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Peregrin v. Kassar

June 19, 2008


The opinion of the court was delivered by: Charles P. Kocoras United States District Judge


CHARLES P. KOCORAS, District Judge

This matter comes before the court on the application of David G. Peregrin to confirm an arbitration award entered on January 18, 2008, in his favor against William E. Kassar, Jr, as well as Kassar's motion to strike Peregrin's application and his petition to vacate the January 18 award. For the following reasons, Kassar's motion and petition are denied; Peregrin's application is granted and the January 18, 2008, arbitration award is confirmed.


On June 13, 2003, Peregrin opened an account with the Milestone Management Group, LLC ("Milestone"), after allegedly having succumbed to respondent Kassar's "extravagant representations" as to the securities the company offered and to their success rate. Kassar was the branch manager for the Milestone Group and was the broker of record for the Peregrin account.

Over the life of the account, Peregrin invested approximately $209,000 in his account with Milestone. From June 2003 to December 2003,*fn1 Kassar executed numerous trades for the Peregrin account. These transactions, beyond generating possible proceeds in favor of the Peregrin account, also yield several commissions as well as mark ups and downs on securities purchased or sold from or to Milestone's own inventory. Peregrin contends that the activity during this time constituted "churning."*fn2 In December 2003, Peregrin withdrew most of the funds remaining in the account and closed it in September 2004. Overall, Peregrin lost about $160,000.

On September 22, 2004, Peregrin filed a four-fold Statement of Claim before the National Association of Securities Dealers, Inc. ("NASD").*fn3 In it, he advanced claims of breach of fiduciary duty, negligence, violations of the NASD rules of fair practice, and failure to supervise against Milestone. Though Kassar was named as a respondent, none of the claims referred specifically to him. On September 29, 2006, the arbitration panel dismissed the claims against Milestone with prejudice and those against Kassar without prejudice. The panel stated that Peregrin was granted leave to "file a new arbitration proceeding to the extent permitted by the applicable law." Any relief not specifically enumerated, including punitive damages and attorneys' fees, were denied with prejudice. Pet. to Vacate, Ex. B, NASD arbitration No. 04-06892, p. 3.

On November 22, 2006, Peregrin filed a second Statement of Claim. Pet. to Vacate, Ex. C., NASD arbitration No. 06-05099. This claim again named both Milestone and Kassar as respondents and asserted the same claims contained in the prior arbitration as well as an additional claim based on the Illinois Consumer Fraud and Deceptive Business Practice Act. Pet. to Vacate, Ex. C. Count V.

The second arbitration commenced on January 9, 2008; Kassar appeared pro se. At the outset of the proceedings, Kassar argued that the initial award had a res judicata effect, precluding the new arbitral panel from considering the new statement of claims. Pet. to Vacate, pp. 5-6. After considering the matter, the arbitration panel concluded that the new proceeding was not barred. Decl. of James McGurk, Ex. C. On January 18, 2008, the panel awarded compensatory damages amounting to $137,000, as well as $54,252.00 for attorneys' fees under the Illinois Consumer Fraud and Deceptive Practices Act, at Kassar's expense. Pet. to Vacate, Ex. D., p. 4.

On February 4, 2008, Peregrin brought this action to confirm the award of the Second Arbitration pursuant to 9 U.S.C. § 9. In response, Kassar moved to strike certain portions of the application and filed a petition to vacate the award pursuant to 9 U.S.C. § 10(a)(4).


The Federal Arbitration Act ("FAA") indicates a strong federal policy in favor of the enforcement of private arbitration agreements. 9 U.S.C. § 1 et seq.; Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225-26, 107 S.Ct. 2332 (1987). According to the FAA, a written agreement to arbitrate "in a contract evidencing a transaction involving commerce ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2; Moses H. Cone Mem'l Hosp. v. Mercury Construction, 460 U.S. 1, 24, 103 S.Ct. 927 (1983). "[I]n cases falling within a court's jurisdiction, the Act makes contracts to arbitrate "valid, irrevocable, and enforceable," so long as their subject involves "commerce." § 2. And this is so whether an agreement has a broad reach or goes just to one dispute, and whether enforcement be sought in state court or federal." Hall Street Associates, L.L.C. v. Mattel, Inc., -- U.S. --, 128 S.Ct. 1396, 1402 (2008).

Once an award is entered, any party to the arbitration may, within one year thereafter, apply to a court for an order confirming the award entered; the court must grant the application unless the award is vacated, modified, or corrected as provided in the FAA. 9 U.S.C. ยง 9. An award may be vacated only if it satisfies one of the ...

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