for all purposes hereafter discussed plaintiffs shall be considered a single investor.
Plaintiffs' complaint consists of ten counts. Counts I through VI are against Hess Grant, only, for alleged breach of agreement, warranty, express and implied, and fiduciary duty relating to options transactions occurring in March, 1982 when Pershing & Co., Inc. was predecessor clearing agent for Hess Grant.
Counts VII through X set forth claims against both Hess Grant and Merrill Lynch. They pertain to a series of options purchases made between September 20 and October 6, 1982 by Hess Grant for plaintiffs. Some of these purchases resulted in Regulation T calls against plaintiffs' margin accounts. Hess Grant determined after consultation with Merrill Lynch that it was necessary to liquidate promptly 4,000 shares of Telex stock held in plaintiffs' account to meet that margin call. Plaintiffs complain that defendants followed through with the liquidation decision despite Mr. Okcuoglu's protests and that they had given him insufficient time and opportunity to meet the call with other resources.
Jurisdiction is based upon diversity of citizenship and the amount in controversy, exclusive of interests and costs, exceeds $10,000. The complaint does not allege any claims arising under the securities laws or other statutes conferring exclusive jurisdiction upon the federal courts.
Plaintiffs seek a jury trial to resolve their state law claims against defendants. Defendants have filed separate motions to stay proceedings in this court pending arbitration of plaintiffs' claims. They contend that arbitration is mandated by several agreements to which Mr. Okcuoglu, and inferentially, Geotech are parties. As to Counts VII through X, defendants claim that plaintiffs are bound to arbitrate pursuant to an options agreement, a Merrill Lynch form, dated October 28, 1982. As to Counts I through VI, Hess Grant contends that arbitration is compelled by a customer agreement and an options agreement with the immediate predecessor clearing agent, Pershing & Company, Inc. Hess Grant claims that it was understood, despite the absence of clear language in the documents in question to that effect, that it was an agent of Pershing & Co. and Merrill Lynch for purposes of all options transactions. Specifically, defendants seek to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 2-4.
The parties agree that where there is a motion to arbitrate the court must decide if a party has agreed to arbitrate. Vespe Contracting Co. v. Anvan Corp., 399 F. Supp. 516, 519 (E.D. Pa. 1975). Whether a matter is subject to arbitration "depends upon the intent of the parties as it appears from the language used, its context within the instrument, and the circumstances surrounding its formation and execution." Bruno v. Pepperidge Farm, Inc., 256 F. Supp. 865, 868 (E.D. Pa. 1966). Essentially, the court must determine whether there was a clear meeting of the minds on the issue.
Whether a party has agreed to arbitration is determined on the basis of ordinary contract principles. A valid arbitration provision must be in writing, but a party may be bound by that provision without having signed an exemplar.