GARGALLO V. MERRILL, LYNCH, PIERCE, FENNER & SMITH
918 F.2d 658 (6th Cir. 1990)
NATURE OF THE CASE: This was a dispute over monies allegedly due on a brokerage account
and a decision barring the claim based on res judicata.
FACTS: Gargallo (D) maintained an account at Merrill (P) from 1976 until 1980 when his
investments did not pan out and losses occurred. P alleged that D owed $17,000. D refused to
pay. P sued D and D countersued for negligence, misrepresentation and churning and that P
had violated federal securities laws. D's claims were eventually dismissed with prejudice
under Ohio Civil Rule 37 for a refusal by D to comply with P's discovery requests. D then
filed a suit in federal court charging P with violating federal securities laws. This was
based on the same transactions at issue in the state action. The District Court then
dismissed the suit against P on res judicata grounds finding that the issues, facts and
evidence to sustain the action were identical to claims asserted in the state counterclaim
that was dismissed. D appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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