Broker-dealer and adviser waived their right to compel arbitration of deceased customer’s estate’s claims against them.
Estrella vs. Damiani, No. PC-2017-5227 (R.I. Super., 2/13/20).
This case arose out of an intra-family dispute over whether Armando Damiani’s (“Mandy”) designation of a new beneficiary (Steven Damiani), while Mandy was essentially on his deathbed, was enforceable due to Mandy’s medical condition and mental state, and the legal consequences to Mandy’s Estate, including its investment accounts, from that purported designation. After a five-day trial, the jury found that Mandy intended to open an account with Janney Montgomery Scott LLC (“Janney”) and that Mandy did not intend to designate Steven Damiani as the transfer-on-death beneficiary, and awarded compensatory damages to Mandy’s Estate.
The Court entered a Declaratory Judgment memorializing the jury’s findings and also found that the disputed funds belonged to Mandy’s Estate. Plaintiff, as Executor of Mandy’s Estate, and Janney and one of its advisers (Ranone) then moved for various forms of post-trial relief (e.g., motions to alter or amend aspects of the judgment; for judgment as a matter of law; for attorney’s fees). The state trial court’s opinion omits many important facts, as the Court refers back to an earlier unpublished decision on a TRO application, but it does resolve some of the substantive claims. The Court also addresses one collateral procedural issue regarding arbitrability of plaintiff’s claims against Janney and Ranone.
The Court finds that those claims are arbitrable at FINRA, because the jury had found that Mandy intended to open a valid account with Janney. However, Defendants waived their right to compel arbitration of the claims against them. First, Defendants moved to compel arbitration early in the case, but then failed to ask the Court to reschedule a postponed evidentiary hearing on the motion to compel, and did not raise the issue again until the post-trial motion. Second, Defendants willingly proceeded to trial on all claims and thus manifested a desire to have the courts resolve the otherwise arbitrable issues. Therefore, the Court denies Defendant’s motion to compel arbitration.
(SOLA Ref. No. 2020-12-09)
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