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Dailey v. Legg Mason Wood Walker

December 8, 2009

DONALD F. DAILEY, JR., PLAINTIFF,
v.
LEGG MASON WOOD WALKER, INC., DEFENDANT/COUNTERCLAIM PLAINTIFF, AND ELIZABETH M. WOLF, COUNTERCLAIM THIRD PARTY PLAINTIFF.



The opinion of the court was delivered by: Magistrate Judge Bissoon

MEMORANDUM AND ORDER

I. MEMORANDUM

For the reasons that follow, Plaintiff's Motion for Summary Judgment to vacate the arbitration award (see Doc. 1) will be denied, and Counterclaimants' Motion for Summary Judgment to confirm the award (see Doc. 11) will be granted.*fn1

BACKGROUND

A. Procedural Disposition

Plaintiff Donald F. Dailey, Jr., commenced this action against Defendant Legg Mason Wood Walker, Inc. ("Defendant"), seeking to vacate an arbitration award entered against him by a three-member panel of arbitrators of the Financial Industry Regulatory Authority, Inc. ("FINRA"), formerly known as the National Association of Securities Dealers, Inc. ("NASD"). See generally Compl. (Doc. 1). Defendant has filed a Counterclaim to confirm the arbitration award, which has been joined by an agent of Defendant, Elizabeth M. Wolf ("Ms. Wolf"). See generally Doc. 11.*fn2

B. The Arbitration Proceeding

In June 2006, Plaintiff initiated an arbitration proceeding with FINRA's predecessor entity, NASD, by filing a "Statement of Claim" against Defendant, Ms. Wolf, and financial advisor John K. Russell, seeking to recover investment losses. The claim was filed in accordance with Plaintiff's account agreements with Defendant, which required that all controversies between the parties be submitted to arbitration. See Countercl. (filed under Doc. 11) at ¶¶ 6-7.*fn3

Plaintiff alleged that Defendant exposed his investment capital to unnecessary risk by purchasing securities inconsistent with his stated objective of preserving his retirement funds through safe investment. See generally Ex. 2 to Compl. Plaintiff claimed losses in excess of $500,000.00, and he brought causes of action under § 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and for common law fraud, breach of fiduciary duty, negligent supervision, breach of contract, and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa.. Cons. Stat § 201-1, et seq. See generally Ex. 2 to Compl.

On August 4, 2006, Defendant filed a "Statement of Answer and Motion to Dismiss [Ms.] Wolf." See Ex. 4 to Compl. Defendant explained that Ms. Wolf had never met Plaintiff, she was not responsible for his accounts or the supervision thereof, and she had not recommended any investment to Plaintiff. By letter dated November 27, 2006, counsel for Plaintiff conceded that Ms. Wolf had been improperly named as a party, and he consented to the dismissal of Ms. Wolf and the expungement of her record. See Countercl. at ¶¶ 15-16.*fn4

Defendant filed a motion to dismiss Plaintiff's remaining claims based on the statute of limitations. See Doc. 13-2 at "Exhibit A." Plaintiff opposed the motion, see Doc. 13-2 at "Exhibit B," and FINRA's three-member arbitration panel held a telephonic hearing. Thereafter, the arbitration panel ordered the following:

1. The motion to dismiss regarding Elizabeth M. Wolf [was] granted and the record expunged regarding her.

2. The arbitration panel ha[d] the right to entertain [Defendant's] motion to dismiss.

3. All counts of [Plaintiff's] complaint [we]re dismissed with the exception of the counts titled "Claim for Breach of Contract' and "Pennsylvania Unfair Trade Practice/Consumer Protection Laws.'

See Arbitration Order dated Jul 9, 2008 (attached as Ex. 3 to Compl.).

In August 2008, the arbitration panel conducted hearings on Plaintiff's remaining claims. See Countercl. at ΒΆ 10. At the hearing, Defendant orally moved for dismissal, whereupon the arbitrators dismissed Plaintiff's claim under the Pennsylvania Unfair Trade Practices and Consumer Protection ...


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