Justia Securities Law Opinion Summaries

Articles Posted in Estate Planning
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The issue on appeal to the Supreme Court was whether the appellate court erred in reversing a trial court's denial of Harold Wright's exception of res judicata. Mr. Wright was paralyzed and incapacitated by a medical accident in 1973. He received $1.7 million in damages. The court declared Mr. Wright an interdict and appointed his wife as his curatrix. In conjunction with the proceeding, the court issued an order allowing the curatrix to invest the damages in long-term bonds. No portion of the Mr. Wright's capital estate could be withdrawn from any long range investments without specific orders from the court. Through his investment bank Defendant A.G. Edwards & Sons, Inc. (and with the court's permission), Mr. Wright received disbursements from the invested damages award. In 2002, Mrs. Wright sued Defendant alleging breach of fiduciary duty. Specifically, she argued that A.G. Edwards and its agents misappropriated the entire $1.7 million and disbursed principal in violation of the court's order. Furthermore, Mrs. Wright alleged that when one of her account managers left A.G. Edwards to work for Morgan Stanley, he took Mr. Wright's remaining principal with him. The dispute went to arbitration. While pending, Mr. Wright died, thereby terminating the interdiction proceeding. An arbitration panel issued an award in favor of Defendants. Mr. Wright's estate then filed a motion with the district court, and Defendants filed several exceptions including an exception of res judicata where they contended the arbitration proceeding precluded further court action. The trial court denied the exception, and the appellate court reversed, dismissing the estate's claims. Upon review, the Supreme Court found that the arbitration award was unconfirmed, and therefore did not have a preclusive effect. Accordingly, the Court reversed the appellate court's ruling and remanded the case for further proceedings.View "Interdiction of Harold Wright" on Justia Law

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Jean W. Reed, Mary W. Haynes, and Susan W. Stockham ("the sisters") sued Regions Bank ("Regions"), Morgan Asset Management, Inc. ("MAM"), Morgan Keegan & Company, Inc. ("Morgan Keegan"), and Regions Financial Corporation ("RFC"), alleging several claims related to the investment of assets belonging to two trusts set up for the benefit of Reed and Haynes. MAM, Morgan Keegan, and RFC unsuccessfully moved the Jefferson Circuit Court to dismiss the claims against them, arguing among other things, that the claims were derivative in nature and could be asserted only in compliance with Rule 23.1, Ala. R. Civ. P., with which the sisters did not comply. MAM, Morgan Keegan, and RFC petitioned the Supreme Court for a writ of mandamus to direct the circuit court to grant their motion to dismiss. Upon review, the Supreme Court found that the sisters had not alleged an injury distinct from that suffered by the trusts' funds; the claims against MAM, Morgan Keegan, and RFC in their complaint were derivative and did not comply with Rule 23.1 for asserting such claims. The sisters therefore lacked standing to sue. The Court granted the petition and issued the writ. View "Reed v. Regions Bank" on Justia Law

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This case stemmed from Reliance Group Holdings, Inc.'s ("RGH") and Reliance Financial Services Corporation's ("RFS") voluntary petitions in Bankruptcy Court seeking Chapter 11 bankruptcy protection and the trust that was established as a result. The trust subsequently filed an amended complaint alleging actuarial fraud and accounting fraud against respondents. At issue was whether the trust qualified for the so-called single-entity exemption that the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"), 15 U.S.C. 77p(f)(2)(C); 78bb(f)(5)(D), afforded certain entities. The court held that the trust, established under the bankruptcy reorganization plan of RGH as the debtor's successor, was "one person" within the meaning of the single-entity exemption in SLUSA. As a result, SLUSA did not preclude the Supreme Court from adjudicating the state common law fraud claims that the trust had brought against respondents for the benefit of RGH's and RFS's bondholders. Accordingly, the court reversed and reinstated the order of the Supreme Court.View "The RGH Liquidating Trust v. Deloitte & Touche LLP, et al." on Justia Law