On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2237-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano and Waugh.
Plaintiff Brian Campbell appeals from the order of the Law Division vacating a previously-entered order to show cause and dismissing his verified complaint against defendants Pamrapo Service Corp. (PSC) and Daniel Massarelli. We affirm substantially for the reasons expressed in the oral opinion of Judge Barry P. Sarkisian.
The record reveals that on April 22, 2010, plaintiff filed a verified complaint seeking to compel defendants to submit to arbitration. Plaintiff alleged certain facts of which there is little dispute.
PSC is a wholly-owned subsidiary of Pamrapo Bancorp (the Bank). Massarelli is a member of the Board of PSC.*fn1 Plaintiff was employed by PSC as a manager and was also licensed as a "registered representative" by the Financial Industry Regulatory Authority (FINRA), the successor to the National Association of Securities Dealers (NASD). The Bank would refer its customers to plaintiff, who maintained a desk in the Bank, for investment advice.
Plaintiff contended that he was required by the Bank to become associated with a "FINRA member broker-dealer," Prime Capital Services Inc. (Prime), thus allowing PSC and plaintiff to share commissions charged in relation to the purchase of securities and life insurance products by the Bank's customers. In order to become licensed and registered with FINRA through Prime, plaintiff completed and executed a Uniform Application for Securities Industry Registration (U-4) which contained the following language:
I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of [FINRA] as may be amended from time to time.
Disputes arose with defendants regarding commissions plaintiff claims were due to him. On or about March 9, 2010, plaintiff filed a "Statement of Claim" with FINRA naming PSC, Prime and Massarelli as respondents. On May 6, 2010, FINRA notified defendants that they were "not required to arbitrate disputes in the FINRA arbitration forum." Apparently in anticipation of this development, plaintiff filed his verified complaint and order to show cause seeking to compel defendants to arbitrate the employment dispute. The judge entered the order to show cause, defendants filed an answer, both parties filed supplemental papers, and the matter was heard on the return date, June 11, 2010.
In his certification in opposition, Massarelli alleged that plaintiff was discharged when he failed to remit more than $270,000 in commissions to PSC. Massarelli further certified that he and PSC were not registered with FINRA, nor did they consent to submit "any claims or disputes between us and [plaintiff] to arbitration." In furtherance of his position, Massarelli attached copies of FINRA's arbitration rules and regulations.
Pursuant thereto, all disputes must be arbitrated if "[r]equired by a written agreement," or "[r]equested by the customer"; the "dispute is between a customer and a member or associated person of a member"; and, "[t]he dispute arises in connection with the business activities of the member or the associated person." FINRA's rules further provide that "a dispute must be arbitrated . . . if the dispute arises out of the business activities of a member or an associated person and is between or among: Members[,] Members and Associated Persons[,] or Associated Persons." These are defined terms, and it is undisputed that defendants are not "customers," "members," or "associated persons," and plaintiff is not a "customer."
In reply, plaintiff disputed Massarelli's claims regarding the commissions, and further certified that he was directed by PSC to obtain his license, and that PSC benefited as a result because it was able to share in the commissions earned by plaintiff. Citing the language of the U-4, plaintiff claimed that "all disputes arising from [his] business activities with [his] member 'firm, or a customer, or any other person,'" were subject to arbitration. Plaintiff argued that PSC was "any other person" and, therefore, required to arbitrate the dispute.
After considering the oral arguments of both sides, Judge Sarkisian noted that "[a]rbitration is a matter of contract," and "there [wa]s no written agreement in which . . . [PSC] agreed to submit . . . to arbitration." The judge also rejected plaintiff's argument that he was acting as PSC's agent when he executed the U-4, thus, binding PSC to submit all disputes to arbitration. Judge Sarkisian concluded that those cases cited by plaintiff were inapposite, and, even if plaintiff was PSC's agent, the U-4 and FINRA's arbitration requirements did not apply to the employment dispute. He noted, "[T]here was [no] employment agreement between plaintiff and the [B]ank which compelled these matters to be submitted to ...