Confidential
Settlement – $170,376Judge
Court
American Arbitration Association
Attorneys
Plaintiff
Defendant
Thomas D. Mauriello
(Mauriello Law Firm APC)
Experts
Plaintiff
Richard E. Peterson
(technical)
Facts
From November 1990 until 1992, the individual defendant was employed by the defendant brokerage company as a registered representative assigned to branches of the defendant bank. In that position, he solicited customers of the defendant bank with the goal of selling them mutual funds and annuities. All of the paperwork which offered products to customers or potential customers, all of the individual defendant's business cards, and all of the signage on and about the individual defendant's desk identified the individual defendant as an employee of the defendant brokerage and also disavowed any relationship between the employee/employer and the defendant bank. While employed by the defendant brokerage, and working at the defendant's branches, the individual defendant met the plaintiff. Over an approximate 18 month period, the individual defendant, who was in his twenties, and the plaintifff became close friends, having lunches and dinners together, traveling on vacations together, visiting each other and their homes, going to bars on a regular basis together, and developing very good mutual friends. The plaintiff in fact "treated" (the individual defendant) like a son." However, at no time while the individual defendant was employed by the defendant marketing company working at the bank, branches did the plaintiff ever purchase a mutual fund or security through the individual defendant, the defendant marketing company and the bank. In approximately January 1992, the plaintiff learned that the individual defendant was interested in leaving the defendant marketing company and developing some real estate. The individual defendant mentioned that he would be obtaining either a construction loan from a conventional lender or a loan from his parents. The plaintiff suggested instead that the individual defendant save the points and interest and borrow the money from the plaintiff. The plaintiff's net worth at this time was at least three or four million dollars and he was earning passive income well in excess of $300,000 per year. He had no debt, owning all of his homes, real estate, investments, vehicles and personal property free and clear. Before the individual defendant purchased the property, the plaintiff visited the individual defendant land on numerous occassions and purchased an adjacent parcel of land in order to protect the individual defendant's view. On Feb. 24, 1992, the plaintiff wrote the individual defendant a check in the amount of $200,000, made payable to the individual defendant. At the time he gave the individual defendant the $200,000 check, a writing was prepared memorializing the parties and material terms to the transaction. However, that writing was never produced and used the proceeds to begin construction on the property and to purchase a variety of mutual funds and securities, which would be sold in order to further fund the development. Unfortunately, the lot proved inappropriate for construction and the defendant walked away from it, quit-claiming his interest back to the entity he had purchased it from. The defendant left his employment with the defendant marketing company in April 1992 and formed his own investment company. On April 24, 1992, the plaintiff made a $75,000 loan to the defendant's new company which was memorialized in a promissory note and fully paid off. In December 1992, the plaintiff became worried that the $200,000 loan would not be repaid. On or about Dec. 16, 1992, the plaintiff forced the defendant to executed a promissory note, whereby the plaintiff agreed to make 84 monthly payments of $3,064. Payments were made by personal check from the defendant to the plaintiff for two years and the plaintiff cashed 24 checks. When the plaintiff's wife threatened to turn the defendant in to the District Attorney and the NASD, the defendant ceased making payments. He thereafter moved to Costa Rica. *****
Settlement Discussions
The plaintiff demanded that if the defendant brokerage company, defendant bank and the defendant bank paid the entire unpaid debt ($152,000) plus attorney's fees ($30,000), he would not pursue interest and punitive damages against them. The individual defendant agreed that he owed $152,000 plus interest and was willing to restate the debt in that total amount. The other defendants jointly offered the plaintiff $110,000, with an indication of more.
Damages
The plaintiff claimed loss of $152,000, plus prejudgment interest ($17,850), attorney's fees, punitive damages and trebled punitive damages for elder abuse.
Result
***** CONTINUATION OF FACTS: However, he did voluntarily return to San Diego to have his videotape deposition taken in this action. Further, in response to the plaintiff's complaint to the NASD, this transaction was investigated and that NASD determined that the defendant had not any wrongdoing with respect to his securities license. The first notice the plaintiff submitted to the defendant marketing company, the defendant _________ or the bank with respect to the subject transaction was when this lawsuit was served on those parties beginning in May 1995. The plaintiff stated that he never felt that had done anything wrong. The defendant marketing company, the defendant ___________ or the defendant bank. The plaintiff brought this action against the defendants based on breach of contract, fraud, negligent misrepresentation, money had and received, constructive trust, impression of equitable lien, rescission, violations of Welfare and Institutions Code º15657, violations of Civil Code º3345 and negligent supervision of the individual defendant who was an employee of the defendant marketing company and performed his services at various branches of the defendant bank. The plaintiff asserted entitlement to trebled punitive damages and attorney's fees as the defendant's acts contituted elder abuse pursuant to Welfare and Institutions Code º15657 and Civil Code º3345. ##### CONTINUATION OF CONTENTIONS: The defendant bank contended that the individual defendant was not an ostensible or actual agent of the defendant bank that the defendant bank took more than sufficient steps to ensure that the individual defendant was perceived by the public as not affiliated with the defendant bank through signage, business cards, disclaimers, and oral statements; that the defendant bank met the applicable standard of care in processing its customers checks; that it could be expected to review each of the $8 million checks drawn on its customers accounts every single business day so as to be sure that the customer was spending his/her money prudently; and , that if bank or any bank, took such steps, it would be subject to claims to invasion or privacy and would lose customers.
Other Information
The award was rendered approximately one year and nine months after the case was filed.
Poll
3-0
Length
4 days
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