Grigsby & Associates, Inc. v. M Securities Investment
635 F. App'x 728
11th Cir.2015Background
- M Securities and Grigsby participated in a 1996 municipal bond underwritten transaction; GBR (partially owned by Grigsby & Associates) arranged a swap and allegedly failed to remit swap profits, leading to related claims and unpaid fees.
- M Securities filed four lawsuits against Grigsby between the late 1990s and early 2000s; three suits were never served or were dismissed sua sponte, and one was dismissed for lack of prosecution.
- After those suits were dismissed and Grigsby settled with GBR (2005), M Securities sued its former attorney for malpractice, alleging missed opportunities to preserve claims; M Securities then initiated NASD arbitration against Grigsby in 2006.
- An NASD arbitrator awarded M Securities damages, interest, and attorney’s fees; Grigsby sought to vacate the award in district court arguing M Securities waived arbitration and requesting an evidentiary hearing.
- The Eleventh Circuit in Grigsby I held the district court should have decided waiver itself and remanded for consideration on the merits; on remand the district court denied waiver and declined to hold an evidentiary hearing, and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether M Securities waived its right to arbitrate | Grigsby: filing four lawsuits, suing counsel for malpractice, and waiting >10 years show inconsistent conduct and prejudice, so waiver occurred | M Securities: prior filings were insubstantial (mostly unserved/dismissed), malpractice suit against counsel is not inconsistent with arbitration, and delay alone is insufficient to show waiver or prejudice | No waiver: filings were minimal/placeholder, malpractice suit unrelated to arbitration, delay without substantial inconsistent conduct or demonstrated prejudice insufficient |
| Whether district court was required by mandate to hold an evidentiary hearing on waiver | Grigsby: Eleventh Circuit remand required an evidentiary hearing to resolve factual disputes about waiver | M Securities/district court: remand required only reconsideration on the merits; hearing not mandatory where facts are not materially disputed | Mandate did not require a hearing; district court properly exercised discretion in denying one |
| Whether district court abused discretion in denying evidentiary hearing | Grigsby: needed to present witness testimony (e.g., Howard Gary) and evidence of litigation expenses to show prejudice | M Securities: Grigsby submitted no affidavits or concrete evidence of fees/expenses and offered only third-party GBR declaration; statute-of-limitations issues concern procedural arbitrability (for arbitrator) not waiver | No abuse: no material disputed facts on waiver were shown; proffered evidence related to procedural arbitrability or was insufficient to show prejudice |
| Whether delay alone can establish waiver | Grigsby: 10+ year delay supports finding of waiver | M Securities: delay without other substantial inconsistent litigation conduct or prejudice does not establish waiver | Held: delay is a factor but, standing alone and absent prejudice or substantial inconsistent conduct, does not establish waiver |
Key Cases Cited
- Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309 (11th Cir. 2002) (legal standard for waiver of arbitration; review standards)
- S & H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d 1507 (11th Cir. 1990) (party may waive arbitration by substantially invoking litigation machinery; consider prejudice)
- Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194 (11th Cir. 2011) (heavy burden on party claiming waiver)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (federal policy favors arbitration and doubts resolved for arbitration)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (distinguishing procedural arbitrability as matter for arbitrator)
- Morewitz v. West of England Ship Owners Mut. Prot. & Indem. Ass’n (Lux.), 62 F.3d 1356 (11th Cir. 1995) (delay and collusion can support waiver when coupled with other misconduct)
- Garcia v. Wachovia Corp., 699 F.3d 1273 (11th Cir. 2012) (example where extensive pre-arbitration litigation supported waiver)
- McDonald’s Corp. v. Robertson, 147 F.3d 1301 (11th Cir. 1998) (no evidentiary hearing required when material facts not disputed)