Osborn v. E.F. Hutton & Co., Inc.
| Decision Date | 05 August 1988 |
| Docket Number | No. 87-2392,87-2392 |
| Citation | 853 F.2d 616 |
| Parties | James L. OSBORN, Jr., Appellant, v. E.F. HUTTON & COMPANY, INC., Merrill Lynch, Pierce, Fenner & Smith Inc., Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Matthew J. Stretz, Kansas City, Mo., for appellant.
Danniel M. Dibble, Kansas City, Mo., for Hutton.
Lynne C. Kaiser, Kansas City, Mo., for Merrill Lynch.
Before ARNOLD, Circuit Judge, ROSS and HENLEY, Senior Circuit Judges.
James L. Osborn, Jr. appeals from two orders of the district court granting the appellees' motions for summary judgment and dismissing each of Osborn's claims alleging that the appellees churned his commodities and fraudulently, negligently, or in breach of fiduciary duty gave him improper trading advice. We affirm.
Osborn is a successful entrepreneur, having founded in 1970 Home Office Reference Laboratory (Home Office), a company which tests human specimens for life insurance purposes. After the success of Home Office, Osborn began investing in various other companies and in 1975 opened his first commodities account. From 1975 until June, 1983 Osborn opened commodities accounts at several brokerage houses including appellees E.F. Hutton & Company, Inc. and Merrill Lynch, Pierce, Fenner & Smith, Inc.
Osborn's income tax returns from 1975 to 1980 show losses in commodities trading ranging from a few thousand dollars to $35,000.00, and gains ranging from $18,121.00 to $57,000.00. In 1981 Osborn sustained losses at Paine Webber, Merrill Lynch and E.F. Hutton in excess of $196,000.00. In 1982 Osborn lost $59,340.00 at Merrill Lynch, and realized a net gain of $22,838.00 in certain commodities and a net loss of $4,817.00 in others at E.F. Hutton. Osborn alleges that in 1983 he lost $916,017.93 at Merrill Lynch and $1,110,180.37 at E.F. Hutton.
Most of the commodities decisions between 1980 and 1982 were made by both Osborn and his brokers. Osborn talked at least once a day with his brokers and was sent "dailies," confirmation slips and monthly statements so that he could keep abreast of his positions. In addition, Osborn kept a quotron machine supplied by Merrill Lynch in his office permitting him to check current commodity prices.
Osborn stated in his deposition that he generally compared the advice of E.F. Hutton and Merrill Lynch and would not execute a trade if either had a firm opinion against it. Osborn also stated that although he relied upon the advice of brokers in approximately ninety per cent of his trades, he knew he had the ultimate authority to say no. In this connection, Osborn further stated that some of his losses may have resulted from his own decisions. Although Osborn could not identify any such trades, he stated that on occasion the appellees acted without his consent.
After his substantial losses in 1983, Osborn commenced this action. Notably, however, he was unable to specify any allegedly improper trades, nor could he identify which trades were based upon a broker's suggestions or his own opinion. In an order dated March 24, 1987, the district court 1 granted partial summary judgment in favor of the appellees dismissing Osborn's claims of churning and fraud. With regard to the former, the district court determined that Osborn's churning claim was deficient as a matter of law because Osborn had not established that the appellees "controlled" his accounts. The court dismissed Osborn's fraud claim because Osborn could not identify any fraudulent misrepresentations or resultant trades.
After supplemental briefing, in an order dated September 17, 1987, the district court 2 granted the appellees' summary judgment motions on the remaining claims of negligent misrepresentation and breach of fiduciary duty. The court determined that the appellees were entitled to summary judgment on the negligent misrepresentation claim because Osborn was unable to identify any specific misrepresentation or resultant trades. Similarly, although Osborn presented the deposition of an expert witness who opined that certain of Osborn's commodity losses may have resulted from the appellees' violation of his credit limits and margin calls which were not met in a timely manner, the expert could not specifically identify any such instances. In addition, the court noted that the record contained no evidence indicating that the appellees failed to exercise reasonable care. The court similarly held that the breach of fiduciary duty claim could not stand because Osborn could not identify any act or omission constituting a breach. This appeal followed.
For reversal, Osborn argues that the district court erred in granting the appellees' motions for summary judgment because (1) genuine issues existed on the question of churning; (2) the court failed to consider facts relevant to the issue of fraud that would have been forthcoming with the allowance of additional discovery; (3) the appellees' customer agreements and company policy manuals imposed fiduciary obligations upon their brokers; and (4) Osborn's negligence claim stated sufficient factual allegations to raise a genuine issue. Osborn also contends that the district court abused its discretion in refusing to compel E.F. Hutton to produce certain documents regarding Osborn's trading activity.
In reviewing the district court's grant of summary judgment, we apply the same standard as that applied by the district court. Stark v. St. Cloud State University, 802 F.2d 1046, 1048 (8th Cir.1986)....
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...in a particular case, the evidence must be viewed in the light most favorable to the nonmoving party. Osborn v. E.F. Hutton & Co., Inc. , 853 F.2d 616, 618 (8th Cir.1988). Where parties file cross-motions for summary judgment, each summary judgment motion must be evaluated independently to ......
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