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Aikens v. Johnson

United States District Court, M.D. Louisiana

July 28, 2017




         This matter is before the Court on the Motion to Dismiss or in the Alternative to Stay Pending Arbitration[1] filed by Defendant Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”). Plaintiff David Aikens (“Plaintiff”), proceeding pro se, has filed an Opposition[2] to this motion. Also before the Court is the Motion to Dismiss[3] by Defendant Benjamin Johnson (“Johnson”), to which Plaintiff filed an Opposition.[4] Plaintiff has also filed a Motion to Not Dismiss Case or Compel any Arbitration, [5] which is essentially an opposition to the motions of the Defendants. Merrill Lynch has filed an Opposition[6] to Plaintiff's motion. For the following reasons, the Court finds that this action should be stayed pending arbitration.


         Plaintiff in this matter is the son of Huey and Elvira Aikens. Prior to 1992, Huey Aikens opened an account with Merrill Lynch naming his wife, Elvira Aikens, as sole beneficiary. Huey Aikens passed away in 1993. On March 17, 1993, Elvira Aikens opened an Individual Retirement Account (“IRA”) pursuant to the Merrill Lynch IRA Adoption Agreement.[8] The IRA Adoption Agreement contains an arbitration provision stating: “I am agreeing in advance to arbitrate any controversies which may arise with the custodian.”[9] The IRA was governed by the terms and conditions set forth in the Merrill Lynch Traditional Individual Retirement Account Custodial Agreement (“Custodial Agreement”).[10]

         The IRA Adoption Agreement executed by Elvira Aikens designated Plaintiff as one of eight beneficiaries to receive 12.5% of the balance of Elvira's account upon her death. Nevertheless, between 1997 and December 2001, Elvira Aikens withdrew all of the funds from her account, and the account was closed in December 2001.[11] Elvira Aikens passed away on January 30, 2006.

         Plaintiff filed this lawsuit claiming, inter alia, that Defendants have committed theft of his inheritance, fraud, and have failed to turn over relevant documents relating to the financial information of both his father and mother. Johnson moved to dismiss alleging the Court lacks jurisdiction based on a lack of federal question or diversity jurisdiction. Merrill Lynch moves to dismiss or alternatively requests a stay pending arbitration considering the binding arbitration provision in the governing contract.

         II. LAW & ANALYSIS - Arbitration

         The Fifth Circuit has recognized that “[a]rbitration is favored in the law.”[12] Moreover, there is a “liberal Federal Policy favoring arbitration agreements.”[13] When presented with a motion to compel arbitration under the Federal Arbitration Act (“FAA”), [14] a court must first determine whether the FAA is applicable. The FAA provides, in pertinent part, that a:

written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.[15]

         The Supreme Court has held that the FAA governs all contracts that are within the reach of the Commerce Clause and has instructed courts to interpret broadly the phrase “involving commerce, ” to be functionally equivalent to “affecting.”[16]

         If the contract between the parties is governed by the FAA, the court must then employ a two-step process to determine whether the parties actually agreed to arbitrate. The court considers: (1) whether there is a valid arbitration agreement between the parties; and (2) whether the dispute in question falls within the scope of the agreement.[17]

         Merill Lynch cites the arbitration clause set forth in the IRA Custodial Agreement to which Evira Aikens acknowledged and agreed. The relevant arbitration clause in the IRA Custodial Agreement provides as follows:

You agree that all controversies which may arise between us, including but not limited to, those involving any transaction or the construction, performance, or breach of this or any other agreement between us, whether entered into prior, on or subsequent to the date thereof, shall be determined by arbitration.
. Arbitration is final and binding on the parties.
. The parties are waiving their right to seek remedies in court, including the right to a ...

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