in the united states court of appeals forthe … · the motion to dismiss without an evidentiary...

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


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


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


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


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


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


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


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


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


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.

3


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.

4


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.

5


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.

6


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

7


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.

8


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

9


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


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.

11


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

12


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

13


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.

14


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

15


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.

16


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

17


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

18


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]


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

20


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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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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in the united states court of appeals forthe … · the motion to dismiss without an evidentiary...

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