Hamrit v. Citigroup Global Markets, Inc.

Background

Houssam Eddine Hamrit, proceeding without a lawyer, sued Citigroup Global Markets, Inc., Citi Personal Wealth Management, and Citigroup, Inc. He alleged that a purchase of AERC stock was executed through his Citigroup brokerage account without his authorization. The complaint sought the return of $432,225, $10 million in punitive damages, interest, costs, and expenses.

Citigroup moved to compel arbitration and to dismiss or stay the case while arbitration proceeded. It relied on a Client Agreement that it said Hamrit electronically signed on May 3, 2020. The agreement contained a broad arbitration clause requiring disputes involving his Citigroup accounts, transactions, and agreements to be decided by the Financial Industry Regulatory Authority.

Issue and governing law

The Federal Arbitration Act generally makes written arbitration agreements enforceable. But arbitration depends on consent: a court cannot require arbitration unless the parties actually formed an agreement to arbitrate. The court, rather than an arbitrator, must decide whether the arbitration agreement was formed in the first place.

Citigroup had the initial burden of showing an apparent written agreement to arbitrate. After Citigroup produced the Client Agreement and electronic-signature record, Hamrit had to provide some evidence supporting his denial that he signed it. Because motions to compel arbitration are evaluated under a standard similar to summary judgment, the court had to draw reasonable inferences in Hamrit’s favor and could not resolve disputed factual issues based solely on competing declarations.

Analysis

Hamrit unequivocally stated in declarations signed under penalty of perjury that he never completed the application, signed the Client Agreement, or agreed to arbitration. He identified apparent inaccuracies in the agreement, including information about his immigration status, his mother’s maiden name, his address, his income, and his company. The court did not rely on the declarations of Hamrit’s purported forensic expert in reaching its decision.

Citigroup submitted evidence describing how a customer could open a C29 Brokerage Account through the Citibank mobile application. It also relied on statements from Matthew K. Higman that Citigroup employees could not open such an account for a customer and that the electronic-signature record established that Hamrit had opened the account. The court found these assertions conclusory and insufficiently explained. The account-opening process did not itself show that a Citigroup employee could not have opened the account, and Citigroup did not adequately explain why the electronic-signature record proved that Hamrit personally completed the online steps.

The court concluded that Hamrit had presented enough evidence to create a genuine dispute about whether he entered into the Client Agreement. The court emphasized that this finding did not establish that Hamrit was correct; it meant only that credibility assessments and factual disputes required a trial.

Disposition

The court held Citigroup’s motion to compel arbitration in abeyance. It ordered a bench trial on whether Hamrit entered into an agreement to arbitrate, because Hamrit had not demanded a jury trial on that specific issue. The court also ordered the parties to attend a status conference to set a trial date and discuss whether limited, expedited pretrial discovery would be useful. The court did not decide whether Hamrit’s alleged stock purchase was unauthorized, whether Citigroup owed him reimbursement, or whether an arbitration agreement ultimately existed.