Posts tagged with "ambiguous"

Federal Court Enforces FINRA Arbitration Award Based Solely on the Plain Language of the Award Because the Award was not “Patently Ambiguous”

Luby’s Restaurants Limited Partnership v. Credit Suisse Securities (USA) LLC, 2011 WL 1740196 (S.D. Tex. May 5, 2011)

In a case before the United States District Court for the Southern District of Texas, Luby’s Restaurants Limited Partnership (“Luby’s”) sought to confirm a Financial Industry Regulatory Authority (“FINRA”) arbitration award pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9.  In its petition, Luby’s also sought a court ruling to interpret the arbitration award as requiring Credit Suisse Securities (USA) LLC (“Credit Suisse”) to recompense an additional $186,000 in damages.  Luby’s originally filed the petition in state court, but Credit Suisse removed to federal court.  The federal district court confirmed the arbitration award in Luby’s favor and denied Luby’s petition to order Credit Suisse to pay the additional sum.

The Dispute

The underlying dispute in this case is based on Luby’s purchase of over $30 million in auction rate securities from Credit Suisse.  Credit Suisse had falsely represented that these securities were suitable to Luby’s investment goals because they were equivalent to money market funds, highly liquid, and safe investments for short term investing.

In October 2008, when Luby’s filed arbitration proceedings, the company had redeemed all but $8.9 million worth of the securities, which could not be sold at par value.  In September 2009, after proceedings had been initiated but before the arbitration hearings had begun, Luby’s redeemed one of the remaining securities for less than par value, sustaining a $186,000 loss.  In May 2010, the FINRA arbitration panel ruled that Credit Suisse was liable to Luby’s for the re-purchase of the disputed auction rate securities at par value, and that Credit Suisse was also liable to Luby’s for interest on the par purchase price of these securities from a specific date after the arbitration award through the date the award was paid in full.

The Arbitration Award

Pursuant to the terms of the arbitration award, Credit Suisse purchased all of Luby’s remaining securities at par value and paid the required interest.  Neither party contested the award and both parties sought its confirmation.

However, Luby’s and Credit Suisse disputed whether the award included the $186,000 loss that Luby’s sustained when it sold securities for less than par value after filing for arbitration. Luby’s did not request the court to modify or correct the award, but to confirm the award as written and interpret the writing as including the additional loss.   In raising this issue, neither Luby’s nor Credit Suisse argued that FINRA arbitration did not fully resolve their dispute, nor did they assert that the language of the arbitration award created a collateral dispute.

Interpretations of an Ambiguous Arbitration Award

Courts are required to enforce arbitration awards only as written by the arbitrator; therefore, if an arbitration award is ambiguous, it is unenforceable and must be remanded to the arbitrator with instructions to clarify the particular ambiguities.  Brown v. Witco Corp., 340 F.3d 209, 216 (5th Cir. 2003) (citing Oil, Chem. & Atomic Workers Int’l Union Local 4–367 v. Rohm & Haas, Tex., Inc., 677 F.2d 492, 495 (5th Cir. 1982).  Remand is only appropriate where: (1) an arbitration award is patently ambiguous; (2) the issues submitted to arbitration were not fully resolved; or (3) the language of the arbitration award created a collateral dispute.  Oil, Chem. & Atomic Workers, 677 F.2d at 495.

Although both Luby’s and Credit Suisse argued different interpretations of the FINRA arbitration award, the district court did not find that the award itself was patently ambiguous.  The plain language of the award makes no mention of additional damages sustained by Luby’s during the pendency of the arbitration hearings.  Credit Suisse could clearly not purchase back the securities that were sold because they were no longer in Luby’s possession.

The Decision

The award clearly denied any relief other than that which was expressly granted in its plain language.  Additionally, during the arbitration hearings, Luby’s presented this loss as a claim distinct from the claim to buy back the auction rate securities at par.  The arbitrators did not include this relief in the arbitration award, thereby effectively denying such relief.  Therefore, because the federal district court found the arbitration award to be unambiguous, it confirmed and enforced the award as written.

The court ordered that the final FINRA arbitration award in Luby’s favor be confirmed and adopted as the judgment of the court.  Luby’s petition to order Credit Suisse to make additional payment of $186,000 was denied as not having been ordered in the final award of the arbitration panel.

Should you have any questions relating to FINRA or arbitration issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at

High Court Considers Whether Second DUI Conviction in Ten Years Is a Felony

In a recent criminal law matter, the Supreme Court of Connecticut considered whether a second DUI conviction within a period of ten years was a felony, or simply fell within the motor vehicle violation exception to the term “offense.”

In this case, the plaintiff was convicted of operating a motor vehicle while under the influence (OMVUI), in violation of Connecticut General Statutes (CGS) § 14-227a, for the second time within ten years. Upon asking for a copy of his criminal record, the plaintiff saw that he was designated as a “convicted felon.” He petitioned the defendant, the Commissioner of Public Safety, to repeal regulations permitting the label, but the request was denied. The plaintiff promptly brought this action against the defendant.

The trial court concluded that even though a second OMVUI conviction “carries a term of incarceration consistent with the definition of a felony [greater than one year],” it is not a felony because pursuant to CGS § 53a-24(a), the motor vehicle violation exception applied. The defendant was permanently enjoined “from labeling any person as a convicted felon on the basis of a second conviction under § 14-227a within a ten-year period.” The defendant appealed, contending that the legislature intended that a second OMVUI conviction within ten years would be a felony and that the trial court misapplied the exception. Conversely, the plaintiff argued that the court’s conclusion was proper.

When a court embarks on an exercise of statutory interpretation, it must determine “whether the statute, when read in context, is susceptible to more than one reasonable interpretation.” If a statute’s language is ambiguous, the courts will consider legislative history, legislative policy, and the relationship of the statute in question to related legislation and common law principles. If, however, the statute was plain and unambiguous, “extratextual evidence of the meaning of the statute shall not be considered.”

In this case, the Supreme Court determined that the plain language of CGS § 14-227a shows the legislature intended that a violation constituted a criminal offense. It cites repeated use of “prosecution” and “criminal penalties” in the language, as well as the increasing penalties imposed. The Court noted that because two enumerated motor vehicle felonies may constitute “prior conviction[s] for the same offense as [OMVUI],” the legislature intended that OMVUI would be a comparable felony.

The plaintiff argued, however, that the breach in question fell under the motor vehicle violation exception of CGS § 53a-24(a), and therefore could not be a felony. “Motor vehicle violation” is not defined, though “violation” is defined as an offense punishable only by a fine. The Court determined that it is reasonable to apply this definition to “motor vehicle violation.” Because the legislature did not include such a definition in CGS § 14-227a, the Court stated that this “is evidence that the legislature did not intent for it to fall within the motor vehicle violation exception to the definition of offense.”

The court conceded, however, that “violation” and “motor vehicle violation” as used in CGS § 53a-24(a) could have multiple reasonable definitions. Did it just apply to breaches where a fine was the only punishment, or also those cases where a court could impose a term of incarceration? Because the answer was not clear, the Court reconsidered the meaning of § 14-227a in light of available extratextual evidence. The extensive legislative history of this statute supported the proposition that a second OMVUI conviction was a felony, a position bolstered by Connecticut case law, comparable statutes in forty-four other states, and ever-increasing penalties for breach. In addition, the Court noted that the legislature has long considered OMVUI a serious crime, and “[c]onstruing § 14-227a so that a breach is not a criminal offense… would frustrate the clear intent and public policy behind [the statute].” Thus, the Court found that a second OMVUI conviction within a ten-year term is a felony, and the judgment was reversed and remanded, instructing the trial court to enter judgment in favor of the defendant.

When faced with a charge of operating a motor vehicle while intoxicated (a.k.a. driving under the influence) or license suspension, an individual is best served by consulting with an experienced criminal law practitioner. Should you have any questions regarding criminal defense, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County at 203-221-3100 or at

Written by Lindsay E. Raber, Esq.