The Ex-Wife, the Ex-Husband Stockbroker, the Two FINRA Arbitrations, the Stale Case, the Default Case, and the Appeal

REPRESENTATION OF PARTIES  

For Claimant Sujata Vyas ("Claimant"): Marie Mirch, Esq., Mirch Law, San Diego, California and Nupur Nagar, Esq., Law Offices of Nupur Nagar, Riverside, California.  

For Respondent Interfirst Capital Corporation ("Interfirst"): Dennis M. Holmgren, Esq., Holmgren Johnson Mitchell Madden, Dallas, Texas.  

Respondents First Affiliated Securities ("First Affiliated") and Bhaskar Chandrakant Vyas ("Bhaskar Vyas") did not enter an appearance.  

SIDE BAR: FINRA Code of Arbitration Procedure for Customer Disputes Rule 12206: Time Limits:

(a) Time Limitation on Submission of Claims. No claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim. The panel will resolve any questions regarding the eligibility of a claim under this rule.

(b) Dismissal under Rule. Dismissal of a claim under this rule does not prohibit a party from pursuing the claim in court. By filing a motion to dismiss a claim under this rule, the moving party agrees that if the panel dismisses a claim under this rule, the non-moving party may withdraw any remaining related claims without prejudice and may pursue all of the claims in court.

(1) Motions under this rule must be made in writing, and must be filed separately from the answer, and only after the answer is filed.

(2) Unless the parties agree or the panel determines otherwise, parties must serve motions under this rule at least 90 days before a scheduled hearing, and parties have 30 days to respond to the motion. Moving parties may reply to responses to motions. Any such reply must be made within 5 days of receipt of a response.

(3) Motions under this rule will be decided by the full panel.

(4) The panel may not grant a motion under this rule unless an in-person or telephonic prehearing conference on the motion is held or waived by the parties. Prehearing conferences to consider motions under this rule will be recorded as set forth in Rule 12606.

(5) If the panel grants a motion under this rule (in whole or part), the decision must be unanimous, and must be accompanied by a written explanation.

(6) If the panel denies a motion under this rule, a party may not re-file the denied motion, unless specifically permitted by panel order.

(7) If the party moves to dismiss on multiple grounds including eligibility, the panel must decide eligibility first.  If the panel grants the motion to dismiss the case on eligibility grounds on all claims, it shall not rule on any other grounds for the motion to dismiss.  If the panel grants the motion to dismiss on eligibility grounds on some, but not all claims, and the party against whom the motion was granted elects to move the case to court, the panel shall not rule on any other ground for dismissal for 15 days from the date of service of the panel's decision to grant the motion to dismiss on eligibility grounds.  If a panel dismisses any claim on eligibility grounds, the panel must record the dismissal on eligibility grounds on the face of its order and any subsequent award the panel may issue.  If the panel denies the motion to dismiss on eligibility grounds, it shall rule on the other bases for the motion to dismiss the remaining claims in accordance with the procedures set forth in Rule 12504(a).

(8) If the panel denies a motion under this rule, the panel must assess forum fees associated with hearings on the motion against the moving party.

(9) If the panel deems frivolous a motion filed under this rule, the panel must also award reasonable costs and attorneys' fees to any party that opposed the motion.

(10) The panel also may issue other sanctions under Rule 12212 if it determines that a party filed a motion under this rule in bad faith.

(c) Effect of Rule on Time Limits for Filing Claim in Court. The rule does not extend applicable statutes of limitations; nor shall the six-year time limit on the submission of claims apply to any claim that is directed to arbitration by a court of competent jurisdiction upon request of a member or associated person. However, when a claimant files a statement of claim in arbitration, any time limits for the filing of the claim in court will be tolled while FINRA retains jurisdiction of the claim.

d) Effect of Filing a Claim in Court on Time Limits for Filing in Arbitration. If a party submits a claim to a court of competent jurisdiction, the six-year time limitation will not run while the court retains jurisdiction of the claim matter

In a letter dated August 1, 2017, Nupur Nagar, a lawyer for Claimant asserted that Interfirst's counsel had violated California Rule of Professional Conduct 5-200 and California Business and Professions Code Section 6068(d) during the July 31, 2017 oral argument on Interfirst's Motion to Dismiss. Ms. Nagar asserted that Interfirst's counsel had done so by:

repeatedly quot[ing] Family jurisdiction on these accounts when in fact a little research would have revealed that current and pending claims filed by Sue in Federal courts have survived the motions to dismiss on the family court jurisdiction because family courts do not have jurisdiction under ERISA 502(a)(2) and (3).

 

The Panel notes that California family law did figure in the arguments of Interfirst's counsel. Interfirst's counsel observed that when Claimant divorced her husband, Bhaskar Vyas, California family law gave Claimant the tools to discover the transactions that she challenges. Since Claimant did not even assert that she used these tools, Interfirst's counsel argued that her failure to discover these transactions does not provide a sound reason for tolling FINRA Rule 12206(a).  

The Panel also notes that how to accommodate California family law and ERISA did not figure in the argument of Interfirst's counsel. This comes as no surprise because the resolution of this issue has no bearing on the motion to dismiss. No argument about this issue could be materially misleading. In any event, the appropriate resolution of this issue is debatable, so if Interfirst's counsel had offered an argument about it, the appropriate professional response would be to offer a counter argument. It would be neither appropriate nor professional to respond by casting aspersions on the ethics and integrity of the lawyer who advanced the original argument. It is even worse to cast these aspersions when the lawyer made no such argument. Ms. Nagar must bear the consequences of her behavior. She must reimburse Interfirst for the costs of replying to her letter.  

SIDE BAR:

The State Bar of California Rule 5-200: Trial Conduct

In presenting a matter to a tribunal, a member:

(A) Shall employ, for the purpose of maintaining the causes confided to the member such means only as are consistent with truth;

(B) Shall not seek to mislead the judge, judicial officer, or jury by an artifice or false statement of fact or law;

(C) Shall not intentionally misquote to a tribunal the language of a book, statute, or decision;

(D) Shall not, knowing its invalidity, cite as authority a decision that has been overruled or a statute that has been repealed or declared unconstitutional; and

(E) Shall not assert personal knowledge of the facts at issue, except when testifying as a witness.

State of California Business and Professions Code

ARTICLE 4. Admission to the Practice of Law  

Section 6068.  

It is the duty of an attorney to do all of the following:

. . . .

(d) To employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law.

[C]laimant's claim against Interfirst is that it failed to adequately supervise Bhaskar Vyas, Claimant's former husband, in connection with trades he made in a pension account held solely in his name. According to Claimant, the trades in question took place no later than 2001 (Interfirst ceased doing business in 2002). Claimant filed her claim in 2015, approximately fourteen years after the occurrence or event giving rise to the claim. Therefore, Rule 12206(a) renders this claim ineligible for submission to arbitration - at least it does unless there appears some sound reason for tolling. That Claimant allegedly did not discover the existence of the pension account until 2014 does not constitute such a reason because Claimant should have discovered it much earlier in connection with the divorce proceedings between her and Bhaskar Vyas.

This is from May of 1992.The deposition was taken in St Louis. The deponent is "Jack Garrett" who was at one time a research chemist at Monsanto's Texas City facility in the 1950's. Monsanto (represented by Ed Carstarphen on the left),was being sued by some residents of Houston represented by Joe "Hairpiece" Jamail on the right with the wagging finger) who alleged that Monsanto had harmed them by exposing them to dangerous chemicals. The suit was settled out of court for $39 million. "Tucker" was an attorney representing Ayrshire. There is an Ayrshire a real estate development company in Houston, so I can only assume it's the same company, though I'm not sure of their role in this case. It's probably got something to do with property values allegedly impacted by Monsanto.

1. Against First Affiliated: violations of federal securities laws; breach of contract; common law fraud; breach of fiduciary duty, negligence and gross negligence; and 

2. Against Bhaskar Vyas: negligence/breach of fiduciary duty; misrepresentation (intentional and negligent); unauthorized trades; and unsuitability.

REPRESENTATION OF PARTIES

For Claimant Sujata Vyas ("Claimant"): Marie Mirch, Esq., Mirch Law, San Diego, California and Nupur Nagar, Esq., Law Offices of Nupur Nagar, Riverside, California. 

Respondents First Affiliated Securities ("First Affiliated") and Bhaskar Chandrakant Vyas ("Bhaskar Vyas") did not enter an appearance.

Upon review of the file and the representations by Claimant, the Arbitrator determined that Bhaskar Vyas was properly served with the Statement of Claim in the Original Case by certified mail (as evidenced by the returned certified mail package which states that it was "refused") as well as by regular mail. He was also served with the notification of default proceedings and a copy of all documents filed in this case by regular mail. 

The Arbitrator also determined that First Affiliated was properly served with the Statement of Claim in the Original Case (as evidenced by the green card signed by Ms. Donna Bartlett) and the notification of default proceedings by regular mail. On June 6, 2016, FINRA received correspondence from an attorney advising that Donna Bartlett no longer worked for First Affiliated and had not done so for some time. At no time, however, has First Affiliated provided FINRA with an updated address or contact person. Accordingly, the Arbitrator finds that First Affiliated has been adequately served. 

The Arbitrator finds that Respondents are required to submit to arbitration pursuant to the Code and are bound by the determination of the Arbitrator on all issues submitted

he was never served with any paperwork related to the FINRA arbitration, including the "Statement of Claim," until he was served with the present petition to confirm the award. Bhaskar declared that he would have defended the matter had he been alerted to it. To support that claim, he declared that he had been sued three times by Sujata since 2011, twice in superior court, and once in federal court. He not only defended all three matters, but he prevailed in all three, paying Sujata nothing. 

Sujata and Bhaskar were married in 1981. During the course of the marriage, Bhaskar worked primarily as an engineer, but he engaged in part-time work as a stockbroker between 1992 and 1997. The parties divorced in 2009. Sujata bought out Bhaskar's separate property interest in the residence, and in 2011 Bhaskar moved to Seattle for work.

The only arbitration documents "served" on Bhaskar were served by FINRA itself. The 18 documents "served" were sent to one of two addresses: Fourteen of the documents were mailed to Sujata's residence, and the remaining were mailed to a house where Bhaskar had not lived in for two years and that had been demolished. The actual service of the "Statement of Claim" was sent by certified mail to Sujata's address and was returned "refused." The actual award was likewise "served" on Bhaskar at Sujata's home. Sujata testified that she forwarded "the FINRA action" to Bhaskar, but the trial court found that testimony lacked credibility. Meanwhile, even though Sujata and her same counsel were litigating both state and federal court cases against Bhaskar, they never served Bhaskar's counsel with a courtesy copy of any of the arbitration documents. 

In late 2016, counsel for Sujata sent an e-mail to the attorney representing Bhaskar in the state and federal litigation, notifying him of a FINRA matter and stating that FINRA had not received any response from Bhaskar. She asked for a current address or for Bhaskar's attorney to accept service on his behalf. Bhaskar's attorney responded that he was not authorized to accept service, and "[o]bviously, [he could not] provide [her] with any of [Bhaskar's] personal information." He went on to inform Sujata's attorney that the 2009 dissolution judgment, that divided the community property, included a broad waiver and release provision, including a Civil Code section 1542 waiver, and any FINRA claims would be subsumed within the divorce judgment. 

[F]irst, she contends Bhaskar's opposition to the petition to confirm the arbitration award was untimely; second, she contends "inadequate notice is not grounds for vacating an arbitration award." . . .

Sujata Vyas petitioned to confirm an arbitration award against her ex-husband, Bhaskar Vyas, which was obtained by default due to Bhaskar not appearing at the arbitration. Well, there was a good reason for that. None of the pleadings were served at his current address. To the contrary, most of the pleadings in the case were "served" on Bhaskar at Sujata's home, where Bhaskar had not lived for several years. The court found Bhaskar had no actual notice of the arbitration and set the award aside. We affirm.

[B]haskar's attorney acknowledged that he was made aware of the arbitration in 2016, but his only knowledge was that the arbitrator had dismissed the case based on the statute of limitations, which he assumed would apply to Bhaskar as well. Moreover, we would add that generally speaking, a party has no obligation to respond to a legal proceeding in the absence of service. Mere awareness that a complaint has been filed does not trigger a duty for the defendant to investigate the matter and file a response. If a plaintiff chooses not to serve the complaint (or, in this case, the "Statement of Claim"), the natural presumption is that the plaintiff chose not to proceed with the matter. The burden of properly serving and notifying a defendant is on the plaintiff, not the defendant. 

With regard to undue means, Sujata knew FINRA was mailing notices, addressed to Bhaskar, to the wrong address-they were being sent to her address! Yet there is nothing in the record to suggest that she notified FINRA of that fact. Moreover, to the extent she claims she had the ability to forward mail to Bhaskar, she would also have had the ability to correct FINRA's mailing address on file for Bhaskar, which never happened. She did not provide a courtesy copy of any documents to either Bhaskar or his attorney, nor provide notice that a default was imminent. Sujata's concealment from FINRA that notices addressed to Bhaskar were being mailed to her address constituted undue means for procuring the arbitration award. Accordingly, the court did not err in setting aside the arbitration award.

• FINRA
• Arbitration
• Lawyers
• Aspersions
• Rule 12206
• Eligibility Rule
• FINRA Eligibility Rule
• Inadequate Notice
• California Bar
• Divorce
• Spouses
• Husband
• Wife
• Pension
• Default
• Service
• Mail
• California Court of Appeal
• BrokeAndBroker
• Bill Singer