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Hazen v. Prudential Securities Inc.

*fn* submitted san francisco california: October 8, 1993.

HOWARD H. HAZEN, PLAINTIFF-APPELLANT,
v.
PRUDENTIAL SECURITIES, INC., DEFENDANT-APPELLEE.



Appeal from the United States District Court for the District of Nevada. D.C. No. CV-91-00853 PMP RJJ. Philip M. Pro, District Judge, Presiding

Before: Thompson and O'scannlain, Circuit Judges, and Nielsen, District Judge.*fn*

MEMORANDUM

OVERVIEW

In his complaint filed in the district court, Howard H. Hazen alleged that Prudential Securities, Inc. was negligent in transferring his security accounts, and breached its fiduciary duty by failing to keep him informed and divulging confidential information. The district court dismissed the complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6) and denied Mr. Hazen's request to amend his complaint. We have jurisdiction under 28 U.S.C. § 1291. We affirm the district court's dismissal of the fiduciary claim, but reverse the dismissal of the negligence claim and remand for further proceedings.

FACTUAL BACKGROUND

Mr. Hazen maintained two securities trading accounts each of a value in excess of $500,000. The accounts were in Oshkosh, Wisconsin with Thomson McKinnon Securities, a firm that merged with Prudential Securities, Inc. in late summer and fall of 1989.

In August 1989, Mrs. Hazen instituted a divorce proceeding. Mr. Hazen denied any knowledge of the divorce proceedings until after October 31, 1989. He moved from Wisconsin to Nevada however, by September 6, 1989. On that same day he wrote to McKinnon requesting that his two accounts be transferred to Prudential's office in Las Vegas, Nevada as expeditiously as possible.

In early September he alleges that he informed his representative at McKinnon that he intended to liquidate his holding of some common stock and it was imperative that his accounts be transferred expeditiously. On several occasions in early October 1989 he allegedly also informed his Prudential representative in Nevada of his plan to liquidate the stock holdings and demanded transfer of the accounts.

In mid to late October 1989, Mrs. Hazen served a subpoena duces tecum and notice of taking deposition of the Prudential office manager in Appleton, Wisconsin, requiring information regarding Mr. Hazen's accounts. The manager was deposed on October 30, 1989 and provided the requested records. Mr. Hazen was not informed by Prudential of the proceedings and was not represented at the deposition.

Mr. Hazen contends that between September 8 and October 25-31, 1989, Prudential refused to permit the liquidation of his accounts. Mr. Hazen does not allege that he requested the holdings be liquidated at any particular time during this period.

On October 31, 1989 Mr. Hazen alleged he was notified by Prudential that his accounts had been transferred and he could resume trading. He alleges that he ordered most of his holdings liquidated on October 31, at a substantial loss from what he would have received had they been liquidated on September 9, 1989.

At an unknown time, Mr. Hazen also alleged that Prudential disclosed to Mrs. Hazen that he was in the process of liquidating his accounts. The information contained in the uncrossed deposition and this confidential information regarding liquidation was allegedly the basis for an ex parte temporary restraining order issued by the Wisconsin court on November 1, 1989, which blocked Mr. Hazen from liquidating at least one-half of the declining securities.

Discussion

A district court's dismissal pursuant to Fed. R. Civ. P. 12(b)(6) is reviewed de novo. Abrahamson v. Brownstein, 897 F.2d 389, 391 (9th Cir. 1990); Love v. United States, 915 F.2d 1242, 1244 (9th Cir. 1989). Fed. R. Civ. P. 12(b)(6) provides for dismissal of causes of action for "failure to state a claim upon which relief can be granted. . . ." Fed. R. Civ. P. 12(b)(6). The issue is not whether Mr. Hazen is likely to succeed on the merits, but only if the complaint is legally sufficient to entitle him to proceed beyond the pleadings and attempt to establish his claim. De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978), cert. denied, 441 U.S. 965, 99 S. Ct. 2416, 60 L. Ed. 2d 1072 (1979). The district court's dismissal is affirmed "only if it is clear that no relief could be granted under any set of facts that could be ...


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