Estate Of Virginia Campana v. Comerica Bank & Trust, N. A.

Filing 99

MEMORANDUM OPINION AND ORDER; GRANTS as to 48 Defendant's Motion to Compel arbitration; GRANTS IN PART 64 motion to Enter Case Management Order, DENIES IN PART 64 defendant's motion to preclude evidence contradicting plaintiffs statem ent regarding authenticity of Virginia Campana's signature. STAYS the case. RETAINS jurisdiction of UBSs pending petition for costs and attorneys fees dkt. no. 89 . Signed by District Judge Irene M. Keeley on 1/4/2012. (Copy counsel of record via CM/ECF)(jmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
ESTATE OF VIRGINIA CAMPANA,
Deceased by Michael Donovan and
Consuela Campana, its Co-Executors,
Plaintiff,
v.

//

CIVIL ACTION NO. 1:10CV194
(Judge Keeley)

COMERICA BANK & TRUST, N.A.,
UBS FINANCIAL SERVICES, and
EDWARD BROWN, individually and
as an employee of UBS
FINANCIAL SERVICES,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is the motion to compel arbitration
filed by the defendants, UBS Financial Services and Edward Brown
(collectively “UBS”). For the reasons that follow, the Court GRANTS
the defendants’ motion (dkt. no. 48).
I.
The Estate of Virginia Campana, Deceased, Michael Donovan and
Consuela Campana, its Co-Executors (“the plaintiff”), alleges that
the defendants, Comerica Bank and Trust, N.A. (“Comerica”), as
trustee, and UBS, as trust asset manager, improperly managed and
executed a trust intended to benefit Virginia Campana during her
lifetime. The facts germane to the instant dispute, however, relate
only to several written agreements with UBS and, more specifically,
mandatory arbitration clauses within those agreements.

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
On November 13, 2003, Virginia Campana’s sister, Mary Lou
Campana, created a revocable trust (the “FBO Trust”) and, by her
will, funded it for the benefit of Virginia. Mary Lou Campana
served as trustee of the FBO Trust until her death, when Comerica
assumed trustee responsibilities. Throughout the duration of the
trust, both Mary Lou Campana and, after her death, Comerica,
retained UBS to provide investment services to the FBO Trust
pursuant to three written agreements (the “FBO Trust agreements”).1
In addition to these agreements, Virginia Campana also contracted
directly with UBS on February 26, 2004 for investment services
unrelated to the FBO Trust (the “February 26, 2004 agreement”).2
Each

of

these

four

agreements

contains

an

identical

arbitration clause that provides:
Client agrees, and by carrying an account for Client, UBS
Financial
Services
agrees
that,
any
and
all
controversies which may arise between UBS Financial
Services, any of UBS Financial Services’ employees or
agents and Client concerning any account, transaction,
dispute or the construction, performance or breach of
this Agreement or any other agreement, whether entered

1

Specifically, UBS entered three contracts with the FBO Trust
trustee: a November 13, 2003 agreement signed by Mary Lou Campana, a
November 26, 2004 agreement signed by Mary Lou Campana, and a May 23,
2005 agreement signed by a Comerica representative.
2

Virginia Campana retained UBS for investment services regarding
a personal trust account unrelated to the FBO Trust.

2

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
into prior, on or subsequent to the date hereof, shall be
determined by arbitration.
This Agreement shall be binding upon Client and Client’s
personal representatives, heirs, estate, executors,
administrators, committee and/or conservators, successors
and assigns, and shall inure to the benefit of UBS
Financial Services and its successors and assigns and
each subsequent holder of this Agreement.
UBS argues that this clause binds Virginia Campana and her
estate to resolve this case through arbitration, rather than in
this Court. Furthermore, it asserts that the plaintiff is bound by
the clause as it appears both in the three FBO Trust agreements and
in Virginia Campana’s February 26, 2004 agreement.
On October 14, 2011, during a hearing on UBS’s motion, the
plaintiff for the first time disputed the authenticity of Virginia
Campana’s signature on the February 26, 2004 agreement. UBS moved
to preclude evidence contradicting the plaintiff’s prior statement
regarding the authenticity of Virginia Campana’s signature or, in
the alternative, to enter a case management order for consideration
of the same (dkt. no. 64). After noting that the plaintiff’s late
challenge prejudiced UBS, which had the right to reasonably rely on
the plaintiff’s earlier concession regarding the authenticity of
Campana’s signature, the Court DENIED IN PART UBS’s motion to
preclude

evidence,

management

order,

GRANTED
and

IN

PART
the

granted
3

UBS’s
parties

motion
leave

for
to

a

case

conduct

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
discovery as to the signature’s authenticity. On October 18, 2011,
the plaintiff filed two expert reports that concluded the signature
on the February 26, 2004 agreement was a forgery. On December 8,
2011, UBS filed its own expert report refuting the plaintiff’s
forgery claim.
For the reasons that follow, the Court concludes that it need
not determine the authenticity of the signature on the February 26,
2004 agreement because the plaintiffs are bound by the arbitration
clauses in the three FBO Trust agreements of which Virginia Campana
was a beneficiary, and there is no dispute as to the validity of
those agreements.
II.
The Federal Arbitration Act (“FAA”) governs the enforcement of
contractual arbitration clauses, and the Fourth Circuit has adopted
“a liberal policy favoring arbitration agreements.” 9 U.S.C. §§ 2–4
(2006); Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir.
2002). Importantly, “due regard must be given to the federal policy
favoring arbitration, and ambiguities as to the scope of the
arbitration clause itself are resolved in favor of arbitration.”
Id. Accordingly, “[a] district court . . . has no choice but to
grant a motion to compel arbitration where a valid arbitration

4

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
agreement exists and the issues in the case fall within its
purview.” Id.
To compel an opposing party to resolve its dispute through
arbitration, a litigant must demonstrate:
(1) the existence of a dispute between the parties,
(2) a written agreement that includes an arbitration
provision which purports to cover the dispute,
(3) the relationship of the transaction, which is
evidenced by the agreement, to interstate or foreign
commerce, and
(4) the failure, neglect or refusal of the defendant to
arbitrate the dispute.
Id.

Once a litigant has met this burden and the court sends his

case to arbitration, “[t]he FAA requires a court to stay ‘any suit
or proceeding’ pending arbitration of ‘any issue referable to
arbitration under an agreement in writing for such arbitration.’”
Id. (quoting 9 U.S.C. § 3). “This stay-of-litigation is mandatory.”
Id.
Here, the plaintiff concedes that UBS has met requirements
(1), (3), and (4) and argues only that the second requirement, the
existence of an arbitration provision that covers this dispute, is
lacking.
A.
Although the FAA and case law clearly favor the liberal
enforcement of arbitration clauses, the plaintiff asserts that,
5

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
because Virginia Campana herself did not sign any of the FBO Trust
agreements, her estate cannot be bound to arbitrate a dispute
related to those agreements. As support, the plaintiff points to a
single statement by the Supreme Court of the United States that
“arbitration is a matter of contract and a party cannot be required
to submit to arbitration any dispute which he has not agreed so to
submit.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83
(2002).
The plaintiff’s reliance on Howsam is misplaced. In that case,
the Court was not deciding whether a case should go to arbitration,
but whether an arbitrator or a judge should decide that threshold
“question of arbitrability.” Id. Thus, Howsam does not address the
applicability of an arbitration clause to a beneficiary who did not
personally sign the agreement, but actually reinforces the policy
favoring enforcement of arbitration provisions.
B.
The plaintiff further argues that, because the arbitration
clauses in dispute do not expressly bind third-party beneficiaries,
the Court should not construe them to require resolution of the
plaintiff’s claims through arbitration. The FAA and case law
clearly favor a broad interpretation of an arbitration clause,
however, and “ambiguities as to the scope of the arbitration clause
6

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
itself [should be] resolved in favor of arbitration.” Adkins, 303
F.3d

at

500.

Furthermore,

the

Fourth

Circuit

has

broadly

interpreted arbitration provisions similar to those in the FBO
Trust agreements, holding that “the reach of an arbitration clause
is not restricted to those causes of action brought under the
contract containing the clause, unless the parties draft a clause
so restricted in scope.” Drews Dist., Inc. v. Silicon Gaming, Inc.,
245 F.3d 347, 350 (4th Cir. 2001). In Drews Distributing, an
arbitration clause covered “any controversy or claim arising out of
or related to this Agreement.” Id. at 349. The Fourth Circuit
interpreted

this

clause

liberally,

holding

that

an

earlier

agreement that merely contemplated this later agreement containing
the arbitration clause was sufficiently related to fall within the
arbitration clause. Id. at 350.
Applying the Fourth Circuit’s reasoning to the instant dispute
requires

that

this

case

be

sent

to

arbitration.

Here,

the

arbitration clauses in the FBO Trust agreements mandate that “any
and all controversies . . . shall be determined by arbitration.”
Further, each agreement is binding upon “Client and Client’s
personal representatives, heirs, estate, executors, administrators,
committee and/or conservators, successors and assigns.” (Dkt. Nos.
49-1 at 23, 24; 49-2 at 23, 24; 49-3 at 10, 12).
7

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
The plaintiff asserts that Virginia Campana, as a beneficiary
of the FBO Trust agreements, is not expressly included in this
list, and therefore, the plaintiff’s dispute with UBS lies beyond
the reach of the arbitration clauses, even though its claims relate
directly to UBS’s performance of the contracts in which these
clauses appear. The FAA and Fourth Circuit precedent, however,
direct this Court to conclude otherwise. The plaintiff’s dispute
with UBS over its management and execution of the FBO Trust
agreements

clearly

falls

within

the

broad

“any

and

all

controversies” language of the arbitration clauses. Furthermore, to
the

extent

that

the

application

of

these

clauses

to

trust

beneficiaries is ambiguous, “ambiguities as to the scope of the
arbitration clause itself are resolved in favor of arbitration.”
See Adkins, 303 F.3d at 500. Therefore, as the court broadly
construed the arbitration clause in Drews Distributing, this Court
concludes that the plaintiff’s claims against UBS fall within the
broad “any and all controversies” language of the arbitration
clauses in the FBO Trust agreements. See 245 F.3d at 350.
III.
Accordingly, because it finds that valid arbitration clauses
exist and this dispute falls within the purview of those clauses,
the Court:
8

ESTATE OF VIRGINIA CAMPANA v.
COMERICA BANK AND TRUST, et al

1:10CV194

MEMORANDUM OPINION AND ORDER
1) DENIES IN PART the defendant’s motion to preclude evidence
contradicting the plaintiff’s statement regarding authenticity of
Virginia Campana’s signature and GRANTS IN PART the motion to enter
a case management order (dkt. no. 64);
2) GRANTS the defendant’s motion to compel arbitration (dkt.
no. 48);
3) STAYS the case as it pertains to the defendants, UBS
Financial

Services

and

Edward

Brown,

pending

resolution

of

arbitration proceedings; and
4) RETAINS jurisdiction of UBS’s pending petition for costs
and attorney’s fees (dkt. no. 89).
The Court will address both UBS’s petition and the case
schedule as it pertains to the plaintiff and Comerica at the status
conference scheduled for Thursday, January 5, 2012 at 1:30 P.M.
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: January 4, 2012
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

9