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Krevosh v. Westminster Financial Securities, Inc.

United States District Court, D. Nevada

June 4, 2019

MARY KREVOSH, Plaintiffs,
v.
WESTMINSTER FINANCIAL SECURITIES, INC., Defendants.

          ORDER

         Presently before the court is defendant Westminster Financial Securities, Inc.'s (“Westminster”) motion to compel arbitration. (ECF No. 17). Plaintiff Mary Krevosh (“Krevosh”) filed a response (ECF No. 22), to which defendant replied (ECF No. 27).

         I. Facts

         Westminster is a broker-dealer that is registered with the Securities and Exchange Commission (“SEC”) and is a member of the Financial Industry Regulatory Authority (“FINRA”). (ECF No. 1 at 2). Upon opening two new investing accounts with Westminster in 2012, Krevosh and her husband signed new account forms, each of which contained an arbitration clause stating, in relevant part:

ANY CONTROVERSY BETWEEN YOU AND U.S. OR PERSHING LLC AND U.S. SHALL BE SUBMITTED TO ARBITRATION BEFORE AND ONLY BEFORE THE FINANCIAL INDUSTRY REGULATORY AUTHORITY.

(ECF No. 17-3, 17-4, 17-5).

         In October 2012, Krevosh and her husband also signed a margin agreement, which provides, in pertinent part:

THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION CLAUSE. BY SIGNED [sic] AN ARBITRATION AGREEMENT THE PARTIES AGREE AS FOLLOWS:
• ALL PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE EACH OTHER IN COURT, INCLUDING THE RIGHTS TO A TRIAL BY JURY, EXCEPT AS PROVIDED BY THE RULES OF THE ARBITRATION FORUM IN WHICH A CLAIM IS FILED.

(ECF No. 17-6). In November 2013, Krevosh and her husband signed additional Westminster agreements with similar arbitration clauses (collectively, the “arbitration agreements”). (ECF No. 17-7, 17-8).

         In April 2017, Krevosh initiated an arbitration proceeding (the “2017 arbitration”) against Westminster through FINRA, alleging various acts of wrongdoing and seeking an award of damages. (ECF No. 17 at 2). Among other things, Krevosh alleged that she and her husband purchased a bronze statue from former Westminster financial advisor Louis Telerico for $200, 000, but did not receive the statue and consequently incurred $200, 000 in losses. Id. Krevosh stated in her FINRA claim that she initiated arbitration with Westminster pursuant to “FINRA rule 12200, which requires a member or an associated person to arbitrate disputes arising out of the associated person or member's business activity or the contract entered into between the parties.” (ECF No. 17-1 at 1).

         During the pendency of the arbitration, Westminster requested that Krevosh produce all documents and information relating to the purchase of the statue, all documents and information relating to money provided or received in relation to the purchase, and all documents and information relating to her claimed losses. Id. On or about June 2018, after the close of discovery in the arbitration case, Krevosh filed an amended statement of claim with FINRA, reiterating her claim regarding the purchase of the statue. Id. at 3.

         On May 18, 2018, the parties attended a mediation conference in Chicago, Illinois, before mediator Jeffrey Grubman (“mediator Grubman”). (ECF No. 22 at 7). The parties were unable to reach a settlement during the mediation. Id. However, the parties continued their negotiations and finally reached an agreement on July 20, 2018. Id. The agreement was memorialized by an email from mediator Grubman to the parties' respective counsel (the “settlement email”). Id. The settlement email stated the basic terms of the agreement and indicated that a draft settlement agreement would be prepared thereafter. (ECF No. 22-1). On the same day, Krevosh's counsel filed a letter of settlement with FINRA to inform it that a settlement had been reached and that the arbitration case should be closed. (ECF No. 22 at 8).

         After the settlement was reached, Westminster came into possession of evidence that had not been previously disclosed by Krevosh, which suggested that her claims regarding the statue were false. (ECF No. 17 at 3). Specifically, Westminster discovered that Krevosh rescinded the transaction to purchase the statue in September 2012 and was reimbursed for the money she claimed to have lost. (ECF No. 17 at 3); (ECF No. 17-2).

         When Westminster confronted Krevosh with this newly discovered information, Krevosh refused to explain the discrepancy. (ECF No. 17 at 4). Instead, Krevosh filed the instant suit on August 2, 2018, seeking to enforce the 2017 arbitration “settlement agreement.”[1] (ECF No. 1). On August 17, 2018, Westminster filed its answer and counterclaims against Krevosh, asserting claims for fraud and abuse of process. (ECF No. 7).

         On August 31, 2018, Westminster filed the instant motion to compel arbitration, which the court now considers. (ECF No. 17).

         II. Legal Standard

         The Federal Arbitration Act (“FAA”) provides for the enforcement of arbitration agreements in any contract affecting interstate commerce. 9 U.S.C. § 2; AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). A party to an arbitration agreement can invoke his or her rights under the FAA by petitioning federal courts to direct that “arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. When courts grant a petition ...


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