Gargallo v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
United States Court of Appeals for the Sixth Circuit
918 F.2d 658 (1990)
- Written by Jamie Milne, JD
Facts
Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill) (defendant) sued Miguel Gargallo (plaintiff) in Ohio state court to collect on a debt for losses Gargallo incurred on a margin brokerage account with Merrill. Gargallo asserted a counterclaim, alleging that Merrill had caused Gargallo’s losses via negligence and misrepresentations violating federal securities laws. The Ohio trial court dismissed Gargallo’s counterclaim with prejudice for Gargallo’s failure to comply with discovery orders. Gargallo then filed a complaint against Merrill and its account executive, Larry Tyree (defendant), in federal district court. The complaint alleged the same violations of federal securities laws. The district court dismissed Gargallo’s claim against Merrill on res judicata grounds, reasoning that the state court’s final judgment on the claim barred relitigation. The district court also dismissed Gargallo’s claim against Tyree, this time on collateral-estoppel grounds. Gargallo appealed.
Rule of Law
Issue
Holding and Reasoning (Ryan, J.)
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