IN THE SUPREME COURT OF FLORIDA PRUDENTIAL SECURITIES INC., n/k/a/ PRUDENTIAL EQUITY GROUP, LLC and WILLIAM J. BREWSTER, JR. Defendants/Petitioners, v. CASE NO. SC06-935 DCA CASE NO. 5D05-248 EPISCOPAL DIOCESE OF CENTRAL FLORIDA v. Plaintiff/Respondent, JOHN B. TRUMBO, Defendant/Respondent. \ PLAINTIFF/RESPONDENT'S ANSWER BRIEF ON JURISDICTION Robert Dyer Florida Bar No. 021590 Brian R. Gilchrist Florida Bar No. 774065 ALLEN, DYER, DOPPELT, MILBRATH & GILCHRIST, PA 255 South Orange Avenue, Suite 1401 Orlando, Florida 32801 Telephone: 407.841.2330 Facsimile: 407.841.2343 Attorneys for Plaintiff/Respondent
TABLE OF CONTENTS SUMMARY OF THE ARGUMENT... 1 ARGUMENT... 3 I. THE DECISION BELOW DOES NOT C IN THE WORDS OF RULE 9.030(a)(2)(A)(iv) C "EXPRESSLY AND DIRECTLY CONFLICT WITH THE DECISION OF ANOTHER DISTRICT COURT OF APPEAL..."... 3 II. THE ADDITIONAL ARGUMENTS RAISED BY THE PRUDENTIAL PETITIONERS DO NOT CREATE CONFLICT JURISDICTION UNDER THE RULE... 5 A. The Supremacy Clause of the United States Constitution was never an issue in the court below and certainly provides no basis for conflict jurisdiction at this stage of the proceeding.... 5 B. Similarly, jurisdiction in this Court cannot be vested simply by arguing that the lower court's "decision is particularly at odds with policies underlying the extensive national extensive national regulation of the securities industry."... 6 CONCLUSION... 6 CERTIFICATE OF SERVICE... 8 CERTIFICATE OF COMPLIANCE... 8
TABLE OF AUTHORITIES RULES Rule 9.030(a)(2)(A)(iv)... 3, 6 CASES Citigroup, Inc. v. Amodio, 894 So. 2d 296 (Fla. 4th DCA 2005), rev. den., 911 So. 2d 792 (Fla. 2005)... 1, 4 EEOC v. Waffle House, Inc., 534 U.S. 279, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002)... 4 Episcopal Diocese of Cent. Fla. v. Prudential Secs., So. 2d, 31 Fla. L. Weekly D 1004 (Fla. 5 th DCA April 7, 2006)... 3, 5 First Options v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995)... 5 Prudential Secs. v. Katz, 807 So. 2d 173 (Fla. 3d DCA 2002)... 3 Regency Group v. McDaniels, 647 So. 2d 192 (Fla. 1 st DCA 1994)... 3 Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999)... 1, 4 iii
SUMMARY OF THE ARGUMENT The Prudential Petitioners claim a direct conflict with the decision below and two correctly decided decisions from the First and Third District Courts of Appeal. There is no conflict among the District Courts; the First and Third decisions dealt with damages arising from events at the subject firms. The breach of fiduciary duty claimed herein occurred at Prudential whereas the damages occurred at the terminated-broker's next employer. The Court below held, in the unique circumstances of this tort, that the Prudential arbitration agreement had no application. The agreement dealt with transactions, etc. at Prudential, in the customer's Prudential accounts, not the over-arching fiduciary duty to warn. Prudential's knowledge of and failure to warn the Episcopal Diocese of the foreseeable harm was held to be a tort claim unrelated to any obligation contemplated by the Prudential arbitration agreement. Moreover, the Court below expressly relied upon Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999); and Citigroup, Inc. v. Amodio, 894 So. 2d 296 (Fla. 4th DCA 2005), rev. den., 911 So. 2d 792 (Fla. 2005), neither of which are challenged by Petitioners. Petitioners wholly failed to show a plausible interpretation of the arbitration agreement (or even to show an ambiguity in the language of that agreement) which would be aided by applying a doctrinally valid presumption favoring arbitration. 1
Without such a showing to this Court, there is no direct conflict with any appellate decision of this State. Petitioners raise two additional arguments in the body of their brief, based upon the federal Supremacy Clause and the danger to the federal scheme of national regulation of the securities industry. Neither issue was raised below prior to the decision by the lower Court. Nor were these issues addressed in the Fifth District's decision. Therefore, this theoretical basis for conflict jurisdiction may not be considered. 2
ARGUMENT I. THE DECISION BELOW DOES NOT C IN THE WORDS OF RULE 9.030(a)(2)(A)(iv) C "EXPRESSLY AND DIRECTLY CONFLICT WITH THE DECISION OF ANOTHER DISTRICT COURT OF APPEAL..." The two "conflict decisions" relied upon by the Prudential Petitioners were properly decided, "Regency Group v. McDaniels, 647 So. 2d 192 (Fla. 1 st DCA 1994), and Prudential Secs. v. Katz, 807 So. 2d 173 (Fla. 3d DCA 2002). However, neither decision in any way "expressly and directly conflict" with the decision under examination, Episcopal Diocese of Cent. Fla. v. Prudential Secs., So. 2d, 31 Fla. L. Weekly D 1004 (Fla. 5 th DCA April 7, 2006). The 1980 Rule Amendment to 9.030 did of course end the practice of parties seeking conflict certiorari based upon per curiam affirmances. But just because there is a written decision does not mean that the "expressly and directly" language of the Rule can be read so expansively as to encompass a purely tangential interpretation, i.e., one having no direct bearing on the substantive basis of the decision challenged. Simply stated, the District Court "interpreted" the subject arbitration provision in a straightforward manner and found no ambiguity: Turning to the language in the agreements, the Diocese agreed to submit disputes involving any "transaction," "my account," or the "construction, performance or breach of this or any other agreement between us." The Diocese has conceded that any losses it may have 3
suffered while its accounts were at Prudential would be arbitrable under these terms. However, the Diocese is not suing for those losses C rather it seeks damages for its investment losses at Continental based on a breach of fiduciary duty tort claim. Id. at 4. The District Court expressly relied upon Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999), and Citigroup, Inc. v. Amodio, 894 So. 2d 296 (Fla. 4 th DCA 2005), rev. den., 911 So. 2d 792 (Fla. 2005), both of which set out an orthodox judicial analysis of arbitration provisions. Petitioners do not point to any flaw in the District Court's contract interpretation nor do they proffer their own analysis of the arbitration provision. Without such a proffer, there really is no way for this Court or Respondent to appreciate how the District Court's interpretation of the arbitration provision was incorrect, or where an ambiguity exists in the arbitration provision. Without an ambiguity, there is nothing to be resolved by applying "a presumption favoring arbitrability." Keep in mind, the damages suffered by the Diocese were not suffered at Prudential, but at the broker's next employer. The District Court made it clear that the case was not one "in which the federal policy favoring arbitration agreements drives" the decision. The lower Court properly relied upon, e.g., EEOC v. Waffle House, Inc., 534 U.S. 279, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002), stating that 4
(Absent an ambiguity in the agreement, it is the language of the contract that defines the scope of dispute subject to arbitration pursuant to the Federal Arbitration Act). So. 2d, 31 Fla. L. Weekly D1004 (Fla. 5 th DCA April 7, 2006). Again, in the absence of a plausible interpretation of the Prudential arbitration provision creating an ambiguity, there is nothing upon which the presumption favoring of arbitrability can operate. Petitioners do not take issue with the proposition stated by the Court below that "under federal law, the language of the agreement defines the scope of the arbitration agreement." By its very nature, any argument to demonstrate an express and direct conflict requires Petitioners to offer up a plausible interpretation of its arbitration provision, one that reveals an embedded ambiguity. In the absence of an alternative, plausible interpretation to demonstrate an ambiguity there simply cannot be "any doubts regarding the scope of... [the] arbitration clause...", to borrow from First Options v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995). II. THE ADDITIONAL ARGUMENTS RAISED BY THE PRUDENTIAL PETITIONERS DO NOT CREATE CONFLICT JURISDICTION UNDER THE RULE A. The Supremacy Clause of the United States Constitution was never an issue prior to the court's decision and certainly provides no basis for conflict jurisdiction at this stage of the proceeding. 5
B. Similarly, jurisdiction in this Court cannot be vested simply by arguing that the lower court's "decision is particularly at odds with policies underlying the extensive national regulation of the securities industry." Petitioners' Jurisdiction Brief at 4. As Petitioners know, the self-regulatory organizations wisely limit the scope of customer agreements. And just as wisely, such agreements are confined to disputes arising out of a customer account, such as securities transactions or the construction, performance or breach of those agreements. Under Petitioners' interpretation, its arbitration provision could reach any and every dispute, from assault and battery to highway accidents. Equally unavailing is the argument that the lower court's decision "threatens to disrupt the 'efficient operation' of the national market for securities." Id. at 4. The actual scope of cases affected by the lower court's decision is narrow indeed, scarcely more than the width of a scintilla juris: when a broker who is prone to violating investment objectives goes to a subsequent firm, that firm typically has resources to respond in damages. It is only when the next employer lacks such resources that it becomes necessary to proceed against the former employer on the fiduciary duty tort claim of failure to warn. One could go a lifetime and not see such a case. CONCLUSION There simply is no conflict between the decision below and any prior appellate decision. The strong language of Rule 9.030(a)(2)(A)(iv) requires a strong, jump-off- 6
the-page conflict. The magisterial decision by the District Court stands in harmony, not conflict with similar decisions. Accordingly, this Court should deny the Petition. Respectfully submitted, Robert Dyer Florida Bar No. 021590 Brian R. Gilchrist Florida Bar No. 774065 ALLEN, DYER, DOPPELT, MILBRATH & GILCHRIST, PA 255 South Orange Avenue, Suite 1401 Orlando, Florida 32801 Telephone: 407.841.2330 Facsimile: 407.841.2343 Attorneys for Plaintiff/Respondent 7
CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Plaintiff/Respondent's Answer Brief on Jurisdiction was furnished by United States Mail on this day of June, 2006 to Attorneys for Petitioner: Sylvia H. Walbolt Carlton Fields Corporate Center Three at International Plaza 4221 W. Boy Scout Blvd., Ste 1000 Tampa, Florida 33607-5736 Defendant/Respondent: John Bowman Trumbo Trumbo Capital Management 1220 Edgewater Drive, Unit 6 Orlando, Florida 32804 Richard L. Martens, Esq. Boose Case Ciklin et al 515 North Flagler Drive, 19 th Floor West Palm Beach, Florida 33401 Brian R. Gilchrist Florida Bar No. 774065 CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that the Answer Brief has been prepared using Times New Roman 14-point type, proportionally spaced. Brian R. Gilchrist Florida Bar No. 774065 8