147 So. 3d 128
Fla. Dist. Ct. App.2014Background
- Grant is a long‑time FINRA-registered representative and neighbor/friend of Rotolante; he gave her informal investment and mortgage advice but never opened an account for her, received compensation, or executed trades for her.
- Acting on Grant’s advice, Rotolante obtained a mortgage from Bank of America, invested the proceeds through the bank’s investment subsidiary, paid fees to the bank, and sustained losses on certain securities.
- Rotolante filed a FINRA customer arbitration against Grant and others; a three‑member FINRA panel asserted jurisdiction, found for Rotolante, and awarded damages against Grant.
- Grant objected to the panel’s jurisdiction during the FINRA proceedings, later sought removal to federal court (remanded), and then moved in state court to vacate the FINRA award arguing his disputes with Rotolante were not arbitrable under FINRA Rule 12200.
- The trial court confirmed the FINRA award; on appeal the court reviewed de novo whether Grant was required to arbitrate (questions of law) and whether Rotolante qualified as his FINRA “customer.”
Issues
| Issue | Rotolante's Argument | Grant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability | FINRA panel properly decided jurisdiction | Court must decide arbitrability absent clear, unmistakable agreement otherwise | Court decides arbitrability here; no clear consent that FINRA panel would decide jurisdiction |
| Waiver of jurisdictional objection | Grant participated and thereby waived objections | Grant repeatedly objected at the arbitration hearing; no waiver | No waiver—Grant preserved arbitrability objection by timely and continuous objection |
| Customer status under FINRA Rule 12200 | Rotolante is a customer entitled to invoke FINRA arbitration | Rotolante never purchased services from, paid, had an account with, or provided compensation to Grant; no business relationship | Rotolante was not Grant’s FINRA “customer”; no arbitration obligation |
| Claim arose from FINRA‑regulated business activities | Dispute arises from Grant’s investment advice | Grant’s advice was informal/personal and not part of his FINRA business activities | Even if a customer, dispute did not arise from Grant’s FINRA‑regulated business activities; not arbitrable |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (issue of who decides arbitrability requires clear and unmistakable evidence)
- Vaden v. Discover Bank, 556 U.S. 49 (FAA does not confer federal jurisdiction; federal substantive law applies)
- Allied‑Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (FAA applies to contracts affecting interstate commerce)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (arbitration is a matter of contract)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (FAA reflects contractual arbitration principles; enforcement of arbitration agreements)
- Morgan Keegan & Co. v. Silverman, 706 F.3d 562 (definition and scope of FINRA customer analyzed)
- UBS Financial Services, Inc. v. Carilion Clinic, 706 F.3d 319 (FINRA “customer” defined as one who purchases services from a FINRA member in its securities business)
- Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733 (courts construe FINRA customer status; no presumption of arbitrability when existence of agreement is contested)