United States District Court, E.D. Tennessee, Greeneville Division
METLIFE SECURITIES, INC., METLIFE INSURANCE COMPANY USA, METLIFE INVESTORS DISTRIBUTION COMPANY, METROPOLITAN LIFE INSURANCE COMPANY AND METLIFE, INC., Petitioners,
PATSY A. HOLT, Respondent.
JORDAN UNITED STATES DISTRICT JUDGE.
matter is before the Court on Petitioners' Petition for
Order to Compel Arbitration [doc. 1] and the Hearing
Transcript [doc. 48]. For the reasons herein, the Court will
grant Petitioner's petition and compel arbitration of the
Patsy A. Holt (“Ms. Holt”) opened several
Individual Retirement Accounts with Petitioners
(“MetLife”) in Greeneville, Tennessee, four of
which are at issue in this action. [Pet. to Compel
Arbitration, doc. 1, ¶¶ 1, 52; Holt Dep., doc. 1-9,
at 8:4-8, 21-23, 9:17-20, 10:15-25, 11:1-3, 14:4-14; Woods
Decl., doc. 4-1, ¶ 5]. Ms. Holt personally signed the
account application for one of the four accounts-account
number XXXXX9324. [Holt Dep. at 14:4-17]. At the suggestion
of MetLife's authorized representative in charge of the
accounts, Mark Salyer (“Mr. Mark Salyer”), Ms.
Holt instructed her daughter, Lydia Salyer (“Ms.
Salyer”), to sign the account applications for the
three other accounts-account numbers XXXXX3828, XXXXX9931,
and XXXXX8578-on her behalf. [Id. at 5:23-25, 6:1,
7:22-25, 8:1-25, 9:1-16, 10:15-25, 11:1-13]. Ms. Holt's
name, Patsy A. Holt, appears in cursive in the signature
block on those three account applications, [see
Account Application 3828, doc. 1-2, at 2; Account Application
9931, doc. 1-3, at 2; Account Application 8578, doc. 1-4, at
2], but Ms. Holt did not view or read them, [Holt Dep. at
11:14-18]. In total, Ms. Holt claims to have invested more
than $1, 900, 000 in the accounts. [Second Am. Compl., doc.
1-8, ¶ 19].
to Ms. Holt, Mr. Mark Salyer went on to misappropriate her
funds, which are now almost entirely gone. [Id.
¶¶ 28, 30]. As a result, she sued Mr. Mark Salyer
and MetLife in the Circuit Court of Sullivan County,
Tennessee, for breach of contract, conversion, failure to
supervise, fraud, and negligence, alleging that MetLife is
responsible for Mr. Mark Salyer's misconduct.
[Id. ¶¶ 25-35]. In response, MetLife filed
in the state court a motion to compel arbitration, arguing
that Ms. Holt has to arbitrate her claims because the four
account applications contain arbitration provisions.
[See Pet. to Compel Arbitration ¶ 9; State
Court Order, doc. 7-2, ¶ 2]. In each account
application, the arbitration provision reads:
MetLife . . . and the purchaser of the shares, who is the
signatory below . . . agree that any controversy . . .
arising out of or relating to any transactions between [them]
shall be determined by arbitration. . . . This agreement and
any arbitration hereunder shall be governed and construed in
accordance with the laws of the State of New York . . . .
[Account Applications, doc. nos. 1-1, 1-2, 1-3, 1-4, at 3].
The court ruled that Ms. Holt's claims related to account
number XXXXX9324 are subject to arbitration but reserved
ruling on the arbitrability of the other claims until it
could decide whether to allow discovery. [Woods Decl. ¶
5]. Mr. Mark Salyer, however, then filed for bankruptcy, and
the court stayed the case for roughly three years. [Pet. to
Compel Arbitration ¶ 9]. When the case resumed after the
bankruptcy proceedings, the court permitted Ms. Holt to file
a revised second amended complaint so she could allege that
the arbitration provisions are unenforceable contracts of
adhesion. [Woods Decl. ¶ 8; see Second Am.
Compl. ¶ 22].
this time, MetLife renewed its motion to compel arbitration,
prompting the state court to allow discovery on whether all
four arbitration provisions are unenforceable contracts of
adhesion. [State Court Order at 2]. The state court reserved
ruling on this issue until it could conduct an evidentiary
hearing, [id.], and the parties proceeded to conduct
some discovery, which included depositions, interrogatories,
and requests for production, [Woods Decl. ¶ 12].
MetLife, however, then brought this action, petitioning this
Court to compel Ms. Holt to arbitrate her claims under the
Federal Arbitration Act (“FAA”), 9 U.S.C.
§§ 1-14. [Pet. to Compel Arbitration at 5-16]. Ms.
Holt filed a Response in Opposition to MetLife's Petition
[doc. 6], which she titled as a “Motion to Dismiss, or
in the Alternative, Motion for Summary Judgment.”
[Resp't's Resp. in Opposition at 1]. Construing Ms.
Holt's response as a motion for summary judgment, the
Court granted MetLife's Petition to Compel Arbitration in
part, requiring Ms. Holt to arbitrate her claims under
Account Application 9324. [See Mem. Op., doc. 8, at
26-29, 35]. The Court ordered an evidentiary hearing to
determine whether Ms. Holt is bound to the arbitration
provisions in Account Applications 3828, 9931, and 8578,
which she did not sign but instructed Ms. Salyer to sign on
her behalf. [See Id. at 30-35]. Having now concluded
the evidentiary hearing, the Court is prepared to rule on the
enforceability of the remaining arbitration provisions.
asked by a party to compel arbitration under a contract, a
federal court must determine whether the parties have agreed
to arbitrate the dispute at issue.” Stout v. J.D.
Byrider, 228 F.3d 709, 714 (6th Cir. 2000) (citation
omitted). If a court concludes that an arbitration agreement
is valid, it must order the parties to arbitration. 9 U.S.C.
§ 4; Great Earth Cos. v. Simons, 288 F.3d 878,
889 (6th Cir. 2002). If it determines, however, that the
validity of the arbitration agreement is “in issue,
” 9 U.S.C. § 4, the parties must then proceed to a
trial to resolve their dispute, Great Earth, 288
F.3d at 889. The burden of showing that an arbitration
agreement is in issue rests with the party opposing
arbitration, and a trial is necessary only if this nonmoving
party can establish that a genuine issue of material fact
exists as to the arbitration agreement's validity.
Id. at 889; see Green Tree Fin. Corp.-Ala. v.
Randolph, 531 U.S. 79, 91 (2000). “The required
showing mirrors that required to withstand summary judgment
in a civil suit.” Great Earth, 288 F.3d at 889
(citing Doctor's Assocs., Inc. v. Distajo, 107
F.3d 126, 129-30 (2d Cir. 1997), cert. denied, 522
U.S. 948 (1997)). The inquiry, therefore, that a court should
make is whether the evidence “is such that a reasonable
finder of fact could conclude that no valid agreement to
arbitrate exists.” Id. (citation omitted).
When making this inquiry, it must view the facts and draw all
reasonable inferences in the light most favorable to the
nonmoving party- that is, the party opposing arbitration.
Court made clear to the parties through its previous orders,
the evidentiary hearing was a limited factual inquiry into a
single issue: whether Ms. Salyer bound her mother to the
arbitration provisions in the account applications through an
agency relationship. [See Mem. Op. at 33-34]. Under
New York law, an agency relationship requires the
manifestation of “ consent of one person to allow
another to act on his or her behalf and subject to his or her
control, and  consent by the other so to act.”
Dynas v. Nagowski, 762 N.Y.S.2d 745, 748
(N.Y.App.Div. 2003) (quotation omitted). The Court reminds
the parties that it has already determined that the record
does not contain a genuine issue of material fact as to the
first element. [Mem. Op. at 31-33]. Ms. Holt previously
testified that she instructed Ms. Salyer to sign
“MetLife account documents” on her behalf. [Holt
Dep., doc. 1-9, at 5:6-11]. Ms. Holt also previously
testified that she does not dispute that these documents
included the account applications at issue:
Q: And you don't have any reason to dispute that you gave
her authority to sign this application on ...