Winer et al v. Eagle Bullion Group, Inc. et al

Filing 27

ORDER Denying 15 & 16 Motions to Expedite Discovery and Trial, Granting 19 Motion to Compel Arbitration, and Granting 20 Motion to Stay. Case stayed for 1 year. Status Conference set for 11/5/2012 10:00 AM before Judge Edward C. Reed Jr. Signed by Judge Edward C. Reed, Jr on 11/1/11. (Copies have been distributed pursuant to the NEF - ASB)

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UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
RENO, NEVADA

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LEO WINER and MICHAEL J. PEPITONE, )
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Plaintiffs,
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vs.
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EAGLE BULLION GROUP, INC.; ERIC
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WEIGAND, M.D.; YOUNG FINANCIAL,
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INC.; INTEGRITY CAPITAL HOLDINGS
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CO; MICHAEL D. YOUNG; TERRY SACKA; )
and SIDNEY SACKA,
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Defendants.
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2:11-CV-01268-ECR-VCF
Order

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Now pending are Plaintiffs’ Motion to Expedite Discovery and

17 Trial (##15, 16), and Defendants’ Motion to Compel Arbitration (#19)
18 and Motion to Stay Court Proceedings (#20).
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I. Background
The Complaint (#1) alleges that in summer 2009, Plaintiffs were

22 solicited by Defendant Eric Weigand (“Weigand”), the Director of
23 Operations of Defendant Eagle Bullion Group, Inc. (“Eagle”) to open
24 individual accounts with Eagle.

(Compl. at ¶ 14 (#1).)

On July 29,

25 2009, Plaintiff Leo Winer (“Winer”) entered into a written agreement
26 governing his account with Eagle.
27 Disc. at Ex. 2 (#21-2).)

(Defs.’ Opp’n Pls.’ Mot. Expedite

Plaintiff Michael J. Pepitone (“Pepitone”)

28 signed an identical agreement on August 4, 2009.

(Id. at Ex. 1.)

1 The written account agreements each contain an arbitration clause
2 whereby the parties agreed that any dispute relating to the accounts
3 will be submitted to binding arbitration in the State of Florida,
4 governed by the substantive and procedural laws of Palm Beach
5 County, Florida.
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(Id.)

Upon being booked by Eagle on or about August 8, 2009, the gold

7 coins delivered by Winer were valued at $112,650, and Pepitone’s
8 coins were valued at $106,300.

(Compl. at ¶¶ 19-20 (#1).)

The

9 Complaint (#1) further alleges in detail a number of transactions
10 Defendants engaged in with regard to Plaintiffs’ accounts, charging
11 Plaintiffs various fees and interest from time to time.
12 ¶¶ 21-22, 27-32.)

(See id. at

Plaintiffs sustained great losses and allege that

13 Defendants concealed the true nature of these investments, that
14 Plaintiffs did not know that they were involved in futures contracts
15 using their gold as leverage.
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(Id. at ¶¶ 30, 32, 36.)

Plaintiffs filed their Complaint (#1) on August 5, 2011.

On

17 September 27, 2011, Plaintiffs filed a Motion to Expedite Discovery
18 and Trial (##15, 16) on the grounds of the Plaintiffs’ advanced age:
19 Plaintiff Winer is ninety-seven years old and in declining health
20 and Mr. Pepitone is eighty years old.

Defendants responded (#21) on

21 October 7, 2011 and Plaintiffs replied (##23, 24) on October 14,
22 2011.
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On September 29, 2011, Defendants filed a Motion to Compel

24 Arbitration (#19) and a Motion to Stay Court Proceedings (#20)
25 pending the arbitration.
26 14, 2011.

Plaintiffs responded (##25, 26) on October

It appears that Defendants have not replied.

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II. Legal Standard
Federal law governs arbitration issues in agreements affecting

3 interstate and foreign commerce.

ATSA of Cal. v. Cont’l Ins. Co.,

4 702 F.2d 172, 174 (9th Cir. 1983).
5 arbitration.

A strong federal policy favors

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth

6 Corp., 473 U.S. 614 (1985).

The federal Arbitration Act (“FAA”)

7 provides that an arbitration clause “shall be valid, irrevocable,
8 and enforceable save upon such grounds as exist in law or equity for
9 the revocation of any contract.”

9 U.S.C. § 2.

“The [FAA] requires

10 courts to compel arbitration in actions where the parties have
11 previously agreed to arbitrate their contractual disputes.”

Bennett

12 v. Liberty Nat’l Fire Ins. Co., 968 F.2d 969, 970 (9th Cir. 1992).
13 Furthermore, “as a matter of federal law, any doubts concerning the
14 scope of arbitrable issues should be resolved in favor of
15 arbitration.”

Moses H. Cone Mem’l Hosp. V. Mercury Constr. Corp.,

16 460 U.S. 1, 24-25 (1983) superseded by statute on other grounds.
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III. Discussion
Defendants seek to compel Plaintiffs to submit their claims to

20 arbitration under the arbitration clause contained in the contract
21 Plaintiffs signed to open their accounts with Defendant Eagle.
22 arbitration clause provides as follows:
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The parties agree that any disputes relating to this
Account will be submitted to binding arbitration. The
venue for any such arbitration shall be exclusive in the
State of Florida and all parties agree that any arbitration
award entered shall be binding and convertible to a State
of Florida judgment subject to the laws of the State of
Florida and further subject to any modifications thereof
permissible thereunder. The parties hereby accordingly
waive their right to any other remedy or to proceed with

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The

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any court actions and further hereby waive jurisdiction and
venue.

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This account and the activities contemplated hereunder
shall be governed by the substantive and procedural laws of
Palm Beach County, the State of Florida without respect to
Florida conflict of law rules and venue of any dispute
resolution shall likewise be in Palm Beach County, State of
Florida without respect to Florida conflict of law rules.

6 (Defs.’ Opp’n Pls.’ Mot. Expedite Disc. & Trial at Ex. 2 (#21-2).)
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Plaintiffs argue that the arbitration clause does not

8 constitute a valid arbitration agreement because it does not specify
9 who the arbitrator will be and/or the arbitrator selection process.
10 This, however, is not fatal to the arbitration agreement.

Where the

11 contract is ambiguous or otherwise does not indicate what arbitral
12 forum the parties have selected, there is left “only one conclusion,
13 that the parties intended to leave the issue open.”

Bauhinia Corp.

14 v. China Nat’l Mach. & Equip. Imp. & Exp. Corp., 819 F.2d 247, 24915 250 (9th Cir. 1987) (citing Oil Basins Ltd. v. Broken Hill
16 Proprietary Co., 613 F. Supp. 483, 487 (S.D.N.Y. 1985)).

In

17 Bauhinia, the Ninth Circuit upheld the District Court’s ordering of
18 arbitration before the American Arbitration Association (“AAA”)
19 where the contract did not specify the arbitral forum and the
20 parties failed to resolve the problem of “when, where and how
21 without court intervention.”

819 F.2d at 250.

Here, the

22 arbitration clause validly leaves the issue of arbitral forum open.
23 In the event the parties cannot agree upon an arbitral forum and/or
24 an arbitrator selection process, the Court may later provide for
25 these terms.

Such an omission is not fatal to the agreement to

26 arbitrate.
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Plaintiffs further argue that the Court should order that the

2 arbitration take place in Las Vegas, Nevada due to Plaintiffs’
3 advanced age and difficulties in traveling to Florida.

Plaintiffs

4 contend that the FAA authorizes the Court to order arbitration in
5 this District.

See 9 U.S.C. § 4 (“The hearing and proceedings,

6 under such agreement, shall be within the district in which the
7 petition for an order directing such arbitration is filed.”).
8 However, this is only true where the parties have not already
9 specified a location.

Bauhinia, 819 F.2d at 250 (“In the absence of

10 a term specifying location, a district court can only order
11 arbitration within its district.”).

Here, the contract expressly

12 and unambiguously provides the location of arbitration - the State
13 of Florida.
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The Court must therefore uphold the parties’ agreement.

The Court further finds that the arbitration agreement is not

15 unconscionable.
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IV. Conclusion
For the foregoing reasons, the Court must compel the parties to

19 arbitrate in accord with their agreement.

The Court will give the

20 parties a chance to agree among themselves upon the specifics that
21 the arbitration agreement has left open: the arbitral forum, the
22 arbitrators, and/or arbitration selection process.

Further, the

23 Court will grant Defendants’ Motion to Stay the Proceedings (#20)
24 pending the outcome of the arbitration.

Because the Court grants

25 the Motion to Compel Arbitration (#19), Plaintiffs’ Motion to
26 Expedite Discovery and Trial (##15, 16) will be denied as moot, as
27 discovery issues are for the arbitral forum to decide.
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IT IS, THEREFORE, HEREBY ORDERED that Plaintiffs’ Motion to

2 Expedite Discovery and Trial (##15, 16) is DENIED.
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IT IS FURTHER ORDERED that Defendants’ Motion to Compel

4 Arbitration (#19) is GRANTED.

The parties shall have twenty-one

5 (21) days within which to confer to determine the arbitral forum and
6 how the arbitrators will be selected and file a joint report in this
7 Court.

In the event the parties are unable to agree upon these

8 arbitration terms, the Court will issue an order providing for them.
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IT IS FURTHER ORDERED that Defendants’ Motion to Stay

10 Proceedings (#20) is GRANTED for a period of one (1) year.

A status

11 conference is hereby set for Monday, November 5, 2012 at 10:00am.
12 In the event a status report is filed within fifteen (15) days of
13 the date set for the status conference, the status conference will
14 be vacated.
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17 DATED: November 1, 2011.
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UNITED STATES DISTRICT JUDGE

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