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Judges order dispute be arbitrated

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A complaint filed by a client against financial services companies and a former employee must be arbitrated per an agreement the client signed when opening an IRA account, the Indiana Court of Appeals concluded. The court split over whether one of the companies could compel arbitration.

In German American Financial Advisors & Trust Co. d/b/a German American Investment Svcs., PrimeVest Financial Svcs., Inc., and Jeffery W. Tooley v. Dennis M. Reed, 19A01-1110-PL-428, German American Financial Advisors and other appellants’ appealed the denial of their second motion to compel arbitration of Dennis Reed’s claims against them. Reed worked with Jeffery Tooley of GAFA and PrimeVest to open an IRA in 2003. GAFA and PrimeVest had a “commission sharing agreement.”

Reed’s new account application included an arbitration clause. In 2006, Reed rolled over his IRA accounts into a variable rate annuity under the advisement of Tooley that he’d be able to earn around $100,000 in three years and be able to withdraw the full amount without penalties at that time.

Three years later, when Reed sought to withdraw all the funds from the annuity, and after Tooley left GAFA, another employee told Reed he could only withdraw a portion without incurring significant penalties. Reed filed his complaint alleging violations of the Indiana Uniform Security Act, fraud, negligence, and other claims in 2009. The trial court denied the appellants’ first motion to compel arbitration; it denied the second motion to compel as well.

Reed challenged the second motion to compel by pointing out that PrimeVest and GAFA didn’t keep his entire record on file, so the original agreement was not found. He also argued that the companies provided several forms that they believed were the correct documents, but those forms turned out not to be the exact agreement that Reed signed in 2003.

The Court of Appeals reversed the trial court and ordered the dispute be arbitrated. They found the appellants satisfied their burden to show the existence of an enforceable arbitration agreement and that the disputed matter is the type of claim that is intended to be arbitrated.

“While we are unimpressed with Appellants’ failure to locate the proper documentation to support their first motion to compel, they ultimately met their burden on the second motion to compel arbitration, which is the only issue before us, and Reed has not offered any evidence to refute the evidence pointing to a valid arbitration agreement,” wrote Judge Edward Najam in the majority opinion.

The judges split over whether GAFA may compel Reed to submit his claims against it to arbitration. The majority found he is required to do so under the doctrine of equitable estoppel, but Judge Michael Barnes believed the majority “is elasticizing the plain and unambiguous language of the arbitration agreement by allowing GAFA to insist on arbitration when GAFA was not a named party to the arbitration agreement—only PrimeVest and Reed were named.”

 

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  1. Future generations will be amazed that we prosecuted people for possessing a harmless plant. The New York Times came out in favor of legalization in Saturday's edition of the newspaper.

  2. Well, maybe it's because they are unelected, and, they have a tendency to strike down laws by elected officials from all over the country. When you have been taught that "Democracy" is something almost sacred, then, you will have a tendency to frown on such imperious conduct. Lawyers get acculturated in law school into thinking that this is the very essence of high minded government, but to people who are more heavily than King George ever did, they may not like it. Thanks for the information.

  3. I pd for a bankruptcy years ago with Mr Stiles and just this week received a garnishment from my pay! He never filed it even though he told me he would! Don't let this guy practice law ever again!!!

  4. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  5. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

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