Andrew Walzer v. Muriel Siebert Co
447 F. App'x 377
| 3rd Cir. | 2011Background
- Walzer opened a personal brokerage account with MSC in 1980 and entered a margin agreement allowing securities purchases on margin.
- In 2002 MSC increased Walzer's margin maintenance requirement under a 1996 agreement; Walzer contested the higher requirement as unnecessary under NYSE/FRB rules.
- Walzer did not deposit funds for the increased margin; MSC sold about $802,000 of Walzer's securities in mid-2002 due to margin-call failures, causing losses.
- Walzer alleged the 1996 agreement used to justify sales was forged and later provided to him after the sales.
- Walzer filed a New York state suit in 2003 asserting breach of contract, fiduciary duty, and fraud; FINRA arbitration was compelled by a 1992 arbitration clause and the New York court stayed the action pending arbitration.
- On remand, the federal action was stayed pending FINRA arbitration and subsequently dismissed on multiple grounds, with Walzer appealing the district court’s decisions to dismiss and deny reconsideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Walzer pleaded reliance for a Section 10(b) claim. | Walzer asserts the alleged misrepresentation was MSC's ongoing representations during sales. | Walzer failed to plead his own reliance; MSC's sales were chosen by MSC, not Walzer. | Walzer failed to plead reliance; dismissal proper. |
| Whether Walzer's federal claims were properly dismissed for failure to state a claim or futility of amendment. | Walzer contends amendment could cure deficiencies. | Amendment would be futile; federal claims not stated. | District Court properly dismissed without leave to amend. |
| Whether the stay pending FINRA arbitration and discovery orders were proper after remand. | Walzer sought discovery on the 1992 clause to respond. | Orders stayed proceedings pending arbitration were appropriate. | Court did not abuse discretion; stay affirmed. |
| Whether the district court erred in treating subsequent Rule 12 motions as permissible under Rule 12(c) posture. | Walzer challenged sequencing of motions. | Harmless error; alternative posture respected. | No reversible error; proper disposition. |
| Whether Walzer should be allowed to reassert or reframe his federal claims on appeal. | Walzer seeks broader relief and inclusion of SEC role. | Waived or moot; no basis to reconsider. | No appellate basis to expand claims; affirmance affirmed. |
Key Cases Cited
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (Supreme Court 2011) (requiring pleading of reliance for a 10(b) claim; heightened pleading considerations)
- Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154 (3d Cir. 2001) (abuse of discretion standards in discovery and related rulings)
- In re Fine Paper Antitrust Litig., 685 F.2d 810 (3d Cir. 1982) (review of discovery and docket-control rulings on appeal)
- Barefoot Architect, Inc. v. Bunge, 632 F.3d 822 (3d Cir. 2011) (standard for evaluating Rule 12(b)(6) dismissals and leave to amend)
- Ross & Co. v. Redington, 442 U.S. 560 (Supreme Court 1979) (scope of appellate mandate and remand implications)
- Jones v. Pittsburgh Nat'l Corp., 899 F.2d 1350 (3d Cir. 1990) (review of reconsideration on appeal)