{ "id": 4170171, "name": "UNITED STATES TRUST COMPANY, N.A., Plaintiff v. STANFORD GROUP COMPANY, JOHN R. RICH, D. KENNETH DIMOCK, GLENDA R. BURKETT, ANTHONY P. MONFORTON, MARTHA JO BROOKS, WILLIAM W. WATSON,VIRGINIA B. SASLOW, SANDRA G. BOES, SUZANNE C. WILCOX, KIM M. VAN ZEE, and KIMBERLY LEMONS, Defendants", "name_abbreviation": "United States Trust Co. v. Stanford Group Co.", "decision_date": "2009-08-18", "docket_number": "No. COA08-179", "first_page": "287", "last_page": "293", "citations": [ { "type": "official", "cite": "199 N.C. App. 287" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "623 S.E.2d 620", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12634717 ], "weight": 2, "year": 2006, "pin_cites": [ { "page": "625", "parenthetical": "reversing order denying motion to compel arbitration and remanding for \"a new order containing findings which sustain its determination regarding the validity and applicability of the arbitration provisions\"" }, { "page": "625" } ], "opinion_index": 0, "case_paths": [ "/se2d/623/0620-01" ] }, { "cite": "629 S.E.2d 892", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12635822 ], "weight": 2, "year": 2006, "pin_cites": [ { "page": "894" }, { "page": "894", "parenthetical": "reversing and remanding because \"[t]he trial court's denial may have resulted from a number of reasons\"" } ], "opinion_index": 0, "case_paths": [ "/se2d/629/0892-01" ] }, { "cite": "606 S.E.2d 708", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2005, "pin_cites": [ { "page": "711" }, { "page": "711" } ], "opinion_index": 0 }, { "cite": "168 N.C. App. 223", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8468909 ], "year": 2005, "pin_cites": [ { "page": "226" } ], "opinion_index": 0, "case_paths": [ "/nc-app/168/0223-01" ] }, { "cite": "566 S.E.2d 130", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2002, "pin_cites": [ { "page": "132" } ], "opinion_index": 0 }, { "cite": "151 N.C. App. 507", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9080966 ], "weight": 3, "year": 2002, "pin_cites": [ { "page": "509" }, { "page": "509" }, { "page": "509" } ], "opinion_index": 0, "case_paths": [ "/nc-app/151/0507-01" ] }, { "cite": "175 N.C. App. 380", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8352106 ], "weight": 2, "year": 2006, "pin_cites": [ { "page": "387", "parenthetical": "reversing order denying motion to compel arbitration and remanding for \"a new order containing findings which sustain its determination regarding the validity and applicability of the arbitration provisions\"" }, { "page": "387" } ], "opinion_index": 0, "case_paths": [ "/nc-app/175/0380-01" ] }, { "cite": "177 N.C. App. 802", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8302950 ], "weight": 2, "year": 2006, "pin_cites": [ { "page": "804" }, { "page": "805" } ], "opinion_index": 0, "case_paths": [ "/nc-app/177/0802-01" ] }, { "cite": "591 S.E.2d 577", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2004, "pin_cites": [ { "page": "580" } ], "opinion_index": 0 }, { "cite": "162 N.C. App. 457", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8917911 ], "year": 2004, "pin_cites": [ { "page": "461" } ], "opinion_index": 0, "case_paths": [ "/nc-app/162/0457-01" ] }, { "cite": "610 S.E.2d 293", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 2005, "pin_cites": [ { "page": "296", "parenthetical": "quoting Slaughter v. Swicegood, 162 N.C. App. 457, 461, 591 S.E.2d 577, 580 (2004)" }, { "page": "297", "parenthetical": "reversing and remanding because \" [t]he order appealed from contained neither factual findings that allow us to review the trial court's ruling, nor a determination whether an arbitration agreement exists between the parties\"" }, { "page": "297", "parenthetical": "requiring \"a determination whether an arbitration agreement exists between the parties\" (emphasis added)" }, { "page": "296" } ], "opinion_index": 0 }, { "cite": "169 N.C. App. 630", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8472320 ], "weight": 4, "year": 2005, "pin_cites": [ { "page": "633", "parenthetical": "quoting Slaughter v. Swicegood, 162 N.C. App. 457, 461, 591 S.E.2d 577, 580 (2004)" }, { "page": "635" }, { "page": "635" }, { "page": "635" } ], "opinion_index": 0, "case_paths": [ "/nc-app/169/0630-01" ] }, { "cite": "120 S. Ct. 1161", "category": "reporters:federal", "reporter": "S. Ct.", "year": 2000, "opinion_index": 0 }, { "cite": "145 L. Ed. 2d 1072", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 2000, "opinion_index": 0 }, { "cite": "528 U.S. 1155", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 9686401, 9686370, 9686435, 9686508, 9686415, 9686384, 9686544, 9686480, 9686578, 9686613, 9686646, 9686454, 9686685 ], "year": 2000, "opinion_index": 0, "case_paths": [ "/us/528/1155-03", "/us/528/1155-01", "/us/528/1155-05", "/us/528/1155-08", "/us/528/1155-04", "/us/528/1155-02", "/us/528/1155-09", "/us/528/1155-07", "/us/528/1155-10", "/us/528/1155-11", "/us/528/1155-12", "/us/528/1155-06", "/us/528/1155-13" ] }, { "cite": "539 S.E.2d 288", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1999, "opinion_index": 0 }, { "cite": "350 N.C. 832", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 132139, 132303, 132023, 132084, 132247 ], "year": 1999, "opinion_index": 0, "case_paths": [ "/nc/350/0832-03", "/nc/350/0832-05", "/nc/350/0832-04", "/nc/350/0832-01", "/nc/350/0832-02" ] }, { "cite": "516 S.E.2d 879", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1999, "pin_cites": [ { "page": "881" } ], "opinion_index": 0 }, { "cite": "134 N.C. App. 116", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11143188 ], "year": 1999, "pin_cites": [ { "page": "118" } ], "opinion_index": 0, "case_paths": [ "/nc-app/134/0116-01" ] }, { "cite": "566 S.E.2d 730", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2002, "pin_cites": [ { "page": "732" } ], "opinion_index": 0 }, { "cite": "152 N.C. App. 103", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9248909 ], "year": 2002, "pin_cites": [ { "page": "106" } ], "opinion_index": 0, "case_paths": [ "/nc-app/152/0103-01" ] }, { "cite": "379 S.E.2d 30", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1989, "pin_cites": [ { "page": "37" }, { "page": "37", "parenthetical": "'Where a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court.'" } ], "opinion_index": 0 }, { "cite": "324 N.C. 373", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2483734 ], "weight": 2, "year": 1989, "pin_cites": [ { "page": "384" }, { "page": "384", "parenthetical": "'Where a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court.'" } ], "opinion_index": 0, "case_paths": [ "/nc/324/0373-01" ] } ], "analysis": { "cardinality": 658, "char_count": 14341, "ocr_confidence": 0.76, "pagerank": { "raw": 1.0836453323310011e-07, "percentile": 0.5631559986701927 }, "sha256": "83b7af6e4e55eb976e8cf9c1736da3e912a7be075440f5c1543034447ae6da62", "simhash": "1:51b7f474566f0cfc", "word_count": 2281 }, "last_updated": "2023-07-14T20:19:28.879345+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges ROBERT C. HUNTER, ELMORE and GEER." ], "parties": [ "UNITED STATES TRUST COMPANY, N.A., Plaintiff v. STANFORD GROUP COMPANY, JOHN R. RICH, D. KENNETH DIMOCK, GLENDA R. BURKETT, ANTHONY P. MONFORTON, MARTHA JO BROOKS, WILLIAM W. WATSON,VIRGINIA B. SASLOW, SANDRA G. BOES, SUZANNE C. WILCOX, KIM M. VAN ZEE, and KIMBERLY LEMONS, Defendants" ], "opinions": [ { "text": "PER CURIAM.\nDefendants John R. Rich, D. Kenneth Dimock, Glenda R. Burkett, Anthony P. Monforton, Martha Jo Brooks, William W. Watson, Virginia B. Saslow, Sandra G. Boes, Suzanne C. Wilcox, Kim M. Van Zee, and Kimberly Lemons (\u201cdefendants\u201d) appeal from the trial court\u2019s order denying their motion to dismiss or, in the alternative, to compel arbitration. On appeal, defendants primarily contend that the trial court failed to make adequate findings of fact as to whether a valid arbitration agreement existed between the parties. Because this Court has repeatedly held that such findings are required, and we are bound under In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989), to follow that authority, we reverse and remand for further findings of fact.\nFacts\nPlaintiff United States Trust Company, N.A. (\u201cU.S. Trust\u201d) is a financial services company that offers a variety of wealth management services to both individual and institutional clients. U.S. Trust is the parent company of UST Securities Corp., a securities broker/dealer.\nIn 2006, while employed by U.S. Trust, Rich, Dimock, Burkett, Monforton, Brooks, Watson, Saslow, and Wilcox applied for and obtained licenses with the National Association of Securities Dealers, Inc., now called the Financial Industry Regulatory Authority (\u201cNASD/FINRA\u201d). Defendants contend that U.S. Trust required these employees to do so as a condition of their employment.\nIn order to apply for licensure, the employees were required to complete a Form U-4 and file it with the NASD/FINRA. The Form U-4 contains an arbitration clause that states in part: \u201cI agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules[.]\u201d (Emphasis added.) The Form U-4 requires that the applicant identify his or her firm\u2019s name. In each case, the employees entered \u201cUST Securities\u201d in the area of the form requesting the firm name.\nIn July 2007, the individual defendants, all employed in U.S. Trust\u2019s Greensboro office, voluntarily terminated their employment with U.S. Trust and formed a new office for Stanford Group Company, a competitor of U.S. Trust. On 19 July 2007, U.S. Trust filed suit against the Stanford Group and the departing employees, alleging claims for breach of contract, breach of the duty of loyalty, conversion, tortious interference with contractual relations, unfair trade practices, civil conspiracy, and misappropriation of trade secrets and confidential information. The complaint included a request for a temporary restraining order and a motion for a preliminary injunction. In an order entered 3 August 2007, the trial court denied U.S. Trust\u2019s motion for a temporary restraining order enforcing certain non-competition agreements.\nOn 30 August 2007, defendants filed a motion to dismiss or, in the alternative, to compel arbitration. According to defendants, they were dual employees of both U.S. Trust and UST Securities.' Defendants contended that U.S. Trust was a third-party beneficiary of the Form U-4 arbitration agreement and, consequently, U.S. Trust was required to arbitrate any claims asserted against defendants. U.S. Trust, on the other hand, contended the arbitration agreement did not apply because U.S. Trust \u201cwas, at most, an incidental beneficiary of the agreement between [defendants] and UST Securities.\u201d On 20 September 2007, the trial court entered an order denying defendants\u2019 motion. Defendants appealed to this Court.\nThe order denying the motion to dismiss or to compel arbitration was not stayed. On 4 January 2008, U.S. Trust filed a motion for a preliminary injunction enforcing employment agreements allegedly entered into by defendants Rich, Burkett, Dimock, Monforton, Brooks, Watson, Wilcox, and Saslow. U.S. Trust did not seek relief as to defendants Boes, Van Zee, and Lemons and ultimately withdrew its request for relief as to defendant Wilcox. On 28 January 2008, the trial court entered an order denying U.S. Trust\u2019s preliminary injunction motion as to defendants Dimock and Rich, but granting it in part as to Burkett, Monforton, Brooks, Watson, and Saslow. U.S. Trust and the five defendants subject to the injunction filed a separate appeal from that order, COA08-472, which is the subject of a separate opinion.\nDiscussion\nAs an initial matter, we note that an appeal from the trial court\u2019s denial of a motion to compel arbitration is an interlocutory order. See Boynton v. ESC Med. Sys., Inc., 152 N.C. App. 103, 106, 566 S.E.2d 730, 732 (2002). Our appellate courts have, however, repeatedly held that \u201c \u2018[t]he right to arbitrate a claim is a substantial right which may be lost if review is delayed, and an order denying arbitration is therefore immediately appealable.\u2019 \u201d Id. (quoting Howard v. Oakwood Homes Corp., 134 N.C. App. 116, 118, 516 S.E.2d 879, 881, disc. review denied, 350 N.C. 832, 539 S.E.2d 288 (1999), cert. denied, 528 U.S. 1155, 145 L. Ed. 2d 1072, 120 S. Ct. 1161 (2000)). This appeal is, therefore, properly before us.\nTurning to the merits of the appeal, when, as here, a party files a motion to compel arbitration, the trial court must perform \u201c \u2018a two-step analysis requiring the trial court to ascertain both (1) whether the parties had a valid agreement to arbitrate, and also (2) whether the specific dispute falls within the substantive scope of that agreement.\u2019 \u201d Ellis-Don Constr., Inc. v. HNTB Corp., 169 N.C. App. 630, 633, 610 S.E.2d 293, 296 (2005) (quoting Slaughter v. Swicegood, 162 N.C. App. 457, 461, 591 S.E.2d 577, 580 (2004)). This Court has stressed repeatedly that, in making this determination, \u201cthe trial court must state the basis for its decision in denying a defendant\u2019s motion to stay proceedings [pending arbitration] in order for this Court to properly review whether or not the trial court correctly denied the defendant\u2019s motion.\u201d Steffes v. DeLapp, 177 N.C. App. 802, 804, 629 S.E.2d 892, 894 (2006). See also Pineville Forest Homeowners Ass\u2019n v. Portrait Homes Constr. Co., 175 N.C. App. 380, 387, 623 S.E.2d 620, 625 (2006) (reversing order denying motion to compel arbitration and remanding for \u201ca new order containing findings which sustain its determination regarding the validity and applicability of the arbitration provisions\u201d); Ellis-Don Constr., 169 N.C. App. at 635, 610 S.E.2d at 297 (reversing and remanding because \u201c [t]he order appealed from contained neither factual findings that allow us to review the trial court\u2019s ruling, nor a determination whether an arbitration agreement exists between the parties\u201d); Barnhouse v. Am. Express Fin. Advisors, Inc., 151 N.C. App. 507, 509, 566 S.E.2d 130, 132 (2002) (\u201cIn the instant case, there is no indication that the trial court made any determination regarding the existence of an arbitration agreement between the parties before denying defendants\u2019 motion to stay proceedings. The order denying defendants\u2019 motion to stay proceedings does not state upon what basis the court made its decision, and as such, this Court cannot properly review whether or not the court correctly denied defendants\u2019 motion.\u201d).\nIn this case, the trial court\u2019s order denying defendants\u2019 motion to compel arbitration stated in its entirety:\nTHIS MATTER came on for hearing before the undersigned Superior Court Judge at the September 18, 2007 Civil Session for Mecklenburg County on Defendants\u2019 Motion to Dismiss, or, in the Alternative, to Stay Proceedings and Compel Arbitration. Having considered Defendants\u2019 Motion, the affidavits submitted by Plaintiff and Defendants, the arguments of counsel for both Plaintiff and Defendants, the applicable law, the pleadings and all other matters of record, this Court is of the opinion that under the facts presented in this case, Plaintiff should not be compelled to arbitrate its dispute with the Defendants and, accordingly, Defendants\u2019 Motion should be denied.\nThis order cannot be meaningfully distinguished from the orders in the above cited cases that were reversed as insufficient.\nFirst, nothing in this order indicates that the trial court specifically decided, as it was required to do, whether the parties had a valid agreement to arbitrate. The order simply states that \u201cPlaintiff should not be compelled to arbitrate,\u201d but does not indicate whether the basis for this determination was the lack of a valid arbitration agreement.\nU.S. Trust contends that no findings of fact on this issue were necessary because there was no dispute regarding the existence of a valid arbitration agreement. According to U.S. Trust, the dispute is not whether the Form U-4 contained an arbitration agreement, but whether U.S. Trust was a party to that agreement. Far from justifying omission of findings of fact, this contention highlights the need for findings of fact.\nU.S. Trust argues on appeal that it was not bound by the arbitration agreement signed by defendants. Thus, the first step of the required analysis was squarely before the trial court, and it was required to make findings of fact \u201cregarding the existence of an arbitration agreement between the parties before denying defendants\u2019 motion to stay proceedings.\u201d Barnhouse, 151 N.C. App. at 509, 566 S.E.2d at 132 (emphasis added). See also Ellis-Don Constr., 169 N.C. App. at 635, 610 S.E.2d at 297 (requiring \u201ca determination whether an arbitration agreement exists between the parties\u201d (emphasis added)).\nIn any event, the order does not set out the rationale underlying the trial court\u2019s decision to deny defendants\u2019 motion. Nothing in the order explains what about \u201cthe facts presented\u201d persuaded the trial court that plaintiff \u201cshould not be compelled to arbitrate its dispute . ...\u201d As this Court recognized in Ellis-Don Constr., \u201c[w]hile denial of defendant\u2019s motion might have resulted from: (1) a lack of privity between the parties; (2) a lack of a binding arbitration agreement; (3) this specific dispute does not fall within the scope of any arbitration agreement; or, (4) any other reason, we are unable to determine the basis for the trial court\u2019s judgment.\u201d 169 N.C. App. at 635, 610 S.E.2d at 296.\nThis case presents an even greater number of possible bases for the trial court\u2019s decision. U.S. Trust itself has presented a number of arguments \u2014 both based on the facts and the law \u2014 in support of the trial court\u2019s order, but this Court has no way of knowing which, if any, of those arguments were persuasive to the trial court, or whether it relied upon some other basis that might or might not be sustainable on appeal. See also Steffes, 177 N.C. App. at 805, 629 S.E.2d at 894 (reversing and remanding because \u201c[t]he trial court\u2019s denial may have resulted from a number of reasons\u201d); Barnhouse, 151 N.C. App. at 509, 566 S.E.2d at 132 (noting that although it was possible to infer from order that trial court found no arbitration agreement existed, \u201cother possibilities [were] equally likely\u201d for denial of motion, including equitable estoppel and procedural grounds).\nUnder these circumstances, we are required to remand for entry of a new order performing the two-step analysis required by Ellis-Don and including the findings of fact necessary to resolve defendants\u2019 motion. As this Court stated in Pineville Forest Homeowners Ass\u2019n, 175 N.C. App. at 387, 623 S.E.2d at 625, because this case cannot be distinguished from Ellis-Don and \u201cbecause that decision as well as Bamhouse are binding upon us, see In the Matter of Appeal from Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989) (\u2018Where a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court.\u2019),\u201d we must reverse the order and remand to the trial court for \u201cfindings which sustain its determination regarding the validity and applicability of the arbitration provisions.\u201d\nOn remand, the trial court should also determine first whether the Federal Arbitration Act or North Carolina law is applicable. This Court explained in Hobbs Staffing Servs., Inc. v. Lumbermens Mut. Cas. Co., 168 N.C. App. 223, 226, 606 S.E.2d 708, 711 (2005), that the question whether the Federal Arbitration Act or the North Carolina Uniform Arbitration Act applies \u201cis a question of fact, which an appellate court should not initially decide.\u201d Therefore, as in Hobbs, \u201c[t]his question should be determined by the trial court upon remand.\u201d Id. at 227, 606 S.E.2d at 711. Because of our resolution of this appeal, we do not address defendants\u2019 remaining arguments.\nReversed and remanded.\nPanel Consisting of:\nJudges ROBERT C. HUNTER, ELMORE and GEER.\n. Although Stanford Group Company was originally named as a defendant, plaintiff voluntarily dismissed the company as a party on 21 November 2007.", "type": "majority", "author": "PER CURIAM." } ], "attorneys": [ "McGuireWoods LLP, by Irving M. Brenner, John G. McDonald, and Makila Sands Scruggs, for plaintiff-appellee.", "James, McElroy & Diehl, P.A., by John R. Buric and Preston O. Odom, III, f\u00f3r defendants-appellants." ], "corrections": "", "head_matter": "UNITED STATES TRUST COMPANY, N.A., Plaintiff v. STANFORD GROUP COMPANY, JOHN R. RICH, D. KENNETH DIMOCK, GLENDA R. BURKETT, ANTHONY P. MONFORTON, MARTHA JO BROOKS, WILLIAM W. WATSON,VIRGINIA B. SASLOW, SANDRA G. BOES, SUZANNE C. WILCOX, KIM M. VAN ZEE, and KIMBERLY LEMONS, Defendants\nNo. COA08-179\n(Filed 18 August 2009)\n1. Appeal and Error\u2014 denial of motion to compel arbitration \u2014 interlocutory\u2014substantial right affected\nThe trial court\u2019s denial of a motion to compel arbitration is an interlocutory order but is immediately appealable because a substantial right would otherwise be lost.\n2. Arbitration and Mediation\u2014 denial of motion to compel \u2014 remanded\u2014findings insufficient\nAn order denying a motion to dismiss or to compel arbitration was remanded where the trial court did not specifically decide whether the parties had a valid agreement to arbitrate, did not set out the rationale underlying the denial, and there were several possible bases for the trial court\u2019s decision. Furthermore, the trial court should also determine on remand whether the Federal Arbitration Act or North Carolina law is applicable.\nAppeal by defendants from order entered 20 September 2007 by Judge Richard D. Boner in Mecklenburg County Superior Court. Heard in the Court of Appeals 23 September 2008.\nMcGuireWoods LLP, by Irving M. Brenner, John G. McDonald, and Makila Sands Scruggs, for plaintiff-appellee.\nJames, McElroy & Diehl, P.A., by John R. Buric and Preston O. Odom, III, f\u00f3r defendants-appellants." }, "file_name": "0287-01", "first_page_order": 313, "last_page_order": 319 }