Aiguier v. Financial Industry Regulatory Authority, Inc., et al. (Lawyers Weekly No. 12-029-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 16-02491 BLS I DUSTIN AIGUIER v. FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., CUSTOMER 1-W, CUSTOMER 1-H, CUSTOMER 2, CUSTOMER 3, CUSTOMER 4-W, and CUSTOMER 4-H and THE SECURITIES DIVISION OF THE OFFICE OF THE SECRETARY OF STATE, intervener MEMORANDUM OF DECISION AND ORDER ON THE DEFENDANTS’ MOTIONS TO DISMISS INTRODUCTION This case, once again, raises the issue of whether, or pursuant to what standard, the Superior Court may adjudicate a claim made by a registered representative of a securities broker-dealer that he is entitled to have records of customer complaints expunged from the data bases maintained by defendant Financial Industry Regulatory Authority, Inc. (FINRA). Plaintiff Dustin Aiguier was formerly a registered representative of New York Life Securities LLC (NYLife). While with NYLife, four complaints were lodged against him by six of his customers (including two sets of spouses) (collectively, the Customers). The plaintiff has filed a complaint which he styles: “Amended Petition for an Order of Expungement of Customer Dispute Information from the Central Registration (CRD System)” (the Complaint). In addition to FINRA, the Complaint also names the Customers as defendants (although the plaintiff seeks no relief with respect to them). The Securities Division of the Office of the Secretary of the 2 Commonwealth has intervened in this action as a defendant on the ground that it is a primary regulator of the securities industry in Massachusetts and is responsible for protecting the public’s interest in access to information concerning customer complaints. The case is now before the court on all of the defendants’ motions to dismiss the Complaint. They move for dismissal asserting that: (a) the Superior Court lacks subject matter jurisdiction (Mass.R.Civ.P. 12(b)(1)) and (b) the Complaint fails to state a claim on which relief may be granted (Mass.R.Civ.P. 12(b)(6)). For the reasons that follow, their motions are allowed. FACTUAL BACKGROUND The court will begin by summarizing the relevant factual allegations in the Complaint, assumed to be true for purposes of this motion, as well as relevant information contained in attachments to the Complaint, to the extent necessary to address the issues raised by the defendants’ motions. It will then describe the regulatory framework relevant to this dispute. The Plaintiff’s relationship to NYLife and the Customer Complaints The plaintiff was a registered representative of NYLife until June 3, 2015, when he was discharged. Four written complaints against him were submitted to NYLife by his customers, each involved the sale of annuities. NYLife settled each of the claims without an arbitration proceeding being commenced. As required by FINRA rules, it reported the claims and settlements to FINRA, and a description of each claim and the settlement, as well as […]
Bank of America, N.A. v. Diamond Financial, LLC (Lawyers Weekly No. 11-167-15)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 14-P-1315 Appeals Court BANK OF AMERICA, N.A.[1] vs. DIAMOND FINANCIAL, LLC. No. 14-P-1315. Suffolk. June 12, 2015. – October 20, 2015. Present: Cohen, Green, & Trainor, JJ. Subrogation. Mortgage, Priority, Junior lien. Jurisdiction, Equitable. Land Court. Civil action commenced in the Land Court Department on December 22, 2011. The case was heard by Judith C. Cutler, J., on motions for summary judgment. George E. Sousa for the defendant. Howard S. Goldman for the plaintiff. TRAINOR, J. Bank of America (BOA), the plaintiff, brought suit against Diamond Financial, LLC (Diamond),[2] seeking equitable subrogation of a mortgage it holds on property located at 18 Eastwood Road, in the town of Shrewsbury. The parties filed cross motions for summary judgment. In granting the plaintiff’s summary judgment motion, the judge found that BOA “is entitled to be equitably subrogated to the priority position” for $ 330,368.29 of the previously recorded mortgage, which was discharged. The defendant, Diamond, appeals. Background. We review the relevant undisputed facts. Milton J. Miranda and Solange D. Miranda purchased a property in Shrewsbury on July 31, 2002. The purchase was financed for the most part with a mortgage loan from Moneyone Corporation. On August 24, 2004, the Mirandas refinanced with a $ 336,150 mortgage loan from Argent Mortgage Company, LLC (Argent).[3] This mortgage was recorded. On or about June 28, 2006, the Mirandas borrowed $ 50,000 from the defendant and granted the defendant a mortgage on the Shrewsbury property and on a property in the city of Worcester.[4] On September 29, 2006, the Mirandas refinanced the Argent mortgage with a mortgage loan of $ 344,000 from Equity Advantage (Equity). As part of the refinancing, $ 330,368.29 of the Equity loan was used to pay the full balance of the Argent mortgage. The Equity mortgage was recorded on October 12, 2006, and the discharge of the Argent mortgage was recorded on October 30, 2006. The closing of the Equity mortgage was conducted by a closing attorney and Closeline, LLC. The Diamond mortgage was not identified during the refinancing process and Equity did not enter into a subrogation agreement. The closing attorney issued a title insurance policy through TICOR Title Insurance Company (TICOR). There is no evidence that Diamond learned of the change in the record order of liens prior to this action. There […]
Zimmerling v. Affinity Financial Corporatiopn, et al. (Lawyers Weekly No. 11-097-14)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 13-P-1439 Appeals Court WILLIAM ZIMMERLING vs. AFFINITY FINANCIAL CORPORATION, & others.[1] No. 13-P-1439. Middlesex. April 8, 2014. – August 18, 2014. Present: Berry, Katzmann, & Sullivan, JJ. Practice, Civil, Action to reach and apply. Escrow. Uniform Commercial Code, Security interest, Secured creditor. Words, “Transferee,” “Interest in property.” Civil action commenced in the Superior Court Department on November 24, 2010. The case was heard by Joseph M. Walker, III, J., on motions for summary judgment, and entry of final judgment was ordered by Kenneth W. Salinger, J. Brian T. Moore, of Colorado (W. Matthew Iler, Jr., with him) for the plaintiff. Thomas M. Elcock (Thomas Sutcliffe with him) for the interveners. SULLIVAN, J. This appeal concerns the enforceability of security interests in funds deposited in an escrow account pursuant to an order of a judge of the Superior Court. The plaintiff, William Zimmerling (Zimmerling), and the interveners, BHC Interim Funding II, LP, and BHC Interim Funding III, LP, (collectively BHC), are creditors of Affinity Financial Corporation (Affinity). Zimmerling and BHC both lay claim to money owed to Affinity by AARP Financial, Inc. (AARP Financial). At issue is whether BHC’s perfected security interests in the funds held by AARP Financial were extinguished because they were transferred from an AARP Financial bank deposit account to a court-ordered escrow account. See G. L. c. 106, § 9-332(b) (2001) (UCC § 9-332).[2] We conclude that the BHC security interests in the escrowed funds were not extinguished, and affirm the judgment awarding the amounts held in escrow to BHC. Background. The case was decided on cross motions for summary judgment based on an undisputed record. In 2008 BHC advanced funds totalling $ 13.5 million to Affinity. Loan documents and security agreements were executed in connection with each of the two loans. Zimmerling does not dispute that these documents created valid security interests, that the security interests were perfected on or about January 15, and April 28, 2008, and that the security interests covered assets, after-acquired assets, and proceeds of assets. By March of 2010 Affinity had defaulted on the loans, and BHC declared Affinity to be in default. Affinity’s assets were insufficient to pay the loans. Affinity also owed money to Zimmerling, who had successfully arbitrated a claim for breach of an employment contract against Affinity. The Zimmerling award was confirmed by […]
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McInnes v. LPL Financial, LLC, et al. (Lawyers Weekly No. 10-157-13)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us SJC‑11356 JANE B. McINNES vs. LPL FINANCIAL, LLC, & another.[1] Barnstable. April 4, 2013. ‑ August 12, 2013. Present: Ireland, C.J., Spina, Botsford, Gants, Duffly, & Lenk, JJ. Federal Arbitration Act. Massachusetts Arbitration Act. Consumer Protection Act, Arbitration. Constitutional Law, Federal preemption. Federal Preemption. Arbitration, Consumer Protection Act, Stay of judicial proceedings. Contract, Arbitration. Statute, Federal preemption. Civil action commenced in the Superior Court Department on September 28, 2011. Motions for stay of proceedings and to compel arbitration were heard by Christopher J. Muse, J., and Gary A. Nickerson, J. The Supreme Judicial Court granted an application for direct appellate review. Thomas J. Carey, Jr. (Michael A. Collora & Justin P. O’Brien with him) for the defendant. Bruce A. Bierhans for the plaintiff. John Pagliaro & Martin J. Newhouse for New England Legal Foundation & another, amici curiae, submitted a brief. John R. Snyder & S. Elaine McChesney, for American Financial Services Association, amicus curiae, submitted a brief. GANTS, J. In Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 826-827 (1982) (Hannon), we held that, even where a consumer executed a valid contract agreeing to arbitrate all disputes, a plaintiff may not be compelled to arbitrate a claim alleging an unfair or deceptive trade practice in violation of G. L. c. 93A, § 9. We hold today that such claims must be referred to arbitration where the contract involves interstate commerce and the agreement to arbitrate is enforceable under the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (2006) (FAA). Because the plaintiff and defendants in this case entered into a valid contract in which they agreed to settle all controversies related to the plaintiff’s financial account by arbitration, and because the arbitration agreement is governed by the FAA, we conclude that the motion judges erred in declining to stay judicial proceedings and order the matter to proceed to arbitration.[2] Background. In September, 2011, the plaintiff, Jane B. McInnes, filed a complaint in Superior Court, asserting claims against LPL Financial, LLC (LPL), and Karl G. McGhee, Jr., for fraud; intentional misrepresentation; breach of fiduciary duty; intentional infliction of emotional distress; and violations of G. L. c. 110A, § 410 (Uniform Securities Act), and G. L. c. 93A (consumer protection act).[3] As alleged in the plaintiff’s complaint, McGhee was a financial […]