JOSEPH PETRONE VS. ALEX J. SABO, ESQ.(L-2648-12, MONMOUTH COUNTY AND STATEWIDE)
A-0460-15T2
| N.J. Super. Ct. App. Div. | Jun 13, 2017Background
- In 2005 Petrone worked as a broker-dealer for Investacorp, Inc., which faced a NASD claim alleging wrongdoing by both Investacorp and Petrone.
- In 2006 BAR represented Investacorp and Petrone; Investacorp settled with the investor for $275,000 just before arbitration, and Petrone separately settled for $2,500.
- Investacorp reported the settlements on Form U4; Petrone disputed that his settlement should be treated separately and not reflected on U4 or later U5, but Investacorp declined to amend.
- In 2007 Petrone filed a FINRA claim alleging false U4/U5 information caused lost income, seeking to remove the misleading information and damages of $531,500, with a breakdown of damages including lost earnings through 2019 and penalties.
- Investacorp counterclaimed for indemnification of the settlement amount and fees; BAR did not represent Investacorp in the employment arbitration.
- FINRA arbitrators found in Petrone’s favor but awarded only $12,150 in compensatory damages and expungement of references to the investor’s claim; damages beyond the arbitration were later the subject of the malpractice action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether collateral estoppel bars relitigation of the damages | Petrone contends damages were not litigated in the prior arbitration. | BAR argues damages were identical and litigated in arbitration, precluding relitigation. | Collateral estoppel applies; damages are precluded. |
Key Cases Cited
- Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511 (2006) (collateral estoppel doctrine applies to issue preclusion)
- In re Estate of Dawson, 136 N.J. 1 (1994) (identical issue and final judgment requirements for collateral estoppel)
- Habick v. Liberty Mut. Fire Ins. Co., 320 N.J. Super. 244 (App. Div. 1999) (arbitration proceedings can give collateral estoppel effect)
- Levine v. Wiss & Co., 97 N.J. 242 (1984) (arbitrators’ dispositions may have collateral estoppel effect)
- Pace v. Kuchinsky, 347 N.J. Super. 202 (App. Div. 2002) (unfairness factors may prevent preclusion even if elements are met)