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Wedbush Morgan Sercurities Inc. v. Worley10/13/2005
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
I. Introduction
Plaintiff, Wedbush Morgan Securities, Inc., appeals from a judgment denying its petition to correct an arbitration award and confirming the award in favor of defendant, Jonathan Worley, in the net amount of $323,450. We affirm.
II. Background
Defendant was employed by plaintiff from June 1998 until February 22, 2001, when he was terminated as a department manager of the plaintiff's Taxable Fixed Income Department. Plaintiff is a registered securities broker-dealer with the National Association of Securities Dealers ("NASD"). The parties do not dispute that when a registered person is terminated, the securities industry requires plaintiff to file a document entitled Uniform Termination Notice for Securities Industry Registration which is commonly known as a Form U-5 with NASD. On March 22, 2001, plaintiff submitted a Form U-5 to the NASD which explained why defendant had been terminated, "[Defendant] failed to mark and mis-marked securities inventory positions resulting in the overpayment of incentive compensation to him by the firm."
On November 20, 2001, plaintiff initiated an arbitration of claims surrounding defendant's termination before the NASD Dispute Resolution, Inc. In its statement of claims against defendant, plaintiff alleged causes of action for fraud, negligence, contract breach, and unjust enrichment. Plaintiff sought reimbursement of alleged overpayments of performance based incentive compensation totaling approximately $63,805.
On January 28, 2002, defendant answered plaintiff's claims and filed a counter-claim for damages. In the counterclaim, defendant asserted causes of action for wrongful termination (in violation of public policy), intentional infliction of emotional distress, and contract breach. On October 10, 2004, defendant submitted an arbitration brief to the panel. In addition to claiming that he had been wrongfully terminated, defendant requested that the arbitrators issue an order expunging the Form U-5 because he claimed it had been submitted with "bogus" information.
On October 26, 2004, the arbitrators issued an interim order requesting the parties to brief the expungement issue. On November 24, 2004, the arbitration award was issued and it states: at the hearing, the arbitrators granted a motion to dismiss the wrongful termination claim; but the arbitrators denied a dismissal motion as to the emotional distress claim; and the arbitrators determined that there was an inadequate basis for recommending expungement or modification. The arbitrators then concluded: "Nevertheless, the Panel notes that the language used by [defendant] in the Reason for Termination was not based on the totality of the facts and circumstances in this case since many of the issues were clearly exacerbated by the confusion in [plaintiff's] policy as to the proper frequency of marking bond and warrant positions to market. Moreover, the Panel finds that any connotations in the U-5 as to dishonesty and intentional fraudulent conduct on the part of [defendant] are not supported by the record in this proceeding."
Plaintiff was awarded $105,000. Defendant was awarded $428,450 for his counterclaim for the net award in his favor of $323,450. Plaintiff filed its timely appeal from the judgment denying its petition to correct the award and confirming the
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