APPELLATE COURT OF ILLINOIS, SECOND DISTRICT
545 N.E.2d 789, 189 Ill. App. 3d 853, 137 Ill. Dec. 136 1989.IL.1622
Appeal from the Circuit Court of Du Page County; the Hon. Roy F. Lawrence, Judge, presiding.
JUSTICE LINDBERG delivered the opinion of the court. McLAREN and INGLIS, JJ., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LINDBERG
Defendant, Wilson J. Rondini, Jr., appeals the trial court's order denying his motion to stay proceedings pending arbitration of a collection dispute with his former employer, Transamerica Financial Resources, Inc. . Defendant contends that the parties' dispute falls within the scope of mandatory arbitration as provided in the rules and constitution of the National Association of Security Dealers . We affirm.
TFR, a securities brokerage firm and member of NASD, hired defendant as a registered representative to sell securities. At the time defendant was hired, TFR and defendant entered into a written loan agreement, by which TFR loaned defendant $20,576.50. By its terms, the loan agreement provided for a forgiveness of defendant's indebtedness if, as of the due date of each installment payment, defendant continued to be a registered representative of TFR. The agreement further required defendant to execute a collateral security agreement in which he assigned his commissions to TFR "only to the extent necessary to secure repayment of any present or future debit balance in [defendant's] account with ." The loan agreement itself required defendant to pay TFR three annual principal installments of $6,858.83.
At some point, defendant's employment with TFR terminated. On August 24, 1988, TFR filed a complaint against defendant alleging the terms of the loan agreement, the loan amount, and an outstanding balance of $13,717.67 which it claimed that defendant had failed to pay. TFR sought collection of the outstanding balance, plus reasonable costs, attorney fees, and the maximum legal interest.
Defendant filed a motion to stay the court proceedings, pending arbitration of TFR's claim before the NASD. Defendant alleged that he had signed a document known as "Form U-4," a portion of his application for registration with NASD; he further alleged that the terms of the document comprised a contract between the parties to abide by and otherwise adhere to the NASD rules, including its Code of Arbitration Procedure. The Code requires submission of certain disputes to arbitration as follows:
"Sec. 8(a) Any dispute, claim or controversy eligible for submission under Part I of this Code between or among members and/or associated persons, and/or certain others, arising in connection with the business of such members(s) or in connection with the activities of such associated person(s), shall be arbitrated under this Code, at the instance of:
(1) a member against another member;
(2) a member against a person associated with a member or a person associated with a member against a member; and,
(3) a person associated with a member against a person associated with a member." NASD Code of Arbitration Procedure, Part II, § 8(a), NASD Manual par. 3708 (1985).
TFR resisted defendant's motion, arguing that its loan to him did not "arise out of or in connection with" its business as a member of NASD, but rather arose solely out of the parties' employment relationship. Following briefing and oral argument by both sides, the trial court denied defendant's motion for the stay. Defendant's appeal of this order is an interlocutory appeal as of right pursuant to Rule 307(a)(1) (107 Ill. 2d R. 307(a)(1)), as the denial of ...