BEZIO v. DRAEGER et al

Filing 15

ORDER ON DEFENDANTS MOTION TO DISMISS AND COMPEL ARBITRATION granting 8 Motion to Compel; granting 8 Motion to Dismiss By JUDGE NANCY TORRESEN. (dfr)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
DOUGLAS G. BEZIO,
Plaintiff,
v.
SCOT E. DRAEGER et al.,
Defendants.

)
)
)
) Civil No. 2:12-CV-00396-NT
)
)
)
)

ORDER ON DEFENDANTS’ MOTION TO DISMISS
AND COMPEL ARBITRATION
Defendants Scot E. Draeger, John M.R. Patterson, Caleb C.B. DuBois, and
Bernstein, Shur, Sawyer and Nelson, P.A. (collectively, BSSN) move pursuant to
the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (2012) (FAA) to dismiss and compel
arbitration of Plaintiff Douglas G. Bezio’s two-count complaint for malpractice and
violation of Maine’s Unfair Trade Practices Act, 5 M.R.S.A. § 213 (ECF No. 8).
Following initial briefing, the Court on June 18, 2013, requested that the parties
provide their positions on whether the Court should certify to Maine’s Supreme
Judicial Court the question of whether attorney representation agreements may
contain arbitration clauses. For the reasons that follow, the Court does not certify
the question and the Defendants’ motion to dismiss this case and compel arbitration
is GRANTED.
I.

Background
From March of 2011 through December of 2011, BSSN represented Bezio

with respect to a matter brought against him by the State of Maine Office of
Securities involving an alleged violation of Maine state securities laws. On
1

September 26, 2011, Bezio signed a consent order in which he agreed not to contest
the State’s conclusion that he, inter alia, “engaged in unlawful, dishonest or
unethical practices in the securities, commodities, investment, franchise, banking,
finance or insurance business” under 32 M.R.S.A. §§ 16412(2)(3) and (4)(M).
Douglas G. Bezio, No. 10-062 (Me. Office of Sec., September 30, 2011). Immediately
following publication of the consent order, Bezio was fired from his job with a
securities firm in Massachusetts.
Bezio alleges that BSSN both failed to involve his employer in the process of
negotiating the consent order and led him to believe that the order would have no
impact outside of Maine. He alleges that as a result of BSSN’s malpractice he lost
his livelihood, or at the very least, lost the value he could have obtained from
transferring his book of business in an orderly manner prior to entry of the consent
order.
When Bezio first hired BSSN, BSSN sent Bezio a three-page letter of
engagement dated March 18, 2011, outlining the terms of the firm’s representation
and incorporating by reference an attached four-page document entitled “Standard
Terms of Engagement.” Bezio executed the letter, and he initialed every page of
both the letter and attached Standard Terms. The final section in the Standard
Terms is entitled “Arbitration.” It states in pertinent part:
If you disagree with the amount of our fee, please take up the question
with your principal attorney contact or with the firm's managing
partner. Typically, such disagreements are resolved to the satisfaction
of both sides with little inconvenience or formality. In the event of a fee
dispute that is not readily resolved, you shall have the right to submit
the fee dispute to arbitration under the Maine Code of Professional

2

Responsibility. Any fee dispute that you do not submit to arbitration
under the Maine Code of Professional Responsibility, and any other
dispute that arises out of or relates to this agreement or the services
provided by the law firm shall also, at the election of either party, be
subject to binding arbitration.
Scott Draeger Decl. Ex. B 6-7 (ECF No. 8-3) (the “Arbitration Clause”).
BSSN contends that the Arbitration Clause requires the Court to dismiss this
case and compel arbitration of Bezio’s claims under the FAA. Bezio opposes
dismissal of this case and opposes arbitration except insofar as it involves BSSN’s
claim against him for unpaid legal fees. Relying on a recent opinion from
Louisiana’s Supreme Court, Bezio argues that the Arbitration Clause is
unenforceable because BSSN failed to obtain his informed consent to this clause.
See Hodges v. Reasonover, 103 So. 3d 1069, 1077 (La. 2012). BSSN does not dispute
that it did not review this clause with Bezio before he signed the agreement. It does
argue, however, that the FAA requires the Court to enforce the clause.
II.

Discussion
A.

Motion to Compel Arbitration

Federal courts will grant a motion to compel arbitration pursuant to the FAA
when “‘(i) there exists a written agreement to arbitrate, (ii) the dispute in question
falls within the scope of that arbitration agreement, and (iii) the party seeking an
arbitral forum has not waived its right to arbitration.’” Combined Energies v. CCI,
Inc., 514 F.3d 168, 171 (1st Cir. 2008) (quoting Bangor Hydro-Elec. Co. v. New Engl.
Tel. & Tel. Co., 62 F. Supp. 2d 152, 155 (D. Me. 1999)).1

1

The parties do not dispute that, since the Court already has jurisdiction over this case, the
FAA applies to the construction and interpretation of their agreement. See Hall St. Associates, L.L.C.

3

1. Existence of a Written Provision to Arbitrate
Section 2 of the FAA provides that a written provision to arbitrate “shall be
valid, irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2 (emphasis added). “When
deciding whether the parties agreed under the FAA to arbitrate a certain matter,
courts ‘generally . . . should apply ordinary state-law principles that govern the
formation of contracts.’” Awuah v. Coverall N. Am., Inc., 703 F.3d 36, 42 (1st Cir.
2012) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)
(alteration in original)).2
Under Section 2 of the FAA:
state law may be applied ‘if that law arose to govern issues concerning
the validity, revocability, and enforceability of contracts generally.’
Thus, generally applicable contract defenses, such as fraud, duress, or
unconscionability, may be applied to invalidate arbitration agreements
without contravening § 2. Courts may not, however, invalidate
arbitration agreements under state laws applicable only to arbitration
provisions.
Doctor’s Assoc., Inc. v. Casarotto, 517 U.S. 681, 686-87 (1996) (citations omitted)
(quoting Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987)). Casarotto made clear that
the FAA places arbitration clauses on equal footing with any other clause in a
contract.

In Casarotto, the Supreme Court rejected a Montana statute that

v. Mattel, Inc., 552 U.S. 576, 582 (2008) (noting that the FAA requires an independent basis for
federal jurisdiction, but “in cases falling within a court’s jurisdiction, the Act makes contracts to
arbitrate ‘valid, irrevocable, and enforceable,’ so long as their subject involves ‘commerce.’” (citing
FAA § 2)).
“‘[A] gateway dispute about whether the parties are bound by a given arbitration clause
raises a ‘question of arbitrability’ for a court to decide.’” Awuah, 703 F.3d at 41 (quoting Howsam v.
Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). Parties may delegate questions of arbitrability to
the arbitrator, see Awuah, 703 F.3d at 41, but BSSN makes no claim that the Arbitration Clause
delegates questions of arbitrability to the arbitrator.
2

4

required arbitration clauses to be placed in underlined capital letters on the first
page of any contract. This statute, the court said, violated the FAA’s requirement
that arbitration clauses not be singled out for suspect status.3
The Casarotto court instructed that the FAA’s goals and policies are
considered “antithetical to threshold limitations placed specifically and solely on
arbitration provisions.” Casarotto, 517 U.S. at 688. The Casarotto court also
reminded that when it comes to holding arbitration clauses unconscionable, courts
cannot “effect what . . . the state legislature cannot.” Casarotto, 517 U.S. at 689 n.3
(quoting Perry, 482 U.S. at 492 n.9).

In their initial briefs, the parties asserted contradictory positions on whether federal or state
law controls. Bezio, citing Combined Energies, 514 F.3d at 171, and First Options v. Kaplan, 514 U.S.
at 944, correctly noted the general principle that state contract law applies to questions regarding
whether the parties agreed to arbitrate a certain matter. BSSN did not distinguish those cases, so
the Court turned to Maine law. Although there is no Law Court opinion on point, the Maine
Professional Ethics Commission issued an advisory opinion holding that arbitration clauses in
attorney engagement agreements are valid. See Me Prof. Ethics Comm’n, Op. No. 170 (Dec. 23,
1999).
The subject of arbitration clauses in attorney engagement agreements turns out to be a hotly
debated issue. Compare Hodges, 103 So.3d at 1077 (requiring informed consent), ABA Formal Ethics
Op. No. 02-425 (Feb. 20, 2002) (same); Vt. Ethics Op. No. 2003-7 (same), Ok. Adv. Op. No. 312, 2000
WL 33389634, at *6 (Okl. Bar Ass. Leg. Eth. Comm., August 18, 2000) (same), Va. Legal Eth. Op.
No. 1707 (Jan. 12, 1998) (same), NYCLA Eth. Op. No. 723, 1997 WL 419331 at *3 (N.Y. Cty. Law.
Assn. Comm. Prof. Eth., July 17, 1997) (same), with Oh. Prof’l Responsibility Op. No. 96-9 (Dec. 6,
1996) (arbitration clauses prohibited in attorney engagement agreements), and D.C. Ethics Op. 211
(May 15, 1990) (same) (overruled in 2007 by a change in D.C. Rule 1.8(g)(2)), and compare with
DeMartini v. Johns, No. 3:12-cv-03929-JCS, 2012 WL 4808448 (N.D. Ca., Oct. 9, 2012) (arbitration
clauses in attorney engagement valid without informed consent), Andrew Grossman Venerable Gp.,
L.P. v. McAfee & Taft, No. Civ.-10-853-M, 2011 WL 463035 (W.D. Okl., Feb. 4, 2011) (same, but not
mentioning the Oklahoma Bar Association Legal Ethics Committee’s advisory opinion), Tolliver v.
True, Civ. A. No. 06-cv-02574-WDM-BNB, 2007 WL 2909393 (D. Co., Sept. 28, 2007) (same), Watts v.
Polaczyk, 619 N.W.2d 714, 607-08 (Mich. App. 2000) (same).
Reluctant to enter this debate, the Court sought briefing on whether to certify the question to
the Maine Law Court. Additional research convinced the Court that state laws that target
arbitration provisions are displaced by the FAA. So regardless of the merits of the varying
viewpoints of state courts and ethics commissions, this Court, in this FAA-governed case, must
follow the FAA.
3

5

Bezio seeks a ruling that under Maine law, BSSN was required to obtain
informed consent to the Arbitration Clause. If the Court did find the Arbitration
Clause unenforceable on this ground, it would be establishing a requirement
applicable only to arbitration clauses. Such a holding would be futile, because the
FAA displaces state law to the extent it “singl[es] out arbitration provisions for
suspect status.” See Casarotto, 517 U.S. at 687. Because Bezio points to no
“generally applicable contract defenses” to support revocation of the contract, the
Arbitration Clause survives.
2. Scope
Under the FAA, “‘[t]he existence of a broad agreement to arbitrate creates a
presumption of arbitrability which is only overcome if it may be said with positive
assurance that the arbitration clause is not susceptible of an interpretation that
covers the asserted dispute.’” MSAD No. 68 v. Johnson Controls, Inc., 222 F. Supp.
2d 50, 55 (D. Me. 2002) (quoting Smith/Enron Cogeneration Ltd. P’ship. v. Smith
Cogeneration Int’l, Inc., 198 F.3d 88, 99 (2d Cir. 1999)). An arbitration clause like
the one at issue here, which defines its scope to include “any . . . dispute that arises
out of or relates to this agreement or the services provided by the law firm” is
“facially broad in scope.” See Winterwood Farm, LLC v. JER, Inc., 327 F. Supp. 2d
34, 39 (D. Me. 2004).
Bezio asserts that the Arbitration Clause does not specifically mention
arbitration of malpractice claims, and therefore it does not reasonably encompass
such claims. It is fair to say that BSSN buries the lead by commencing the

6

Arbitration Clause with a discussion of fee disputes. But Bezio does not claim that
the phrase “any other dispute that arises out of or relates to this agreement or the
services provided by the law firm” is unclear. Under FAA principles, the Court must
broadly construe this provision, and it is certainly susceptible to an interpretation
that covers the asserted dispute.
3. Waiver
In its supplemental briefing, BSSN agreed to waive its claim to compel
arbitration should the Court certify the question of the validity of its arbitration
clause to the Law Court. Since the Court has not certified the question, BSSN’s
conditional waiver is inapplicable. Bezio makes no independent claim that BSSN
has waived its right to arbitration.
B.

Motion to Dismiss

BSSN has requested dismissal of the suit, and, since both counts of the
Complaint are subject to arbitration, the Court has discretion to grant this request.
See Bercovitch v. Baldwin Sch., Inc., 133 F.3d 141, 156 n.21 (1st Cir. 1998). The
Court sees no compelling reason to retain this case on its docket, and therefore
dismisses the case.

7

III.

Conclusion
For the foregoing reasons, the Defendants’ motion to dismiss and compel

arbitration is GRANTED.
SO ORDERED.
/s/ Nancy Torresen
United States District Judge
Dated this 16th day of July, 2013.

8