Opinion
Civil Action 2:20-1103-BHH-MHC
11-23-2020
Wells Fargo Clearing Services, LLC d/b/a Wells Fargo Advisors Plaintiff, v. Walter G. Taylor, Defendant.
REPORT AND RECOMMENDATION
MOLLY H. CHERRY UNITED STATES MAGISTRATE JUDGE
This matter is before the Court on Plaintiff's Motion to Confirm Arbitration Award (“Motion”), pursuant to § 9 of the Federal Arbitration Act, 9 U.S.C. § 9. ECF No. 1.
Defendant Walter G. Taylor (“Taylor”), proceeding pro se, filed an Answer/Response to the Motion on June 26, 2020, wherein he indicated he “will be challenging the validity of the award and will be asking the court to vacate the award.” ECF No. 12 at 2 ¶ 10. Taylor did not otherwise move to vacate the award. On September 10, 2020, the undersigned issued an Order giving Taylor twenty-one days to submit any additional argument, legal authority or other material to support his request to vacate the arbitration award. ECF No. 22. On October 15, 2020, that deadline was extended until November 5, 2020. ECF No. 25. Taylor submitted a memorandum on November 10, 2020, ECF No. 27, and Plaintiff filed a Reply on November 18, 2020, ECF No. 29. Plaintiff's Motion is ripe for review.
In his Answer, Taylor admitted that jurisdiction was proper in this Court because the amount in controversy exceeds $75,000, and Taylor is a citizen of South Carolina while Plaintiff is not. ECF No. 1 at ¶ 3; ECF No. 12 at ¶ 3.
All pretrial proceedings in this case were referred to the undersigned pursuant to 28 U.S.C. § 636(b)(1)(A) and (B) and Local Civil Rule 73.02(B)(2)(e) (DSC). This Report and Recommendation is entered for review by the District Judge. For the reasons set forth below, the undersigned recommends that Plaintiff's Motion be granted.
BACKGROUND
This case arises from an arbitration proceeding before the Financial Industry Regulatory Authority (“FINRA”), Wells Fargo Clearing Services, LLC d/b/a Wells Fargo Advisors v. Taylor, No. 19-00050. ECF No. 1 at ¶ 5; ECF No. 12 at ¶ 5. On January 2, 2019, Plaintiff filed a Statement of Claim against Taylor to collect on a series of three promissory notes. See ECF No. 29-1. Plaintiff executed a FINRA Arbitration Submission Agreement on January 2, 2019. ECF No. 1-1. An arbitrator was assigned to the case on or around March 25, 2019. ECF No. 1-4.
Following a series of extensions, Taylor filed his Answer to the Statement of Claim on August 1, 2019. See ECF No. 29-4. Although Taylor stated that he planned to file counterclaims, he did not assert any in his Answer, see id. at 2 ¶ 5, nor did he file any counterclaims during the pendency of the arbitration. See Award, ECF No. 1-5 (showing that Taylor asserted various affirmative defenses but did not request any affirmative relief).
On September 24, 2019, the arbitrator issued an Order in which he concluded that Taylor had “taken full advantage of the FINRA forum in this matter and ha[d] filed pleadings and motions herein, ” such that the arbitrator ruled that Taylor was “bound by the terms and conditions of the FINRA Arbitration Submission Agreement as if he had signed and filed one in this matter.” ECF No. 1-2 at 2. Around the same time, Taylor executed a FINRA Arbitration Submission Agreement. ECF No. 1-3; see Ans., ECF No. 12 ¶ 6 (“Mr. Taylor under pressure signed the arbitration submission agreement. Mr. Taylor would not have signed agreement if he fully understood the agreement.”).
The arbitrator denied Taylor's motion to postpone the Feb. 3, 2020 hearing, but he granted Taylor's request to appear by phone and responded to Taylor's claims alleging “disadvantage.” See ECF No. 29-8 at 2-3. The arbitration hearing was held on February 3, 2020, in Raleigh, North Carolina. See ECF No. 1-5 at 1 & 3. The arbitrator rendered his award on February 27, 2020, in favor of Plaintiff and against Taylor. ECF No. 1-5.
LEGAL STANDARD
Section 9 of the Federal Arbitration Act (“FAA”) provides that when the parties agree in their arbitration agreement that a court will enter a judgment after the arbitrator's award, a party to the arbitration may apply for an order confirming the award any time within one year after the arbitration award is made. 9 U.S.C. § 9.
“It is well settled that a court's review of an arbitration award ‘is among the narrowest known to the law.'” U.S. ex rel. Coastal Roofing Co. v. P. Browne & Assocs., Inc., 771 F.Supp.2d 576, 579 (D.S.C. 2010) (quoting U.S. Postal Serv. v. Am. Postal Workers Union, AFL-CIO, 204 F.3d 523, 527 (4th Cir. 2000)). “[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.” Id. (quoting Taylor v. Nelson, 788 F.2d 220, 225 (4th Cir. 1986)); see also Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d Cir. 1987) (“Absent a statutory basis for modification or vacatur, the district court's task [is] to confirm the arbitrator's final award as mandated by section 9 of the Act.”). When reviewing an arbitrator's decision, the court must “determine only whether the arbitrator did his job-not whether he did it well, correctly, or reasonably, but simply whether he did it.” Wachovia Sec., LLC v. Brand, 671 F.3d 472, 478 (4th Cir. 2012) (internal quotation marks omitted).
DISCUSSION
I. Venue is Proper in this Court.
Taylor appears to challenge the venue of these proceedings, arguing that the judgment should not be confirmed in South Carolina but rather in Raleigh, North Carolina, where the arbitration occurred. ECF No. 27 at 4. The undersigned finds that venue is proper in this Court.
“[V]enue in an action to confirm an arbitration award may be established either under the FAA's special venue statute or under the general venue statute.” U.S. Ship Mgmt., Inc. v. Maersk Line, Ltd., 357 F.Supp.2d 924, 935 (E.D. Va. 2005); see Cortez Byrd Chips v. Bill Harbert Constr. Co., 529 U.S. 193, 198, 204 (2000) (holding that the venue provisions of the FAA, including sections 9 and 10, should be read permissively such that they supplement, but do not supplant, the general venue provision). The FAA provides that if no court is specified in the agreement of the parties, an application to confirm, vacate or modify an arbitration award may be brought in the district in which the award was made. See 9 U.S.C. §§ 9-11. Meanwhile, under the general venue statute, venue is proper in “a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located.” 28 U.S.C. § 1391(b)(1).
In this case, venue is proper in the District of South Carolina under both the FAA's special venue statute and the general venue statute. First, the parties' agreements to arbitrate provide that “[j]udgment upon any award rendered by an arbitration panel may be entered in any state or federal court of competent jurisdiction.” 2009 Promissory Note, ECF No. 29-1 at 9; 2011 Promissory Note, ECF No. 29-1 at 13; 2012 Promissory Note, ECF No. 29-1 at 17-18. Thus, the parties agreed that a motion to confirm could be brought in any federal court, including this Court.
Second, venue is also proper in this Court under 28 U.S.C. § 1391(b)(1). In his Answer, Taylor admitted that he is a citizen of South Carolina. ECF No. 1 at ¶ 3; ECF No. 12 at ¶ 3. Moreover, Taylor has directed this Court to mail correspondence to him at an address in Pawley's Island, South Carolina, see ECF No. 21, and he listed the same Pawley's Island address as his return address on the envelope in which he mailed his Answer in this case, see ECF No. 12-1. Similarly, during the arbitration proceedings, he represented that his “address and residence is in Pawleys Island[, ] South Carolina.” Apr. 4, 2019 e-mail, ECF No. 29-2 at 103. Thus, the undersigned concludes that venue is proper in this Court because Taylor is the only defendant and he resides in this District. See 28 U.S.C. § 1391(b)(1).
II. Plaintiff Has Not Established Any Ground for Vacatur.
Taylor “pleads to the court for vacatur, ” arguing that “under no circumstances should [the court] be motivated nor allowed to consider confirming the FINRA award.” ECF No. 27 at 5. The undersigned concludes that Taylor has failed to establish any grounds for vacatur.
Where a party seeks to vacate an award, it is that party's burden to prove that the unfavorable portions of the award should be vacated. See Coastal Roofing Co., 771 F.Supp.2d at 579. The Fourth Circuit has made clear “that under the FAA, a court ‘must' confirm an arbitration award ‘unless' a party to the arbitration demonstrates that the award should be vacated under one of [§ 10's] four enumerated grounds, ” Jones v. Dancel, 792 F.3d 395, 401 (4th Cir. 2015) (quoting Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 582 (2008)), or because the arbitrator manifestly disregarded the law, id. (citing Wachovia Sec., 671 F.3d at 483).
Section 10 of the FAA states, in relevant part:
(a) In any of the followi
ng cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.9 U.S.C. § 10(a).
Taylor argues generally that he was not granted fair and reasonable due process through the FINRA arbitration proceedings, see ECF No. 27 at 1, but he fails to set forth evidence sufficient to establish that any of his general grievances are grounds for vacatur. He complains that the arbitrator's legal fee of $24,000 was excessive, see id. at 2, but he has not provided any evidence to support this conclusion. He also states that although he had been told he could file a counterclaim, he was not granted the right to do so. Id. at 2-3. However, the record shows that Taylor filed an answer in the FINRA proceeding on August 1, 2019, see ECF No. 29-4, and the FINRA rules expressly state that an “answer to the statement of claim may include any counterclaims against the claimant . . . specifying all relevant facts and remedies requested, as well as any additional documents support such claim.” See FINRA Rule 13303(b), https://www.finra.org/rules-guidance/rulebooks/finra-rules/13303 (last visited Nov. 20, 2020). Taylor has not presented any evidence to support a finding that he was prevented from filing a counterclaim during the FINRA proceeding.
Similarly, Taylor complains that although he had been told that there would be three arbitrators, there was only one. ECF No. 27 at 2. It appears Plaintiff also anticipated three arbitrators, as Plaintiff's Statement of Claim requested that FINRA appoint a panel of three arbitrators for the case. See ECF No. 29-1 at 3 ¶ 4. However, pursuant to FINRA Rule 13806(b)(1), when there is no counterclaim, promissory-note arbitrations proceed with a single arbitrator, as opposed to three arbitrators. See https://www.finra.org/rules-guidance/rulebooks/finra-rules/13806 (last visited Nov. 20, 2020). Thus, the proceeding complied with the relevant rule.
Taylor also argues that he did not sign the submission agreement because he did not believe that he would be granted fair due process. ECF No. 27 at 2. He further asserts that the arbitrator signed the submission agreement as if Taylor had done so. Id. at 3. To the extent that Taylor is claiming that the arbitrator forged Taylor's name on the submission agreement, the undersigned finds no merit to the argument. First, Taylor provides no evidentiary support for this new forgery claim. Second, this claim is flatly contradicted by the statement in Taylor's Answer that “Mr. Taylor under pressure signed the arbitration submission agreement.” ECF No. 12 at ¶ 6. Finally, the signatures on his Answer and on his Memorandum before this Court (see id. at 2; ECF No. 27 at 5) appear the same as the signature on the arbitration submission agreement, see ECF No. 1-3 at 2.
Taylor's assertion that the arbitrator signed the submission agreement “as if Taylor had done it” may be a reference to the arbitrator's September 24, 2019 Order, in which he ruled that because Taylor had “taken full advantage of the FINRA forum in this matter and ha[d] filed pleadings and motions herein, ” Taylor was “bound by the terms and conditions of the FINRA Arbitration Submission Agreement as if he had signed and filed one in this matter, ” ECF No. 297 at 3 (emphasis added). However, the undersigned has reviewed the September 24 Order, as well as the entire record before the Court, and has found no evidence (1) that the award was procured by corruption, fraud or undue means; (2) of evident partiality or corruption in the arbitrator; (3) of arbitrator misconduct; (4) that the arbitrator exceeded his powers; or (5) of manifest disregard for the law. See 9 U.S.C. § 10(a); Dancel, 792 F.3d at 401. Accordingly, the undersigned concludes that Taylor has failed to prove that the arbitration award should be vacated. See Coastal Roofing Co., 771 F.Supp.2d at 579.
III. The Arbitrator's Award Should Be Confirmed.
The undersigned has reviewed the arbitrator's award to determine if he did his job and concludes that he did. See Wachovia Sec., 671 F.3d at 478. Therefore, the undersigned recommends that the Court grant Plaintiff's Motion and confirm the arbitrator's award.
CONCLUSION
For the foregoing reasons, it is RECOMMENDED that Plaintiff's Motion to Confirm the Arbitration Award, ECF No. 1, be GRANTED.
IT IS SO RECOMMENDED.
The parties are referred to the Notice Page attached hereto.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).