Fisher v. Wheat First Securities, Inc. ( 2003 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
POWELL FISHER, 
Plaintiff-Appellant,
v.
 No. 02-1673
WHEAT FIRST SECURITIES,
INCORPORATED; WILLIAM H. ROGERS,
Defendants-Appellees.

Appeal from the United States District Court
for the District of South Carolina, at Florence.
Margaret B. Seymour, District Judge.
(CA-01-136-4-24)
Argued: February 26, 2003
Decided: April 8, 2003
Before LUTTIG and MICHAEL, Circuit Judges, and
Robert E. PAYNE, United States District Judge for the
Eastern District of Virginia, sitting by designation.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: William Reynolds Williams, WILLCOX, BUYCK &
WILLIAMS, P.A., Florence, South Carolina, for Appellant. Ricardo
Juan Nunez, Legal Division, WACHOVIA SECURITIES, INC.,
Richmond, Virginia, for Appellees.
2 FISHER v. WHEAT FIRST SECURITIES
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Jesse Powell Fisher appeals an order of the United States District
Court for the District of South Carolina confirming an arbitration
award granted to Fisher’s former employer, Wheat First Securities,
Inc. (Wheat First), by a National Association of Securities Dealers
(NASD) arbitration panel. Fisher argues that the district court erred
in concluding that the arbitration panel had jurisdiction over a coun-
terclaim filed by Wheat First against him. Because we conclude that
Fisher agreed to arbitrate the counterclaim at the time he submitted
his own claims to arbitration, we affirm the judgment of the district
court.
I.
On July 7, 1998, Fisher accepted employment with Wheat First as
a senior vice president and branch manager for the firm’s offices in
Charleston and Myrtle Beach, South Carolina. (First Union Securities,
Inc. is the successor in interest to Wheat First. For clarity’s sake, the
parties continue to refer to the corporate defendant as Wheat First. We
do the same.) Fisher’s position at Wheat First provided him with sev-
eral perks, including a generous bonus schedule and profit overrides.
As a condition of his employment, Fisher filed a Form U-4, Uniform
Application for Securities Industry Regulation. The Form U-4, which
is a contract between Fisher, the NASD, and the securities exchanges,
included the following provision:
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 [self-regulatory organizations]
....
FISHER v. WHEAT FIRST SECURITIES 3
NASD rules provide for arbitration of "any dispute, claim, or contro-
versy arising out of . . . the employment or termination of employ-
ment of associated person(s) with any member."
On March 17, 1999, Fisher signed a promissory note to Wheat
First, agreeing to repay a loan of $761,008.00. This sum represented
85 percent of the amount that remained due to Fisher under his staged
bonus plan. (The loan was essentially an advance on bonus payments
that Fisher would otherwise receive over the course of five years.)
The parties agreed that one-fifth of the promissory note would be for-
given each year on the anniversary of Fisher’s employment with
Wheat First. The promissory note provided that:
In the event of the separation of service of [Fisher] with
Wheat and/or its affiliates for any reason . . . the full amount
of any unpaid balance shall become due and payable imme-
diately and any amount outstanding to the credit of or due
[Fisher] by Wheat and/or its affiliates shall be used for the
repayment of the unpaid balance.
The promissory note also provided that in the event of default in the
payment of the note, Fisher authorized First Wheat to confess a judg-
ment against him in the Circuit Court of the City of Richmond, Vir-
ginia. The note further provided that:
Wheat and [Fisher] hereby expressly intend to except this
Note and any dispute arising hereunder from any arbitration
requirement arising with respect to the employment relation-
ship between Wheat and [Fisher], and otherwise agree to,
and do hereby, waive any right to arbitration of any dispute
or matter concerning this Note.
According to Fisher, the forum selection clause of the promissory
note was attractive because it avoided one of the risks associated with
arbitration: NASD’s bylaws provide for expulsion from NASD mem-
bership and license revocation for a member’s failure to pay an arbi-
tration award. In addition to signing the promissory note, Fisher also
assigned, in writing, all of his "salary, commissions, wages, [and]
bonuses" to Wheat First as security for repayment of the note.
4 FISHER v. WHEAT FIRST SECURITIES
In August of 1999 Wheat First underwent a management change,
and as a result, Fisher’s profit percentages decreased and he no longer
received the guaranteed minimums he claims to have been promised
when hired. On January 12, 2001, Fisher resigned from Wheat First,
claiming that the firm had failed to pay him over $81,000 in profit
bonuses, over $300,000 in profit overrides, and over $200,000 in
wages due. Four days later Fisher filed a diversity action in federal
court against Wheat First and William H. Rogers, Wheat First’s man-
aging director. Fisher asserted three causes of action: (1) common law
breach of contract; (2) violation of the South Carolina Payment of
Wages Statute, see S.C. Code Ann. § 41-10-10, et seq.; and (3) viola-
tion of the South Carolina Unfair Trade Practices Act, see S.C. Code
Ann. § 39-5-10, et seq. The defendants moved to compel arbitration
and to stay the federal court proceedings. The parties then consented
to arbitrate the dispute. On March 23, 2001, Fisher filed a Statement
of Claim before the NASD in which he presented the same three
causes of action against Wheat First and Rogers. With the Statement
of Claim, Fisher also submitted a signed NASD Uniform Submission
Agreement. The Uniform Submission Agreement provides that the
"parties hereby submit the present matter in controversy . . . and all
related counterclaims . . . to arbitration." Rogers answered the State-
ment of Claim; Wheat First answered and asserted a counterclaim
against Fisher alleging non-payment of the promissory note. At that
time Fisher owed $608,808.40 in principal and $36,896.48 in interest
on the note. Fisher responded to Wheat First’s counterclaim by argu-
ing that the NASD arbitration panel lacked jurisdiction over that
claim. The panel rejected his argument and assumed jurisdiction over
the counterclaim. On January 23, 2002, the arbitration panel issued a
decision denying all of Fisher’s claims and awarding Wheat First the
unforgiven balance on the principal due on the promissory note, plus
interest and attorney’s fees. Both Fisher and Wheat First filed motions
in federal court, Fisher to vacate the award and Wheat First to con-
firm it. Following a hearing on the motions, the district court con-
firmed the award. Fisher now appeals.
II.
Fisher asserts on appeal that the district court erred in failing to
vacate the NASD arbitration panel’s award, at least as it relates to
Wheat First’s counterclaim on the promissory note. First, Fisher
FISHER v. WHEAT FIRST SECURITIES 5
argues that Wheat First’s counterclaim was not "related to" his claims
and thus should not have been arbitrated. Second, Fisher argues that
the arbitration panel lacked jurisdiction to hear the counterclaim
because the parties agreed in the promissory note that the note was
excepted from any arbitration requirement arising with respect to their
employment relationship. According to Fisher, when he signed the
Uniform Submission Agreement he believed the waiver in the prom-
issory note would continue to govern any dispute about the note. For
the reasons that follow, we disagree with Fisher and conclude that the
arbitration panel properly asserted jurisdiction over Wheat First’s
counterclaim on the promissory note.
An arbitration award may be vacated when "the arbitrators
exceed[ ] their powers." 9 U.S.C. § 10(a)(4). We review de novo a
district court’s decision to confirm an arbitration award. First Options
of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995). Federal law strongly
favors arbitration. "[A]ny 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 allega-
tion of waiver, delay, or a like defense to arbitrability." Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-25
(1983). When a party questions the scope of an arbitration clause,
doubts are to be resolved in favor of coverage. Am. Recovery Corp.
v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 92 (4th Cir.
1996). That said, arbitration may only be compelled when parties
have agreed to it, and then only to the extent agreed. Zandford v.
Prudential-Bache Sec., Inc., 112 F.3d 723, 727 (4th Cir. 1997).
The Uniform Submission Agreement completed and signed by
Fisher is a valid and binding contract that has the force of modifying
earlier agreements. See Dean Witter Reynolds, Inc. v. Fleury, 138
F.3d 1339, 1342 (11th Cir. 1998); Piggly Wiggly Operators’ Ware-
house Inc. v. Piggly Wiggly Operators’ Warehouse Indep. Truck
Drivers’ Union, Local No. 1, 611 F.2d 580, 584 (5th Cir. 1980); First
Montauk Sec. Corp. v. Menter, 26 F. Supp. 2d 688, 689 (S.D.N.Y.
1998). The Uniform Submission Agreement uses broad "related to"
language with respect to counterclaims brought into the arbitrator’s
jurisdiction by the claimant’s submission of the agreement. See Inter-
city Co. Establishment v. Ahto, 13 F. Supp. 2d 253, 260-61 (D. Conn.
1998) (citing WorldCrisa Corp. v. Armstrong, 129 F.3d 71, 75 (2d
6 FISHER v. WHEAT FIRST SECURITIES
Cir. 1997)). In this case, Wheat First’s counterclaim seeking payment
under the promissory note clearly relates to the claims submitted to
arbitration by Fisher. Fisher’s Statement of Claim lists three causes
of action against Wheat First, all of which concern monies allegedly
owed to him by Wheat First under the terms of his employment agree-
ment. Under the explicit terms of the promissory note, any amounts
owed to Fisher by Wheat First at the time of Fisher’s separation of
service are to be applied toward payment of the note. In addition,
Fisher expressly assigned his wages and bonuses as security for
repayment of the note. Thus, Fisher’s claim for nonpayment of wages
and bonuses and Wheat First’s claim for nonpayment under the prom-
issory note are inherently intertwined. One party’s claim cannot be
fully resolved without addressing that of the other party. Given the
clear relationship between Fisher’s claims and Wheat First’s counter-
claim, Fisher knew, or should have anticipated, at the time he filed his
Uniform Submission Agreement that Wheat First would, or at least
could, raise a counterclaim on the note in the arbitration proceedings.
And when Fisher completed, signed, and filed the Uniform Submis-
sion Agreement, he was bound by its terms to arbitrate the promissory
note dispute should Wheat First assert it as a related counterclaim.
Fisher argues nonetheless that he specifically agreed to the terms
of the promissory note because it excepted disputes from arbitration
and thus that it was not his intent to agree to submit that issue to arbi-
tration when he filed the Uniform Submission Agreement. Assuming
arguendo that Fisher properly raises this argument on appeal (defen-
dants claim he does not), we find it unavailing. Courts generally look
to a party’s objective intent in interpreting a contract, First Montauk,
26 F. Supp. 2d at 689, and consider the party’s subjective intent only
when contractual terms are ambiguous, Bridgestone/Firestone, Inc. v.
Prince William Square Assocs., 463 S.E.2d 661, 664 (Va. 1995).
Fisher’s arguments that he did not intend to agree to arbitrate the
promissory note issue fail in the face of the plain language of the Uni-
form Submission Agreement. While the promissory note excepted
disputes under it from arbitration, Fisher’s filing of the Uniform Sub-
mission Agreement unambiguously manifested his agreement to sub-
ject disputes involving the note to arbitration because they are related
to his employment claims. Cf. Federated Dep’t Stores, Inc. v. J.V.B.
Indus., Inc., 894 F.2d 862, 870 (6th Cir. 1990) (party does "not retain
FISHER v. WHEAT FIRST SECURITIES 7
the right selectively to omit from arbitration certain claims or counter-
claims, however surprising").
In sum, we conclude, as did the district court, that when Fisher
completed and signed the Uniform Submission Agreement, he agreed
to submit all related counterclaims, which included the dispute over
the promissory note, to arbitration. The Uniform Submission Agree-
ment validly modifies the earlier agreement in the promissory note to
except disputes about the note from arbitration, and the Uniform Sub-
mission Agreement is binding upon Fisher. Because we conclude that
Fisher agreed to submit the counterclaim to arbitration when he filed
the Uniform Submission Agreement, we need not reach Wheat First’s
argument that Fisher also agreed to arbitrate the promissory note dis-
pute when he filed the NASD U-4 Form at the time he accepted
employment with Wheat First.
III.
For all of the foregoing reasons, the judgment of the district court
is affirmed.
AFFIRMED