Candelora v. Clouser

• Decision Date: 28 October 1985
• Docket Number: Civ. A. No. 83-419-JLL.
• Citation: 621 F. Supp. 335
• Court: U.S. District Court — District of Delaware
• Parties: Kay A. CANDELORA, Plaintiff, v. Harold A. CLOUSER, Jr., and Merrill, Lynch, Pierce, Fenner & Smith, Inc., Defendants.

621 F. Supp. 335

Kay A. CANDELORA, Plaintiff, v.Harold A. CLOUSER, Jr., and Merrill, Lynch, Pierce, Fenner & Smith, Inc., Defendants.

Civ. A. No. 83-419-JLL.

United States District Court, D. Delaware.

October 28, 1985.

James F. Kipp of Trzuskowski, Kipp, Kelleher & Pearce, Wilmington, Del., and Erv D. McLain of Maloney & Danyi, Bethlehem, Pa., of counsel, for plaintiff.

Walter L. Pepperman, Jr., of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., for defendants.

OPINION

LATCHUM, Senior District Judge.

This diversity action¹ is presently before the Court on a renewed motion for summary judgment by the defendants, Harold A. Clouser, Jr.("Clouser"), and his employer, Merrill, Lynch, Pierce, Fenner & Smith, Inc.("Merrill Lynch"), pursuant to Fed.R. Civ.P. 56.The plaintiff, Kay A. Candelora("Candelora"), alleges fraud perpetrated by Clouser in concert with a certain James S. Ryan("Ryan") to defraud her of $110,000.(Docket Item "D.I."1.)She seeks judgment for that amount as well as damages for physical and emotional pain and suffering, and medical expenses caused by the alleged fraud, negligence and intentional infliction of emotional distress arising out of Candelora's opening and maintenance of an account at Merrill Lynch.Ryan, the key figure in this case, actively appropriated and absconded with plaintiff's assets, but has been dismissed for lack of service.²This Court previously denied defendant's first motion for summary judgment on February 20, 1985(D.I. 41), because of possible inferences arising from the relationship between Ryan and Clouser.Because the production of further evidence requested by the Court and further briefing by the parties has resolved the Court's concern, the defendant's renewed motion for summary judgment will be granted.

BACKGROUND

Plaintiff Candelora is a forty-seven year old woman who lives in Shamokin, Pennsylvania.(D.I. 25, 5-6.)Although plaintiff dropped out of high school in her junior year due to a "nervous condition,"she subsequently passed a GED test and received her high school diploma in 1970.(Id. at 14-15.)About a year after she left high school, plaintiff performed secretarial work for approximately two years in a department store in Shamokin.(Id. at 9-11.)After that job, she worked at different times as a shirt presser in an Arrow shirt factory in Shamokin, as an aide in the diet department at the Danville State Hospital in Danville, Pennsylvania, and as a receptionist for the Pennsylvania State Welfare Department at its office in Shamokin.(Id. at 10-13.)

Plaintiff was married from 1958 to 1967.(D.I. 25, 6.)She has two children, ages 23 and 21, both of whom are currently in the Armed Services.(Id. at 7, 37.)In 1964plaintiff had a nervous breakdown due in part to the deteriorating condition of her marriage.(Id. at 30.)As a result of the breakdown, she was hospitalized for some time at the Allentown General Hospital and received psychiatric care from a Dr. C.D. Elliott.(Id. at 30-31.)Plaintiff has remained under Dr. Elliott's care on an off-and-on basis since 1964.(Id. at 32.)She was again hospitalized for approximately three weeks by Dr. Elliott in 1977 or 1978 at the Bethlehem Pennsylvania Hospital for depression.(Id. at 32-33.)Plaintiff was last hospitalized in 1982 in Charlottesville, Virginia, under Dr. Elliott's care for approximately six weeks, again due to depression.(Id. at 33-35.)

In 1979, Candelora received $215,000³ worth of bearer bonds as a gift from a Frederick E. Lark.(D.I. 25, 17-18.)Mr. Lark, the attorney who handled Candelora's 1967 divorce, gave the bearer bonds as well as some gold coins and a $2,000 gold ring to Candelora for the "security" of plaintiff and her family.(Id. at 18.)⁴Although Mr. Lark had been a friend of Candelora's for some time, his generosity resulted in controversy.(Id. at 20-21.)Mrs. Lark demanded the return of the gifts, and there was a suggestion that criminal charges were going to be filed against Candelora in connection with these gifts.(Id. at 23.)However, no litigation ever resulted, and Candelora did not return any portion of the gifts to the Larks.Mr. Lark was institutionalized in a nursing home for a period of time after he gave Candelora the gifts.(Id. at 20-22.)In June, 1984, at the age of seventy, Mr. Lark died.(Id. at 125.)

In April 1980, Candelora, on the advice of her attorney, Thomas J. Maloney,⁵ took the bonds to the First National Bank of Palmerton ("Palmerton Bank")(D.I. 25, 43-44), and instructed the bank to sell the bonds and establish a Certificate of Deposit ("C.D.") with the proceeds.(Id. at 79-81;D.I. 35A at A-125, 128-29.)On May 9, 1980, Candelora purchased a $110,000 C.D.⁶ with interest in excess of $900 a month.(D.I. 25, 65.)Because Candelora had left her job with the Department of Welfare when she received the gift from Lark in 1979, the interest from the C.D. was her only source of income.(Id.)

In May of 1980, Candelora purchased a new Oldsmobile from an automobile dealer in Ashland, Pennsylvania.(D.I. 25, 47.)Approximately six weeks later, she returned the car to the dealer because it had been the object of vandalism.(Id. at 48.)Apparently, this vandalism was one incident in an ongoing series of events that began in 1978 and continued into 1980.(Id. at 35.)Candelora believed that a former boyfriend was committing the vandalism.(Id. at 26-27.)

Candelora spoke to the Oldsmobile car salesman about the vandalism she had experienced, and he suggested that she discuss the matter with a private detective named James S. Ryan("Ryan") from the Francis E. Ryan Agency in York, Pennsylvania.(D.I. 25, 49-50.)In the last week of June 1980, Candelora telephoned Ryan and subsequently hired Ryan to find out who was vandalizing her car.Candelora gave Ryan a $500 retainer and agreed to pay him $15 per hour for his services.(Id. at 52-53.)

Ryan began investigating on July 4, 1980.Ryan spent two weeks at Candelora's house, "standing in the front door" and watching her cars,⁷ but he failed to discover anything concerning the vandalism.At that point, Candelora, having decided that she could no longer afford to pay Ryan, terminated his services and paid him $2,500.(D.I. 25, 181-82.)Approximately a week and a half later, Ryan telephoned Candelora "to see if everything was all right."(Id. at 55.)Candelora told him that she had found "some tacks sprinkled around outside."(Id.)Ryan then began stopping by to see Candelora on a regular basis "to check on things."Ryan also began to ask Candelora a lot of questions which kept her constantly afraid.Ryan soon became Candelora's "confidant and advisor."She saw him on a daily basis, and in August 1980, she became personally and sexually involved with him.⁸(Id. at 57.)

In December 1980 or January 1981, Ryan suggested to Candelora that she should cash her C.D. to prevent the Larks from getting the funds and in order to make more money.(D.I. 25, 71.)On February 9, 1981, Ryan went with Candelora to Palmerton Bank where she cashed the $110,000 C.D. (Id. at 82-83.)A $5,575 penalty was assessed against her for cashing the certificate early, leaving a balance of $104,425.Candelora received these proceeds in the form of a cashier's check for $64,425 and $40,000 in cash which was handed to Mr. Ryan.(Id. at 83-84.)Candelora and Ryan then drove with the proceeds to Wilmington, Delaware, to the Wilmington Trust Company on February 10, 1981, where Candelora opened a checking account solely in her name and deposited into that account (a) the endorsed Palmerton cashier's check for $64,425 together with cash of $75 for a total of $64,500, and (b) a second deposit of $200 in cash.(D.I. 53.)Thus, on February 10, 1981, Candelora had deposited only $64,700 with Wilmington Trust.⁹

Afterwards, Candelora and Ryan went to the offices of Merrill Lynch in Wilmington.Ryan went into the offices alone while Candelora waited outside the building because of Ryan's warning that she might be recognized.¹⁰(Id. at 88.)This scenario would become routine.Candelora also testified at deposition that she gave Ryan a check drawn to cash for the full amount which she had deposited in Wilmington Trust.(Id. at 88-89.)Plaintiff's recollection was again faulty as she did not draw a check for cash in the amount of $64,000 from her Wilmington Trust account until February 24, 1981.(D.I. 53.)

When Ryan entered the offices of Merrill Lynch, he met with Harold A. Clouser, a stockbroker employed by Merrill Lynch.(D.I. 36.)Ryan had met Clouser in 1980 because their wives had gone to school together.(D.I. 25, 135.)Between 1980, when Clouser first met Ryan, and February 1981, when Ryan came to see Clouser at Merrill Lynch's offices, Clouser had seen Ryan five or six times on social occasions.As a result of those contacts, Clouser became aware that Ryan was a private detective who worked for his father's agency in Pennsylvania.(D.I. 36, ¶ 3.)At this February 10 meeting, Ryan told Clouser that Candelora was one of his clients and that Candelora had asked Ryan to open an account for her in her name.Clouser agreed to open a non-discretionary cash account in Candelora's name.

Although Candelora testified that it was her understanding that the purpose of Ryan's visit to the Merrill Lynch office on February 10 was to invest the proceeds from the C.D., Ryan only gave Clouser $35,500 to open a Merrill Lynch Ready Asset Account.(D.I. 54, Ex. 7-6.)¹¹In addition to deposits in the Ready Asset Account, on that date Ryan also for $340 in cash directed Merrill Lynch to purchase 4,000 shares of Permaloy Corporation for Candelora's account.(D.I. 54, Ex. 6.)Thus, as of February 10, 1981, a total of $35,850.00 in cash was invested by Ryan with Merrill Lynch in Candelora's account.(D.I. 54, Ex. 6.)

When Ryan came out of Merrill Lynch's office, he told Candelora that he had invested the money in an account in her name.(D.I. 25, 94....