Lynch v. Sudaka-Karlsson

Full title: MERRILL LYNCH, PIERCE, FENNER SMITH, INC., LINUS G. COOKE, JOHN D. OLSON…

Court: Supreme Court of the State of New York, New York County

Date published: Dec 14, 2008

2008 N.Y. Slip Op. 33400 (N.Y. Sup. Ct. 2008)

Opinion

112826/08.

December 14, 2008.

DECISION, ORDER AND JUDGMENT

MICHAEL D. STALLMAN, J.

Petitioners, a brokerage house and several of its financial advisor employees, seek, pursuant to CPLR 7510, to confirm an arbitration award entered by a Financial Industry Regulatory Authority (FINRA) arbitration panel on March 31, 2007.

BACKGROUND

Respondent filed a Statement of Claim with FINRA on July 7, 2007, alleging that petitioners, along with other brokerage houses, conspired with her ex-husband to swindle her, and her ex-husband's employees, out of huge sums of money. Respondent, acting pro se both at the FINRA arbitration and in the instant opposition, sought damages in the amount of $17,000,000.

An arbitration hearing was held on March 11, 2007, after which the panel determined that the matter was time-barred, the occurrences alleged by respondent having taken place more that six years prior to the institution of the arbitration. Consequently, the claim was dismissed. Additionally, the panel determined that the claims against the individual financial advisors were baseless, and that the matter should be expunged from their records. It is noted that, in order to effectuate that expungement, the award must be confirmed by a court of competent jurisdiction.¹

1 By letter dated August 28, 2008, FINRA approved petitioners' request to waive the obligation to name FINRA as a party in judicial confirmation of the expungement relief contained in the award. See Verified Petition, Ex I.

Respondent did not seek judicial review of the arbitrators' decision. Respondent asserts that she was never told that she had only 90 days in which to seek judicial review of the arbitrators' determination, which she claims was a breach of the arbitrators' fiduciary obligation to her as a pro se claimant. Respondent further alleges that petitioners engaged in a series of swindles with her ex-husband, but fails to identify any such action with specificity.

FINRA Rule 12206 (a) specifies that "[n]o claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim."

Prior to making its determination, the arbitration panel engaged in lengthy discovery, and over 3,400 pages of documents were turned over to respondent. After hearing testimony from respondent, the panel determined that the matter was time-barred, pursuant to FINRA Rule 12206 (a). The panel further decided that the claims and allegations against the individual financial advisors, with the exception of Richard L. Ecklund a/k/a Richard Alan Petit, who did not appear, were factually impossible or clearly erroneous, and none was involved in any investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds, and that all reference to this matter should be expunged from these individuals' records.

DISCUSSION

Although respondent failed to seek judicial review to vacate the arbitration award within the legally permissible time period, pursuant to CPLR 7511 (a), she is entitled to oppose the instant petition to confirm that award.

The grounds for overturning an arbitration award are limited and specifically enumerated in CPLR 7511 (b): one, corruption, fraud or misconduct in procuring the award; two, partiality of an arbitrator; three, an award that exceeds the arbitrator's power; and four, the arbitrator failing to follow the procedures of Article 75 of the CPLR.

The function of any court in a proceeding to overturn an arbitration award "is not to decide the appropriateness or wisdom of the award or whether the judges of a court would have rendered the same award had they acted as arbitrators but, rather, to ascertain whether the arbitrator who did make the award exceeded his powers or so imperfectly executed then as to require vacatur." In the Matter of Marine Lines, Inc. (Crooks), 13 NY2d 206, 212 (1963). As a general rule, "[a]n arbitration award may not be vacated unless it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power." Matter of Board of Education of the Arlington Central School District v Arlington Teachers Association, 78 NY2d 33, 37 (1991). More simply stated, "[a] court . . . may not set aside an arbitrator's decision merely because it may disagree with the merits or appropriateness of the arbitrator's findings and award." Board of Education of Central School District No. 1 of the Towns of Niagara, Wheatfield, Lewiston and Cambria v Niagara Wheatfield Teachers Association, 54 AD2d 281, 284 (4^th Dept 1976).

As long as any plausible basis exists for an arbitration award, the court may not vacate it. Azrielant v Azrielant, 301 AD2d 269, 275 (1^st Dept 2002). Consequently, the party seeking to overturn the arbitration award has a heavy burden to vacate that award. See Lehman Bros., Inc. v Cox, 10 NY3d 743 (2008).

Respondent has failed to evidence any grounds that would allow the Court to overturn the arbitration award. Respondent's only contention is that alleged misconduct with respect to her ex-husband's company's employee retirement plan occurred within the six year period; however, respondent is not and was not an employee covered by the plan, and the panel determined that she had no standing to complain about any transactions associated with that plan. Respondent does not dispute the conclusion that the other events complained of occurred more than six years prior to the filing of her FINRA claim. Respondent has made conclusory allegations of fraud, conspiracy, bias and conflict of interest, with no substantiating evidence, which is ineffective to overturn the award. See Aviles v Allstate Insurance Company, 47 AD3d 710 (2d Dept 2008); Rose v J.J. Lowrey Co., 181 AD2d 418 (1^st Dept 1992).

Based on the foregoing, the Court grants the petition to confirm the arbitration award.

CONCLUSION

It is hereby

ADJUDGED that the petition to confirm the arbitration award is granted, and the arbitration award entered by FINRA on March 31, 2007, in the proceeding entitled Janeen Alice Sudaka-Karlsson, Claimant v Merrill Lynch, Pierce, Fenner Smith, Incorporated, Linus G. Cooke, John D. Olson, Erik W. Peske, Citigroup Global Markets, Inc., Marcelo C. Ippoliti, Arthur A. Auch, Kelly A. Walsh, James F. Ducey, Catherine M. Maguire, Karen G. Siannas, James Lombardi, Lisa M. Feld, Maria R. Frattaroli, Christine K. Cunningham, Thomas Duddie, Richard L. Ecklund a/k/a Richard Alan Petit, Katherine M. Ferraro, S. Goldman, Philip J. Gullo, Jelmena Orinthia Hudson, Joseph J. Plumeri, and JP Morgan Chase Bank, Respondents, FINRA Dispute Resolution Arbitration No. 07-00916, is confirmed, and it is further

ORDERED that all references to the above-referenced FINRA Dispute Resolution Arbitration No. 07-00916 be expunged from the respective registration records of petitioners Linus G. Cooke, John D. Olson, Eric W. Peske, Lisa M. Feld, and Maria R. Frattaroli maintained by FINRA's Central Registration depository, upon service of a copy of this decision, order, and judgment with notice of entry upon FINRA.