Empire Asset Management v. Best ( 2022 )

21-1798-cv
Empire Asset Management v. Best
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 28th day of March, two thousand twenty-two.
PRESENT: JOSÉ A. CABRANES,
REENA RAGGI,
SUSAN L. CARNEY,
Circuit Judges.
EMPIRE ASSET MANAGEMENT COMPANY,
Plaintiff-Appellant, 21-1798-cv
v.
JOSEPH BEST,
Defendant-Appellee.
FOR PLAINTIFF-APPELLANT: BARRY BORDETSKY, Law Offices of Barry
M. Bordetsky, Morristown, NJ.
FOR DEFENDANT-APPELLEE: JONATHAN E. NEUMAN, Law Offices of
Jonathan E. Neuman, Esq., Fresh
Meadows, NY.
Appeal from an order and judgment of the United States District Court for the Southern
District of New York (Paul A. Crotty, Judge).
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UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the order and judgment of the District Court be and hereby
are AFFIRMED.
In 2013, Joseph Best (“Best”) entered into a contract (the “Contract”) with Empire Asset
Management Company (“Empire”) under which Empire provided Best with brokerage services. The
Contract included an arbitration clause (the “Arbitration Clause”) stating that “controversies arising
under or relating to any activity or this agreement . . . shall be determined by arbitration and in
accordance with the rules of the Financial Industry Regulatory Authority, Inc. (‘FINRA’) before an
arbitration panel appointed by FINRA in accordance with its rules . . . .” Joint App’x 87
(capitalization omitted). In April 2021, Best initiated arbitration proceedings against Empire with
FINRA, alleging that Empire had wrongfully caused him more than $2.8 million in losses. Empire
filed a petition in New York State Supreme Court seeking to stay the FINRA proceedings and have
them dismissed on the ground that they were time-barred by a statute of limitations. Best removed
the action to the District Court on the basis of diversity jurisdiction and filed a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6). The District Court granted the motion, and Empire
appeals. We assume the parties’ familiarity with the underlying facts, the procedural history of the
case, and the issues on appeal.
DISCUSSION
The dispositive issue on appeal, as below, is whether Empire’s statute of limitations defense
is arbitrable. Best argues that it is, relying, inter alia, on the Contract’s Arbitration Clause. Empire
argues that it is not, relying, inter alia, on the Contract’s choice of law clause and a clause concerning
the arbitrability of requests for temporary or provisional relief.
“The arbitrability of [a] statute of limitations defense is a question of law that we review de
novo,” and “any ambiguity in the contract must be resolved in favor of arbitration.” Bechtel do Brasil
Construcoes Ltda. v. UEG Araucaria Ltda., 638 F.3d 150, 154 (2d Cir. 2011); see also Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983) (“[A]s a matter of federal law, any doubts
concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the
problem at hand is the construction of the contract language itself or an allegation of waiver, delay,
or a like defense to arbitrability.”).
We agree with the District Court’s conclusion that Empire’s statute of limitations defense is
committed to arbitration by the Arbitration Clause. That clause provides that “controversies arising
under or relating to any activity or this agreement . . . shall be determined by arbitration.” Joint App’x 87
(emphasis added). The wording of the clause is “inclusive, categorical, unconditional and unlimited,”
and is “elastic enough to encompass disputes over whether a claim is timely.” Bechtel, 638 F.3d at 155
(quoting PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1199 (2d Cir. 1996)).
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Empire’s primary counterargument is based on the choice of law clause in the Contract,
which provides that “any claim, controversy or dispute arising under or related to . . . the
interpretation and enforcement of the rights and duties of the parties will be governed by the laws of
the State of New York.” Joint App’x 86 (capitalization omitted). Empire argues that according to
New York law, “[a] choice of law provision, which states that New York law shall govern both ‘the
agreement and its enforcement,’ adopts as ‘binding New York’s rule that threshold Statute of
Limitations questions are for the courts.’” Diamond Waterproofing Sys., Inc. v. 55 Liberty Owners Corp., 4
N.Y.3d 247, 253 (2005) (quoting Smith Barney, Harris Upham & Co. v. Luckie, 85 N.Y.2d 193, 202
(1995)). This argument is conclusively foreclosed by our holdings in Bybyk and Bechtel, under
Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63–64 (1995). See Bechtel, 638 F.3d at 155–56.
We also reject Empire’s argument that its petition requesting dismissal of Best’s proceeding
before FINRA on the basis of a statute of limitations is a request for “temporary” or “provisional”
relief governed by Section 23(b) of the Contract. Joint App’x 87; see N.Y.C.P.L.R. § 7502
(distinguishing the assertion of a statute of limitation “as a bar to [an] arbitration” under subsection
(b), from the application to a court “for an order of attachment or for a preliminary injunction in
connection with an arbitration,” as provisional remedies under subsection (c)). Even if we did not,
we would at most consider Section 23(b) of the Contract to be in conflict with the Arbitration
Clause under Section 23(a), and would resolve that conflict in favor of arbitration under our
precedents. See Bechtel, 638 F.3d at 158; Bybyk, 81 F.3d at 1199–1200.
CONCLUSION
We have reviewed all of the arguments raised by Empire on appeal and find them to be
without merit. For the foregoing reasons, we AFFIRM the June 28, 2021 order and June 29, 2021
judgment of the District Court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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