Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

KATZ v. ROUND HILL SECURITIES

September 16, 2005.

STANLEY J. KATZ, et al., Petitioners,
v.
ROUND HILL SECURITIES, INC., et al., Respondents.



The opinion of the court was delivered by: PHYLLIS HAMILTON, District Judge

ORDER GRANTING PETITION TO CONFIRM ARBITRATION AWARD

On August 31, 2005, the court heard argument in connection with the petition of Stanley J. Katz, Edwin L. Katz, and First Alliance Management, Inc., to confirm an arbitration award entered in favor of petitioners and against respondents Round Hill Securities, Inc., and First Allied Securities, Inc. Petitioners appeared by their counsel Richard T. White and Thomas P. Whelley II, and respondents appeared by their counsel Michael R. Simmonds. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS the petition to confirm the arbitration award.

INTRODUCTION

  Petitioners Stanley J. Katz and Edwin L. Katz ("the Katz brothers") are residents of Dayton, Ohio. Petitioner First Alliance Management, Inc. ("First Alliance"), is an Ohio corporation owned by the Katz brothers, and is registered with the Securities and Exchange Commission as an investment advisor. Respondent Round Hill Securities, Inc. ("Round Hill") is a California corporation and a registered broker-dealer of securities.

  On March 26, 1998, each of the Katz brothers executed a National Association of Securities Dealers ("NASD") Form U-4 (Uniform Application for Securities Industry Registration or Transfer). Round Hill filed the Form U-4s, which also stated that each of the Katz brothers would be transferring as a broker from Paine Webber on March 27, 1998, with the appropriate regulators. In signing the Form U-4, the Katz brothers agreed to

 
arbitrate any dispute, claim, or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the organizations indicated in item 10 as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of competent jurisdiction.*fn1
  On March 27, 1998, the Katz brothers and First Alliance entered into a Registered Representative Agreement ("the Agreement") with Round Hill, whereby Round Hill appointed petitioners independent "Contractors" for Round Hill in the sales of securities to the public.

  The Agreement, which was drafted by Round Hill, provided in ¶ 8.3 that "any" controversy between the parties "arising out of or relating to this Agreement or the breach thereof" would be submitted to binding arbitration in accordance with the rules of either NASD or the American Arbitration Association ("AAA"), "as the Contractor [i.e., the petitioners herein] may elect." The Agreement provided further that any court — state or federal — having jurisdiction was granted power to enter a judgment on any award resulting from arbitration because the arbitration award resulting from arbitration was to be a final and nonappealable decision on the controversy submitted.

  In January 2003, a dispute arose between the parties concerning the payment of commissions to the Katz brothers, and management fees to First Alliance. This was a matter "arising out of" the Agreement. Petitioners elected to take the matter to arbitration with the AAA. An arbitrator was selected and confirmed in September 2003, and the arbitrator held hearings and heard evidence. On April 4, 2005, the arbitrator issued an award in favor of petitioners in the amount of $306,902, plus $141,000 in attorneys' fees. On April 8, 2005, petitioners filed the present petition for confirmation of the award.

  On May 9, 2005, Round Hill filed an application for an order vacating the arbitration award (in lieu of filing an opposition to the petition). Round Hill asserted that the arbitrator had exceeded his powers because he did not have jurisdiction to hear the Katz brothers' claim, and because the award ordered Round Hill to pay commissions to a non-broker-dealer and non-NASD member (First Alliance), in violation of NASD rules.

  In June 2005, Round Hill merged with respondent First Allied Securities, Inc. ("First Allied"), a New York corporation with its principal place of business in San Diego, with First Allied as the surviving entity. After Round Hill and First Allied merged, petitioners filed a supplemental petition to confirm the award, and served First Allied. First Allied then filed a notice of joinder in the application to vacate the award.

  DISCUSSION

  A. Legal Standard

  The Federal Arbitration Act ("FAA") "gives federal courts only limited authority to review arbitration decisions, because broad judicial review would diminish the benefits of arbitration." Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004) (citing Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 998 (9th Cir. 2003) (en banc)). Under the FAA, if a party seeks a judicial order confirming an arbitration award, "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." 9 U.S.C. § 9. Confirmation is required "even in the face of erroneous ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.