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PFEFFER v. 165 NY 10006 (2018)

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United States Court of Appeals, Second Circuit.

Alba T. PFEFFER, Plaintiff-Appellant, v. WELLS FARGO ADVISORS, LLC, One Wells Fargo Center, 301 South College Street, Charlotte, NC 28202, Andre Mirkine, One Wells Fargo Center, 301 South College Street, Charlotte, NC 28202, Defendants-Appellees, Financial Industry Regulatory Authority, Inc., Arbitration Panel, One Liberty Plaza, 165 Broadway, 27th Floor, New York, NY 10006, Defendant.*


Decided: February 15, 2018

PRESENT: RALPH K. WINTER, GERARD E. LYNCH, DENNY CHIN, Circuit Judges. FOR PLAINTIFF-APPELLANT: Alba T. Pfeffer, pro se, Rye Brook, New York. FOR DEFENDANT-APPELLEE: Sandra D. Grannum, Drinker Biddle & Reath LLP, Florham Park, New Jersey.


Pro se plaintiff-appellant Alba T. Pfeffer (“Mrs. Pfeffer”) appeals the district court's May 24, 2017 judgment, entered pursuant to its May 23, 2017 opinion and order, denying her motion to vacate an arbitration award, dismissing her complaint, and granting the motion to confirm the award by defendants-appellees Wells Fargo Advisors, LLC (“Wells Fargo”) and its financial advisor Andre Mirkine. A three-member Financial Industry Regulatory Authority (“FINRA”) arbitration panel (the “Panel”) dismissed Mrs. Pfeffer's state law claims arising from defendants' failure to follow her late husband's instructions to transfer all assets from a trust naming his children as beneficiaries (“children's trust”) to a trust naming her as the beneficiary (“plaintiff's trust”). We assume the parties' familiarity with the underlying facts, the procedural history of the case, and the issues on appeal.

In 2004, Mrs. Pfeffer's late husband, Murray Pfeffer (“Mr. Pfeffer”), created two revocable trusts—the children's trust and plaintiff's trust. Mirkine was the Pfeffers' financial advisor, and Wells Fargo maintained both trusts and other personal accounts for the Pfeffers.

In January 2010, Mr. Pfeffer requested by phone and by letter that Mirkine transfer all assets from the children's trust (totaling about $665,000) to plaintiff's trust. At the arbitration hearing, Mrs. Pfeffer explained that her husband requested the transfer because the Pfeffers became concerned about Mirkine's management of the accounts. Mirkine explained that he did not transfer the assets because he became concerned following conversations with Mr. Pfeffer and Mr. Pfeffer's son that Mr. Pfeffer was not competent and was being unduly influenced by Mrs. Pfeffer. After receiving two letters from physicians opining that Mr. Pfeffer was not capable of making financial decisions, Wells Fargo froze both trusts.

In August 2010, following a guardianship proceeding commenced by Mr. Pfeffer's children, the New York State Supreme Court, Westchester County, appointed Mrs. Pfeffer as the guardian of Mr. Pfeffer's “person” and an independent guardian for Mr. Pfeffer's property. After Mr. Pfeffer died in October 2012, the independent guardian distributed the proceeds of each trust to their respective beneficiaries.

On February 2, 2015, Mrs. Pfeffer filed a statement of arbitration claim with FINRA alleging breach of fiduciary duty, breach of contract, negligent misrepresentation, and conversion based on defendants' failure to follow Mr. Pfeffer's January 2010 instructions to transfer the assets from the children's trust to plaintiff's trust. On September 30, 2016, following a five-and-a-half day hearing during which both parties presented testimony and other evidence, the Panel denied Mrs. Pfeffer's claim.

On October 25, 2016, Mrs. Pfeffer filed a complaint challenging the arbitration award, which the district court construed as a motion to vacate the award. On November 21, 2016, defendants moved to dismiss the complaint and confirm the award. The district court confirmed the award and this appeal followed.

On appeal, Mrs. Pfeffer argues that the award was procured by undue means, evident partiality, and misconduct because the Panel was intimidated by defense counsel and refused to consider relevant evidence. She alleges that the Panel exhibited manifest disregard for the law and facts.

When reviewing a district court's decision to confirm or vacate an arbitration award, we review questions of law de novo and findings of fact for clear error. Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 103 (2d Cir. 2013). Under the Federal Arbitration Act, a district court may vacate an arbitration award if: (1) the award was procured by “corruption, fraud, or undue means”; (2) the arbitrators exhibited “evident partiality” or “corruption”; (3) the arbitrators were guilty of “misconduct” such as “refusing to hear evidence pertinent and material to the controversy” or “any other misbehavior” that prejudiced the rights of any party; or (4) the arbitrators “exceeded their powers.” 9 U.S.C. § 10(a); see also AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 350, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). This Circuit does not recognize manifest disregard of the evidence as a proper ground for vacating an arbitration panel's award, and will only find a manifest disregard for the law where there is no colorable justification for a panel's conclusion. Wallace v. Buttar, 378 F.3d 182, 193 (2d Cir. 2004). “[T]he burden of proof necessary to avoid confirmation of an arbitration award is very high, and a district court will enforce the award as long as ‘there is a barely colorable justification for the outcome reached.’ ” Kolel Beth Yechiel Mechil of Tartikov, 729 F.3d at 103–04 (citation omitted).

Upon review, we find no error in the district court's confirmation of the arbitration award. Mrs. Pfeffer failed to meet her “very high” burden to demonstrate that vacatur was appropriate. Id. at 103. The transcript of the arbitration reveals no suggestion that the award was produced by undue means, evident partiality, or misconduct. Her allegations that the Panel failed to abate defense counsel's abrasive manner and that it was intimidated by him are belied by the record. Contrary to Mrs. Pfeffer's allegations, the transcript of the proceedings shows that the Panel considered her evidence, understood the issues underlying her claims, and afforded her latitude because she was proceeding pro se. Furthermore, Mrs. Pfeffer has shown nothing to indicate that the Panel manifestly disregarded the law in coming to its conclusion.

We have considered Mrs. Pfeffer's remaining arguments and find them to be without merit. Accordingly, we AFFIRM the judgment of the district court.

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