Oppenheimer v. Prudential Securities Inc.
| Decision Date | 06 September 1996 |
| Docket Number | No. 95-50887,95-50887 |
| Citation | 94 F.3d 189 |
| Parties | Fed. Sec. L. Rep. P 99,312, 35 Fed.R.Serv.3d 1319 Kaye Butler OPPENHEIMER, Plaintiff-Appellant, v. PRUDENTIAL SECURITIES INCORPORATED, also known as Prudential Bache Securities, Inc.; and Robert E. Green, Defendants-Appellees. Summary Calendar. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Larry Wayne Kimes, Austin, TX, for Plaintiff-Appellant.
Steven J. Berry, Gardere & Wynne, Dallas, TX, Michael V. Marconi, Dallas, TX, for Defendants-Appellee.
Appeal from the United States District Court for the Western District of Texas.
Before GARWOOD, WIENER, and PARKER, Circuit Judges.
FACTS
In March of 1987, Kaye B. Oppenheimer ("Oppenheimer"), opened an account with Thomson McKinnon Securities ("TMS"). Robert E. Green 1 ("Green"), served as Oppenheimer's stockbroker while her account was maintained at TMS. After opening the account with TMS, Oppenheimer purchased On or about July 17, 1989, TMS and Prudential Securities Incorporated ("Prudential") entered into an asset purchase agreement (the "Asset Purchase Agreement"), to be effective on or about September 22, 1989. In that agreement, Prudential agreed to purchase the business premises and fixed assets of TMS as well as certain related leases and contracts. In addition, Prudential agreed to hire certain former TMS employees whom it found acceptable. As a result, Prudential hired Green. Because Oppenheimer did not provide TMS with instructions regarding the disposition of her account, Prudential opened and maintained that account. Oppenheimer kept her account at Prudential until July of 1992, at which time she transferred her investments to another brokerage firm.
approximately 11 separate securities over a two-year period.
On or about August 12, 1993, Oppenheimer filed her Original Complaint. In her Original Complaint, Oppenheimer asserted a laundry list of claims against TMS, Green, and Prudential, but complained of only three specific transactions, all of which were initiated at TMS in March of 1987, or earlier. Oppenheimer also accused Green and Prudential of mismanagement of her account after it was transferred to Prudential, but did not plead any facts with respect to the purported mismanagement. Oppenheimer subsequently entered into an agreement with Prudential and Green wherein the parties agreed that Prudential and Green would not be required to respond to the Original Complaint until Oppenheimer amended. Oppenheimer filed her First Amended Original Complaint on September 21, 1994.
Oppenheimer's First Amended Original Complaint was virtually identical to the Original Complaint except that it identified eleven other TMS transactions of which she complained. In addition, she identified two transactions that occurred while her account was maintained with Prudential. Further, Oppenheimer claimed Prudential was liable as a successor-in-interest for the TMS transactions because of the existence of an indemnity provision in the Asset Purchase Agreement.
Prudential filed its Motion to Dismiss for Failure to State a Claim, or in the Alternative, Motion for Summary Judgment and Motion for a more definite statement. In its Motion to Dismiss, Prudential sought to have all claims relating to the TMS transactions dismissed, or in the alternative, denied by summary judgment as a matter of law. Prudential also requested that Oppenheimer's Prudential transactions be dismissed because it contended that she had incurred no loss from those investments. Finally, Prudential requested that Oppenheimer be required to replead with greater particularity the nature of her fraud claims, because Prudential contended that those claims lacked meaningful factual support.
The trial court granted Prudential's motion to require Oppenheimer to replead her claims relating to Rule 10b-5 and § 10(b) of the Securities Exchange Act of 1934, her breach of fiduciary duty claims, her breach of contract claims, and her negligence claims against Green and Prudential. 2 In addition to requiring Oppenheimer to replead, the court also required Prudential to state which of the transactions, of which Oppenheimer complained, had actually occurred while Prudential maintained her account. Oppenheimer then filed her Second Amended Original Complaint.
Oppenheimer's Second Amended Original Complaint varied little from the First Amended Complaint. Oppenheimer reasserted a laundry list of purported causes of action including: (i) violations of federal securities laws; (ii) constructive fraud; (iii) breach of fiduciary duty; (iv) common law and statutory fraud; (v) violations of the Texas Deceptive Trade Practices Act ("DTPA"); (vi) breach of implied warranty of fitness for a particular purpose; (vii) breach of contract; and (viii) negligence.
In response to the Second Amended Original Complaint, Prudential re-urged its Motion to Dismiss and offered summary judgment Oppenheimer responded by offering evidence of Prudential's crediting of certain of its customer accounts victimized by an embezzlement scheme (hereinafter referred to as the "Saddlebrook incident"). She contended that this evidence demonstrated that Prudential was liable as a successor-in-interest for all TMS transactions occurring before the date of the Asset Purchase Agreement. 3 The Saddlebrook incident involved a TMS cashier embezzling funds from TMS accounts from a Saddlebrook, New Jersey office. Soon after the transfer of certain TMS accounts to Prudential, Prudential discovered the scheme, confronted the cashier, and ultimately elected to make restitution to its aggrieved customers.
evidence of the following: (i) that Prudential was not legally responsible for TMS Transactions; (ii) that many of the complained of TMS transactions were never even transferred to Prudential; (iii) that even assuming Oppenheimer's allegations with respect to her Prudential transactions were true, Oppenheimer's monthly statements provided her with notice of any failure of Green or Prudential to honor her instructions regarding the purchase of these investments; and (iv) that Oppenheimer sustained no damages from her Prudential transactions.
Oppenheimer claimed the reimbursement of accounts was inconsistent with Prudential's claim that it had no successor-in-interest liability. Oppenheimer further argued that "Prudential ... waived any right [it] may have had to claim that it did not assume [TMS] liabilities...." Addressing Oppenheimer's "waiver" argument, the court ruled that evidence relating to the Saddlebrook incident was inadmissible based on Oppenheimer's failure to properly serve Prudential with an executed subpoena by which Oppenheimer obtained evidence of the reimbursements. Further, the court found that the evidence of reimbursement would be inadmissible pursuant to Fed.R.Evid. 408. Finally, the court found that, even if admissible, the Saddlebrook incident was totally unrelated to Oppenheimer's claim of successor liability and provided no issue of fact with respect to Prudential's liabilities for TMS transactions. As a result, the court granted Prudential's motion for summary judgment with respect to the TMS transactions. The court dismissed the remainder of Oppenheimer's claims relating to her Prudential transactions because Oppenheimer was unable to support her allegations of misrepresentations regarding those transactions.
Addressing Oppenheimer's breach of fiduciary duty claims, the court found the facts pled by Oppenheimer in support of those claims insufficient to establish the existence of any fiduciary duty. The court specifically noted that Oppenheimer failed to identify any specific acts which would impose liability on Prudential for any acts of Green. Because no contract existed between Oppenheimer and Prudential or Green, the court dismissed her breach of contract claims. Finally, the court dismissed her negligence claims because she failed to state a cause of action for negligence against Prudential. Oppenheimer appealed.
On appeal, Oppenheimer challenges the district court's decision to grant Prudential's motion for summary judgment on the issue of successor-in-interest liability. She argues that the court erred when it: (1) determined that evidence of the Saddlebrook incident was inadmissible as a result of Oppenheimer's failure to properly serve Prudential with notice of her subpoena to the New York Stock Exchange ("NYSE"); (2) found that evidence of Prudential's decision to settle claims arising from the Saddlebrook incident was inadmissible under Fed.R.Evid. 408; (3) determined that Prudential's decision to pay victims of the Saddlebrook incident did not result in a waiver of its right to claim that it had not assumed the liabilities of TMS; and (4) held that the Asset Purchase Agreement did not indicate that Prudential assumed the liabilities of TMS.
We conduct a de novo review of a district court's grant of summary judgment. Fireman's Fund Ins. Co. v. Murchison, 937 F.2d 204, 207 (5th Cir.1991). No deference is given to the district court and all reasonable inferences from the evidence must be resolved in favor of the nonmovant. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).
We will assume, arguendo, that Oppenheimer properly served Prudential with notice of the subpoena duces tecum, and that Fed.R.Evid. 408 did not preclude the admission of evidence relating to the Saddlebrook incident. However, we agree with the district court's conclusion concerning Oppenheimer's waiver argument.
The Saddlebrook incident did not involve any alleged misrepresentations of a registered representative in connection with the purchase and sale of securities. It is an incident totally unrelated to the claims being made by Oppenheimer in the instant case and presents no issues of fact with respect to Prudential's liabilities for TMS transactions. Consequently, ...
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