United States District Court, D. New Mexico
BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF BERNALILLO, Petitioner,
BOK FINANCIAL SECURITIES, INC. f/k/a/ BOSC, INC., and THOMAS WAYNE HAYES, Respondents.
Clinton W. Marrs and Patrick J. Griebel, Marrs Griebel Law,
Ltd., Albuquerque, New Mexico, for Petitioner Board of County
Commissioners of the County of Bernalillo.
Benjamin E. Thomas and Keith Mier, Sutin, Thayer &
Browne, A Professional Corporation, Albuquerque, New Mexico,
and Frederic Dorwart, Paul DeMuro, and Jared M. Burden,
Frederic Dorwart, Lawyers, PLLC, Tulsa, Oklahoma, for
Respondents BOSC, Inc., and Thomas Wayne Hayes.
MEMORANDUM OPINION AND ORDER
Kelly, Jr. United States Circuit Judge.
MATTER is before the court on a petition and various motions
concerning an arbitration award. ECF Nos. 4, 5, 16. Upon
consideration thereof, the arbitral award should be
confirmed, with the exception of Respondents' request for
prejudgment interest calculated at 15% per
case arises out of arbitration between Petitioner Board of
County Commissioners of the County of Bernalillo (“the
County”) and Respondents BOSC, Inc. (now known as BOK
Financial Securities, Inc.), and its representative, Thomas
Wayne Hayes (collectively, “BOSC”). On November
20, 2014, the Director of the New Mexico Securities Division
issued a Notice of Contemplated Action to BOSC, alleging BOSC
gave unsuitable investment advice and failed to ensure the
investments made by the Bernalillo County Treasurer's
Office were commensurate with its investment policy. Am. Pet.
3 (ECF No. 4). The County sued BOSC in New Mexico State court
the following July. See Burden Aff. 1 ¶ 4 (ECF
No. 5-1); Bd. of Cty. Comm'rs of the Cty. of
Bernalillo v. BOSC INC, No. D-202-CV-201506106 (N.M.
Dist. Ct., Albuquerque Dist. 2015). BOSC removed the case to
the United States District Court for the District of New
Mexico in September 2015. Notice of Removal, Bd. of Cty.
Comm'rs of the Cty. of Bernalillo v. BOSC, Inc., No.
1:15-cv-00772-MV-LF (D.N.M. Sept. 1, 2015), ECF No. 1. BOSC
then moved to dismiss the case, and, after full briefing by
the parties, the County voluntarily dismissed its action
without prejudice to pursue its claims in arbitration before
the Financial Institutions Regulatory Authority
(“FINRA”) pursuant to Mr. Hayes's Form U4
Uniform Application for Securities Industry Registration or
Transfer. Am. Pet. 4; Pl.'s Notice of Dismissal,
Bd. of Cty. Comm'rs of the Cty. of Bernalillo v.
BOSC, Inc., No. 1:15-cv-00772-MV-LF (D.N.M. Oct. 19,
2015), ECF No. 22; Statement of Claim and Demand for
Arbitration (ECF No. 4-1). BOSC sued separately in the
District of New Mexico to enjoin the FINRA arbitration,
claiming the County had waived its right to arbitration when
it filed the state lawsuit, but the court disagreed and
compelled arbitration. BOSC, Inc. v. Bd. of Cty.
Comm'rs of the Cty. of Bernalillo, No.
15-cv-1042-KG-LF, 2016 WL 7428796 (D.N.M. Feb. 25, 2016),
aff'd, 853 F.3d 1165 (10th Cir. 2017).
County's Statement of Claim and Demand for Arbitration
alleged misleading securities sales practices under the New
Mexico Uniform Securities Act, unfair or deceptive trade
practices under the New Mexico Unfair Practices Act (UPA),
breach of fiduciary duty, negligent misrepresentation, breach
of contract and implied covenant of good faith and fair
dealing, and theories of negligent supervision and
respondeat superior, and it demanded costs and
attorney's fees. Statement of Claim and Demand for
Arbitration 13-27. In its answer, BOSC argued the County
failed to state a claim upon which relief can be granted, and
that the claims were both “fabricated” and
“implausible.” Answer 3, 7 (ECF No. 5-6).
arbitration was conducted by a three-member FINRA arbitration
panel in an eight-day hearing over the course of one month
and “in accordance with the FINRA ByLaws, Rules, and
Code of Arbitration Procedure.” FINRA Arbitration
Submission Agreements (ECF Nos. 4-2, 4-4 & 4-5); Burden
Aff. 2 ¶ 7. On the first day of the merits hearing BOSC
informed the arbitration panel that “at the end of this
case we want our fees, because, we shouldn't be
here.” 1 Arbitration Tr. 2 (p. 82) (ECF No. 4-6). It
reiterated its request at closing argument, citing both to
the UPA and to New Mexico common law, which it argued support
the payment of attorney's fees by a claimant whose claim
is found to be frivolous. 8 Arbitration Tr. 4-5 (pp. 1808-10)
(ECF No. 4-6). The County responded:
[T]he only fee shifting basis available to BOSC is under the
Unfair Practices Act and that is only if [--] it is not
enough for BOSC to be a prevailing party.
. . . [T]he fee shifting under UPA on the defense for
Respondent's side, you must not only prevail but then the
panel would have to go further and find that the claims were
The claims can have merit but not succeed, and that is not
the same as the claims being groundless. So you have to go
that extra step to shift fees to the Respondents under UPA.
Id. at 5 (p. 1811). The County also disagreed that
New Mexico common law allowed for fee shifting because it
argued its claims were not frivolous, and it objected to the
fact that BOSC only requested costs or fees in its closing
argument, not its pleading. Id. at 5, 6 (p. 1811-12,
response, an arbitrator noted, “I don't think the
[FINRA] rules foreclose a recovery of attorney fees and costs
if it is not in the initial pleadings.” Id. at
6 (p. 1816). The County disagreed, but it was unable to point
to an applicable rule supporting its position. Id.
at 6 (p. 1816); 8 Arbitration Tr. 3-4 (pp. 1816-17) (ECF No.
5-7). The arbitrator also noted that BOSC had raised the
issue of attorney's fees in its opening argument. 8
Arbitration Tr. 4 (p. 1817) (ECF No. 5-7). At the end of the
hearing, the County reiterated that fees could not shift
because its claims were not frivolous, and it lodged a
continuing objection to BOSC's requested costs and fees.
8 Arbitration Tr. 7 (p. 1897-99) (ECF No. 4-6). The
arbitration panel issued its award dismissing the
County's claims on July 27, 2017, and it awarded BOSC
$285, 358.89 in attorney's fees and $73, 527.60 in
costs. Award, FINRA Office of Dispute Resolution
3 (ECF No. 4-7). The panel held that the award of
attorney's fees was “pursuant to the authority set
forth in New Mexico State Highway and Transportation
Department v. Edward Baca, 120 NM 1 (1995) and NMSA 1978
57-12-10C [of the UPA].” Id.
County commenced the present action in September 2017,
seeking vacatur of the award under 9 U.S.C. §§
10(a)(3)-(4), or alternatively, modification under 9 U.S.C.
§ 11(b). ECF Nos. 1, 4. Count I of its Amended Petition,
ECF No. 4, alleges the arbitration panel exceeded its
authority by granting an untimely claim for attorney's
fees and costs. Count II alleges the arbitration panel's
award of attorney's fees and costs requires modification
or correction, and Count III alleges the award violates