shown a meeting of the minds because the documents were unsigned, incomplete, or unauthenticated. The court rejected that argument, finding that the arbitration provisions were presented in full and contained the essential terms. It also found that the executed account applications acknowledged receipt and understanding of the arbitration provisions. Judith Jamieson’s statement that she did not remember agreeing to arbitrate did not invalidate the provisions.

The plaintiffs also argued that Securities America Advisors, Inc. could not enforce provisions that referred to Securities America, Inc. The court applied a rule allowing a nonsignatory to enforce an arbitration agreement when the claims are closely connected to the agreement and the parties’ relationship. It found that the claims against Securities America Advisors were intertwined with the brokerage accounts and that the plaintiffs’ complaint treated the two Securities America entities as one for liability purposes.

The plaintiffs further challenged the connection between the arbitration provisions and the account applications, as well as differences among the provisions concerning governing law and the arbitration administrator. The court rejected those arguments, relying on declarations linking the provisions to the applications and finding that the differences did not affect the essential agreement to arbitrate.

Finally, the court found that a 2010 agreement did not replace the earlier arbitration agreements. The 2010 agreement concerned one particular account and contained neither a specific forum-selection clause nor language showing that the parties intended to cancel or replace their arbitration obligations.

Scope of Arbitration

The court determined that the arbitration provisions were broad because they covered “all controversies” concerning the parties’ agreements, including agreements made before or after the accounts were opened. The court held that the plaintiffs’ claims against Securities America arose from the entities’ alleged oversight and maintenance of the brokerage accounts and therefore fell within the arbitration provisions, even if the claims were labeled as federal or state statutory and common-law claims rather than contract claims.

Stay and Disposition

The court held that the claims against Securities America must be arbitrated and that a stay of the entire action was appropriate because those claims predominated. Although some claims were also asserted against May, Bell, and ECP, the court stayed all proceedings pending arbitration. The opinion also stated that criminal charges pending against Bell further supported staying the claims against her.

The court granted Securities America’s motion for a stay and to compel arbitration. The action was stayed pending further order. The plaintiffs and Securities America were directed to submit joint status letters by March 31, 2020, and every 90 days afterward, and to provide a status report within ten days after arbitration was completed.