I N THE COURT OF APPEALS OF TENNESSEE
DUANE A. PETERS, ) ) FILED C/ A NO. 03A01- 9508- CV- 00295 BLOUNT COUNTY CI RCUI T COURT Pl a i nt i f f - Appe l l a nt , ) ) March 5, 1996 ) ) Cecil Crowson, Jr. v. ) Appellate C ourt Clerk
) HONORABLE W DALE YOUNG, . ) J UDGE ) ) ) ) COM ONW M EALTH ASSOCI ATES, ) ) APPEAL DI SM SSED I De f e nda nt - Appe l l e e . ) REMANDED
KEVI N W SHEPHERD, M r yvi l l e , f or Appe l l a nt . . a
DAVI D T. BLACK a nd C. EDW N SHOEM I AKER of KI ZER AND BLACK, M r y v i l l e , f or Appe l l e e . a
O P I N I O N
Sus a no, J .
1 Thi s i s a n a c t i on br ought by Dua ne A. Pe t e r s ( Pe t e r s )
f o r a l l e ge d vi ol a t i ons of t he Te nne s s e e Se c ur i t i e s Ac t of 1980 1
a n d t h e Te nne s s e e Cons ume r Pr ot e c t i on Ac t of 1977 2 . Pe t e r s ' s ui t
a g a i n s t Commonwe a l t h As s oc i a t e s ( Commonwe a l t h) a r os e out of
i n v e s t me nt s ma de by Pe t e r s t hr ough Da vi d Dudki n, a n a ge nt of
Co mmo n we a l t h. Commonwe a l t h move d t o s t a y t hi s a c t i on a nd t o
c o mp e l a r bi t r a t i on of Pe t e r s ' c l a i ms pur s ua nt t o T. C. A. § 29- 5 -
3 0 1 e t s e q. , t he Uni f or m Ar bi t r a t i on Ac t 3 . I n s uppor t of i t s
mo t i o n , Commonwe a l t h r e l i e d upon a wr i t t e n a gr e e me nt , s i gne d by
Pe t e r s , whe r e i n h e a gr e e d t o s ubmi t a l l c ont r ove r s i e s be t we e n t h e
p a r t i e s t o a r bi t r a t i on. The t r i a l c our t gr a nt e d Commonwe a l t h' s
mo t i o n , s t a yi ng a l l pr oc e e di ngs i n c our t a nd or de r i ng t he pa r t i e s
t o p r o c e e d wi t h a r bi t r a t i on. Pe t e r s a ppe a l s , r a i s i ng t he
f o l l o wi ng i s s ue s :
1. I s t he a r bi t r a t i on a gr e e me nt voi d unde r t he pr ovi s i ons of t he Te nne s s e e Se c ur i t i e s Ac t of 1980?
2. Di d t he t r i a l c our t e r r i n or de r i ng a r bi t r a t i on o f Pe t e r s ' c l a i ms ?
1 T.C.A. § 48-2-101, et seq.
2 T.C.A. § 47-18-101, et seq. 3 Commonwealth also relied upon the Federal Arbitration Act. We do not find it necessary to determine if this federal legislation is applicable to this case. Cf. Arnold v. Morgan Keegan & Co., Inc., 03S01-9410-CH-00091, 1996 WL 15857 at *7, footnote 2 (Supreme Court at Knoxville, January 16, 1996).
2 I
Pe t e r s doe s not di s put e t ha t he s i gne d a " Cus t ome r
Ag r e e me nt " wi t h Commonwe a l t h whi c h s t a t e s t ha t " c ont r ove r s i e s
a r i s i n g be t we e n [ Pe t e r s ] a nd [ Commonwe a l t h] . . . s ha l l be
d e t e r mi ne d b y a r bi t r a t i on. " He a s s e r t s , h owe ve r , t h a t t he
a g r e e me nt i s voi d unde r t h e f ol l owi ng pr ovi s i on of t he Te nne s s e e
Se c u r i t i e s Ac t of 1980:
Any c ondi t i on, s t i pul a t i on, or pr ovi s i on bi ndi ng a ny pe r s on a c qui r i ng a ny s e c ur i t y t o wa i ve c ompl i a nc e wi t h a ny pr ovi s i on of t hi s pa r t or a ny r ul e or or de r he r e unde r i s voi d.
T. C. A. § 48- 2- 122( i ) . Pe t e r s c ont e nds t ha t " t he a r bi t r a t i on
l i mi t a t i on wi t hi n h i s Cus t ome r Agr e e me nt i s a pr ovi s i on whi c h
wo u l d a t t e mpt t o l i mi t [ hi s ] a bi l i t y t o c ha l l e nge " Commonwe a l t h
f o r a l l e ge d s t a t ut or y vi ol a t i ons . Pe t e r s f ur t he r a r gue s t ha t
" [ t ] h e t r i a l c our t ' s a c t i on i n c ompe l l i ng a r bi t r a t i on ha s i n
e f f e c t pr e e mpt e d t he a ppl i c a t i on of t he t wo s t a t ut or y vi ol a t i on s
r a i s e d by [ hi m] . "
As c a n b e s e e n, Pe t e r s a r gue s i n t he a l t e r na t i ve .
Fi r s t , he c ont e nds t ha t t hi s c a s e i s not c ont r ol l e d by t he
Un i f o r m Ar bi t r a t i on Ac t be c a us e , s o t he a r gume nt goe s , t he
a r b i t r a t i on pr ovi s i on i n q ue s t i on i s voi d a s vi ol a t i ve of T. C. A.
§ 4 8 - 2 - 122( i ) . Se c ond, he c ont e nds t ha t e ve n i f t he Uni f or m
Ar b i t r a t i on Ac t a ppl i e s , t he t r i a l c our t s houl d not ha ve or de r e d
3 a r b i t r a t i on. W wi l l a ddr e s s t he a ppe l l a nt ' s f i r s t i s s ue f or t he e
t h r e s h o l d pur pos e of de t e r mi ni ng whe t he r t he pa r t i e s ' Cus t ome r
Ag r e e me nt i s s ubj e c t t o t he Uni f or m Ar bi t r a t i on Ac t .
II
The pos i t i on a dv a nc e d by Pe t e r s i n hi s f i r s t i s s ue wa s
r e j e c t e d b y t he Uni t e d St a t e s Supr e me Cour t i n a c a s e a r i s i ng
u n d e r a f unc t i ona l l y i de nt i c a l pr ovi s i on of t he f e de r a l
Se c u r i t i e s Ac t of 1933. I n Rodr i gue z de Qui j as v .
She a r s o n/ Ame r i c an Exp. , I nc . , 490 U. S. 477, 109 S. Ct . 1917, 10 4
L. Ed . 2 d 526 ( 1989) , t he c our t f ound a n a gr e e me nt t o a r bi t r a t e
d i s p u t e s e nf or c e a bl e , not i ng t ha t
[ b] y a gr e e i ng t o a r bi t r a t e a s t a t ut or y c l a i m, a pa r t y doe s not f or go t he s ubs t a nt i ve r i ght s a f f or de d by t he s t a t ut e ; i t onl y s ubmi t s to t he i r r e s ol ut i on i n a n a r bi t r a l , r a t he r t ha n a j udi c i a l , f or u m.
I d . , 4 9 0 U. S a t 481, 109 S. Ct a t 1920. W a gr e e wi t h t he e
a n a l y s i s of t he Supr e me Cour t . Pe t e r s ' s ubs t a nt i ve s t a t ut or y
r i g h t s wi l l not be a br i dge d by s ubmi s s i on of hi s c l a i ms t o a b o d y
o f a r b i t r a t or s r a t he r t ha n t o a j udi c i a l f or um. The f ol l owi ng
o b s e r v a t i on by t he c our t i n Rodr i gue z de Qui j as hol ds t r ue he r e :
The r e i s not hi ng i n t he r e c or d be f or e us , nor i n t he f a c t s o f whi c h we c a n t a ke j udi c i a l not i c e , t o i ndi c a t e t ha t t he a r bi t r a l s ys t e m . . . woul d not a f f or d t he pl a i nt i f f t he r i ght s t o whi c h he i s e nt i t l e d.
4 I d . , 4 9 0 U. S. a t 483, 109 S. Ct . a t 1921. W hol d t he a r bi t r a t i o n e
p r o v i s i on a t i s s ue i n t hi s c a s e i s not voi de d by T. C. A. § 48- 2 -
122( i ) . The r e f or e , t he pa r t i e s ' Cus t ome r Agr e e me nt i s s ubj e c t t o
t he Un i f or m Ar bi t r a t i on Ac t .
III
Re ga r di ng Pe t e r s ' ge ne r a l c ha l l e nge t o t he t r i a l
c o u r t ' s or de r c ompe l l i ng a r bi t r a t i on, Commonwe a l t h a r gue s t ha t
s u c h a n or de r i s not a ppe a l a bl e unde r Te nne s s e e ' s s t a t ut or y
a r b i t r a t i on s c he me . W a gr e e . e I n t he unr e por t e d c a s e of
Ande r s o n Count y v . Ar c hi t e c t ur al Te c hni que s Cor p. , No. 03A01-
9 2 0 5 - CH- 00184, 1993 W 592 1 ( Cour t of Appe a l s a t Knoxvi l l e , L
J a n u a r y 14, 1993) ( Fr a nks , J . ) , t hi s c our t a ddr e s s e d t he que s t i o n
o f wh e t he r a n or de r c ompe l l i ng a r bi t r a t i on i s a ppe a l a bl e , a nd
c o n c l u d e d i t wa s not .
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I N THE COURT OF APPEALS OF TENNESSEE
DUANE A. PETERS, ) ) FILED C/ A NO. 03A01- 9508- CV- 00295 BLOUNT COUNTY CI RCUI T COURT Pl a i nt i f f - Appe l l a nt , ) ) March 5, 1996 ) ) Cecil Crowson, Jr. v. ) Appellate C ourt Clerk
) HONORABLE W DALE YOUNG, . ) J UDGE ) ) ) ) COM ONW M EALTH ASSOCI ATES, ) ) APPEAL DI SM SSED I De f e nda nt - Appe l l e e . ) REMANDED
KEVI N W SHEPHERD, M r yvi l l e , f or Appe l l a nt . . a
DAVI D T. BLACK a nd C. EDW N SHOEM I AKER of KI ZER AND BLACK, M r y v i l l e , f or Appe l l e e . a
O P I N I O N
Sus a no, J .
1 Thi s i s a n a c t i on br ought by Dua ne A. Pe t e r s ( Pe t e r s )
f o r a l l e ge d vi ol a t i ons of t he Te nne s s e e Se c ur i t i e s Ac t of 1980 1
a n d t h e Te nne s s e e Cons ume r Pr ot e c t i on Ac t of 1977 2 . Pe t e r s ' s ui t
a g a i n s t Commonwe a l t h As s oc i a t e s ( Commonwe a l t h) a r os e out of
i n v e s t me nt s ma de by Pe t e r s t hr ough Da vi d Dudki n, a n a ge nt of
Co mmo n we a l t h. Commonwe a l t h move d t o s t a y t hi s a c t i on a nd t o
c o mp e l a r bi t r a t i on of Pe t e r s ' c l a i ms pur s ua nt t o T. C. A. § 29- 5 -
3 0 1 e t s e q. , t he Uni f or m Ar bi t r a t i on Ac t 3 . I n s uppor t of i t s
mo t i o n , Commonwe a l t h r e l i e d upon a wr i t t e n a gr e e me nt , s i gne d by
Pe t e r s , whe r e i n h e a gr e e d t o s ubmi t a l l c ont r ove r s i e s be t we e n t h e
p a r t i e s t o a r bi t r a t i on. The t r i a l c our t gr a nt e d Commonwe a l t h' s
mo t i o n , s t a yi ng a l l pr oc e e di ngs i n c our t a nd or de r i ng t he pa r t i e s
t o p r o c e e d wi t h a r bi t r a t i on. Pe t e r s a ppe a l s , r a i s i ng t he
f o l l o wi ng i s s ue s :
1. I s t he a r bi t r a t i on a gr e e me nt voi d unde r t he pr ovi s i ons of t he Te nne s s e e Se c ur i t i e s Ac t of 1980?
2. Di d t he t r i a l c our t e r r i n or de r i ng a r bi t r a t i on o f Pe t e r s ' c l a i ms ?
1 T.C.A. § 48-2-101, et seq.
2 T.C.A. § 47-18-101, et seq. 3 Commonwealth also relied upon the Federal Arbitration Act. We do not find it necessary to determine if this federal legislation is applicable to this case. Cf. Arnold v. Morgan Keegan & Co., Inc., 03S01-9410-CH-00091, 1996 WL 15857 at *7, footnote 2 (Supreme Court at Knoxville, January 16, 1996).
2 I
Pe t e r s doe s not di s put e t ha t he s i gne d a " Cus t ome r
Ag r e e me nt " wi t h Commonwe a l t h whi c h s t a t e s t ha t " c ont r ove r s i e s
a r i s i n g be t we e n [ Pe t e r s ] a nd [ Commonwe a l t h] . . . s ha l l be
d e t e r mi ne d b y a r bi t r a t i on. " He a s s e r t s , h owe ve r , t h a t t he
a g r e e me nt i s voi d unde r t h e f ol l owi ng pr ovi s i on of t he Te nne s s e e
Se c u r i t i e s Ac t of 1980:
Any c ondi t i on, s t i pul a t i on, or pr ovi s i on bi ndi ng a ny pe r s on a c qui r i ng a ny s e c ur i t y t o wa i ve c ompl i a nc e wi t h a ny pr ovi s i on of t hi s pa r t or a ny r ul e or or de r he r e unde r i s voi d.
T. C. A. § 48- 2- 122( i ) . Pe t e r s c ont e nds t ha t " t he a r bi t r a t i on
l i mi t a t i on wi t hi n h i s Cus t ome r Agr e e me nt i s a pr ovi s i on whi c h
wo u l d a t t e mpt t o l i mi t [ hi s ] a bi l i t y t o c ha l l e nge " Commonwe a l t h
f o r a l l e ge d s t a t ut or y vi ol a t i ons . Pe t e r s f ur t he r a r gue s t ha t
" [ t ] h e t r i a l c our t ' s a c t i on i n c ompe l l i ng a r bi t r a t i on ha s i n
e f f e c t pr e e mpt e d t he a ppl i c a t i on of t he t wo s t a t ut or y vi ol a t i on s
r a i s e d by [ hi m] . "
As c a n b e s e e n, Pe t e r s a r gue s i n t he a l t e r na t i ve .
Fi r s t , he c ont e nds t ha t t hi s c a s e i s not c ont r ol l e d by t he
Un i f o r m Ar bi t r a t i on Ac t be c a us e , s o t he a r gume nt goe s , t he
a r b i t r a t i on pr ovi s i on i n q ue s t i on i s voi d a s vi ol a t i ve of T. C. A.
§ 4 8 - 2 - 122( i ) . Se c ond, he c ont e nds t ha t e ve n i f t he Uni f or m
Ar b i t r a t i on Ac t a ppl i e s , t he t r i a l c our t s houl d not ha ve or de r e d
3 a r b i t r a t i on. W wi l l a ddr e s s t he a ppe l l a nt ' s f i r s t i s s ue f or t he e
t h r e s h o l d pur pos e of de t e r mi ni ng whe t he r t he pa r t i e s ' Cus t ome r
Ag r e e me nt i s s ubj e c t t o t he Uni f or m Ar bi t r a t i on Ac t .
II
The pos i t i on a dv a nc e d by Pe t e r s i n hi s f i r s t i s s ue wa s
r e j e c t e d b y t he Uni t e d St a t e s Supr e me Cour t i n a c a s e a r i s i ng
u n d e r a f unc t i ona l l y i de nt i c a l pr ovi s i on of t he f e de r a l
Se c u r i t i e s Ac t of 1933. I n Rodr i gue z de Qui j as v .
She a r s o n/ Ame r i c an Exp. , I nc . , 490 U. S. 477, 109 S. Ct . 1917, 10 4
L. Ed . 2 d 526 ( 1989) , t he c our t f ound a n a gr e e me nt t o a r bi t r a t e
d i s p u t e s e nf or c e a bl e , not i ng t ha t
[ b] y a gr e e i ng t o a r bi t r a t e a s t a t ut or y c l a i m, a pa r t y doe s not f or go t he s ubs t a nt i ve r i ght s a f f or de d by t he s t a t ut e ; i t onl y s ubmi t s to t he i r r e s ol ut i on i n a n a r bi t r a l , r a t he r t ha n a j udi c i a l , f or u m.
I d . , 4 9 0 U. S a t 481, 109 S. Ct a t 1920. W a gr e e wi t h t he e
a n a l y s i s of t he Supr e me Cour t . Pe t e r s ' s ubs t a nt i ve s t a t ut or y
r i g h t s wi l l not be a br i dge d by s ubmi s s i on of hi s c l a i ms t o a b o d y
o f a r b i t r a t or s r a t he r t ha n t o a j udi c i a l f or um. The f ol l owi ng
o b s e r v a t i on by t he c our t i n Rodr i gue z de Qui j as hol ds t r ue he r e :
The r e i s not hi ng i n t he r e c or d be f or e us , nor i n t he f a c t s o f whi c h we c a n t a ke j udi c i a l not i c e , t o i ndi c a t e t ha t t he a r bi t r a l s ys t e m . . . woul d not a f f or d t he pl a i nt i f f t he r i ght s t o whi c h he i s e nt i t l e d.
4 I d . , 4 9 0 U. S. a t 483, 109 S. Ct . a t 1921. W hol d t he a r bi t r a t i o n e
p r o v i s i on a t i s s ue i n t hi s c a s e i s not voi de d by T. C. A. § 48- 2 -
122( i ) . The r e f or e , t he pa r t i e s ' Cus t ome r Agr e e me nt i s s ubj e c t t o
t he Un i f or m Ar bi t r a t i on Ac t .
III
Re ga r di ng Pe t e r s ' ge ne r a l c ha l l e nge t o t he t r i a l
c o u r t ' s or de r c ompe l l i ng a r bi t r a t i on, Commonwe a l t h a r gue s t ha t
s u c h a n or de r i s not a ppe a l a bl e unde r Te nne s s e e ' s s t a t ut or y
a r b i t r a t i on s c he me . W a gr e e . e I n t he unr e por t e d c a s e of
Ande r s o n Count y v . Ar c hi t e c t ur al Te c hni que s Cor p. , No. 03A01-
9 2 0 5 - CH- 00184, 1993 W 592 1 ( Cour t of Appe a l s a t Knoxvi l l e , L
J a n u a r y 14, 1993) ( Fr a nks , J . ) , t hi s c our t a ddr e s s e d t he que s t i o n
o f wh e t he r a n or de r c ompe l l i ng a r bi t r a t i on i s a ppe a l a bl e , a nd
c o n c l u d e d i t wa s not . W s t a t e d t he f ol l owi ng i n t he Ande r s on e
Co unt y opi ni on:
The Uni f or m Ar bi t r a t i on Ac t pr ovi de s whe n a n a ppe a l a s o f r i ght wi l l l i e i n a r bi t r a t i on cas es . T. C. A. Se c . 2 9- 5- 319 s t a t e s :
" Appe a l . - - ( a ) An a ppe a l ma y be t a ke n f r om:
( 1) An or de r de nyi ng a n a ppl i c a t i on t o c ompe l a r bi t r a t i on ma de unde r Se c . 29- 5- 3 03; ( 2) An or de r gr a nt i ng a n a ppl i c a t i on t o s t a y a r bi t r a t i on ma de unde r Se c . 29- 5- 303( b) ; ( 3) An or de r c onf i r mi ng or de nyi ng c onf i r ma t i on of a n a wa r d;
5 ( 4) An or de r modi f yi ng or c or r e c t i ng a n a wa r d; ( 5) An or de r va c a t i ng a n a wa r d wi t hout di r e c t i ng a r e - he a r i ng; a nd ( 6) A j udgme nt or de c r e e e nt e r e d pur s ua nt t o t he pr ovi s i ons of t hi s pa r t .
( b) The Appe a l s ha l l be t a ke n i n t he ma nne r a nd t o t he s a me e xt e nt a s f r om or de r s or j udgme nt s i n a c i vi l a c t i on. "
None of t he ba s e s f or a ppe a l s i n t he f or e goi ng c ode s e c t i on i s me t . Si nc e t he s t a t ut e a l l ows a n a ppe a l f r om t he gr a nt i ng of a s t a y [ of a r bi t r a t i on] , t h e c or ol l a r y i s no a ppe a l i s pr ovi de d f r om t he de ni a l of a s t a y. M e ove r , " j udgme nt or de c r e e " r e f e r r e d t o i n or Se c . 29- 5- 319( a ) ( 6) i s t he e nt r y of j udgme nt or d e c r e e a s c o nt e mpl a t e d i n T. C. A. Se c . 29- 5- 315. 4
I d. a t 1993 W 5921 a t *1. L
The Ge ne r a l As s e mbl y ha s not a me nde d T. C. A. § 29- 5- 3 1 9
t o a l l o w a n a ppe a l of a n o r de r c ompe l l i ng a r bi t r a t i on s i nc e t h e
Ande r s o n Count y c a s e . W a dhe r e t o our j udgme nt t ha t we c a nno t e
" r e a d i n" a pr ovi s i on a l l o wi ng a n a ppe a l i n a f a c t ua l pa t t e r n n o t
s p e c i f i c a l l y r e c ogni z e d i n t he c ode pr ovi s i on t ha t de l i ne a t e s
wh e n " [ a ] n a ppe a l ma y be t a ke n. " Fur t he r , i n l i ght of t he
Un i f o r m Ar bi t r a t i on Ac t ' s pr ovi s i on ma nda t i ng t ha t " [ t ] hi s pa r t
s h a l l b e s o c ons t r ue d a s t o e f f e c t ua t e i t s ge ne r a l pur pos e t o
4 T. C. A. § 29- 5- 315 pr ovi de s as f o l l o ws :
Up o n t h e g r a n t i n g o f a n o r d e r c o n f i r mi n g , mo d i f y i n g o r c o r r e c t i n g a n a wa r d , j u d g me n t o r d e c r e e s h a l l b e e n t e r e d i n c o n f o r mi t y t h e r e wi t h a n d b e e n f o r c e d a s a n y o t h e r j u d g me n t o r d e c r e e . Co s t s o f t h e a p p l i c a t i o n , a nd of t he pr oc e e di ngs s ubs e que nt t he r e t o, and d i s b u r s e me n t s ma y b e a wa r d e d b y t h e c o u r t .
6 ma k e u n i f or m t he l a w of t hos e s t a t e s whi c h e na c t i t 5 , " we f i nd
p e r s u a s i ve c a s e s i n a c c or d wi t h our vi e w f r om ot he r s t a t e s t ha t
h a v e e n a c t e d t he pr ovi s i on of our Uni f or m Ar bi t r a t i on Ac t de a l i n g
wi t h a p p e a l s . Se e , e . g . , Che m- As h, I nc . v . Ar kans as Powe r &
Li ght Co. , 751 S. W 2d 353 ( Ar k. 1988) ; Fay e t t e Count y Far m Bur e au .
Fe d e r a t i on v . M t i n, 758 S. W 2d 713 ( Ky. App. 1988) ; ar . Bl uf f s ,
I nc . , v . W s oc ki , 314 S. E. 2d 291 ( N. C. App. 1984) ; s e e ge ne r al l y y
An n o t a t i on, Appe al abi l i t y of St at e Cour t ' s Or de r or De c r e e
Co mp e l l i ng or Re f us i ng t o Compe l Ar bi t r at i on, 6 A. L. R. 4t h 652
( 1981) .
Thi s a ppe a l i s pr e ma t ur e . The r e f or e , we c a nnot r e a c h
t he a p p e l l a nt ' s i s s ue c l a i mi ng t ha t t he t r i a l c our t e r r e d i n
o r d e r i n g a r bi t r a t i on.
Thi s a ppe a l i s d i s mi s s e d. The c os t s on a ppe a l a r e
t a x e d t o t he a ppe l l a nt a nd hi s s ur e t y. Thi s c a s e i s r e ma nde d t o
t h e t r i a l c our t f or s uc h f ur t he r pr oc e e di ngs a s ma y be ne c e s s a r y ,
c o n s i s t e nt wi t h t hi s opi ni on.
5 T.C.A. § 29-5-320.
7 ___________________________ _ Cha r l e s D. Sus a no, J r . , J .
CONCUR:
_ _ _ _ _ _ _ ____________________ Ho u s t o n M Godda r d, P. J . .
_ _ _ _ _ _ _ _ ___________________ He r s c he l P. Fr a nks , J .