Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Anderson
| Decision Date | 22 December 1986 |
| Docket Number | No. BK-396,BK-396 |
| Citation | 12 Fla. L. Weekly 40,501 So.2d 635 |
| Court | Florida District Court of Appeals |
| Parties | 12 Fla. L. Weekly 40 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Appellants, v. David ANDERSON and Jo An Anderson, Appellees. |
Patricia E. Cowart and Steven M. Greenbaum of Ruden, Barnett, McClosky, Schuster & Russell, Miami and Curtin R. Coleman, Fort Lauderdale, for appellants.
Thomas M. Ervin, Jr., of Ervin, Varn, Jacobs, Odom & Kitchen, Tallahassee, for appellees.
Merrill Lynch, Pierce, Fenner & Smith (Merrill Lynch) the plaintiff and counter defendant below, appeals a judgment in favor of David and Jo An Anderson entered on both Merrill Lynch's five count complaint and David Anderson's counterclaim. On appeal Merrill Lynch asserts several grounds why it should be granted a new trial. Because we agree that under the circumstances a new trial is warranted, we reverse the judgment and remand for a new trial on all counts.
This case arose out of a series of events occurring in September 1978. The Andersons maintained an account with Merrill Lynch which David Anderson utilized to engage in a fairly extensive amount of trading in stock options, a volatile, speculative and high risk type of investment. The account required the Andersons to periodically provide Merrill Lynch with payment for the amount of the debit balance of the account. The controversy in the instant case began when David Anderson delivered two checks to Merrill Lynch in the approximate amounts of $53,000 and $83,000, dated Sept. 14 and 18, 1978, respectively. Both checks were subsequently returned marked "insufficient funds". David Anderson acknowledged that he knew there was not enough money in the account to cover the checks, but asserts that Merrill Lynch was aware of this fact when it accepted the checks. He also asserted that Merrill Lynch knew that sufficient funds could only be provided by the sale of options currently being held in the margin account. According to David Anderson, he ordered such a sale on Sept. 18, 1978. However no sale actually took place until Sept. 21, 1978 when the market price of the options had dropped substantially.
Merrill Lynch denied any knowledge that the checks were drawn on insufficient funds until after they had been deposited and returned by the bank on Sept. 21, 1978. It also denied that Anderson placed any sell order on Sept. 18, 1978. On Sept. 21, the day the two checks were returned by the bank, Merrill Lynch liquidated the contents of the Anderson account in accordance with the terms of the parties' agreement which provided for such liquidation should Merrill Lynch deem itself insecure. Because the market price of the options had dropped, the sale yielded only $16,000 to be applied against the $136,000 debt owed by the Andersons. Therefore approximately $120,000 was still owed on the account.
Merrill Lynch's and David Anderson's versions of what transpired next differ sharply. Anderson states that when he realized his Sept. 18 sell order had not been executed until Sept. 21, resulting in a substantial loss, he confronted his broker and the office manager. According to Anderson, both men told him that Merrill Lynch's position would be to deny that any sell order was placed on Sept. 18. Merrill Lynch subsequently contacted him and asked if he would be willing to execute a promissory note and mortgage in favor of Merrill Lynch to satisfy the indebtedness and avoid litigation. Anderson refused.
According to Merrill Lynch, on Sept. 21 David Anderson acknowledged that the two checks were drawn on insufficient funds. He then agreed to the liquidation of his account and voluntarily went to the office manager to explain his predicament and to see what could be worked out. An agreement was reached that Anderson would execute a note and mortgage for the amount due, and upon his request it was decided that his former law partner would draw up the necessary papers. The documents were prepared, but were never signed, and litigation commenced when Merrill Lynch filed suit against the Andersons in December 1978.
Merrill Lynch's five count complaint alleged causes of action for account stated, open account, dishonored check, fraud and civil theft, and sought to recover the $120,000 due on the account as well as punitive damages. David Anderson, individually, filed a counterclaim seeking compensatory and punitive damages for gross negligence. The cause did not proceed to trial until October 1985, almost seven years later. Much of the delay was attributable to the difficulty Merrill Lynch encountered obtaining discovery from the Andersons. The court repeatedly ordered the Andersons to comply with Merrill Lynch's discovery demands. At one point the court even imposed sanctions on the Andersons which, on appeal, were found to be too severe. Anderson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 434 So.2d 43 (Fla. 1st DCA 1983).
The jury trial took four days and encompassed the testimony of ten witnesses, including that of David Anderson, who acted as attorney for himself and his wife. After the Andersons had rested on their counterclaim, and again at the close of all the evidence, Merrill Lynch unsuccessfully moved for a directed verdict on the counterclaim. Following the closing arguments and instructions the jury retired. After approximately two hours of deliberation the jury requested a written copy of the jury instructions, particularly those on the dishonored check, fraud and civil theft counts. Instead the judge replayed the court reporter's audio tape of the entire jury instructions and the jury again retired. After a total of five hours deliberations the jury returned the following verdict:
Count 1: Account stated--For the Andersons
Count 2: Open account--For the Andersons
Count 3: Dishonored check--For the Andersons
Count 4: Fraud--For Merrill Lynch
Count 5: Civil theft--For Merrill Lynch
Counterclaim: Gross negligence--For the Andersons The jury awarded the Andersons $161,361 compensatory damages and $500,000 punitive damages, and denied Merrill Lynch any damages. Merrill Lynch timely filed a motion for judgment in accordance with its previous directed verdict motions or in the alternative, for a new trial. The motion was denied and instead the judge entered a "Judgment NOV" in the Anderson's favor on the fraud and civil theft counts.
On appeal Merrill Lynch raises several issues. First Merrill Lynch argues that the trial court erred in failing to grant a new trial because the jury verdict was so inconsistent that it was clear the jurors were hopelessly confused. We agree. It was uncontroverted that ...
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