March 5, 2019
In today's featured FINRA intra-industry arbitration, Ameriprise Financial Services sued a former stockbroker in an effort to recover balances due on three promissory notes. When the stockbroker shows up to the proceedings without a lawyer and represents himself, well, you know, that's not exactly a formula for success. And it wasn't. The odd part of the case is found in a few errant words that the arbitrators tossed into their Decision. Maybe those words were meant to have significant meaning -- maybe not?
Case In Point
In a FINRA Arbitration Statement of Claim filed in April 2016 and as amended thereafter, FINRA member firm Ameriprise Financial Services alleged breach of promissory notes and loan agreements arising from Respondent Disesso's alleged failure to repay sums due on promissory notes dated August 20, 2009, March 9, 2010, and March 14, 2011. Claimant Ameriprise sought $101,211.49 in principal; $63,878.18 negative compensation; $7.3507 per day in pre-Award interest; post-award interest; fees; and costs. In the Matter of the Arbitration Between Ameriprise Financial Services, Inc., Claimant, v. Nicholas M. Disesso, Respondent (FINRA Arbitration Decision 16-01111, February 28, 2019) http://www.finra.org/sites/default/files/aao_documents/16-01111.pdf
Affirmative Defenses: Now Ya See 'Em, Now Ya Don't
The FINRA Arbitration Decisions asserts that
Unless specifically admitted in the Statement of Answer, Respondent denied the allegations made in the Statement of Claim and asserted various affirmative defenses.
Notwithstanding the above statement, the FINRA Arbitration Decision then asserts that:
In the Statement of Answer, Respondent did not delineate a specific relief request.
In its Reply to Respondent's Statement of Answer, Claimant stated that Respondent
had not alleged any affirmative defenses in his Statement of Answer, and to the extent
that any of the allegations are construed as an affirmative defense, Claimant denied all
affirmative defenses raised in the Statement of Answer and demanded strict proof of same
at the hearing.
So . . . let's see . . . according to the FINRA arbitrators, Disesso "denied the allegations" and "asserted various affirmative defenses;"but Claimant Ameriprise argued that "Respondent had not alleged any affirmative defenses" but, you know, just in case any of his allegations might be "construed as affirmative defenses," well, hey, Claimant denies all of them. Don't ya love litigation?
The FINRA Arbitration Panel rendered the following:
1. Respondent is liable for and shall pay to Claimant the sum of $173,229.90 in
compensatory damages inclusive of pre-judgment interest.
2. Respondent is liable for and shall pay to Claimant post-judgment interest on the
above-stated sum at the amount of $7.3734 per day accruing from the date of this
Award through and including the date the Award is paid.
3. Respondent is liable for and shall pay to Claimant the sum of $28,179.85 in
attorneys' fees and costs pursuant to the Notes.
4. The Panel examined all written evidence presented, as well as oral testimony
provided by the parties. The Panel agrees that the Notes were the prevailing factors
in its decisions, and Respondent shall pay Claimant the awarded amount. Further,
the Panel did not consider or decide whether Claimant's termination of Respondent's
employment was either proper or improper.
5. Any and all claims for relief not specifically addressed herein are denied.
The Panel and/or FINRA assessed the following fees:
Claimant Ameriprise: $2,125 Initial Claim Filing Fee; $1,700 Member Surcharge' $3,250 Member Process Fee; $562.50 Adjournment Fee; and $1,350 Hearing Session Fees
Respondent Disesso: $1,678.50 Adjournment Fee; and $1,350 hearing Session Fees.
Bill Singer's Comment
Not a great day for the go-it-alone spirit of a pro se industry respondent. If you add up the award of $173,229.90 and $28,179.85, that's $201,409.75 exclusive of $7.37 per diem interest going forward. Plus, Disesso got hit with over $3,000 in FINRA fees. Seems like a clean sweep for Ameriprise.
Now that everything is broom-sweep clean, I've noticed that some dirt was swept under the rug. Pointedly, I'm not quite sure what to make of this pregnant comment:
4. The Panel examined all written evidence presented, as well as oral testimony provided by the parties. The Panel agrees that the Notes were the prevailing factors in its decisions, and Respondent shall pay Claimant the awarded amount. Further, the Panel did not consider or decide whether Claimant's termination of Respondent's employment was either proper or improper.
Okay, sure, that's nice for the arbitrators to tell us that the in a FINRA arbitration seeking to force the payment of balances due on three promissory notes that the "Notes were the prevailing factors." Not to be too snarky but, umm, like what else would have been the prevailing factors in a promissory note collection case? Perhaps the arbitrators' declaration was meant to make something clear but witht the actual intent of drawing our attention to something else? Given that the arbitrators seem to have re-stated the fairly obvious about the notes being the prevailing factor in this case, I'm puzzled about the arbitrators' other statement that they "did not consider or decide whether Claimant's termination of Respondent's employment was either proper or improper."
There's lots of ways to take that very pregnant comment; for example, the Arbitrators didn't consider the termination issue because Respondent did not properly raise it in his Answer or it wasn't a "prevailing" factor and, thus, not germane. Could be. Maybe not. Then again, who knows.
Another possibility is that after the FINRA Arbitration Panel heard testimony about the circumstances of Disesso's termination by Ameriprise, the arbitrators tried to send a subtle message to pro se Disesso that he might want to sue Ameriprise in a new arbitration concerning those very circumstances of his termination. If that were the arbitrators' intent, then they gave Disesso the ammunition to counter any argument by Ameriprise that the termination issue can't be re-litigated per the doctrine of res judicata (you can't re-litigate a matter that has previously been adjudicated on its merits). Quoting the FINRA Arbitration Decision, Disesso could counter that the FINRA Arbitration Panel "did not consider or decide" any aspect of his termination. Could be. Maybe not. Then again, who knows.