On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5732-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo and Hoffman.
Plaintiffs, Michael and Robyn Hirsch, and Hirsch, LLP, appeal from a June 24, 2011 order granting a motion by third-party defendant Securities America, Inc. (SAI), to stay all proceedings in the Law Division and compel arbitration. The underlying dispute concerns plaintiffs' purchase of securities that defaulted. Plaintiffs' account agreements with their stockbroker, SAI, mandated arbitration of any disputes arising between the parties. No agreement between plaintiffs and defendants, Amper Financial Services, LLC (AFS) and EisnerAmper, LLP - plaintiffs' financial services firm and accounting firm, respectively - mandated arbitration. After filing a claim for arbitration against SAI, plaintiffs filed an action in the Law Division against defendants, and they, in turn, filed a third-party complaint against SAI, seeking contribution and indemnification. Upon receiving the third-party complaint, SAI filed the motion that resulted in the order under appeal.
On this appeal, we are asked to determine whether all of plaintiffs' claims arising out of this dispute should be decided in one arbitration proceeding, despite the absence of an arbitration provision between plaintiffs and defendants. For the reasons that follow, we resolve this question in the affirmative, and affirm.
This dispute arose out of plaintiffs' purchase of securitized notes issued by Medical Capital Companies (Med Cap). In 2002, plaintiffs' accounting firm, Amper, Politziner & Mattia (now known as EisnerAmper, LLP), referred them to an investment advisor, Marc Scudillo, a broker and registered financial representative with AFS, a financial planning and wealth management firm. EisnerAmper and Scudillo each own a fifty-percent interest in AFS. Plaintiffs allege they purchased the notes on the recommendation of Scudillo. SAI served as the broker-dealer for each transaction.
In September 2010, EisnerAmper's website listed Scudillo as the managing partner of AFS. From 2001 to 2010, the records of the Financial Industry Regulatory Authority ("FINRA") listed Scudillo as a registered broker with SAI.
Plaintiffs signed two account applications with SAI. The first, dated July 13, 2004, was signed in the name of Hirsch, FLP, and the second, dated June 7, 2006, was signed in the names of both individual plaintiffs. Scudillo also signed each agreement as "registered representative" and "principal" for SAI. Each account application incorporated a three-page Customer Agreement. Paragraph 18 of this agreement, entitled "Pre-Arbitration Agreement," states in pertinent part:
All parties to this agreement are giving up their right to sue each other in court, including the right to a trial by jury . . . .
All controversies that may arise between us (including but not limited to, controversies concerning any account, order, or transaction, or the continuation, performance, interpretation, or breach of this or any other agreement between you and us, whether entered into or arising before, on, or after the date this account is opened) shall be determined by arbitration in accordance with the rules then prevailing of the New York Stock Exchange, Inc. or the NASD . . . . *fn1
Plaintiffs do not dispute the enforceability of this clause as to their claims against SAI and Scudillo.
From 2004 to 2008, plaintiffs purchased four securitized notes issued by Med Cap with the following values: $300,000 on July 13, 2004; $250,000 on April 10, 2006; $300,000 on July 11, 2007; and $250,000 on May 6, 2008.*fn2 For each purchase, the broker transaction record listed Scudillo as the representative and SAI as the broker-dealer.
Starting in October 2008, Med Cap defaulted on the notes. On July 16, 2009, the SEC filed an enforcement action alleging securities fraud against Med Cap in federal district court in California. On August 17, ...