FUTURESELECT PORTFOLIO MANAGEMENT, INC., FUTURESELECT PRIME ADVISOR II LLC, THE MERRIWELL FUND, L.P., AND TELESIS IIW, LLC, Petitioners,
TREMONT GROUP HOLDINGS, INC., TREMONT PARTNERS, INC., OPPENHEIMER ACQUISITION CORPORATION, MASSACHUSETTS MUTUAL LIFE INSURANCE CO., GOLDSTEIN GOLUB KESSLER LLP, ERNST & YOUNG LLP, Defendants, and KPMG LLP, Respondent.
Portfolio Management Inc. seeks to challenge a 2011 King
County Superior Court order granting KPMG LLP's motion to
compel arbitration. FutureSelect argues that the Court of
Appeals erred by dismissing its appeal as untimely because
either the relevant law changed after 2011 in our decision in
Hill v. Garda CL Northwest, Inc., 179 Wn.2d 47, 308
P.3d 635 (2013), the 2016 appeal followed entry of a final
judgment against another defendant, or discretionary review
was appropriate. Because none of these rationales provides a
basis for FutureSelect's untimely appeal, we uphold the
Court of Appeals' order of dismissal.
AND PROCEDURAL HISTORY
plaintiff FutureSelect is headquartered in Washington, and it
manages a number of investment funds. The second named
defendant, Tremont Partners Inc., is headquartered in New
York and serves as the general partner to the Rye Funds,
whose status as feeder funds to Bernard L. Madoff Investment
Securities LLC (BMIS) is at the heart of this dispute.
Tremont allegedly offered FutureSelect a valuable opportunity
to invest with BMIS, and made assurances regarding its
oversight and understanding of BMIS's operation. Relying
on these assurances and the audit opinions of the accounting
firm hired by Tremont, FutureSelect decided to invest in the
Rye Funds in 1998. Between 1998 and late 2008, when
BMIS's Ponzi scheme finally came to light, FutureSelect
continued investing additional funds in the Rye Funds
allegedly based on the representations it regularly received
from Tremont and its auditors. In all, FutureSelect invested
$195 million with Tremont. But, BMIS never invested any of
this capital channeled through Rye Funds. As a result,
FutureSelect lost its entire investment. FutureSelect
Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc. 180
Wn.2d 954, 960-61, 331 P.3d 29 (2014). Believing that it was
misled by Tremont, FutureSelect sued Tremont and its parent
companies Massachusetts Mutual Life Insurance Company and
Oppenheimer Acquisition Corporation in August 2010; as well
as Tremont's auditors-Ernst & Young (EY), KPMG, and
Goldstein Golub Kessler LLP. Clerk's Papers (CP) at 1-51
3, 2011, the trial court granted KPMG's motion to compel
arbitration and stayed the case against KPMG pending
resolution of these arbitration proceedings. CP at 400-01
(Order Granting KPMG LLP's Mot. to Compel Arbitration).
FutureSelect filed a notice of appeal, to which KPMG
responded with a motion to dismiss, arguing that the order
compelling arbitration was not immediately appealable and
that discretionary review was not warranted under RAP 2.3(b).
KPMG LLP's Mot. to Dismiss Appeal, No. 67302-5-1, at 5-9
(Wash.Ct.App. May 11, 2011). On November 11, 2011, a
three-judge panel granted KPMG's motion to dismiss and
denied discretionary review, thus terminating review.
FutureSelect did not seek further review of the order in this
court, and a certificate of finality was issued on December
30, 2011. Notation Ruling, No. 74611-1 -I, at 2 (Wash.Ct.App.
May 20, 2016).
FutureSelect then indicated to the superior court that it
intended to proceed with arbitration of claims against KPMG
without delay. It did so in the context of seeking a
certificate of finality of orders dismissing other
defendants. See CP at 762, 764 (Pis.' Mot. for
Entry of Final J. at 5, 7) ("The arbitration between
Plaintiffs and KPMG will be a complex proceeding that will
take several years to resolve.... [A]n appeal of the
judgments in favor of the Dismissed Defendants would not
delay this action, which has been stayed, and will not delay
the arbitration proceedings against Plaintiffs and
KPMG."). To date, FutureSelect and KPMG have not
initiated arbitration proceedings.
settling with several defendants, FutureSelect obtained a
judgment against another defendant, auditor EY. CP at 701-03
(J. for Pis.). A different trial judge had earlier denied
EY's motion to compel arbitration, based on waiver and a
finding that the plaintiffs were not bound by the engagement
agreement with the auditor, as they were not signatories and
their claims were direct rather than
January 2016, FutureSelect filed a notice of appeal of the
same June 3, 2011 order compelling arbitration with KPMG that
it had unsuccessfully appealed in 2011. KPMG moved to
dismiss, arguing that the June 2011 order was not properly
before the Court of Appeals. The Court of Appeals
commissioner dismissed the appeal as untimely. See
Notation Ruling at 3. A panel of the Court of Appeals denied
FutureSelect's motion to modify. Order Den. Mot. to
Modify, No. 74611-1-1 (Wash.Ct.App. Oct. 5, 2016).
FutureSelect then sought review in this court.
FutureSelect asserts a global right to immediately appeal
from an order compelling arbitration, this case is less about
arbitration rules than appellate rules. FutureSelect
primarily argues that at this juncture our review is
appropriate because the prior rulings in 2011 conflict with
our intervening decision in Hill, 179 Wn.2d 47.
FutureSelect also argues that review is timely following
entry of a final judgment against EY, and that discretionary
review should have been granted in any event. All of these
arguments fail. The Court of Appeals properly dismissed
FutureSelect's appeal as untimely.
Hill Does Not Provide a Basis for Review of the 2011
Order Compelling Arbitration
Hill, we granted discretionary review of a labor
dispute and reversed the Court of Appeals affirmation of a
trial court order compelling arbitration because we found the
arbitration clause unconscionable. Id. at 50. In
rejecting an argument to not reach the unconscionability
issue, we observed in Hill that
"arbitration is a matter of contract and a party cannot
be required to submit to arbitration any dispute which he has
not agreed so to submit." To that end, we have
recognized our authority to decide "gateway
dispute[s]." These types of disputes go to the validity
of the contract and are preserved for judicial determination,
as opposed to arbitrator determination, unless the
parties' agreement clearly and unmistakably provides
otherwise. Unconscionability is one such gateway dispute.
Id. at 53 (alteration in original) (internal
quotation marks and citations omitted) (quoting Satomi
Owners Ass'n v. Satomi, LLC,167 Wn.2d 781, ...