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Ubs Financial Services Inc. v. Montoya

United States District Court, N.D. California

June 24, 2014

UBS FINANCIAL SERVICES INC., Petitioner,
v.
MACARIO MONTOYA, Respondent.

CORRECTED ORDER GRANTING IN PART AND DENYING IN PART PETITION TO CONFIRM ARBITRATION AWARD; AND VACATING HEARIN

WILLIAM ALSUP, District Judge.

INTRODUCTION

Petitioner moves to confirm and enter judgment on an arbitration award, and requests attorney's fees and interest. The motion to confirm the award, with interest, is GRANTED IN PART. The request for attorney's fees, however, is DENIED. The hearing set for June 26 is hereby VACATED.

STATEMENT

According to its petition, UBS Financial Services Inc. alleges that it is a Delaware corporation with its principal place of business in New Jersey. Respondent Macario Montoya is a resident of California who worked as a financial advisor at UBS's San Francisco office beginning in September 2004.

As part of his employment, Montoya signed a Uniform Application for Securities Industry Registration or Transfer, otherwise known as a Form U-4, which included an arbitration agreement (Steele Exh. 1 at 12). UBS also gave Montoya an Employee Forgivable Loan for $136, 062, memorialized in a promissory note. This loan was in addition to compensation in the "form of commissions and fees on financial products" (Scanlon Decl. ¶ 5). "Brokerage firms, including UBS, offer such loans as a means of recruiting and retaining brokers" ( id. at ¶ 4). As long as Montoya continued to be employed by UBS, the loan would be forgiven in equal installments, on an annual basis, over the next six years. In the event of default, the balance would bear interest "at the rate equal to the rate of interest announced from time to time by Citibank, N.A. in New York, New York as its base rate or prime rate'... plus two percent" (Steele Exh. 2 at 1). The note also included an arbitration clause and provided that the governing law for the note would be that of New York ( id. at 5-6).

Here, UBS alleges that Montoya was terminated in February 2006, thereby triggering an acceleration clause in the note that made his balance due immediately. When Montoya did not pay, UBS filed a claim with FINRA, and the case was arbitrated in San Francisco in 2013. Montoya represented himself at the arbitration proceeding.

On January 13, 2014, the arbitrator denied Montoya's statute of limitations defense and ruled on the parties' briefs. He issued an award to UBS, including: (1) the sum of $190, 642.77 (comprising $110, 709.12 for the balance due on the loan, and $79, 933.65 as pre-award interest on that amount); (2) interest on this sum beginning on November 30, 2013, until the full amount was paid and at the rate specified in the note; and (3) attorney's fees and costs in the amount of $39, 128.55. The total monetary award was thus $229, 771.32 (Steele Exh. 3 at 3).

On May 1, 2014, UBS filed the instant petition, requesting (1) confirmation and judgment on the award of $229, 771.32; (2) interest on that amount at the New York statutory rate, from the date of the arbitration award until judgment ("post-award, pre-judgment interest"), followed by post-judgment interest at the federal statutory rate; and (3) attorney's fees and costs. Although UBS served Montoya with a copy of its petition on May 14, Montoya has filed no opposition thereto. This is so even after an order providing notice of the opposition deadline was served upon Montoya on May 28 (Dkt. No. 9). With that deadline now passed, this order decides as follows.

ANALYSIS

1. CONFIRMATION OF THE ARBITRATION AWARD.

Section Nine of the Federal Arbitration Act states (emphasis added):

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... then at any time within one year after the award is made any party to the arbitration may apply... 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.

Here, UBS filed to confirm the award within six months of the service of the award. The ...


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