# Petition for Writ of Certiorari — Prudential-Bache Securities, Inc. v. Finn

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1988
- **Citation:** 488 U.S. 917

## Text

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FILED
AUG 10 998
JOSEPH & SPANIOL, JR.
NO. CLERK
in the
Supreme Court
of the
United States

Octo Term 1988
ce
.S)

PBUDENDIAL- BACHE SECURITIES INC.,

eye” . Petitioner,

US.
J. RICHARD FINN and REGINA R. FINN,

Respondents.

PETITION FCR WRIT OF CERTIORARI
TO THE FOURTH DISTRICT COURT OF APPEAL
FOR THE STATE OF FLORIDA

Curtis Carlson
Counsel of Record

and

Lloyd R. Schwed

City National Bank Building
25 West Flagler Street
Miami, Florida 33130
Telephone (305) 358-6550

QUESTION PRESENTED

Whether the state appellate court erred by creating a
substantive rule of law under the Federal Arbitration Act
that is in direct conflict with federal law, where this Court
has held that the FAA creates a body of federal substantive
law of arbitrability, which is applicable in both state and
federal courts and which preempts state law to the contrary.
Southland Corp. v. Keating, 465 U.S. 1 (1984); Moses H. Cone
Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (1983).

TABLE OF CONTENTS

PAGE
QUESTION PRESENTED 2.2... ccc cnc cecsices i
TABLE OF CATERERS 6c ene ccc evncscassans ii
TABLE OF AUTHORITIES. .........2cccceeees iv
OPTIONS TRAP occ cc cre ccunaccesasnenas 2
ETRE bocce ctascasnenpagaseskas eee 2
STATUTORY PROVISIONS INVOLVED ........ 2
STATEMENT OF CASE 2 wn ccccdscacccccvesees 2
REASONS FOR GRANTING WRIT ............. 5

THE STATE COURT’S DECISION REGARD-
ING WAIVER UNDER THE FEDERAL AR-
BITRATION ACT IS IN DIRECT CONFLICT
WITH SUPREME COURT PRECEDENT AND
THE MANDATE OF CONGRESS, AND
PRESENTS A QUESTION OF GREAT NA-
TIONAL IMPORTANCE

CORSCEA snk ceccavdnusvasceneusueaweens 10

CERTIFICATE OF SERVICE .........2.000080. 11

il

TABLE OF CONTENTS—(Continued)

APPENDICES

APPENDIX A— Order Staying Action and
Compelling Arbitration

APPENDIX B— Finn v. Prudential-Bache
Securities, Inc., 523 So.2d
617 (Fla. 4th DCA 1988)

APPENDIX C— Order Denying Petition for
Rehearing

APPENDIX D— Federal Arbitration Act 9
U.S.C. §2, 3 and 4.

lil

PAGE

a,

TABLE OF AUTHORITIES

Case Page
ATSA of California, Inc. v. Continental Ins. Co.,

$e Ff Fo & -pererrrrry 6
Benoay v. Prudential-Bache Securities, Inc.,

805 F.2d 1437 (11th Cir. 1986)....... ewes 6
Dean Witter Reynolds, Inc. v. Byrd,

470 US. 213, 105 S.Ct. 1238 (1985).......... 5
E.C. Ernst, Inc. v. Manhattan Construction
Co. of Texas,

599 F.2d 268, 269 (5th Cir. 1977) cert. denied,

434 U.S. 1067, 98 S.Ct. 1246 (1978).......... 7
Finn v. Prudential-Bache Securities, Inc.,

523 So.2d 617 (Fla. 4th DCA 1988) .......... passim
Fisher v. A.G. Becker Paribas, Inc.,

iO, { 5G. Ye SS . eee 6
Florida v. Meyers,

466 U.S. 380, 104 S.Ct. 1852 (1984).......... 8
Hobbie v. Unemployment Appeals Com’n of
Florida,

480 U.S. 136, 107 S.Ct. 1046 (1987).......... 8

In re Emergency Amendments To Rules, Etc.,
ee ec eee en

Co

Local 174, Teamsters, etc. v. Lucas Flour Co.,
369 U.S. 101, 82 S.Ct. 571 (1962)............ 8

Miller Brewing Co. v. Fort Worth Distributing Co.,
Tek Be GOO Geek Ge. FR oc bce csccscciae 6

iv

TABLE OF AUTHORITIES—(Continued)

Case Page
Mitsubishi Motors Corp. v. Soler Chrysler-
Plymouth,

473 U.S. 614, 105 S.Ct. 3346 (1985).......... 5

Moses H. Cone Memorial Hosp. v.
Mercury Constr. Corp.,
460 US. 1, 103 S.Ct. 927 (1983)............. 5,6

Ohio-Sealy Mattress Mfg. Co. v. Kaplan,
712 F.2d 270, 272 (7th Cir. 1983), cert. denied,
Ge We EE h0 0c kb 2 bab eaK cde nesacs 6

Perry v. Thomas,
eee) ee Pe eee 5, 8

Price v. Drexel Burnham Lambert, Inc.,
iB A Bi y Fo Fee 6

Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 87 S.Ct. 1801 (1967)........... 5, 6

Shearson/American Express, Inc. v. McMahon,
US.__, 107 S.Ct. 2332 (1987).......... 5

Southland Corp. v. Keating,
465 U.S. 1, 104 S.Ct. 852 (1984)............. passim

Williams v. Florida,
399 U.S. 78, 90 S.Ct. 1893 (1970)............ 8

TABLE OF AUTHORITIES—(Continued)

OTHER AUTHORITIES Page
Article V, Section 3(b),

Florida Constitution (1980)... ..... 2... 6665665. 3
Federal Arbitration Act 9 U.S.C. §2, et seq....... passim
3B UBL. GIBBSITE 2c cccccccccccccsscscseccess 2,9

Fla.R.App.P. Rule 9.030(a) ....... 2... e eee nues 3

NO.

in the
Supreme Court
of the
United States

October Term 1988

PRUDENTIAL-BACHE SECURITIES INC.,

Petitioner,
US.

J. RICHARD FINN and REGINA R. FINN,

Respondents.

PETITION FOR WRIT OF CERTIORARI
TO THE FOURTH DISTRICT COURT OF APPEAL
FOR THE STATE OF FLORIDA

Prudential-Bache Securities Inc. (“Prudential-Bache’’)
petitions for a Writ of Certiorari to review the judgment of
the Fourth District Court of Appeal for the State of Florida.

*The parent company of Prudential-Bache Securities Inc. is the Prudential
Insurance Company of America.

OPINIONS BELOW

The order of the circuit court of Palm Beach County
staying action and compelling arbitration (App. A) is
unreported; the opinion of the court of appeal (App. B) is
reported at 523 So.2d 617; the order of the court of appeal
denying Prudential-Bache’s petition for rehearing (App. C)
is unreported.

JURISDICTION

Petitioner seeks review of the judgment of the state court
of appeal rendered on May 12, 1988. The opinion of the state
court of appeal was entered on February 24, 1988. The
petition for rehearing was denied on May 12, 1988. This court
has jurisdiction to issue the requested writ under 28 U.S.C.
§1257(3).

STATUTORY PROVISIONS INVOLVED

The relevant »rovisions of the Federal Arbitration Act
(“FAA”), 9 U.S. §2, 3 and 4 are reproduced at App. D.

STATEMENT OF CASE
A. Course of Proceedings and Disposition.

Prudential-Bache filed a motion to compel arbitration in
the Florida circuit court pursuant to the Federal Arbitration
Act. The trial court granted the motion, and the Finns
appealed to Florida’s Fourth District Court of Appeal.

The Fourth District Court reversed the order compelling
arbitration, ruling that Prudential-Bache waived its right
to arbitration under the FAA by taking inconsistent acts.
Finn v. Prudential-Bache Securities, Inc., 523 So.2d 617 (Fla.
4th DCA 1988) (“Finn”). The holding of the court is that

inconsistent acts, standing alone, constitute waiver under the
FAA and that no showing of prejudice is necessary.

Because the Finn decision directly conflicts with binding
precedent of the United States Supreme Court, Prudential-
Bache has filed a petition to invoke the discretionary
jurisdiction of the Florida Supreme Court in order to exhaust
its state-court remedies. However, Florida law does not
provide for discretionary jurisdiction in the state Supreme
Court on the basis of a conflict with federal law. Fla.R.App.P.
9.030(a). Accordingly, it is quite possible that the Fourth
District Court constitutes the “court of last resort” in Florida
for Prudential-Bache.'

Meanwhile, on remand, the state trial court has specially
set the case for jury trial in January 1989.

B. Statement of Facts.

The Finns signed four separate agreements to arbitrate
“any controversy” relating to their investment account at
Prudential-Bache. Nevertheless, when a controversy arose,
the Finns filed parallel lawsuits in state and federal court
against Prudential-Bache.

‘In 1980, Florida voters approved constitutional modifications to the
state Supreme Court's jurisdiction. See Article V, Section 3(b), Florida
Constitution (1980). The impetus for these modifications was a burgeoning
caseload and the attendant need to make more efficient use of limited
appellate resources. Consistent with this purpose, revised Fla.R.App.P.
9.030(a) limits the Supreme Court’s appellate, discretionary, and original
jurisdiction to cases that substantially affect the law of the state. Thus,
Florida district courts of appeal constitute the courts of last resort for the
vast majority of litigants under amended Article V. In re Emergency
Amendments to Rules, Etc., 381 So.d 1370 (Fla. 1980).

Prudential-Bache filed a motion to compel arbitration of
the Finns’ claims pursuant to the FAA in the state court.’
The trial court granted the motion and compelled arbitration
and the Finns appealed to the Fourth District Court.

The Fourth District held that Prudential-Bache had
waived its right to arbitration by taking “inconsistent acts.’
The court stated that the Finns did not have to show prejudice
because inconsistent acts, standing alone, constitute waiver
under the FAA.

Prudential-Bache filed a motion for rehearing en banc
on the ground that the court’s holding directly conflicts with
federal law, which requires a showing of inconsistent acts
and prejudice to constitute waiver. The Fourth District denied
the petition for rehearing.

Prudential-Bache has filed an appeal to the Florida
Supreme Court, but the court has not yet ruled on the petition
to invoke discretionary jurisdiction. This Petition for Writ
of Certiorari followed.

?Prudential-Bache also filed a motion to compel arbitration of the
claims in federal court. The motion has been pending before the Honorable
Judge Alcee Hastings since September of 1987.

3It is important to note the nature of the “inconsistent acts’ which
prompted the Fourth District to find waiver. Because of dramatic changes
regarding arbitration in Florida and federal law during 1984 and 1985,
the Finns’ claims were non-arbitrable at the beginning of the case and
then arbitrable for only 35 days before they became non-arbitrable by virtue
of a Florida Supreme Court decision. The Fourth District held that
Prudential-Bache waived its right to arbitration during the 35-day window
of arbitrability. However, Prudential-Bache took absolutely no action in
the case during those 35 days. Only two activities occurred in the litigation
when the Finn claims were arbitrable, and Prudential-Bache did not
participate in either activity. First, the court entered an Order denying
an earlier filed motion for summary judgment, denying an earlier motion
for protective order, and granting the Finns’ motion to compel discovery.
Second, the Finns filed a motion to set the case for trial. Obviously, these
activities did not prejudice the Finns.

REASONS FOR GRANTING WRIT

THE STATE COURT’S DECISION REGARDING
WAIVER UNDER THE FEDERAL
ARBITRATION ACT IS IN DIRECT CONFLICT
WITH SUPREME COURT PRECEDENT AND
THE MANDATE OF CONGRESS, AND
PRESENTS A QUESTION OF GREAT
NATIONAL IMPORTANCE.

A. Introduction.

The state appellate court has rejected 20 years of Supreme
Court precedent and the national policy favoring arbitration.‘
Congress enacted the FAA to guarantee the enforcement of
arbitration agreements across the land “unencumbered by
state-law constraints.” Southland Corp. v. Keating, 465 U.S.
1, 13 (1984). The FAA creates a body of federal substantive
law endowed “with pre-emptive force under the Supremacy
Clause.” Perry v. Thomas, 107 S.Ct. 2520, 2526 (1987);
Southland, 465 U.S. 1. Incredibly, Florida’s Fourth District
Court of Appeal has taken the position that state law
preempts federal law on the issue of whether Prudential-
Bache waived its right to arbitrate under 9 U.S.C. §3.

‘Since 1967, the Supreme Court has consistently held that federal
law—not state law—governs the enforceability of arbitration agreements
involving interstate commerce. Shearson/American Express, Inc. v.
McMahon, 107.8.Ct. 2332 (1987); Perry v. Thomas, 107 S.Ct. 2520 (1987);
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985);
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985); Southland Corp.
v. Keating, 465 U.S. 1 (1984); Moses H. Cone Memorial Hosp. v. Mercury
Constr. Corp., 460 U.S. 1 (1983); and Prima Paint Corp. v. Flood & Conklin
Mfg. Co., 388 U.S. 395 (1967).

a

B. Preemption of State Law Under the FAA.

In Finn, the Fourth District held that inconsistent acts,
standing alone, constitute waiver under the Federal
Arbitration Act and that no showing of prejudice is required.
523 So.2d at 619-620. This holding was based solely on two
Florida appellate court decisions. The Fourth District relied
on Florida law even though Prudential-Bache forcefully
argued that federal law preempted conflicting state law.

It is firmly established that federal law is controlling on
the issue of whether Prudential-Bache waived its right to
arbitrate under the FAA, notwithstanding any contrary state
rule. Prima Paint, 388 U.S. 395 (1967); Moses H. Cone, 460
U.S. 1; Miller Brewing Company v. Fort Worth Distrib. Co.,
781 F.2d 494 (5th Cir. 1986). Indeed, the concept of waiver
expressly arises under the default provision of the FAA, 9
U.S.C. §3. Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 712 F.2d
270, 272 (7th Cir. 1983), cert. denied, 464 U.S. 1002 (1983).

Federal law expressly requires a showing of both
inconsistent acts and actual prejudice to support a finding
of waiver. ATSA of California, Inc. v. Continental Ins. Co.,
702 F.2d 172 (9th Cir. 1983); Fisher v. A.G. Becker Paribas,
Inc., 791 F.2d 691 (9th Cir. 1986); Price v. Drexel Burnham
Lambert, Inc., 741 F.2d 115 (5th Cir. 1986); Benoay uv.
Prudential-Bache Securities, Inc., 805 F.2d 1437 (11th Cir.
1986).5

‘The Supreme Court has repeatedly stated the “Arbitration Act
establishes that, as a matter of federal law, any doubts concerning the
scope of arbitrable issues should he 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.” Moses
H. Cone, 460 U.S. at 24-25 [emphasis supplied].

Under federal law, “prejudice is the essence of waiver.”
E.C. Ernst, Inc. v. Manhattan Constr. Co. of Texas, 599 F.2d
268, 269 (5th Cir. 1977) cert. denied, 434 U.S. 1067 (1978).
“Inconsistent behavior -lone is not sufficient; the party
opposing the motion to compel arbitration must have suffered
prejudice.” ATSA of California, 702 F.2d at 175. Despite this
well-established federal law, the Fourth District ignored
Supreme Court precedent and the Supremacy Clause to deny
Prudential-Bache’s right to arbitration, holding that “a
showing of prejudice is not required if waiver is based upon
inconsistent acts.” Finn, 523 So.2d at 619-620.

The fact is that the Finns could not show prejudice
resulting from any inconsistent acts taken by Prudential-
Bache. Under the unprecedented rule of law created by Finn,
the arbitration agreements signed by the Finns would be
enforceable in federal court, but not in state court. The
Florida court has ignored and rejected Supreme Court
precedent and congressional intent embodied in the FAA.

In Southland, this Court recognized that Congress
enacted the FAA because of “‘the widespread unwillingness
of state courts to enforce arbitration agreements.” Jd., 465
U.S. at 13. In acknowledging the judicial hostility to
arbitration, this Court held that federal law is paramount
on the issue of arbitration in state courts, as well as federal
courts:

To confine the scope of the Act to arbitrations
sought to be enforced in federal courts would
frustrate what we believe Congress intended to be
a broad enactment appropriate in scope to meet the
large problems Congress was addressing.

* * *

And since the overwhelming proportion of all civil
litigation in this country is in the state courts, we
cannot believe that Congress intended to limit the
Arbitration Act to disputes subject only to federal-
court jurisdiction.

Southland, 465 U.S. at 14-16.

In Finn, the Florida appellate court ignored the mandate
of Congress and this Court. Under federal law, a litigant must
show both inconsistent acts and prejudice to prove waiver.
In Florida, a litigant need only show inconsistent acts—no
matter how insignificant.

Thus, there is an unmistakable conflict between federal
and Florida law and, by virtue of the Supremacy Clause,
Florida law “must give way.” Perry, 107 S.Ct. at 2526.

C.° A Word About Jurisdiction

Because of previously-mentioned modifications to the
Florida Constitution, the state Supreme Court may decline
to invoke its discretionary jurisdiction to review this conflict
with federal law. See supra note 1 and accompanying text.
Accordingly, the U.S. Supreme Court is probably the only
court that can quash Finn and prevent an erosion of the
national policy favoring arbitration.

On previous occasions, this Court has invoked its
certiorari jurisdiction to review judgments from intermediate
appellate courts where the structure of the state judicial
system prohibited a party from presenting a federal question
for review in the state Supreme Court. Florida v. Meyers, 466
U.S. 380 (1984); Local 174, Teamsters, etc. v. Lucas Flour Co.,
369 U.S. 101 (1962); Williams v. Florida, 399 U.S. 78 (1970);
Hobbie v. Unemployment Appeals Com’n of Florida, 480 U.S.
136 (1987). In such circumstances, this Court has consistently

held that “the decision below constitute[s] a final judgment
under 28 U.S.C. §1257(3).” Meyers, 466 U.S. at 381.

Such immediate review by this Court is particularly
important in the context of the FAA:

For us to delay review of a state judicial decision
denying enforcement of the contract to arbitrate
until the state-court litigation has run its course
would defeat the core purpose of a contract to
arbitrate.

Southland, 465 U.S. at 8.

The state trial court has specially set the case for jury
trial in January, 1989. Unless this Court invokes its
certiorari jurisdiction and reverses Finn, Prudential-Bache
will be deprived of its federal right to arbitration and any
subsequent appeal will be rendered moot.

; ; ST SS sees > =

CONCLUSION

This case presents a matter of great national importance.
There is a litigation crisis in this country. Congress has
responded by establishing a federal right to enforcement of
arbitration agreements under the FAA. If litigants are
permitted to circumvent the FAA through forum-shopping
in state courts, the federal policy favoring arbitration will
be eviscerated.

Congress and this Court have attempted to avoid such
a result by requiring states to follow federal law on
arbitration. The Florida appellate court has rejected this
mandate and instead chosen to adopt its own set of rules in
direct violation of the Supremacy Clause. For the foregoing |
reasons, Supreme Court review is warranted and this Petition
for Writ of Certiorari should be granted.

Respectfully submitted,

CURTIS CARLSON

Counsel of Record

LLOYD R. SCHWED

FOWLER, WHITE, BURNETT, HURLEY,
BANICK & STRICKROOT, P.A.

Attorneys for Petitioner

501 City National Bank Bldg.

25 West Flagler Street

Miami, Florida 33130

Telephone: (305) 358-6550

16

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the
foregoing was served by mail this 9th day of August, 1988
to: Gloria O. North, Esq., Mattlin, McClosky & North, 5355
Town Center Road, Suite 901, Boca Raton, Florida 33486.

CURTIS CARLSON
LLOYD R. SCHWED

11

Appendix

APPENDIX A

IN THE CIRCUIT COURT OF THE 15TH
JUDICIAL CIRCUIT, IN AND FOR,
PALM BEACH COUNTY, FLORIDA

CASE NO. 84-3156 CA (L) N
J. RICHARD FINN and REGINA R. FINN,
Plaintiffs,
Us.
PRUDENTIAL-BACHE SECURITIES INC.., et. al,
Defendants.

ORDER STAYING ACTION AND
COMPELLING ARBITRATION

THIS CAUSE came on for hearing on April 11, 1985, upon
the motion of the Defendant, Prudential-Bache Securities,
Inc., for entry of an order staying this action and compelling
the Plaintiffs to arbitrate their claims, and the Court having
considered said motion along with argument and the
applicable case law submitted by counsel for both parties,
and being otherwise fully advised in the premises, it is

ORDERED and ADJUDGED that said motion to stay this
action and compel arbitration be and the same is hereby
granted, and this cause is hereby stayed pending arbitration;
it is

App. A-l

FURTHER ORDERED and ADJUDGED that this Court
shall retain jurisdiction over this matter in order to confirm
any award that is obtained in arbitration.**

DONE and ORDERED in chambers at West Palm Beach,
Florida, on this 11th day of April, 1985.

/s/
Circuit Court Judge

Copies to:

Fred W. Mattline, Esquire
Richard Levenstein, Esquire
Curtis Carlson, Esquire

**Due to the extensive pre-trial preparation and late date (trial
was scheduled to begin Aprii 15, 1985) of the entry of this
order, this Court encouraged a speedy setting and disposition
of this cause in arbitration and suggests this matter be
concluded within 90 days.

App. A-2

APPENDIX B
[DOCKETED 3/7/88]
IN THE DISTRICT COURT OF APPEAL OF THE
STATE OF FLORIDA FOURTH DISTRICT
JANUARY TERM 1988

NOT FINAL UNTIL TIME EXPIRES TO FILE
REHEARING MOTION AND, IF FILED, DISPOSED OF.

CASE NO. 85-1118.
J. RICHARD FINN and REGINA R. FINN,
Petitioners,

Vv.

PRUDENTIAL-BACHE SECURITIES, INC.,
a Delaware corporation,

Respondent.
Opinion filed February 24, 1988

Petition for writ of common law certiorari to the Circuit Court
for Palm Beach County; Harold J. Cohen, Judge.

Gloria Ohsman North of Siemon, Larsen, Mattlin & Purdy,
Boca Raton, for petitioners.

Curtis Carlson of Fowler, White, Burnett, Hurley, Banick
& Strickroot, P.A., Miami, for respondent.

HERSEY, C.J.

App. B-1

Petitioners seek review by way of certiorari of an order
granting a motion to compel arbitration.

On June 1, 1984, the petitioners filed a complaint against
the respondent and one of its former employees, alleging
various counts for negligent misrepresentation, fraud, and
violation of sections 517.301 and 895.03(3), Florida Statutes.
Respondent answered and filed a counterclaim against the
petitioners. On July 17, 1984, respondent filed a motion for
summary judgment which was denied. A considerable
number of discovery requests and pretrial motions were
thereafter filed by both parties and the case was set for trial.
On April 8, 1985, respondent filed its motion to compel
arbitration, which resulted in the order now before us for
review.

The issue is whether respondent waived its contractual
right to arbitration by participating in litigation, an act
inconsistent with its right to compel arbitration.

A party’s contractual right to arbitration may be waived
by active participation in a lawsuit or by taking action
inconsistent with that right. Klosters Roderi A/S v. Arison
Shipping Co., 280 So.2d 678 (Fla. 1973), cert. denied, 414 U.S.
1131, 94 S.Ct. 896, 38 L.Ed.2d 755 (1974); Lapidus v. Arlen
Beach Condominium Association, 394 So.2d 1102 (Fla. 3d
DCA 1981); King v. Thomson & McKinnon, Auchincloss
Kohlmeyer, Inc., 352 So.2d 1235 (Fla. 4th DCA 1977); Gettles
uv. Commercial Bank at Winter Park, 276 So.2d 837 (Fla. 4th
DCA 1973); Ojus Industries, Inc. v. Mann, 221 So.2d 780 (Fla.
3d DCA 1969). The issue in the present case is clouded,
however, by the fact that during much of the pertinent time
frame, June of 1984 to August of 1985, the law in Florida
with regard to the enforceability of agreements to arbitrate
claims under Florida securities laws was in a state of flux.

App. B-2

At the time petitioners filed their complaint in state court
on June 1, 1984, the most recent pronouncement from this
district on the issue of enforceability of arbitration
agreements was in Merrill Lynch Pierce Fenner & Smith, Inc.
v. Melamed, 405 So.2d 790 (Fla. 4th DCA 1981), rev. denied,
433 So.2d 519 (Fla. 1983) (Melamed J), where this court held
that tate courts must recognize and apply the Federal
Arbiti ation Act, and that arbitration agreements which are
valid and enforceable under the federal law are also valid
and enforceable in Florida courts.

In 1983 the third district decided Young v. Oppenheimer
& Co., 434 So.2d 369 (Fla. 3d DCA 1983), which held that
arbitration of alleged fraud, misrepresentation and breach
of fiduciary duties is not consistent with the policy and
language of the Florida Securities Act, and agreements to
arbitrate controversies cannot oust courts of jurisdiction
conferred upon them by organic law. See also Merrill Lynch
Pierce Fenner & Smith, Inc. v. Westwind Transportation, Inc.,
442 So.2d 414 (Fla. 2d DCA 1983) (denial of motion to compel
arbitration of state securities claims held to be error).

The conflict between the districts became more
pronounced when Merrill Lynch Pierce Fenner & Smith, Inc.
v. Melamed, 453 So.2d 858 (Fla. 4th DCA 1984) (Melamed
ID, was decided on July 13, 1984, in which this court held
that as to claims arising under the Florida securities law
arbitration agreements are binding and enforceable.

The conflict was temporarily resolved when the Florida
Supreme Court, on September 27, 1984, ruled that an
arbitration agreement-concerning disputes in securities is
unenforceable. Oppenheimer & Co. v. Young, 456 So.2d 1175
(Fla. 1984). Subsequently, however, the United States
Supreme Court decided Byrd v. Dean Witter Reynolds, Inc.,
470 US. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). The issue
in that case was whether, when a complaint raises both

App. B-3

federal securities claims and pendent state claims, a federal
district court may deny a motion to compel arbitration of the
state law claims despite the parties’ agreement to arbitrate
their disputes. The court held that the Arbitration Act
requires the district courts to compel arbitration of pendent
arbitrable claims when one of the parties files a motion to
compel, even where the result would be the possibly
inefficient maintenance of separate proceedings in different
forums.

Thereafter, in Oppenheimer & Co. v. Young, 470 US.
1078, 105 S.Ct. 1830, 85 L.td.2d 131 (1985), on the authority
of Byrd, the U.S. Supreme Court vacated and remanded the
Florida Supreme Court’s decision in Oppenheimer, and on
remand the Florida Supreme Court quashed the district
court’s decision and rejected the respondent’s request that
the court reverse its earlier ruling that the petitioner did not
waive its right to compel arbitration by failing to invoke the
right to compel arbitration when it appeared in federal court.
Oppenheimer & Co., Inc. v. Young, 475 So.2d 221 (Fla. 1985).
The court reasoned that there was a split of authority on the
issue, and it would have been pointless to invoke the
arbitration agreement.

It could be argued that the same reasoning should be
applied here; however, respondent agrees that petitioner’s
claims were arbitrable during that period of time between
this court’s decision on July 13, 1984, in Melamed II, holding
that arbitration agreements are binding and enforceable as
to claims arising under the Florida securities laws, and the
Florida Supreme Court’s decision on September 27, 1984, in
Oppenheimer & Co. v. Young, 456 So.2d 1175 (Fla. 1984),
holding arbitration agreements unenforceable. Respondent,
during that period of time, filed a motion for protective order,
a motion for summary judgment, objections to interrogatories,
and objections to petitioners’ request for admissions and
production of documents. We therefore conclude that the

App. B-4

respondent actively pursued this litigation in the lower court
without raising the agreement providing for arbitration,
thereby waiving its right to compel arbitration.

Respondent argues that the party opposing arbitration
must make a strong showing of both inconsistent acts and
actual prejudice. However, the cases cited by respondent
make it clear that actual prejudice must be shown only where
there is a finding of waiver based on delay in assertion of
one’s right. A showing of prejudice is not required if waiver
is based upon inconsistent acts. Melamed II; Graham
Contracting, Inc. v. Flagler County, 444 So.2d 971 (Fla. 5th
DCA 1983), rev. denied, 451 So.2d 848 (Fla. 1984). Respondent
here waived not by inaction, but rather by inconsistent acts.

Our determination of this issue renders it unnecessary
to consider other issues argued by the parties. We grant the
petition for writ of certiorari and quash the lower court’s
ruling which granted respondent’s motion to compel
arbitration.

CERTIORARI GRANTED; ORDER QUASHED.

LETTS and GLICKSTEIN, JJ., concur.

App. B-5

APPENDIX C
IN THE DISTRICT COURT OF APPEAL
OF THE STATE OF FLORIDA
FOURTH DISTRICT
CASE NO. 85-1118.

J. RICHARD FINN and REGINA R. FINN,

Petitioner(s),

Vv.

PRUDENTIAL-BACHE SECURITIES, INC.,
a Delaware corporation,

Respondent(s).

May 12, 1988

BY ORDER OF THE COURT:

ORDERED that the Respondent’s March 10, 1988, Motion
for Rehearing and Motion for Rehearing En Banc is hereby

denied.

FURTHER ORDERED that the Respondent’s April 6,

1988, Motion for Leave to file Reply is granted.

App. C-1

I hereby certify the foregoing is a true copy of the original
court order.

/s) Clyde L. Heath

CLYDE L. HEATH,
CLERK.

ce: Curtis Carlson, Esq.
Gloria O. North, Esq.
Richard Levenstein, Esq.

pab

App. C-2

APPENDIX D

[374] * * *

§ 2. Validity, irrevocability, and enforcement of
agreements to arbitrate

A written provision in any maritime transaction or a
contract evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter arising out of
such contract or transaction, or the refusal to perform the
whole or any part thereof, or an agreement in writing to
submit to arbitration an existing controversy arising out of
such a contract, transaction, or refusal, shall be valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any contract.

§ 3. Stay of proceedings where issue therein referable to
arbitration

If any suit or proceeding be brought in any of the courts
of the United States upon any issue referable to arbitration
under an agreement in writing for such arbitration, the court
in which such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on application
of one of the parties stay the trial of the action until such
arbitration has been had in accordance with the terms of the
agreement, providing the applicant for the stay is not in
default in proceeding with such arbitration.

§ 4. Failure to arbitrate under agreement; petition to
United States court having jurisdiction for order
to compel arbitration; notice and service thereof;
hearing and determination

A party aggrieved by the alleged failure, neglect, or
refusal of another to arbitrate under a written agreement

App. D-1

for arbitration may petition any United States district court
which, save for such agreement, would have jurisdiction
under Title 28, in a civil action or in admiralty of the subject
matter of a suit arising out of the controversy between the
parties, for an order directing that such arbitration proceed
in the manner provided for in such agreement. Five days’
notice in writing of such application shall be served upon the
party in default. Service thereof shall be made in the manner
provided by the Federal Rules of Civil Procedure. The court
shall hear the parties, and upon being satisfied that the
making of the agreement for arbitration or the failure to
comply therewith is not in issue, the court shall make an
order directing the parties to proceed to arbitration in
accordance with the terms of the agreement. The hearing and
proceedings, under such agreement, shall be within the
district in which the petition for an order directing such
arbitration is filed. If the making of the arbitration
agreement or the failure, neglect, or refusal to perform the
same be in issue, the court shall proceed summarily to the
trial thereof. If no jury trial be demanded by the party alleged
to be in default, or if the matter in dispute is within admiralty
jurisdiction, the court shall hear and determine such issue.
Where such an issue is raised, the party alleged to be in
default may, except in cases of admiralty, on or before the
return day of the notice of application, demand a jury trial
of such issue, and upon such demand the court shall make
an order referring the issue or issues to a jury in the manner
provided by the Federal Rules of Civil Procedure, or may
specially call a jury for that purpose. If the jury find that no
agreement in writing for arbitration was made or that there
is no default in proceeding thereunder, the proceeding shall
be dismissed. If the jury find that an agreement for
arbitration was made in writing and that there is a default
in proceeding thereunder, the court shall make an order
summarily directing the parties to proceed with the
arbitration in accordance with the terms thereof.

App. D-2

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_2175%3A1. Public record. Not legal advice.