Sterling Financial Investment Group, Inc. v. Hammer

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
December 16, 2004
No. 03-15745
THOMAS K. KAHN
________________________ CLERK

D. C. Docket No. 03-80395-CV-DMM

STERLING FINANCIAL INVESTMENT GROUP, INC.,

Plaintiff-Appellee,

versus

BERNARD D. HAMMER,

Defendant-Appellant.

________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________

(December 16, 2004)

Before BARKETT, HULL and COX, Circuit Judges.

COX, Circuit Judge:
 I. INTRODUCTION

Bernard D. Hammer appeals an order entered by the district court in the

Southern District of Florida granting Sterling Financial Investment Group Inc.’s

motion to stay arbitration in Houston, Texas and compel arbitration in Boca Raton,

Florida. We conclude that the district court properly exercised jurisdiction in this

case pursuant to section 4 of the Federal Arbitration Act, 9 U.S.C. § 4 (2004).

Accordingly, we affirm.

II. BACKGROUND & PROCEDURAL HISTORY

Bernard Hammer, a stockbroker at Morgan Stanley/Dean Witter in Beaumont,

Texas, was approached by the Sterling Financial Investment Group, Inc. about

possible employment at Sterling’s headquarters in Boca Raton, Florida. After several

months of negotiations, Hammer accepted Sterling’s offer to work as their nationwide

supervisor for recruitment of brokers. He resigned his position at Morgan

Stanley/Dean Witter in Texas, relocated to Florida, and began working for Sterling

in September of 2001.

Hammer entered into two agreements with Sterling in October of 2001, an

Employment Agreement and a Representative Agreement. The Employment

Agreement states that Hammer is an “at will” employee of Sterling. And, the

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Employment Agreement contains an arbitration agreement with a forum selection

clause, which provides that:

The parties agree that any claim or controversy concerning the terms,
conditions or application of this Agreement shall be subject to
arbitration pursuant to the National Association of Securities Dealers,
Inc. in Boca Raton, Florida.

(R.-1 at Ex. A, ¶ 11.) The Employment Agreement further provides that it “shall be

construed, and the validity, performance and enhancement thereof, shall be governed

by the laws of the State of Florida.” (Id. at ¶ 5.) Similarly, the Representative

Agreement contains an arbitration agreement with a forum selection clause, which

provides that:

Any disputes between the parties hereto shall be submitted to binding
arbitration before the National Association of Securities Dealers with
venue being in the State of Florida.

(R.-1 at Ex. B, ¶ 14.) The Representative Agreement also states that it “shall be

construed in accordance with and shall be governed by the laws of the State of

Florida.” (Id. at ¶ 13.)

Not long after beginning his new job, Hammer was fired. Sterling claims that

Hammer’s job performance was unsatisfactory. Hammer claims that he was not

provided with sufficient support staff, office or telephone arrangements, and that

there was confusion at Sterling about his position and his responsibilities. Hammer

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returned to Texas and, in February 2003, commenced arbitration proceedings against

the company. Hammer filed a Statement of Claim against Sterling with the National

Association of Securities Dealers (NASD), asserting claims for fraudulent

inducement and quasi contract, breach of contract and promissory estoppel, and

“other claims under statutory and common law.” (R.-1 at Ex. C.) Hammer asked that

the arbitration be assigned to a panel in Houston, Texas. Sterling objected to the

Texas venue and asked that the NASD transfer venue to Florida. The NASD denied

Sterling’s request, and referred the motion to an arbitration panel in Houston, Texas.

Sterling filed a motion in the United States District Court for the Southern

District of Florida, seeking to stay the Texas arbitration and compel arbitration in

Florida. The district court granted Sterling’s motion, and Hammer appeals.

III. ISSUE ON APPEAL AND STANDARD OF REVIEW

We must determine whether the district court properly enjoined arbitration in

Houston, Texas and compelled arbitration in Boca Raton, Florida. We review the

district court’s decision de novo. Employers Ins. of Wausau v. Bright Metal

Specialties, Inc., 251 F.3d 1316, 1321 (11th Cir. 2001).

IV. CONTENTIONS OF THE PARTIES

Hammer contends that the district court improperly enjoined the arbitration and

improperly reversed the venue determination made in arbitration. According to

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Hammer, since both parties agree that arbitration is appropriate, all decisions --

including a decision about venue -- should be made by the arbitrators. Hammer’s

position is bolstered by rule 10315 of the NASD’s Code of Arbitration Procedure,

which states that “[t]he Director shall determine the time and place of the first

meeting of the arbitration panel and the parties.” NASD Code of Arbitration

Procedure § 10315 (2003). The rule further provides that “[t]he arbitrators shall

determine the time and place for all subsequent meetings. . . .” Id. Hammer asserts

that it is inappropriate for federal courts to micro-manage the vast array of issues

which arise in arbitration proceedings.

Sterling contends that the district court had the authority under the Federal

Arbitration Act to enforce the terms of the Employment and Representative

agreements. According to Sterling, the mere fact that both parties consent to

arbitration does not divest a federal court of jurisdiction to enforce forum selection

and choice of law clauses in the parties’ agreements.

V. DISCUSSION

We begin our discussion with section 4 of the Federal Arbitration Act, which

provides that:

A party aggrieved by the alleged failure, neglect, or refusal of another
to arbitrate under a written agreement for arbitration may petition any
United States district court . . . for an order directing that such

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 arbitration proceed in the manner provided for in such agreement. .
. . The court shall hear the parties, and upon being satisfied that the
making of the agreement for arbitration or the failure to comply
therewith is not in issue, the court shall make an order directing the
parties to proceed to arbitration in accordance with the terms of the
agreement. The hearing and proceedings, under such agreement, shall
be within the district in which the petition for an order directing such
arbitration is filed.

9 U.S.C. § 4 (emphasis added). Despite Hammer’s assertion that a federal court may

only review an arbitration proceeding after it has concluded, the plain language of the

statute indicates otherwise. We therefore hold that a federal district court, pursuant

to 9 U.S.C. § 4, has jurisdiction to enforce a forum selection clause in a valid

arbitration agreement that has been disregarded by the arbitrators.

The Second Circuit reached the same conclusion in Bear, Stearns & Co. v.

Bennett, 938 F.2d 31 (2d Cir. 1991). In Bennett, a Florida resident filed a demand to

have his dispute with Bear Stearns arbitrated in Naples, Florida. Bear Stearns, relying

upon the parties’ Customer Agreement, filed a petition in the Southern District of

New York to compel arbitration in New York City. The Second Circuit rejected

Bennett’s argument that the “situs of suit” should be determined by the arbitrators

rather than by the district court. Id. at 32. The court found that the parties had agreed

on New York as the venue for arbitration, and “[w]here there is a valid agreement for

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arbitration, Congress has directed the district courts to order that arbitration proceed

‘in accordance with the terms of the agreement.’” Id. (citing 9 U.S.C. § 4).

Hammer, however, asserts that there was no valid agreement for arbitration in

his case as he was fraudulently induced to work at Sterling. Hammer’s fraudulent

inducement claim is based on alleged misrepresentations made while Hammer was

still in Texas, prior to his move to Florida. Thus, according to Hammer, we should

apply the principle from Texas law that one cannot assert a venue clause from a

contract in a case involving improper inducement to enter into that contract. Busse

v. Pac, Cattle Feeding Fund, 896 S.W. 2d 807, 813 (Tex. App. 1995) (“Where the

wrongs arise from misrepresentations inducing a party to execute the contract and not

from breach of the contract, remedies and limitations specified by the contract do not

apply.”).

While Hammer’s Statement of Claim does contain a count for fraudulent

inducement, Hammer never argued in the district court that his claim for fraudulent

inducement rendered the forum selection clauses or the choice of law clauses in the

agreements invalid. The law in our circuit is clear that “arguments not presented in

the district court will not be considered for the first time on appeal.” Mills v.

Singletary, 63 F.3d 999, 1008, n. 11 (11th Cir. 1995) (citing Lancaster v. Newsome,

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880 F.2d 362, 371 (11th Cir. 1989)). We therefore decline to consider Hammer’s new

argument.

VI. CONCLUSION

The district court properly exercised its jurisdiction pursuant to section 4 of the

Federal Arbitration Act in staying arbitration in Houston, Texas and compelling

arbitration in Boca Raton, Florida. The order of the district court is, therefore,

affirmed.

AFFIRMED.

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