WEISS CAPITAL MANAGEMENT, INC., APPELLANT,
v.
WESLEY CROWDER, RICHARD WANDOFF AND MORGAN STANLEY DW, INC., APPELLEES

Fla. 4th DCA | 2007-09-19
No. 4D07-775
SHAHOOD, C.J., WARNER and STEVENSON, JJ., concur.
964 So. 2d 865 Florida District Court of Appeal, Fourth District (2007)

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Synopsis

Weiss Capital Management appealed an order compelling it to arbitrate a dispute with former investment advisor Wesley Crowder and his new employer Morgan Stanley. The court reversed, holding that WCM had no express arbitration agreement with Crowder and could not be forced to arbitrate based on NASD rules applicable only to WCM's wholly-owned subsidiary.


Holding

The court held that WCM was not required to arbitrate because there was no express arbitration agreement between WCM and Crowder, NASD rules did not apply to WCM directly, and WCM and WCS were separate corporations without evidence of alter ego liability justifying piercing the corporate veil.


Headnotes

[1] A party cannot be compelled to arbitrate a dispute that it did not intend or agree to arbitrate.

[2] Membership in a self-regulatory organization, such as the NASD, does not automatically bind a non-member parent corporation to arbitrate disputes involving its subsidiary…

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Key Quotes

“no party may be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate”

Establishes the fundamental principle governing arbitration; a party cannot be compelled to arbitrate absent agreement.

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Facts & Procedural History

Wesley Crowder resigned as an investment advisor from Weiss Capital Management (WCM) and joined Morgan Stanley. WCM sued Crowder and Morgan Stanley. T…

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Opinion of the Court
PER CURIAM.

PER CURIAM.

This is an appeal of an order staying the civil suit below and compelling arbitration. We reverse.

Following Wesley Crowder’s resignation as an investment advisor with appellant, Weiss Capital Management, Inc. (WCM), WCM sued Crowder and his current employer, Morgan Stanley. WCM now appeals an order staying the trial court proceedings and requiring WCM to arbitrate a dispute with Crowder and Morgan Stanley. We have reviewed the record on appeal and conclude that the trial court erred in granting Crowder’s motion to compel arbitration. There was no express agreement between WCM and Crowder that required WCM to arbitrate its dispute with Crowder and we reject Crowder’s claim that WCM was required to arbitrate based on the National Association of Security Dealers (NASD) rules. We further reject Crowder’s argument that WCM should be required to arbitrate because WCM’s wholly-owned subsidiary, Weiss Capital Securities (WCS), was a NASD member and Crowder was an associated person of that firm.1 WCM and WCS are separate corporations and there was no evidence of any abuse of the corporate entity by either company which would make them alter egos. See United States v. Fid. Capital Corp., 920 F. 2d 827 (11th Cir.1991); see also InterGen N.V. v. Gri- no, 344 F. 3d 134,149 (1st Cir.2003) (“Common ownership and common management, without more, are insufficient to override corporate separateness and pave the way for alter ego liability.”); United States v. Jon-T Chems., Inc., 768 F. 2d 686, 691 (5th Cir.1985) (“[O]ne-hundred percent ownership and identity of directors are, even together, an insufficient basis for applying an alter ego theory to pierce the corporate veil”).

Accordingly, we reverse the order on appeal and remand for further proceedings, including the trial court’s consideration, and ruling upon, WCM’s motion for temporary injunction to enforce a confidentiality agreement. This court, and others, has long held that “no party may be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate.” Steve Owren, Inc. v. Connolly, 877 So. 2d 918, 920 (Fla. 4th DCA 2004). We have considered the other arguments raised by appellees, but find no legal or factual support for the order compelling WCM to arbitrate its dispute with Crowder. Reversed and remanded.

SHAHOOD, C.J., WARNER and STEVENSON, JJ., concur. . NASD Rule 10201 requires arbitration between certain categories of people and companies.


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