Bufkin v. Scottrade, Incorporated et al
OPINION AND ORDER granting 20 Motion to compel arbitration and to Stay or Dismiss the Proceedings Against Scottrade, Inc. Pending Arbitration. Plaintiff and Scottrade shall proceed with arbitration pursuant to the terms of the Brokerage Accou nt Agreement and this case is stayed as to Scottrade pending further order and notification that the stay is due to be lifted and the case dismissed as to Scottrade. Scottrade shall file a status report on or before December 3, 2018, if the arbitration is not complete. Signed by Judge John E. Steele on 11/29/2017. (RKR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
MICHAEL EDWARD BUFKIN,
JACOB J. LEW, TIMOTHY F.
DOUGLAS SHULMAN, STEVEN T.
WILLIAM J. WILKINS, C.D.
STATES OF AMERICA,
OPINION AND ORDER
This matter comes before the Court on Scottrade, Inc.'s Motion
to Compel Arbitration and to Stay or Dismiss the Proceedings
Against Scottrade, Inc. Pending Arbitration (Doc. #20) filed on
September 1, 2017.
Plaintiff filed a Response (Doc. #29), and
Scottrade, Inc. (Scottrade) filed a Reply in Support (Doc. #53)
with leave of Court.
Plaintiff asserts only one claim of breach against Scottrade
in his Complaint (Doc. #1).
The remaining claims all pertain to
the United States and those named individually and officially.
Plaintiff alleges that Scottrade sold his shares of both Sprott
Silver Fund and Sprott Gold Fund, and transferred the proceeds to
the Internal Revenue Service (IRS) in May 2013.
(Doc. #1, ¶¶ 16-
Plaintiff alleges that Scottrade breached their contract by
selling the shares at the request of the IRS who is not authorized
on his trading account, and by transferring the proceeds of those
sales to the IRS without his authorization.
(Id., ¶¶ 20-22.)
Plaintiff asserts that he did not volunteer to be a taxpayer for
any purported taxes, and that he provided no Tax Identification
Plaintiff alleges that Scottrade should have demanded
proof from the IRS of his volunteering to pay taxes.
(Id., ¶¶ 25,
Plaintiff states that he specifically crossed out Tax ID
provided a Social Security Number.
(Id., ¶ 18.)
restoration of the Scottrade account, a principal amount of damages
in the amount of $380,108.00 for the breach, and pre- and post
(Id., ¶¶ 23, 138.)
A. The Agreement
The first page of the Scottrade Brokerage Account Application
(Doc. #1-1) for a traditional IRA account was signed in 2010, and
is attached to the Complaint.
Above the signature line of the
first page is the following statement in all capital letters:
BY SIGNING THIS AGREEMENT I ACKOWLEDGE THAT I
HAVE RECEIVED, READ AND AGREE TO ABIDE BY THE
TERMS OF THE ACCOMPANYING BROKERAGE ACCOUNT
ARBITRATION CLAUSE AT PARAGRAPH 29.
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(Doc. #1-1, P-1.)
An Account Transfer Form is also attached.
The full Terms and Conditions (Doc. #20-1, Exh. B) of the
Brokerage Account Agreement are attached to Scottrade’s motion by
way of Affidavit of Harry Carr (Doc. #20-1, Exh. 1), a Senior
Paralegal and Records custodian with Scottrade who reviews such
agreements in the regular course of his business.
terms are set forth in paragraphs 28 and 29 as follows:
28. Arbitration Disclosures. This Agreement
contains a predispute arbitration clause. By
signing this Agreement, the parties agree as
(A) All parties to this Agreement are giving
up the right to sue each other in court,
including the right to a trial by jury, except
as provided by the rules of the arbitration
forum in which a claim is filed.
(B) Arbitration awards are generally final and
binding: a party’s ability to have a court
reverse or modify an arbitration award is very
(C) The ability of the parties to obtain
discovery is generally more limited in
arbitration than in court proceedings.
(D) The arbitrators do not have to explain the
reason(s) for their award.
(E) The panel of arbitrators will typically
include a minority of arbitrators who were or
are affiliated with the securities industry.
(F) The rules of some arbitration forums may
impose time limits for bringing a claim in
arbitration. In some cases, a claim that is
ineligible for arbitration may be brought in
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(G) The rules of the arbitration forum in
which the claim is filed, and any amendments
thereto, shall be incorporated into this
29. Agreement to Arbitrate Controversies. You
agree that any controversy, dispute, claim, or
grievance between us, any of our affiliates or
our or their shareholders, officers, directors
employees, associates, or agents, on the one
hand, and you or, if applicable, your
shareholders, officers, directors employees,
associates, or agents on the other hand,
Agreement, or any service provided by us,
including transactions of any kind made on
your behalf through us, shall be resolved by
arbitration, in accordance with the rules of
the Financial Industry Regulatory Authority
(FINRA). If you are not a resident of the
United States at the time a controversy
subject to arbitration arises, you agree that
any arbitration hearing shall be held in St.
Louis, Missouri; you consent to the personal
jurisdiction of all courts located in the
State of Missouri for purposes of enforcing
this arbitration agreement and any arbitration
award; and you agree that any arbitration
proceeding shall be conducted in the English
language. If any party unsuccessfully resists
confirmation or enforcement of an arbitration
award rendered under this agreement, then all
costs, attorneys’ fees, and expenses incurred
by the other party or parties in confirming or
enforcing the award shall be fully assessed
against and paid by the party resisting
confirmation or enforcement of the award.
Under the Arbitration Act, a written provision in a contract
involving commerce to settle by arbitration “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at
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law or in equity for the revocation of any contract.”
9 U.S.C. §
Thus, there is a strong federal policy of favoring arbitration,
and agreements to arbitrate should be “rigorously enforce[d]” by
Lawson v. Life of the S. Ins. Co., 648 F.3d 1166,
1170 (11th Cir. 2011) (citations omitted).
to compel arbitration is a matter of contract, and the Court
applies state contract law to determine if a clause should be
In this case, plaintiff alleges a breach of the
contract, and does not dispute the validity of the arbitration
More specifically, plaintiff does not dispute the terms and
arbitration because FINRA “concluded” that the matter was not
arbitrable because it is a tax issue.
Attached to plaintiff’s
Response is correspondence with FINRA stating plaintiff’s intent
to file a claim.
In a letter dated June 4, 2014, from a Case
Assistant with FINRA to plaintiff, she stated:
FINRA Dispute Resolution only administers
arbitrations that involve disputes arising in
connection with the business activities of
FINRA . . . . The Department of Treasury, the
Commissioner of the Internal Revenue Service
are not member firms and, as such, we regret
that, at this time, we are unable to offer our
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forum to parties other than the member firms.
. . .
arbitration claim against Scottrade, please
file, with this office, an Amended Statement
of Claim wherein you remove all parties except
(Doc. #29-5, FINRA-5) (emphasis added).
The letter clearly states
that plaintiff may proceed against Scottrade, but without the
United States parties who are not subject to arbitration or parties
plaintiff’s claim for breach of the written Brokerage Account
Agreement is subject to the arbitration clause.
compelled because the breach of contract claim cannot be severed
from the claims against the United States and the individual
defendants, and Scottrade’s motion is actually trying to sever the
The Court rejects this argument.
for a breach of the Brokerage Account Agreement with one defendant
has no direct bearing on plaintiff’s claims against the other
defendants regarding his taxpayer status.
“[T]he Arbitration Act
arbitrable claims when one of the parties files a motion to compel,
even where the result would be the possibly inefficient maintenance
Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 (1985).
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Pursuant to 9
U.S.C. § 3, the case will be stayed as to Scottrade pending
arbitration under the Brokerage Account Agreement.
Accordingly, it is hereby
1. Scottrade, Inc.'s Motion to Compel Arbitration and to Stay
or Dismiss the Proceedings Against Scottrade, Inc. Pending
Arbitration (Doc. #20) is GRANTED.
2. Plaintiff and Scottrade shall proceed with arbitration
pursuant to the terms of the Brokerage Account Agreement,
and this case is STAYED as to Scottrade pending further
and notification that the stay is due to be lifted, and
the case dismissed as to Scottrade.
3. Scottrade shall file a status report on or before December
notification has not been filed by this date.
DONE and ORDERED at Fort Myers, Florida, this
of November, 2017.
Counsel of Record
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