First Of Michigan Corp. v. Bramlet

141 F.3d 260 (6th Cir. 1998)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Ds invested approximately $62,000 in an Individual Retirement Account ('IRA') with First of Michigan pursuant to the advice of Michael Sobol, an investment broker. Ds' June 1, 1996, IRA statement indicated a loss of $37, 556. On June 24, 1996, Ds, residents of Florida, initiated an arbitration action against First of Michigan and Sobol by filing a Uniform Submission Agreement with the National Association of Securities Dealers ('NASD') in Florida. In their arbitration complaint, Ds alleged that First of Michigan and Sobol failed to provide them with periodic statements of their IRA's value, thereby concealing the account's steady loss until it was too late to mitigate the damage. The terms of the arbitration agreement provided that any arbitration hearing between the parties would be conducted in accordance with 'the Constitution, By-Laws, Rules, Regulations and/or NASD Code of Arbitration Procedures of the sponsoring organization.' P filed this action in the district court for the Eastern District of Michigan, n1 seeking to enjoin and dismiss Ds' arbitration claims as ineligible for arbitration, pursuant to NASD Code of Arbitration §15, which bars arbitration of claims relating to investments more than six years old. P asserted jurisdiction in the federal district court based on the parties' diversity of citizenship and 28 U.S.C. §1391(a), which establishes the proper venue for diversity cases. Ds moved to dismiss the case against them, pursuant to 28 U.S.C. §1406(a) which requires dismissal or transfer of cases filed in an improper venue. In the alternative, D sought to transfer the case to Florida, pursuant to 28 U.S.C. §1404(a), claiming that the Michigan district court was an inconvenient forum. The district court dismissed the Ps' case based on improper venue, reasoning that 'the most substantial event giving rise to plaintiffs' complaint for declaratory relief was Ds' filing of an arbitration action, which they initiated in Florida.' The district court concluded that because Ds did not reside in Michigan, and a 'substantial part of the events giving rise to the Ps' complaint' did not occur in Michigan, venue in Michigan was improper. P appealed.