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Clark v. Stearns

filed: June 12, 1992.

ISABEL CLARK, PLAINTIFF-APPELLEE,
v.
BEAR STEARNS & CO., INC., A DELAWARE CORPORATION; MORGAN OLMSTEAD, KENNEDY & GARDNER INCORPORATED, A CALIFORNIA CORPORATION; GARY HANKINS, AN INDIVIDUAL; AND DOES 1 THROUGH 50, INCLUSIVE, DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the Southern District of California. D.C. No. CV-88-0190-G(M). Earl B. Gilliam, District Judge, Presiding.

Before: Arthur L. Alarcon, Robert R. Beezer and Pamela Ann Rymer, Circuit Judges. Opinion by Judge Beezer; Concurrence by Judge Rymer.

Author: Beezer

BEEZER, Circuit Judge:

An arbitration panel dismissed state negligence and fraud claims brought against Bear Stearns & Co., Inc., as part of Isabel Clark's securities action. The district court concluded that the dismissal did not have preclusive effect on Clark's federal claims under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5. The court denied the defendants' motion for summary judgment. Bear Stearns & Co., Inc., and Gary W. Hankins, a former Bear Stearns broker, appeal. We have jurisdiction pursuant to 28 U.S.C. § 1292(b) and we affirm.

I

Arbitration provides a speedy and efficient method for the resolution of disputes. At least that is the theory. In practice, a dispute submitted for arbitration often drones on in the manner of Jarndyce v. Jarndyce,*fn1 becoming so convoluted in the course of time that no man or woman alive could hope to sort it out.

On January 9, 1988, more than four years ago, Isabel Clark brought a securities fraud action against Bear Stearns & Co., Inc., Morgan Olmstead Kennedy & Gardner, Inc., and Gary W. Hankins. Clark's complaint alleged violations of federal securities laws, fraud, breach of fiduciary duty, negligence and conversion. Clark did not specify under the laws of which state the common law violations allegedly occurred.

The district court ordered arbitration of all claims except Clark's federal claims arising under section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Those claims were stayed by the district court pending resolution of the arbitrable claims.

At the Conclusion of the arbitration, the panel submitted a written decision and award. The panel found Morgan Olmstead Kennedy & Gardner, Inc., and Gary W. Hankins jointly and severally liable in the amount of $301,265. The award also stated with commendable clarity - but with no elaboration - that "all claims against Respondent Bear Stearns & Co., Inc. are dismissed."

On August 30, 1990, defendants Bear Stearns and Gary W. Hankins filed a motion for summary judgment in the district court. They contended that the arbitration award precluded Clark's claims under section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Specifically, they argued that Clark's federal claims were barred by the doctrines of res judicata and collateral estoppel.

After denying defendants' motion for summary judgment, the district court granted defendants' motion for certification of an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). We granted defendants' petition to appeal from the district court's denial of their motion for summary judgment and defendants timely filed their notice of appeal. Because Clark settled her federal claims against Morgan Olmstead, Bear Stearns and Hankins are the sole defendants-appellants.

II

We review de novo a district court's grant or denial of a motion for summary judgment. Lockary v. Kayfetz, 917 F.2d 1150, 1153 (9th Cir. 1990). Res judicata and collateral estoppel questions are also reviewed de novo. A & A Concrete v. White Mountain Apache Tribe, 781 F.2d 1411, 1414 (9th ...


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