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IN THE UNITED STATES COURT OF APPEALSFOR THE ELEVENTH CIRCUIT
Case No. 13-12665-FF
MICCOSUKEE TRIBE OF INDIANS OF FLORIDA,
Plaintiff-Appellant,
v.
MORGAN STANLEY SMITH BARNEY, ET AL.,
Defendants-Appellees,
On Appeal from the United States District Courtfor the Southern District of Florida
Case No. 12-cv-22439-MGC
MICCOSUKEE TRIBE OF INDIANS OF FLORIDA'SAPPELLANT BRIEF
Bernardo Roman III,Tribal Attorney for the Miccosukee TribeP.O. Box 440021, Tamiami StationMiami, Florida 33144Tel.: (305) 894-5214Fax: (305) [email protected]
Yesenia Rey, Esq.Yinet Pino, Esq.1250 SW 27th AvenueSuite 506Miami, Florida 33135Tel: (305) 643-7993Fax: (305) [email protected]@bromanlaw.com
Counsels for Appellant,Miccosukee Tribe ofIndians ofFlorida
Case: 13-12665 Date Filed: 07/22/2013 Page: 1 of 32
CERTIFICATE OF INTERESTED PERSONS AND CORPORATEDISCLOSURE STATEMENT
As Appellant, the Miccosukee Tribe of Indians of Florida submit this list,
which includes the names of the trial judge and all attorneys, persons, associations
of persons, firms, partnerships, or corporations that have an interest in the outcome
of this review:
The Judge that has an interest in this appeal is the Honorable Marcia G. Cooke.
The parties to this appeal are:
Miccosukee Tribe of Indians of Florida
Morgan Stanley Smith Barney
Guy Lewis, Esq.
Michael Tein, Esq.
Lewis Tein P.L.
Dexter Lehtinen, Esq.
Billy Cypress
Miguel Hernandez
Julio Martinez
The following persons have an interest III this appeal or III related pending
litigation:
Avila, Manuel
Bruce S. Rogow, P.A.
C- 1 of3
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Calli, Paul
Campion, Tara
Carlton Fields
Cooke, The Honorable Marcia G.
Cypress, Billy
Goldsmith, Steven
Hernandez, Miguel
Koltun & Lazar
Lazar, Scott Alan
Lehtinen, Dexter
Lewis, Guy
Lewis Tein P.L.
Manuel A. Avila, Esq. & Associates, P.A.
Martinez, Julio
McAliley, United States Magistrate Judge Chris
Miccosukee Tribe of Indians of Florida
Pino, Yinet
Rey, Yesenia
Rogow, Bruce
Roman, Bernardo
C- 2 of3
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Saunooke Law Firm
Saunooke, Robert O.
Short, Charles
Strader, Yolanda
Tein, Michael
Tew Cardenas
West, Bryan T.
There are no publicly traded companies with an interest in the outcome of
this matter. Furthermore, Appellant understands the continuing obligation to notify
the Court immediately of any additions, deletions, corrections or other changes that
should be made to its certificate.
Respectfully submitted on this 23rd day of July of 2013.
By: sf Bernardo Roman IIIBernardo Roman III (FI Bar No.:2739)Tribal AttorneyMiccosukee Tribe of Indians of FloridaLegal DepartmentP.O. Box 440021, Tamiami StationMiami, FL 33144Telephone: (305) 894-5214Facsimile: (305) 894-5212
C- 3 of3
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STATEMENT REGARDING ORAL ARGUMENT
Appellant, the Miccosukee Tribe of Indians of Florida (hereinafter, "the
Miccosukee Tribe") respectfully requests oral arguments because it may assist the
Court in the adjudication of the highly important issues presented in this case.
1
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TABLE OF CONTENTS
CERTIFICATE OF INTERESTED PERSONS AND CORPORATEDISCLOSURE STATEMENT C-l
STATEMENT REGARDING ORAL ARGUMENT .i
TABLE OF CITATIONS iii
STATEMENT OF JURISDICTION 1
STATEMENT OF THE ISSUES 2
STATEMENT OF THE CASE 3
STATEMENT OF THE FACTS 5
SUMMARY OF THE ARGUMENT 9
ARGUMENT 11
I. THE DISTRICT COURT ERRED IN UPHOLDING THE VALIDITY OFTHE ARBITRATION AGREEMENT BETWEEN THE MICCOSUKEE TRIBEAND MORGAN STANLEY 11II. THE DISTRICT COURT ERRED IN FINDING THAT BILLY CYPRESSHAD THE APPARENT AUTHORITY TO BIND THE MICCOSUKEE TRIBETO AN ARBITRATION CLAUSE 14III. THE DISTRICT COURT ABUSED ITS DISCRETION IN GRANTINGTHE MOTION TO DISMISS WITHOUT AN EVIDENTIARY HEARING 16CONCLUSION 17
CERTIFICATE OF COMPLIANCE 19
CERTIFICATE OF SERVICE 20
11
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TABLE OF CITATIONS
Am. Lease Plans, Inc. v. Silver Sand Co. ofLeesburg, Inc.,637 F. 2d 311 (5th Cir. 1981) 14
Bess v. Check Express,294 F. 3d 1298, 1306 (I lth Cir. 2002) 9, 11
Bonner v. City ofPrichard,661 F.2d 1206, 1209 (l l th Cir. 1981) 14
Cancanon v. Smith Barney, Harris, Upham & Co.,805 F.2d 998 (l lth Cir, 1986) 13, 16
Chanel Inc. v. Italian Activewear ofFla.,931 F. 2d 1472 (11th Cir. 1991) 11
Citibank, N.A. v. Data Lease Financial Corp.,828 F. 2d 686 (lIth Cir. 1987) .16
Lummus Co. v. Commonwealth Oil Refining Co.,280 F.2d 915(lst Cir.1960) 13
Montes v. Shearson Lehman Bros., Inc.,128 F. 3d 1456 (Ll th Cir. 1997) 9
Otsego Aviation Servo V. Glens Falls Ins. Co.,102 N.Y.S. 2d 344,349 (N.Y.A.D. 1951) 10, 12
Prima Paint Corp. v. Flood & Conklin Mfg. Co.,388 U.S. 395 (l967) 9, 16
Solymar Investments, Ltd. v. Banco Santander S.A.,672 F. 3d 981 (11th Cir. 2012) 10, 11
Sunseri v. Macro Cellular Partners,412 F. 3d 1247 (11th Cir. 2005) 16
us. V. Gregory,730 F.2d 692 (11th Cir.1984) 14
III
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us. v. Hamker,455 F.3d 1316 (I lth Cir. 2006) 14
us. v. Puche,350 F. 3d 1137(lIth Cir. 2003) 12
Williamson v. Tucker,645 F.2d 404 (5th Cir.1981) 17
World Rentals & Sales, LLC v. Volvo Constr. Equip. Rents, Inc.,517 F.3d 1240,1244 (Llth Cir. 2008) 11
Statutes
9 U.S.C. § 2 .,9, 11
IV
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STATEMENT OF JURISDICTION
The Court has jurisdiction of the appeal of the District Court's May 17,2013
Order pursuant to 28 U.S.C. § 1291.
1
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STATEMENT OF THE ISSUES
1. Whether the District Court erred in upholding the validity of the arbitration
agreement between the Miccosukee Tribe and Morgan Stanley Smith
Barney?
2. Whether the District Court erred in finding that Billy Cypress had the
apparent authority to bind the Miccosukee Tribe to an arbitration clause?
3. Whether the District Court erred in granting Morgan Stanley Smith Barney's
Motion to Compel Arbitration and Dismiss without holding an evidentiary
hearing?
2
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STATEMENT OF THE CASE
On July 1, 2012, Appellant, the Miccosukee Tribe of Indians of Florida
(hereinafter, the "Miccosukee Tribe"), filed its federal Complaint against the
Defendants: Morgan Stanley Smith Barney ("Morgan Stanley"), Guy Lewis
("Lewis"), Michael Tein ("Tein"), Lewis Tein PL ("Lewis Tein"), Miguel
Hernandez ("Hernandez"), Julio Martinez ("Martinez"), Dexter Lehtinen
("Lehtinen") and Billy Cypress ("Cypress"). D.E. No.1. The Complaint alleged
federal civil RICO, conspiracy to commit RICO, embezzlement, civil theft, fraud,
aiding and abetting fraud, and breach of fiduciary duty. On July 30, 2012, the
Miccosukee Tribe filed an Amended Complaint as of right which added a count for
Florida civil RICO, fraudulent misrepresentation and a request for equitable and
injunctive relief. D.E. No. 13.
On August 6, 2012, Defendant Lewis Tein filed a Motion to Require
Plaintiff to File a RICO Case Statement. D.E. No. 14. On August 20,2012, in the
Miccosukee Tribe's Response to Defendant Lewis Teiri's Motion to Require
Plaintiff to File a RICO Case Statement, it asserted that the Amended Complaint
was sufficient. However, the Miccosukee Tribe alternatively requested that it be
granted leave to amend in the event that the court found the allegations
insufficient. D.E. No. 15.
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On September 24, 2012, Appellee, Morgan Stanley Smith Barney filed its
Motion to Compel Arbitration and Dismiss or Stay Action Based Upon Agreement
to Arbitrate. D.E. No. 39. its Motion, Morgan Stanley alleged that the Client
Agreement, signed by Defendant Cypress, former Chairman of the Miccosukee
Tribe, included an arbitration agreement which is enforceable against the
Miccosukee Tribe.
On October 10, 2012, the court issued an Order granting in part and denying
in part Defendant Lewis Teins Motion to Require Plaintiff to File a RICO Case
Statement which afforded the Miccosukee Tribe thirty (30) days to amend its First
Complaint. D.E. No. 55.
On October 11,2012, the Miccosukee Tribe filed its Response in Opposition
to Morgan Stanley Smith Barney's Motion to Compel Arbitration and Dismiss or
Stay Action Based Upon Agreement to Arbitrate. D.E. No. 61. On October 26,
2012, Morgan Stanley filed its Reply in Support of its Motion to Compel
Arbitration. D.E. No. 72.
On November 9, 2012, the Miccosukee Tribe filed its Second Amended
Complaint which added counts of Florida RICO and conspiracy to violate Florida
RICO, along with additional factual details in support of the other enumerated
counts. D.E. No. 75.
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On November 19, 2012, in light of the filing of the Miccosukee Tribe's
Second Amended Complaint, Morgan Stanley filed its Notice of Adoption of the
Motion to Compel Arbitration As Applied to the Second Amended Complaint.
D.E. No. 80.
On May 15,2013, Morgan Stanley filed a Motion to Set Oral Argument on
its Motion to Compel Arbitration, which the Miccosukee Tribe did not oppose or
object. D.E. No. 226. On May 17,2013, the court issued its Order granting Morgan
Stanley's Motion to Compel Arbitration and dismissing the Miccosukee Tribe's
Second Amended Complaint as to Morgan Stanley. D.E. No. 227.
The Tribe filed a timely Notice of Appeal of the Order granting Morgan
Stanley's Motion to Compel Arbitration on June 13,2013. D.E. No. 240.
STATEMENT OF FACTS
This case stems from a well-orchestrated fraud perpetrated against the
Miccosukee Tribe by all named Defendants in the lawsuit below. From 2005
through and including January 2010, Financial Advisor Alexander Fernandez and
Morgan Stanley knew that Defendant Cypress was improperly accessing the
Morgan Stanley Investment Account belonging to the Miccosukee Tribe and
converting millions of dollars from this Investment Account for his personal use
and benefit, as well as the personal use and benefit of third parties.
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The scheme created, perpetrated and concealed by Defendant Cypress,
Defendant Martinez, Defendant Hernandez, Defendant Lewis, Defendant Tein,
Defendant Lewis Tein, P.L., and Defendant Morgan Stanley entailed withdrawing
several thousand dollars daily from the Miccosukee Tribe's Morgan Stanley
Financial Management Account ("FMA") Cards and American Express charge
cards to indulge in personal expenditures such as gambling, purchasing expensive
homes, and other real estate, exotic vacations, and a flotilla of vehicles.
On June 9, 2008, Defendant Cypress, Chairman of the Miccosukee Tribe at
that time, signed an Account Application for Morgan Stanley, on behalf of the
Miccosukee Tribe, which included an arbitration agreement clause. During his
tenure as Chairman of the Miccosukee Tribe, Defendant Cypress misappropriated
millions of dollars from the Miccosukee Tribe for his personal use. In order to
further his illegal, wrongful, and fraudulent scheme to steal and embezzle millions
of dollars from the Miccosukee Tribe, Defendant Billy Cypress, without
knowledge and consent from the Miccosukee General Council, as required under
the Miccosukee Constitution and By-Laws, signed an arbitration agreement which
purports to deny the Miccosukee Tribe's access to court. Defendant Cypress was
not authorized to sign such arbitration agreement and to bind the Miccosukee Tribe
to such arbitration agreement clause.
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The Miccosukee Tribe is a sovereign Indian Tribe and will generally not
enter into binding arbitration agreements, much less a boilerplate contract which is
not customized to fit the needs of the Miccosukee Tribe. Arbitration agreements
require a waiver of the Miccosukee Tribe's sovereign immunity, which goes
against its practices and policies. Additionally, while the Miccosukee Tribe agreed
to a contract with Morgan Stanley for financial services, the Miccosukee Tribe
never agreed to be bound by an arbitration clause. Morgan Stanley assisted and
failed to disclose to the Miccosukee Tribe the illegal transactions by Defendant
Cypress. Morgan Stanley actually enabled and facilitated such illegal transactions
by Defendant Cypress by circumventing established account management
procedures to substantially assist in the fraudulent scheme in exchange for
commissions and fees that resulted from its "administration" of the Investment
Account.
Appellee, Morgan Stanley and Financial Advisor Alexander Fernandez,
performed atypical banking transactions, some of which were in direct violation or
exceptions to established safeguards, policies, and standard investment and
banking practices established by Morgan Stanley and federal regulations under the
Bank Secrecy Act. Specifically: Defendant Cypress's unauthorized decision to
override the three (3) signatures required for withdrawals of funds from the
Morgan Stanley Investment Account was accepted; daily withdrawal of funds that
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were well above the standard practices permitted of daily ATM limits were
authorized; automatic funds transfers between the Morgan Stanley Investment
Account and other accounts of the Miccosukee Tribe in direct contradiction to
Defendant Morgan Stanley's standard financial practices were established and
authorized; and, the suspicious withdrawals were never brought to the attention of
the Miccosukee Tribe.
Morgan Stanley's actions, as well as inactions, contributed in significant part
to the depletion of twenty six million dollars ($26,000,000) belonging to the
Miccosukee Tribe, which were to be used for a tribal purpose. Defendants Cypress,
with the assistance of Morgan Stanley and the other named Defendants, devised a
scheme, which involved key critical players. The alliance of these Defendants with
specialized financial knowledge and expertise not shared by others, allowed them
to design, present, and perpetuate a sophisticated fraudulent financial scheme,
under which they presented misleading, untrue, and manipulated financial
information to the Business Council and obtained approval of improper financial
transactions under false pretenses. This sophisticated financial scheme worked well
until discovered, because the participants were members of the Enterprise and
occupied positions of trust, which allowed them to create, approve, and disguise
these improper and fraudulent expenditures.
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The scheme was not discovered until after the Miccosukee Tribe's current
Chairman, Colley Billie, took office and began investigating the practices of the
former administration and its attorneys. Once the fraudulent transactions were
discovered, the Miccosukee General Council approved the filing of the underlying
lawsuit. After the filing of the lawsuit, in an effort to avoid liability for their
actions, Morgan Stanley moved to compel arbitration based on an arbitration
agreement that was signed by Defendant Cypress in 2008. The District Court
granted Morgan Stanley's Motion and that Order is the subject of this appeal.
SUMMARY OF THE ARGUMENT
A district court order compelling arbitration is to be reviewed de novo.
Montes v. Shearson Lehman Bros., Inc., 128 F. 3d 1456, 1458 n.2 (lIth Cir. 1997).
While the Federal Arbitration Act (hereinafter, "FAA") establishes a liberal policy
in favor of arbitration contracts, if there exist grounds in law or equity, an
arbitration contract may be revoked. See 9 U.S.C. § 2. "The FAA allows state law
to invalidate an arbitration agreement, provided the law at issue governs contracts
generally and not arbitration agreements specifically." Bess v. Check Express, 294
F. 3d 1298, 1306 (lIth Cir. 2002).
The District Court incorrectly concluded that the validity and enforceability
of the arbitration clause was not at issue. In fact, the Miccosukee Tribe directly
disputed the validity and enforceability of the arbitration agreement. The court is
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the proper forum to evaluate a challenge to the validity of an arbitration clause.
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967).
There is a two step process to determine the arbitrability of any claim arising under
a contract with an arbitration agreement: (1) determine whether there are any
deficiencies in the formation of the contract; and (2) determine whether any
remaining challenges are as to the entire contract or only the arbitration clause.
Solymar Inv., Ltd. v. Banco Santander S.A., 672 F. 3d 981,990 (1Ith Cir. 2012).
Furthermore, the arbitration agreement signed by Defendant Cypress IS
governed by the laws of the State of New York. Because the FAA allows state
laws to invalidate an arbitration agreement, then the arbitration agreement at issue
in this case may be invalidated by any available contractual defenses under New
York law. Because this arbitration agreement was procured by Morgan Stanley and
Defendant Cypress in furtherance of their conspiracy against the Miccosukee
Tribe, Defendant Cypress was acting for interests adverse to the Miccosukee Tribe
and the agreement is void. See Otsego Aviation Servo V. Glens Falls Ins. Co., 102
N.Y.S. 2d 344, 349 (N.Y.A.D. 1951).
Additionally, the District Court granted Morgan Stanley's Motion to Compel
Arbitration based on a finding that Defendant Cypress had "apparent authority" to
bind the Miccosukee Tribe to the arbitration agreement. The Miccosukee Tribe
should not be bound by Defendant Cypress's signing of this arbitration agreement
10
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because Morgan Stanley and its agents knew that Defendant Cypress was
bypassing the safeguards which had been instituted to protect Tribal interests and
funds. Morgan Stanley's willful blindness is sufficient to bar them from now
claiming that Defendant Cypress had apparent authority. See Chanel Inc. v. Italian
Activewear ofFla., 931 F. 2d 1472, 1476 (llth Cir. 1991).
ARGUMENT
I. THE ARBITRATION AGREEMENT BETWEEN THEMICCOSUKEE TRIBE AND MORGAN STANLEY IS VOID ANDNOT BINDING ON THE MICCOSUKEE TRIBE
The Miccosukee Tribe disputes the validity and enforceability of the
arbitration agreement contained within Morgan Stanley's client agreement. While
the FAA strongly favors the enforceability of arbitration agreements, "arbitration is
a matter or consent, not coercion." See World Rentals & Sales, LLC v. Volvo
Constr. Equip. Rents, Inc., 517 F.3d 1240,1244 (llth Cir. 2008). Therefore, if
there is any reason grounded in law or equity, an arbitration agreement may be
revoked. See 9 U.S.C. § 2. In the instant case, there are both deficiencies in the
legal aspects of the arbitration agreement and the equity aspects. The arbitration
agreement at issue in this case is governed by New York law, therefore New York
state law on contracts may be used to invalidate the arbitration agreement. See
Bess, 294 F. 3d at 1306.
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The first step to determine whether a claim is arbitrable is to determine
whether there are any deficiencies as to the formation of the contract. Solymar
Investments, 672 F. 3d at 990. Under New York law, an "agent cannot properly
possess any individual interests or represent interests adverse to those of his
principal in transactions which involve the subject matter of the agency." Otsego
Aviation, 102 N.Y.S. 2d at 349. Defendant Cypress was engaged in a scheme to
defraud the Miccosukee Tribe, improperly diverting millions of dollars in tribal
funds for his personal use. Morgan Stanley's participation in this fraudulent
scheme was instrumental toward the perpetuation of the conspiracy. Morgan
Stanley, as a financial institution, has the means to detect suspicious financial
transactions. For example, Defendant Cypress's several daily withdrawals of less
than $10,000 should have been sufficient cause for Morgan Stanley to alert the
Miccosukee Tribe of the irregular transactions. See Us. v. Puche, 350 F. 3d 1137,
1151 (11th Cir. 2003)(Defendants structured deposits in amounts less than $10,000
in order to evade currency transaction reporting.). Morgan Stanley allowed all of
Defendant Cypress's improper maneuvers, although as a sophisticated institution it
knew that the transactions were illegal, in order to continue earning the
commission for managing the Miccosukee Tribe's accounts.
The Miccosukee Tribe cannot and should not be bound by an arbitration
agreement which was entered into by two co-conspirators to the detriment of the
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Miccosukee Tribe. While it is true that in some instances, the agent's knowledge is
imputed to the principal and that effectively serves as a waiver of a defense to the
principal, the same rule does not apply where there is a "fraud and an acquiescence
in the fraud by the agent." See Otsego Aviation, 102 N.Y.S. 2d at 348. In the
present case, Morgan Stanley and Defendant Cypress were engaged in an active
conspiracy against the Miccosukee Tribe and the arbitration agreement provided a
layer of protection to Morgan Stanley as an incentive to continue participating in
the fraud. Therefore, since the Miccosukee Tribe did not have actual knowledge of
the arbitration clause in the Morgan Stanley client agreement, then the arbitration
agreement may not be enforced against the Miccosukee Tribe. The Miccosukee
Tribe did not waive its due process rights to a jury trial and Defendant Cypress's
knowledge of the arbitration agreement may not be properly imputed to the
Miccosukee Tribe.
"[T]he mere execution of a document ... does not negate a factual assertion
that such signature was not intended to represent a contractual undertaking."
Cancanon v. Smith Barney, Harris, Upham & Co., 805 F.2d 998, 1000 (11th Cir,
1986)(quoting Lummus Co. v. Commonwealth Oil Refining Co., 280 F.2d 915, 923
n. 8 (1st Cir.1960)). Therefore, the fact that Defendant Cypress signed the client
agreement containing the arbitration clause allegedly on behalf of the Miccosukee
Tribe, does not foreclose the fact that the Miccosukee Tribe did not consent to
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Defendant Cypress binding the Miccosukee Tribe to arbitration. Whether
Defendant Cypress was acting within his authority to bind the Miccosukee Tribe
when he signed the arbitration agreement is also not subject to resolution by
arbitration, but must be determined by the court. Id. at nA. Therefore, the District
Court erred in granting the Motion to Compel Arbitration without considering the
attacks on the validity of the arbitration agreement and the Miccosukee Tribe's
lack of assent to the arbitration agreement, which are squarely before this court to
be decided.
II. BILLY CYPRESS DID NOT HAVE THE APPARENT AUTHORITYTO BIND THE MICCOSUKEE TRIBE TO AN ARBITRATIONCLAUSE
The District Court's Order focuses on Defendant Cypress's apparent
authority to bind the Miccosukee Tribe to the arbitration agreement. The concept
of apparent authority may be applicable in situations where there is one innocent
party, who is induced to rely on the "apparent authority" of an agent in order to
enter into a contract. See Am. Lease Plans, Inc. v. Silver Sand Co. of Leesburg,
Inc., 637 F. 2d 311,314 (5th Cir. 1981)1. Those circumstances are not existent in
this case where Morgan Stanley was a co-conspirator and there is no harm to
1 In Bonner v. City of Prichard, 661 F. 2d 1206, 1209 (lIth Cir. 1981) (en bane), this circuitadopted as binding precedent all decisions of the former Fifth Circuit handed down prior toOctober 1, 1981.
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Morgan Stanley from not honoring the arbitration agreement. Defendant Morgan
Stanley is not an innocent party.
Moreover, It is clear that an agent may not authorize a fraud upon the
principal. United States v. Gregory, 730 F.2d 692, 701 (l lth Cir.1984). The
arbitration agreement was part and parcel of the fraud against the Miccosukee
Tribe because it would protect Morgan Stanley from having to defend its
fraudulent acts in court. Therefore, the doctrine of apparent authority does not bind
the Miccosukee Tribe to arbitration in this case. See Us. v. Hamker, 455 F.3d
1316, 1326 (Ll th Cir. 2006).
Additionally, while the Miccosukee Tribe agreed to a contract with Morgan
Stanley for financial services, the Miccosukee Tribe never agreed to be bound by
an arbitration clause. Defendant Morgan Stanley assisted and failed to disclose to
the Miccosukee Tribe the illegal transactions by Defendant Cypress. Defendant
Morgan Stanley actually enabled and facilitated such illegal transactions by
Defendant Cypress by circumventing established account management procedures
to substantially assist in the fraudulent scheme in exchange for commissions and
fees that resulted from its "administration" of the Investment Account.
Defendant Cypress overstepped the bounds of his authority and without the
consent of the Miccosukee Tribe signed the arbitration agreement. The arbitration
agreement was mutually beneficial to Defendant Cypress and Defendant Morgan
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Stanley and the Miccosukee Tribe should not be bound by the arbitration
agreement to arbitrate through the fraud of these Defendants. The arbitration
agreement was signed by Defendant Cypress during the course of the scheme to
defraud the Miccosukee Tribe, and was an act in furtherance of the conspiracy.
Defendant Cypress, as Chairman of the Miccosukee Tribe at that time, had
the duty to act in the best interest of the Tribe. When Defendant Cypress engaged
in acts that were directly adverse and harmful to the best interest of the
Miccosukee Tribe and its people, repeatedly stealing and embezzling money from
the Miccosukee Tribe and its people, he was acting beyond the scope of his
authority. Therefore, there was ineffective assent to the arbitration agreement by
the Miccosukee Tribe. The allegation of ineffective assent to the arbitration
agreement by the Miccosukee Tribe is not subject to resolution through the
arbitration process. See Prima Paint Corp., 388 U.S. at 403-04. Whether
Defendant Cypress was acting within his authority to bind the Miccosukee Tribe
when he signed the arbitration agreement is also not subject to resolution by
arbitration, but must be determined by this Court. Cancanon, 805 F.2d at 1000.
Morgan Stanley conspired to defraud the Miccosukee Tribe along with all
other named Defendants. The actions of Morgan Stanley extended to active
concealment of the SUSpICIOUS financial transactions. Morgan Stanley's
concealment and participation in the scheme amounted to unclean hands.
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Therefore, Morgan Stanley's unclean hands forecloses the enforcement of the
arbitration contract against the Miccosukee Tribe. See Citibank, NA. v. Data Lease
Financial Corp., 828 F. 2d 686, 699 (lIth Cir. 1987).
III. THE DISTRICT COURT ABUSED ITS DISCRETION INGRANTING THE MOTION TO DISMISS WITHOUT ANEVIDENTIARY HEARING
The court's decision to rule on a motion to dismiss without an evidentiary
hearing is reviewed for abuse of discretion. Sunseri v. Macro Cellular Partners,
412 F. 3d 1247, 1250 (lIth Cir. 2005). The Miccosukee Tribe did not request a
hearing in this matter, however, Morgan Stanley did. Morgan Stanley filed a
Motion to Set Oral Argument on the Motion to Compel Arbitration and to Dismiss
on May 15,2013. D.E. No. 226. The Miccosukee Tribe did not oppose the motion
because it agreed that the best manner in resolving this motion was allowing the
District Court to hear argument, where the Miccosukee Tribe could have presented
evidence to refute Morgan Stanley's assertions of Defendant Cypress's apparent
authority and many of the issues could have been further clarified.
"Where resolution of the motion to dismiss turns on credibility, however, the
proper exercise of discretion may be to hold an evidentiary hearing." See
Williamson v. Tucker, 645 F.2d 404, 414 (5th Cir.1981). Resolution of Morgan
Stanley's motion was based on the District Court believing that Morgan Stanley
had a good faith basis to believe Defendant Cypress had the authority to bind the
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Miccosukee Tribe. It would have been appropriate to hold a hearing on this matter
due to the complexity of the issues. Therefore, it was abuse of discretion for the
District Court to decide Morgan Stanley's Motion without holding oral argument
or an evidentiary hearing.
CONCLUSION
The Miccosukee Tribe respectfully requests this Honorable Court to quash
the District Court's Order granting Morgan Stanley's Motion to Compel
Arbitration and dismissing the Miccosukee Tribe's Second Amended Complaint as
to Morgan Stanley. D.E. No. 227.
Respectfully submitted on this 22nd day of July, 2013.
IslBernardo Roman IIIBernardo Roman III, EsquireFla. Bar No. 0002739Tribal Attorney, Miccosukee Tribe ofIndians ofFloridaP.O. Box 440021, Tamiami StationMiami, Florida 33144Tel: (305) 894-5214Fax: (305) 894-5212E-mail: [email protected]
IslYesenia ReyYesenia Rey, EsquireFla. Bar No. 89577Attorney for the Miccosukee Tribe ofIndians of Florida1250 SW 27th Avenue, Suite 506Miami, Florida 33135Telephone: (305) 643-7993Facsimile: (305) 643-7995
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19
E-mail: [email protected]
/s/Yinet PinoYinet Pino, EsquireFla. Bar No. 085272Attorney for the Miccosukee Tribe ofIndians of Florida1250 SW 27th Avenue, Suite 506Miami, Florida 33135Telephone: (305) 643-7993Facsimile: (305) 643-7995E-mail: [email protected]
Case: 13-12665 Date Filed: 07/22/2013 Page: 27 of 32
CERTIFICATE OF COMPLIANCE
I certify that this Brief complies with the type-volume limitation set forth in
FED.R.ApP.P. 32(a)(7)(B). This Brief contains 3,640 words, excluding the parts of
the brief exempted by FED.R.ApP.P. 32(a)(7)(B)(iii). This Brief complies with the
typeface requirements of FED.R.ApP.P. 32(a)(5) and the type style requirements of
FED.R.ApP.P. 32(a)(6) because this Brief has been prepared in a proportionally
spaced typeface using Microsoft Office Word 2007 in Times New Roman, size 14.
Dated: July 22,2013
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Case: 13-12665 Date Filed: 07/22/2013 Page: 28 of 32
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on July 22, 2013 I electronically served the
foregoing document to all counsel of record for the parties.
Respectfully Submitted,
s/Bernardo Roman IIIBernardo Roman III, Esq.
SERVICE LIST
Miccosukee Tribe ofIndians ofFlorida v. CypressCase No. 12-22439-COOKE/McAliley
United States District Court for the Southern District of Florida
Paul A. Calli, EsquireCharles Short, EsquireYolanda Strader, EsquireCarlton Fields, P.A.100 S.E. 2nd Street, Suite 4000Miami, FL 33131Telephone: (305) 530-0050Facsimile: (305) 530-0055E-mail: [email protected]: [email protected]: [email protected]: [email protected]: [email protected] for Defendants Guy Lewis, Esquire.Michael Tein, Esquire, and Lewis
Tein, PL
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Case: 13-12665 Date Filed: 07/22/2013 Page: 29 of 32
Manuel A. Avila, EsquireManuel A. Avila, Esq.& Associates, P.A.,11120 N. Kendall DriveSuite 200Miami, Florida 33176Telephone: (305) 249-1111Facsimile: (305) 647-0686E-mail: [email protected] for Defendant Julio Martinez
Scott Alan Lazar, EsquireKoltun & Lazar7901 SW 67th Ave.Suite 100Miami, FL 33143Telephone: (305)-595-6791Facsimile: (305)-595-5400E-mail: [email protected] for Defendant Miguel Hernandez
Bruce S. Rogow, EsquireTara A. Campion, EsquireBruce S. Rogow, P.A.500 E. Broward Blvd., Ste. 1930Fort Lauderdale, FL 33394Telephone: 954-767-8909Facsimile: 954-767-1530E-mail: [email protected]: [email protected] for Defendant Morgan Stanley
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Bryan T. West, EsquireTew Cardenas LLP1441 Brickell Avenue, 15th FloorMiami, FL 33131Telephone: (305) 536-1112Facsimile: (305) 536-1116E-mail: [email protected] for Defendant Dexter W Lehtinen, Esquire
Robert O. Saunooke, Esq.,Saunooke Law Firm, P.A.,18620 SW 39 Court,Miramar, Florida 33029E-mail:[email protected] andCounsel for Defendant Billy Cypress
Steven M. Goldsmith, Esq.Steven M. Goldsmith, P.A.,5355 Town Center Road, Suite 801,Boca Raton, Florida 33486,E-mail:[email protected] for Defendant Billy Cypress
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