PHILADELPHIA – A Philadelphia judge rejected a plaintiff’s motion to dismiss a private arbitration award, due to it being filed two days past the 90-day deadline with which to act under the law.
Judge Mark A. Kearney said Oct. 18 because plaintiff Janice Levy moved to vacate an arbitration award in an untimely fashion, that her motion to dismiss had to be vacated and the case closed.
Levy hired Kevin J. Larkin in 1970 to assist in managing her investments in securities, and Larkin eventually worked for defendant Wells Fargo Advisors. The parties signed a customer agreement providing “any arbitration under this agreement will be conducted pursuant to the Federal Arbitration Act and the Laws of the State of New York.”
After a three-and-a-half-day hearing before a Financial Industry Regulatory Authority (FINRA) Panel, Levy received notice of the FINRA Panel’s award in favor of Larkin and Wells Fargo on May 31, 2016. On Aug. 31, 2016, 92 days later, Levy moved to vacate the arbitration award and e-mailed her motion to Wells Fargo’s counsel.
“Levy argues her motion to vacate is timely because the Federal Arbitration Act (Act), rather than New York Law, governs the timeliness of her motion. Wells Fargo and Larkin argue there is no conflict between New York Law and the Act, and a petitioner under this customer agreement must file a motion within 90 days of the entry of the arbitration award under New York Law, and serve the motion within three months of the entry of the arbitration award under the Act,” Kearney said.
Since the Act governs service of Levy’s motion while New York law governs the filing of her motion, the Court ruled that both the Act and New York law apply here.
“The Act refers to service: ‘Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three-months after the award is filed or delivered. New York law provides ‘an application to vacate or modify an award may be made by a party within ninety days after its delivery to him,” Kearney said. “By its plain language, the Act governs when service must be made and New York law governs when the motion must be filed.”
“We disagree with Mrs. Levy’s reliance…to argue the Act rather than New York law applies when the customer agreement provides both the Act and New York law will apply. Wells Fargo agrees the service of process deadlines imposed by Section 12 of the Act apply, but also argues Mrs. Levy must comply with New York’s mandate for the timeliness of filing of a motion to vacate under Section 751 l(a),” the Court stated.
“The District Court and our Court of Appeals in Oberwager both discuss at length whether the Act’s three-month limitation or the state’s 90-day limitation governs when filing a motion to vacate an arbitration award. While at first glance the reasoning in Oberwager appears persuasive, the issue in Oberwager is not presented here,” Kearney stated.
Kearney explained the plaintiffs in Oberwager argued the application of Delaware’s law because it defined “final award” more broadly than the Act and provided plaintiffs with more time to file a motion to vacate.
“Our Court of Appeals addressed whether to apply the Act or Delaware law in defining ‘final award’ and found the Act governed because a generic choice-of-law provision does not show intent to opt out of the default rule,” Kearney said. “The Court of Appeals never discussed whether a generic choice-of-law provision would alter the time deadlines for filing a motion to vacate because the Act and Delaware law do not conflict. Here, as found by courts described above, New York Law governs filing and the Act governs service of the timely filed motion upon the adverse party.”
Kearney said Levy and her stockbroker signed “a customer agreement governed by both the Act and New York law” and would have agreed with Levy for the Act’s precedence if they conflicted, but they do not.
“Mrs. Levy moved to vacate 92 days after the final award. Filing and service are different concepts and the Act and New York law do not conflict on this point. Federal law does not address a filing deadline but New York law requires a filing within 90 days of the award,” Kearney said.
Kearney added even if one were to assume Levy’s e-mail service on the 92nd day after the award were valid under the Act, she did not timely file the motion to vacate within 90 days of the May 31, 2016 arbitration award as required by the governing New York law.
“As Mrs. Levy untimely moved, we cannot proceed to the merits of whether a court should vacate the arbitration award. We are constrained under New York law to dismiss her motion to vacate, and close this case,” Kearney stated.
The plaintiff is represented by Deborah R. Gross of Kaufman Coren & Ress, in Philadelphia.
The defendant is represented by Brian T. Feeney of Greenberg Traurig, also in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 16-171
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com