AG Edwards & Sons, Inc. v. Petrucci

525 So. 2d 918, 1988 WL 39138
CourtDistrict Court of Appeal of Florida
DecidedApril 27, 1988
Docket87-1509
StatusPublished
Cited by3 cases

This text of 525 So. 2d 918 (AG Edwards & Sons, Inc. v. Petrucci) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AG Edwards & Sons, Inc. v. Petrucci, 525 So. 2d 918, 1988 WL 39138 (Fla. Ct. App. 1988).

Opinion

525 So.2d 918 (1988)

A.G. EDWARDS & SONS, INC., and James S. Pinkerton, Appellants,
v.
Vincent PETRUCCI and Barbara Petrucci, Appellees.

No. 87-1509.

District Court of Appeal of Florida, Second District.

April 27, 1988.

Douglas R. Bald and Andrew Shaw of Fergeson, Skipper, Shaw, Keyser, Baron & Tirabassi, P.A., Sarasota, for appellants.

Steven G. Schember and George Franjola of Dykema, Gossett, Spencer, Goodnow & Trigg, Sarasota, for appellees.

DANAHY, Chief Judge.

This appeal arises from a contract for stockbrokerage services between the appellants, defendants in the trial court, and the appellees, plaintiffs below. The appellants moved for and were granted an order compelling arbitration of all counts in the complaint except one whose issue is not relevant here. The motion to compel arbitration was pursuant to the account agreement between the parties. At the arbitration hearing, the appellees presented Thomas E. Nix as an expert witness in the areas of securities trading and investments. On voir dire the appellants' counsel sought to disqualify Nix by showing that counsel had contacted the institutions which had purportedly granted Nix's degrees but that the institutions replied that they had not, in fact, bestowed the claimed degrees upon Nix. The appellees refused to withdraw Nix as their expert, and the arbitrator received *919 Nix's opinion testimony into evidence subject to later verification of his academic status which qualified him as an expert. After the hearing, but before the arbitrator made his decision, the appellees themselves further investigated Nix's background and credentials only to find that Nix was not what he claimed to be and did not have the background and training to qualify him as an expert.[1] Based on what they had discovered, the appellees asked the arbitrator to withdraw from his consideration all of Nix's opinion testimony leaving in only Nix's computations as to damages since Nix's computations were substantially the same as the appellants' computations on that issue. The appellees further urged the arbitrator to decide the case as to liability and damages after excluding consideration of Nix's opinion testimony. The arbitrator did exactly what the appellees asked and, thereafter, entered his decision finding in favor of the appellants on all claims.

The appellees then moved the trial court to vacate the award which they now claimed was based on fraud. Their motion stated that "[t]he hearing in this matter and the award of the arbitrator was so tainted by the fraudulent testimony of a witness that justice requires that the award be vacated." The appellants countermoved to strike the appellees' motion to vacate on the grounds that there was no fraud within the meaning of the applicable law. The trial court held a hearing and received several posthearing memoranda containing the various arguments of the parties. The trial court, granting the appellees' motion to vacate,[2] specifically found:

5. Although Mr. Nix's calculations were not stricken from the record, these calculations, without the benefit of expert testimony as to their significance, are meaningless.
... .
7. Mr. Nix committed a fraud upon the parties, their counsel and the arbitrator. The award, therefore, was procured by fraud within the meaning of § 10(a) of the United States Arbitration Act, 9 U.S.C. § 10, which act applies to this dispute.

The appellants appeal from this order.

As a threshold matter, we must decide whether, since the trial court found in its order vacating the arbitration award that the proceedings were pursuant to the Federal Arbitration Act, 9 United States Code, section 10, the state court had jurisdiction to hear those matters. The appellants cite to us Hilton Construction Co. v. Martin Mechanical Contractors, Inc., 166 Ga. App. 40, 303 S.E.2d 119, aff'd, 251 Ga. 701, 308 S.E.2d 830 (1983). The posture of the case before the appellate court in Hilton was different than in the case before us: the appeal was from a final order of the trial court which had granted one party's motion to confirm the award when it also had before it the other party's prior motion to vacate the award. The Hilton court concluded that because the wording of 9 United States Code, sections 3 and 9, differed from the wording of 9 United States Code, section 10, the state court did not have jurisdiction to vacate an arbitration award, although it did have jurisdiction to stay trial proceedings pending arbitration and confirm the resulting award.

The pertinent parts of 9 United States Code, sections 3 and 9, which seem to confer jurisdiction on federal as well as state courts, read as follows:

§ 3. Stay of proceedings where issue therein referable to arbitration
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration *920 under an agreement in writing for such arbitration, the court in which such suit is pending, ... shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, ... .
... .
§ 9. Award of arbitrators; confirmation; jurisdiction; procedure
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made.

On the other hand, 9 United States Code, section 10, seems to restrict jurisdiction to federal courts if the motion is only one to vacate. The relevant portion of the statute reads:

§ 10. Same; vacation; grounds; rehearing
In either of the following 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 —
(a) Where the award was procured by corruption, fraud, or undue means.

The Georgia appellate court concluded that they could not ignore the clear language of section 10 restricting jurisdiction to federal courts because it was obvious that when Congress intended to confer concurrent jurisdiction, it had no trouble doing so as evidenced by sections 3 and 9. The appellate court affirmed the trial court's refusal to vacate the arbitration award on the jurisdictional grounds and further concluded that the trial court properly confirmed the award, which action was within its jurisdiction. On review, the Georgia Supreme Court affirmed the appellate court although the supreme court questioned the reasoning of the appellate court in differentiating the jurisdiction under section 10.

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Bluebook (online)
525 So. 2d 918, 1988 WL 39138, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ag-edwards-sons-inc-v-petrucci-fladistctapp-1988.