American Airlines Federal Credit Union v. Fonseca

Third District Court of Appeal
State of Florida
Opinion filed October 19, 2016.
Not final until disposition of timely filed motion for rehearing.
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No. 3D16-208
Lower Tribunal No. 15-17241
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American Airlines Federal Credit Union,
Appellant,
vs.
Carlos Hernan Fonseca, and Morgan Stanley Smith Barney, LLC,
Appellees.
An Appeal from a non-final order from the Circuit Court for Miami-Dade
County, John W. Thornton, Jr., Judge.
Heckman Law Group, and Chad Heckman, (Tallahassee); Ausley &
McMullen, and Martin B. Sipple (Tallahassee), for appellant.
Riley Warnock & Jacobson, and Timothy L. Warnock and Salvador M.
Hernandez, (Nashville, Tennessee); Shumaker Loop & Kendrick, and Michael S.
Taaffe and Scott A. La Porta, (Sarasota), for appellees.
Before WELLS, SHEPHERD and SALTER, JJ.
WELLS, Judge.
American Airlines Federal Credit Union (“AAFCU”), the plaintiff below,
appeals from a non-final order compelling arbitration and staying proceedings in
the court below. Because we find that the parties did not contract to arbitrate
AAFCU’s claims, we reverse and remand for further proceedings in the trial court.
In June 2008, AAFCU entered into an employment agreement with Carlos
Fonseca. Under the 2008 agreement, AAFCU hired Fonseca as an investment
representative to provide investment advice and to offer and sell securities and
insurance products to AAFCU’s members and joint account owners. Because
AAFCU was not a member of the Financial Industry Regulatory Authority
(“FINRA”), the 2008 agreement required Fonseca to become a “registered
representative . . . of any broker/dealer . . . with which AAFCU may enter into a
relationship concerning the provision of Investment or Insurance Services.” The
agreement also contained several restrictive covenants, including a provision
governing use or disclosure of AAFCU’s confidential information and a provision
precluding Fonseca, for a period of 12 months following termination of his
employment, either from “solicit[ing] or accept[ing] Investment or Insurance
Services from any Client,” or from encouraging any Client to transfer accounts
away from AAFCU:
3. COVENANTS TO PROTECT AAFCU’S CLIENTS,
GOODWILL, EXPECTATIONS, TRAINING AND
CONFIDENTIAL INFORMATION, INVESTMENT AND
OTHER INTERESTS.
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Covenant One: Non-Use and Non-Disclosure of Confidential
Information. In exchange for AAFCU’s agreement to provide
Employee with Confidential Information and other consideration
referenced in this Agreement, Employee agrees not to directly or
indirectly disclose, divulge, reveal, report, publish, transfer or use, for
any purpose whatsoever, any Confidential Information at any time
during or after his/her Service with AAFCU, other than as required in
the course of Employee’s Service, and promises he/she will not allow
any unauthorized use of Confidential Information. . . . .
....
Convenant Five: Non-Solicitation/Acceptance of and Non-
Interference with Business. Employee agrees that during and for
twelve (12) months after his/her Service with AAFCU, other than
for the benefit of AAFCU, he/she shall not directly or indirectly,
whether on his/her own behalf and/or for the benefit of a third
party (including but not limited to any consultant or consulting
company) (a) solicit or accept Investment and Insurance Services
business from any Client, or (b) solicit, encourage, induce or
attempt to influence any Client to cancel, limit or postpone the
Client’s Investment and Insurance Services business with
AAFCU, to transfer any of the Client’s accounts away from
AAFCU and/or to utilize Employee, directly, or indirectly, such
Investment and Insurance Services.
(Emphasis added).
This agreement contained no arbitration clause and expressly stated that the
parties were free to “seek all available remedies at law or at equity for any breach.”
Significantly, the agreement provided it could not be modified absent a writing
specifically referring to the 2008 agreement that was signed “by an officer of
AAFCU.”
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Because AAFCU was not a member of FINRA, Fonseca, as contemplated by
the 2008 agreement, entered into a separate, dual employment agreement with
AAFCU’s designated broker/dealer so that Fonseca could sell securities and
insurance products to AAFCU clients.1 This dual employment agreement
contained an arbitration clause.2
With the 2008 employment agreement still in place, in May 2015, Fonseca
resigned from his employment at AAFCU and accepted employment as a
registered representative of Morgan Stanley. In August 2015, AAFCU filed the
instant action against Fonseca and Morgan Stanley. Counts I through IV of the
Amended Complaint alleged that Fonseca breached the above referenced
covenants of the 2008 employment agreement by soliciting and accepting
investment and insurance services from AAFCU clients within a year of his
1 As contemplated by the 2008 employment agreement, Fonseca entered into a
dual employment agreement with AAFCU’s then designated broker/dealer, CUNA
Brokerage Services, Inc. (“CUNA”) for the provision of investment services at
AAFCU as a registered representative of CUNA. When CUNA was replaced by
PrimeVest Financial Services (“PrimeVest”) in 2010, a second dual employment
agreement was entered into so that Fonseca would continue to provide investment
services at AAFCU as a registered representative of PrimeVest. In 2013, AAFCU
and Fonseca agreed to an assignment of PrimeVest’s rights under the 2010 dual
employment agreement to yet another designated broker/dealer, Cetera Investment
Services, LLC (“Cetera”).
2 This dual employment agreement, which set forth Fonseca’s responsibilities and
obligations as a registered representative of the broker/dealer, contained a
provision providing that “[a]ny dispute between the parties shall be settled by
arbitration before arbitrators sitting in St. Cloud Minnesota.”
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resignation; by inducing AAFCU clients to cancel their business with AAFCU
and/or to transfer their accounts to Morgan Stanley within a year of his resignation;
and by using AAFCU’s clients’ confidential information in order to facilitate the
transfer of AAFCU client accounts to Morgan Stanley. Count VI alleged a claim
for unjust enrichment against Fonseca. Count VII alleged tortious interference
with AAFCU’s business relationships against Fonseca. Count V against both
Fonseca and Morgan Stanley alleged misappropriation of trade secrets. Thus, all
counts of AAFCU’s complaint were strictly within the purview of the non-compete
provisions of the 2008 agreement.
In response to AAFCU’s complaint, Fonseca and Morgan Stanley moved to
compel arbitration, citing not to the 2008 employment agreement, but to the 2010
dual employment agreement that had been entered into with AAFCU’s then
designated broker/dealer. Following a hearing on the matter, the trial court
adopted Fonseca’s position finding that “[AAFCU’s] claims fall within the scope
of the arbitration provision” contained in the dual employment agreement and
ordered that this matter proceed to arbitration.
We do not agree and reverse because the claims asserted here flow not from
the 2010 dual employment agreement between Fonseca and now Cetera, but from
the 2008 employment agreement between AAFCU and Fonseca which contains no
arbitration provision. As this court confirmed in All American Semiconducter,
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Inc. v. Unisys Corp., 637 So. 2d 59, 60 (Fla. 3d DCA 1994), the provisions of a
second agreement between two parties, which requires arbitration, cannot be
extended to a prior, separate agreement between the same parties, “unless the
parties expressly agree to arbitrate” both agreements. In this case there is no
express agreement to arbitrate disputes arising under both agreements. Thus,
because the instant “complaint flows from a relationship and agreement outside the
scope of the second and distinct agreement,” no contract to arbitrate exists. See id.
Accordingly, we reverse the order compelling arbitration and staying this
matter and remand for further proceedings in the court below.
Reversed and remanded.
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