United States District Court, C.D. California
CHELSEA MORGAN SECURITIES, INC. D/B/A CHELSEA FINANCIAL SERVICES and JOHN THOMAS PISAPIA, Plaintiffs,
RICHARD G. RAPPAPORT and LAURA E. RAPPAPORT, Defendants
For Chelsea Morgan Securities Inc, doing business as Chelsea Financial Services, John Thomas Pisapia, Plaintiffs: Sabryne Coleman, Theodore C Peters, LEAD ATTORNEYS, Edgerton and Weaver LLP, Hermosa Beach, CA.
For Richard G. Rappaport, Laura E. Rappaport, Defendants: Adam Brett Wolf, Tracey Berger Cowan, LEAD ATTORNEYS, Wolf Legal PC, San Francisco, CA; Daniel J Carr, PRO HAC VICE, Peiffer Rosca Abdullah & Carr, LLC, New Orleans, LA.
ORDER GRANTING MOTION TO COMPEL ARBITRATION AND DISMISSING COMPLAINT
MANUEL L. REAL, UNITED STATES DISTRICT JUDGE.
Before the Court is Richard and Laura Rappaport's " Motion to Compel Arbitration" (" Motion" ), which was filed on February 3, 2014. Chelsea Morgan Securities and John Thomas Pisapia (collectively " Chelsea" ) filed an opposition on February 10, 2014 and the Rappaports filed a reply on February 18, 2014. Finding it suitable for decision on the papers, the Court took this matter under submission on February 18, 2014.
" A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Title 9 U.S.C. § 2.
This provision reflects " both a liberal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract." AT& T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011). " [T]he party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).
The Financial Industry Regulation Regulatory Authority (" FINRA" ) is " a self-regulatory organization established under Section 15A of the Securities and Exchange Act of 1934." UBS Fin. Services, Inc. v. West Virginia Univ. Hospitals, Inc., 660 F.3d 643, 648 (2d. Cir. 2011). It has the authority to exercise oversight over " all securities firms that do business
with the public." Id. " Upon joining FINRA, a member organization agrees to comply with FINRA's rules." Id. The FINRA rules constitute an agreement for purposes of Title 9 U.S.C. § 2. Id.
Chelsea is a member of FINRA. Earl Duggins was a registered representative of Chelsea from November 5, 2008 to January 28, 2009. Carr Decl., Ex. 2. During this time period Duggins was also the contact person for the Rappaports with respect to their investments with Diversified Lending Group (" DLG" ). See e.g., Supp. Decl. Richard Rappaport ¶ 3.
The Rappaports made investments in DLG through Duggins at this time. Richard Rappaport submitted a check, dated January 21, 2009, for $96,000 to DLG for investment purposes. Id. Ex. 3. Laura Rappaport submitted three checks, dated January 22, 2009, totaling $44,808.54 to DLG for investment purposes. Supp. Decl. Laura Rappaport Ex. 2. In their arbitration claim the Rappaports also claim that they " reinvested an additional $490,706 in DLG notes between December, 2008 and January, 2009." Decl. Richard Rappaport ¶ 5; Compl. Ex. A at 2.
The parties agree that the following provision of FINRA governs the issue of whether the claims ...