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  • Reba Monisoff v. American Eagle Investments, Inc, Allen R. Rosenberg, 104 F.3d 356, 2d Cir. (1996)

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    This document summarizes a court case where American Eagle Investments (AEI) and Allen Rosenberg appealed a district court's denial of their motion to stay litigation and compel arbitration. The appeals court affirmed the district court's ruling, finding that the arbitration agreement between the plaintiff and Ernst & Company, the clearing broker, did not unambiguously include AEI as the introducing broker. The court determined that principles of contract law showed the parties did not intend to arbitrate disputes involving AEI. The document provides background on the case and analyzes the issues regarding whether an arbitration agreement existed between the plaintiff and AEI.

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    Filed: 1996-12-09 Precedential Status: Non-Precedential Citations: 104 F.3d 356 Docket: 96-7798

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    This document summarizes a court case where American Eagle Investments (AEI) and Allen Rosenberg appealed a district court's denial of their motion to stay litigation and compel arbitration. The appeals court affirmed the district court's ruling, finding that the arbitration agreement between the plaintiff and Ernst & Company, the clearing broker, did not unambiguously include AEI as the introducing broker. The court determined that principles of contract law showed the parties did not intend to arbitrate disputes involving AEI. The document provides background on the case and analyzes the issues regarding whether an arbitration agreement existed between the plaintiff and AEI.

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    91 views4 pages

    Reba Monisoff v. American Eagle Investments, Inc, Allen R. Rosenberg, 104 F.3d 356, 2d Cir. (1996)

    Uploaded by

    Scribd Government Docs
    This document summarizes a court case where American Eagle Investments (AEI) and Allen Rosenberg appealed a district court's denial of their motion to stay litigation and compel arbitration. The appeals court affirmed the district court's ruling, finding that the arbitration agreement between the plaintiff and Ernst & Company, the clearing broker, did not unambiguously include AEI as the introducing broker. The court determined that principles of contract law showed the parties did not intend to arbitrate disputes involving AEI. The document provides background on the case and analyzes the issues regarding whether an arbitration agreement existed between the plaintiff and AEI.

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    of 4

    104 F.

    3d 356

    NOTICE: THIS SUMMARY ORDER MAY NOT BE CITED


    AS PRECEDENTIAL AUTHORITY, BUT MAY BE CALLED
    TO THE ATTENTION OF THE COURT IN A SUBSEQUENT
    STAGE OF THIS CASE, IN A RELATED CASE, OR IN ANY
    CASE FOR PURPOSES OF COLLATERAL ESTOPPEL OR
    RES JUDICATA. SEE SECOND CIRCUIT RULE 0.23.
    Reba MONISOFF, Plaintiff-Appellee,
    v.
    AMERICAN EAGLE INVESTMENTS, INC, Allen R.
    Rosenberg,
    Defendants-Appellants.
    No. 96-7798.

    United States Court of Appeals, Second Circuit.


    Dec. 9, 1996.

    Appeal from the United States District Court for the Southern District of
    New York.
    APPEARING FOR APPELLANT: DANIEL E. BACINE, ESQ.
    PHILADELPHIA, PENNSYLVANIA
    APPEARING FOR APPELLEE: RUSSELL K. STATMAN, ESQ. NEW
    YORK, NEW YORK
    S.D.N.Y.
    AFFIRMED.
    Before CARDAMONE and WALKER, Circuit Judges, and RESTANI,*
    JJ.
    This cause came on to be heard on the transcript of record from the United
    States District Court for the Southern District of New York (Rakoff, J.),
    and was argued.

    ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,


    ADJUDGED AND DECREED that the judgment of said district court be and it
    hereby is AFFIRMED.

    Defendants-Appellants American Eagle Investments, Inc. ("AEI"), and Allen R.


    Rosenberg (together, "defendants") appeal from the order of the district court
    denying defendants' motion for a stay pending arbitration. This court has
    jurisdiction over the appeal pursuant to 9 U.S.C. 16(a).

    On March 27, 1996, plaintiff Reba Monisoff ("plaintiff") brought suit against
    the defendants in the Southern District of New York, alleging primarily that
    defendants negligently and/or fraudulently mismanaged the securities account
    plaintiff maintained with AEI. Contending that an arbitration agreement (the
    "agreement") between plaintiff and defendants entitled defendants to arbitrate
    plaintiff's claims, defendants moved to stay the litigation pending arbitration,
    pursuant to 3 of the Federal Arbitration Act. 9 U.S.C. 3. On June 10, 1996,
    the district court denied the defendants' motion to stay the action pending
    arbitration. Defendants filed this appeal.

    This court reviews a district court's denial of a motion to stay an action pending
    arbitration de novo. See In re Salomon Inc. Shareholders, 68 F.3d 554, 557 (2d
    Cir.1995).

    While there exists a strong federal policy favoring arbitration agreements and
    resolving "any doubts concerning the scope of arbitrable issues ... in favor of
    arbitration," Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460
    U.S. 1, 24-25 (1983), a court first must conclude that the parties intended to
    arbitrate in the first instance before the scope of arbitration may be defined, see
    Spear Leeds & Kellog v. Central Life Ins. Co., 85 F.3d 21, 25 (2d Cir.1996)
    (scope of arbitration is a different inquiry than is threshold issue of existence of
    arbitration agreement). As the district court noted, although "federal arbitration
    policy may help to define the scope of what the parties are agreeing to when
    they agree to arbitrate a contractual dispute, it cannot create a contract between
    non-contracting parties." Monisoff v. American Eagle Inv., Inc., 927 F.Supp.
    137, 138 (S.D.N.Y.1996).

    We rely on principles of contract law to determine whether the parties entered


    into an arbitration agreement. See Gould v. Sidel, 1990 WL 209641, at * 1
    (S.D.N.Y. Dec. 17, 1990); see also McPheeters v. McGinn, Smith and Co., Inc.,
    953 F.2d 771, 772-773 (2d Cir.1992) (per curiam). Thus, we first look to the
    contract's language, and will only examine extrinsic evidence as to the parties'

    intent if we find the contract to be ambiguous. See McPheeters, 953 F.2d at 772
    ("Where the dispute concerns an issue of a contract, the application of federal
    law simply comprises generally accepted principles of contract law.") (citations
    and internal quotations omitted).
    7

    In the present case, we find that the language of the arbitration agreement
    unambiguously applies only to plaintiff and Ernst & Company, the clearing
    broker. First, the agreement was written on Ernst & Company letterhead.
    Second, AEI is not mentioned by name anywhere in the agreement, nor is there
    any other language in the Agreement from which to infer that the term "broker"
    should be interpreted to include AEI.

    We also find no merit in defendants' argument that, as the introducing broker,


    AEI is effectively part of Ernst's "organization," and thus, is covered under the
    provision of the agreement that states that "[t]his agreement shall enure to the
    benefit of the Broker's present organization...." We agree with the district
    court's determination that "there is nothing in the plain meaning of these words
    to suggest that an independent brokerage firm like American Eagle Investments
    is somehow encompassed in the definition of Ernst & Company's 'present
    organization.' " Monisoff, 927 F.Supp. at 138.

    Finally, we find meritless defendants' argument that the Federal Arbitration Act
    gives them a right to a jury trial on the issue of whether or not an arbitration
    agreement existed. The statute makes clear that the right to have a jury decide
    this question applies only to the party opposing arbitration. See 9 U.S.C. 4
    ("Where such an issue is raised, the party alleged to be in default [of the
    arbitration agreement] may ... demand a jury trial"); cf. Painewebber Inc. v.
    Hartmann, 921 F.2d 507, 510-11 (3d Cir.1990) ("An 'issue' requiring resolution
    by the district court arises under 4 only when the party refusing to arbitrate
    contends that the dispute is not one that the parties agreed to arbitrate."). In the
    present case, defendants sought to compel, not avoid, arbitration, and thus the
    right to a jury trial never attached.

    10

    We have carefully considered defendants' other arguments, and find them to be


    without merit. Accordingly, for the reasons set forth above and in the district
    court's well-reasoned opinion, the order of the district court denying a stay
    pending arbitration is

    11

    AFFIRMED.

    The Honorable Jane A. Restani of the United States Court of International

    The Honorable Jane A. Restani of the United States Court of International


    Trade, sitting by designation

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