Wachovia Securities, Inc. v. Gangale

125 F. App'x 671
CourtCourt of Appeals for the Sixth Circuit
DecidedMarch 16, 2005
Docket03-4441, 03-4462, 03—4625, 03-4628
StatusUnpublished
Cited by19 cases

This text of 125 F. App'x 671 (Wachovia Securities, Inc. v. Gangale) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wachovia Securities, Inc. v. Gangale, 125 F. App'x 671 (6th Cir. 2005).

Opinion

*672 MERRITT, Circuit Judge.

In this contested securities arbitration case in which the parties made claims in three separate courts under both the Ohio and Federal Arbitration Acts, appellant and cross-appellee Dominic Gangale, who is appearing pro se, appeals two decisions from the Northern District of Ohio. Wachovia Securities, Inc. cross-appealed in both instances. In one decision, Wachovia won a summary judgment in which the district court concluded, on May 14, 2003, that the arbitration award should be sustained against an action by Gangale seeking to have it vacated under the Ohio Arbitration Act. In a second decision, on October 1, 2003, the District Court confirmed, under the Federal Arbitration Act, the arbitrators’ monetary award for the entire amount claimed against Gangale by Wachovia. The court then declined to confirm the monetary award under the Ohio Arbitration Act. Wachovia has cross-appealed the two decisions in its favor for reasons that are not entirely clear. For the reasons that follow, we affirm the May 14, 2003, and the October 1, 2003, decisions.

I.

While the facts leading to the lawsuits that resulted in these appeals are relatively straightforward, the procedural history is difficult to understand because Wachovia brought several lawsuits in state and federal courts to have the arbitration award confirmed under both the Ohio and Federal Arbitration Acts. We will begin

with a recitation of the facts, which are not in dispute, followed by an effort to explain the remarkable procedural history of these appeals.

In the fall of 1999, Dominic Gangale and his wife Dale Gangale set up a margin investment account with First Union Brokerage Services, now known as Wachovia Securities, Inc., 1 and began trading on the margin account. Over about a four-month period, the account accumulated a debit balance of approximately $246,860. Despite receiving notice and demand for payment from First Union to bring the account current, the Gangales did not remit the amount due because they assert that they believed the amount grew to such a level in violation of both New York Stock Exchange rules and First Union’s own policies. In May 2000, pursuant to a written margin agreement between First Union and the Gangales, 2 First Union filed an arbitration action with the National Association of Securities Dealers. On October 19, 2001, after a proceeding in which both sides participated, a panel of arbitrators from National Association of Securities Dealers Dispute Resolution, Inc. found in favor of First Union on all of its claims in the amount of $279,319.21, plus interest, fees and costs. The Securities Dealers arbitration award did not state any factual findings or legal conclusions whatsoever, or give any explanation at all for its decision, which is permissible under the terms of the Margin Agreement between the parties, as well as federal and Ohio law. Al *673 though not stating any legal or factual bases for its decision, the award recounts the fact that the arbitration panel threatened the Gangales with sanctions for failing to produce documentary evidence to First Union and barred them from presenting evidence during the hearing that had not been timely produced to First Union. Arbitration Award, Oct. 19, 2001 (Supp. Appendix at 96.)

Gangale challenged the award by timely filing an Application and Motion to Vacate the Arbitration Award in the Northern District of Ohio pursuant to the Ohio Arbitration Act, Chapter 2711 of the Ohio Revised Code 3 and the language of the Margin Agreement. In the motion to vacate, Gangale claimed that the arbitrators abused their discretion because they did not require First Union to follow industry rules or its own internal rules regarding margin accounts. Application and Motion to Vacate Arbitration Award, filed January 16, 2002. (Appendix at 1.) This suit was assigned to Magistrate Judge Gallas and Judge Economus under Docket Number 5:02-CV-100. 4 On June 21, 2002, First Union filed an Answer and Counterclaim denying the charges in the motion to vacate and counterclaiming for confirmation of the arbitration award pursuant to the Ohio Arbitration Act. 5 First Union did not make a claim or counterclaim pursuant to the Federal Arbitration Act at this time, and neither did Gangale.

On September 16, 2002, First Union moved for summary judgment on Gangale’s motion to vacate the arbitration award. The motion did not address First Union’s counterclaim for confirmation of the entire award. On May 14, 2003, the magistrate judge issued a memorandum opinion and order granting First Union’s motion for summary judgment. (Supplemental Appendix at 146.) Acknowledging that the arbitration decision consisted of “naked conclusions with no explanation of how the decision was reached,” the district court held that Ohio law generally does not permit the court to examine the actual merits upon which such an award is based. *674 Decision of May 14, 2003, at 6. (Supp. Appendix at 151). The court concluded that Gangale had not met any of the listed criteria for vacating an arbitration award under Section 2711.10 of the Ohio Revised Code. 6 The court explicitly noted that the “case [would] proceed to resolve these final issues.” Id. at 7. Thus, the order did not appear to be a final appealable order and no appeal of the ruling was made by Gangale at that time.

On October 21, 2002, one year and two days after issuance of the arbitration award, and one month after moving for summary judgment, First Union made three separate filings in three separate courts seeking confirmation of the arbitration award under both the Federal Arbitration Act and the Ohio Arbitration Act. 7 In the briefs and record before us, no explanation is given for the separate filings and no explanation given for raising the Federal Arbitration Act for the first time at that point. Even so, through transfers and consolidations, the separate cases pending in federal court were eventually consolidated so that only two remained in federal court by the end of 2003:(1) Case No. 02-100, arising from the original Motion to Vacate filed by Gangale in which summary judgment in favor of First Union was granted on May 14, 2003, and in which First Union had filed a counterclaim under the Ohio Arbitration Act that was still pending, and (2) Case No. 02-288, wherein First Union filed a complaint for coñfirmation of the arbitration award on October 21, 2002, under both the Ohio and Federal Arbitration Acts.

The appeals and cross-appeals from the judgments in these two cases are before us now. First Union filed a motion for summary judgment in Case No. 02-288 seeking confirmation of the award under the Ohio and Federal Arbitration Acts, which was granted on October 1, 2003, as to the *675 Federal Arbitration Act, 9 U.S.C.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
125 F. App'x 671, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wachovia-securities-inc-v-gangale-ca6-2005.