Bulgo v. Munoz
| Citation | 853 F.2d 710 |
| Decision Date | 02 August 1988 |
| Docket Number | 87-2646,Nos. 87-2297,s. 87-2297 |
| Parties | Blue Sky L. Rep. P 72,765 Joseph BULGO, Plaintiff-Appellant, v. Frank MUNOZ, also known as Frank Munoz Martin, individually; Land & Construction Company, Inc., a Hawaii corporation; Paine Webber, Inc., formerly Paine, Webber, Jackson & Curtis, Inc.; Alex Lau, an individual, Defendants- Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
John H. Boone, San Francisco, Cal., James M. Dombroski, Honolulu, Hawaii, for plaintiff-appellant.
Richard R. Clifton, Cades Schutte Fleming & Wright, Paul A. Lynch, Case & Lynch, Honolulu, Hawaii, for defendants-appellees.
Appeal from the United States District Court for the District of Hawaii.
Before BROWNING, SNEED, and TROTT, Circuit Judges.
Joseph Bulgo's second amended complaint set forth six claims of misconduct pertaining to a securities transaction against Frank Munoz (Munoz), Land and Construction Co. (L & C), PaineWebber, Inc. (PaineWebber) and Alex Lau (Lau). Numerous rulings were made by the district court and certain special verdicts were returned by the jury. The result is that Bulgo's claims were rejected for various reasons and by different means. We affirm in all respects.
Bulgo's six claims were against two pairs of defendants-appellees. One pair consists of Munoz and his corporation, L & C. The second pair consists of PaineWebber and its former employee Lau.
Bulgo and Munoz have a long-standing business and personal relationship. Munoz is president of L & C which maintained a securities trading margin account with PaineWebber that, in the manner of such accounts, permitted the purchase of stock on credit. Munoz offered Bulgo the use of the margin account for Bulgo's securities transactions.
Defendant Lau was PaineWebber's broker in charge of the L & C account. On December 1, 1982, Bulgo placed an order with Lau on the L & C margin account for the purchase of 3000 shares of Mattel stock. On December 9, 1982, Bulgo gave L & C a check for $50,000.00 toward the purchase of the stock, and L & C paid PaineWebber $50,000.00.
The value of the Mattel stock dropped by nearly fifty percent within days of the purchase. Bulgo refused to satisfy the balance of the margin account when billed by L & C on March 21, 1983. Bulgo refused collection attempts by L & C for the balance. L & C ordered the stock sold on May 1, 1984 and billed Bulgo for the balance owed, $26,500.01.
Bulgo contends that he was the victim of a scheme, under which he placed a order for Mattel stock on November 19, 1982 with Lau who then failed to execute the order. Bulgo asserts Munoz thereafter placed an order for the 3,000 shares of Mattel stock on December 1, 1982 with the intention of capturing the profits from any appreciation of the stock. According to Bulgo, Munoz and Lau defrauded Bulgo of the $50,000 in order to replenish the equity in L & C's margin account. Bulgo asserts that he did not even know that he had placed a margin order until he received the March 21, 1983 bill for the balance of the margin purchase. Bulgo contends that after receiving the bill, he contacted another PaineWebber employee, Elliott Luke, who told Bulgo that the account had been transferred to another brokerage house and that Bulgo should let the stock rise in price. Bulgo asserts that he did not understand that he had been the victim of a scheme until March 1985.
Bulgo's first two claims, set forth in his second amended complaint, alleged the defendants made fraudulent misrepresentations to Bulgo to induce him to buy the stock in violation of, first, federal securities law and, second, common law. The third claim alleged that defendants made negligent misrepresentations to plaintiff. The fourth alleged defendants breached fiduciary duties they owed the plaintiff. The fifth alleged the defendants' conduct violated Hawaii's state securities statute (Haw.Rev.Stat. Sec. 485-25) and Hawaii's unfair trade practices act (Haw.Rev.Stat. Sec. 480-2). The sixth claim alleged that the defendants converted plaintiff's $50,000 to their own use and benefit.
Munoz and L & C brought cross-claims against PaineWebber and Lau who, in turn On March 28, 1986, the district court dismissed Bulgo's unfair trade practices claim (Sec. 480-2) against PaineWebber on the ground that the statute does not apply to securities transactions. The district court at that point, however, refused to dismiss PaineWebber's counterclaim against Bulgo for contribution.
counterclaimed against Bulgo for contribution and cross-claimed against Munoz and L & C for contribution and indemnification. Munoz and L & C counterclaimed against Bulgo seeking recovery of the $26,500.01 balance from the margin purchase, plus costs and expenses.
After denying summary judgment motions by both parties, a jury trial began on February 3, 1987. During the trial's course, the district court granted several directed verdicts, four of which Bulgo appeals. First, the district court granted a directed verdict against Bulgo's claim against Munoz and L & C under Hawaii's unfair trade practices act (Sec. 480-2). Next, the district court directed a verdict against Bulgo's claim under the Hawaii state securities statute (Sec. 485-25), because of a two-year statute of limitations period. Third, the district court directed a verdict against Bulgo's claims alleging fraud by Munoz and L & C. Fourth, the district court directed a verdict against Bulgo's claims for punitive damages against PaineWebber.
Bulgo's remaining claims (certain of those against PaineWebber and Lau) were submitted to the jury which, in a special verdict, found in favor of the defendants on all claims. The jury also found in favor of L & C on its counterclaim against Bulgo for the balance of the margin purchase. The resulting judgment entered on March 23, 1987 provided for recovery of that sum from Bulgo, and dismissed the PaineWebber counterclaim for contribution as moot.
The district court subsequently denied Bulgo's motions for a judgment notwithstanding the verdict and for a new trial. Bulgo appeals each of these rulings by the district court and argues that improper jury instructions on comparative responsibility and conversion were given. 1 Bulgo also appeals the grant of attorney's fees and costs to L & C and Munoz.
The district court had jurisdiction under section 27 of the Securities Exchange Act, 15 U.S.C. Sec. 78aa, and 28 U.S.C. Sec. 1331 and the principles of pendent jurisdiction. This court has jurisdiction under 28 U.S.C. Sec. 1291.
This case with its numerous issues compels the utilization of a potpourri of standards of review. They are as follows:
We review the district court's construction of state law de novo. Sax v. World Wide Press, Inc., 809 F.2d 610, 613 (9th Cir.1987). Thus, the applicability of Haw.Rev.Stat. Sec. 480-2 is reviewed de novo. See Spinner Corp. v. Princeville Development Corp., 849 F.2d 388 (9th Cir.1988).
Similarly, we so review the district court's application of the Hawaii statute of limitations on the Sec. 485-25 securities claim.
The clearly erroneous standard must be employed in reviewing the district court's award of attorney's fees to the appellees on the basis of Bulgo's bad faith. Dogherra v. Safeway Stores, Inc., 679 F.2d 1293, 1298 (9th Cir.), cert. denied, 459 U.S. 990, 103 S.Ct. 346, 74 L.Ed.2d 386 (1982). Once bad faith is determined, however, the amount awarded is reviewed for abuse of discretion. Beaudry Motor Co. v. Abko Properties, Inc., 780 F.2d 751, 756 (9th Cir.), cert. denied, 479 U.S. 825, 107 S.Ct. 100, 93 L.Ed.2d 51 (1986).
In reviewing jury instructions, the standard is "whether, viewing the jury instructions as a whole, the trial judge gave adequate instructions on each element of the case to ensure that the jury fully understood the issues." Los Angeles Memorial Coliseum Comm. v. National Football League, 726 F.2d 1381, 1398 (9th Cir.), cert. denied, 469 U.S. 990, 105 S.Ct. 397, 83 L.Ed.2d 331 (1984). Action by the district court concerning a motion for a new trial is reviewed for an abuse of discretion. Robins v. Harum, 773 F.2d 1004, 1006 (9th Cir.1985). Other issues are reviewed under our standard for directed verdicts. That standard is whether the evidence permits only one reasonable conclusion after viewing the evidence in the light most favorable to the non-moving party and drawing all inferences in favor of that party. Peterson v. Kennedy, 771 F.2d 1244, 1256 (9th Cir.1985), cert. denied, 475 U.S. 1122, 106 S.Ct. 1642, 90 L.Ed.2d 187 (1986). We now turn to alleged erroneous actions of the district court.
The district court dismissed the Sec. 480-2 claim against PaineWebber and Lau, and directed a verdict against the Sec. 480-2 claim against Munoz and L & C because it believed this unfair trade practices statute was not intended to cover securities transactions. See Order Denying Motion for Reconsideration, Excerpt of Record (E.R.) tab 14 and E.R. tab 21, at 213. Bulgo asserts this was error. Last month, this court decided precisely this issue in Spinner Corp. v. Princeville Development Corp., 849 F.2d 388 (9th Cir.1988). We concluded "that the Hawaii Supreme Court, if confronted with the question whether Hawaii's baby FTC act applies to claims arising from securities transactions, would hold that it does not." At 393. 2 The district court's dismissal and directed verdict regarding Bulgo's Sec. 480-2 claims were proper.
As already pointed out, the district court declined to dismiss PaineWebber's counterclaim against Bulgo for contribution. This was proper. Sufficient evidence to support the district court's refusal existed. Moreover, any possible error was harmless because the counterclaim was made moot as a result of the jury verdict.
To continue reading
Request your trial
-
Richardson v. Suzuki Motor Co., Ltd.
...trade secret questions that were before the jury, we conclude that the jury was incorrectly instructed on the law. See Bulgo v. Munoz, 853 F.2d 710, 714 (9th Cir.1988) (quoting Los Angeles Memorial Coliseum Comm'n v. National Football League, 726 F.2d 1381, 1398 (9th Cir.), cert. denied, 46......
-
Rogers v. Cisco Systems, Inc., 3:03 CV 32/LAC/MCR.
...However, it is difficult to conceive of an "unconscionable" act or practice that would not also be "unfair." 20. See Bulgo v. Munoz, 853 F.2d 710 (9th Cir.1988)(Hawaii's "baby" FTC Act did not apply to securities transactions); Spinner v. Corp. Princeville Dev. Corp., 849 F.2d 388 (9th Cir.......
-
Lui Ciro, Inc. v. Ciro, Inc., CV. No. 94-00629-DAE.
...as fraud unless the person making the statement has specialized knowledge upon which another party is entitled to rely. Bulgo v. Munoz, 853 F.2d 710, 716 (9th Cir.1988); Horn v. Ray E. Friedman & Co., 776 F.2d 777 (8th Cir.1985). Here, the Amended Complaint does not explain what was mislead......
-
Warfield v. Alaniz
...court had personal and subject matter jurisdiction over federal securities act claims and pendent state-law claims), Bulgo v. Munoz, 853 F2d 710, 713 (9th Cir.1988) (holding that the district court had jurisdiction under section 27 of the Securities Exchange Act, 15 U.S.C. § 78aa, 28 U.S.C.......