# Opposition Brief — Zerman v. Melton

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0464%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1985
- **Citation:** 474 U.S. 845

## Text

. Supreme Court, U.S.

PILED

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No. 85-83 SEB ne Ieee

IN THE

Supreme Court of the Unite? States
October Term, 1985

EVELYN ZERMAN,

Petitioner,
v.

ANDREW J. MELTON, Jr.,. ROBERT M. GARDINER,
PETER BYRNE and DEAN WITTER REYNOLDS, INC.

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR RESPONDENTS
ANDREW J. MELTON, Jr.,. ROBERT M. GARDINER,
PETER BYRNE & DEAN WITTER REYNOLDS, INC.
IN OPPOSITION

JOHN F. X. PELOSO
SAGE Gray TopD & SIMS
Two World Trade Center
100th Floor

New York, New York 10048
(212) 466-9600

Counsel for Respondents

Of Counsel:
DOROTHY E. HUGHES

BEST AVAILABLE COPY

QUESTIONS PRESENTED

Whether Petitioner's failure to present
good or sufficient reasons for granting
of a writ of certiorari warrants denial

of the petition.

Whether the frivolous nature of this

petition supports an award of appropriate

damages.

(1)

TABLE OF CONTENTS

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TABLE OF AUTHORITIES
Cases:

Bivens v. Six Unknown Fed. Narcotics
peenee, 405 U.5. 368 (1970) ........

zerman v. Jacobs, 459 U.S. 811
i

zerman v. Jacobs, 104 S.Ct. 183
ee ee

zerman v. Jacobs, 104 S.Ct. 399
Ne

Statutes:

Securities Act of 1933,

section 12(2), 15 U.S.C. §771(2)
0, ES a ee ae

10

10

10

(iv)
Section 17(a), 15 U.S.C. §77q
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Rules of the Supreme Court of the United
States:

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Federal Rules of Civil Procedure:

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IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1985

No. 85-83
EVELYN ZERMAN,
PETITIONER
Vv.

ANDREW 2. MELTON, JR., ROBERT M. GARDINER,
PETER BYRNE and DEAN WITTER REYNOLDS, INC.,

RESPONDENTS.

ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS FOR
THE SECOND CIRCUIT

BRIEF FOR RESPONDENTS ANDREW J. MELTON, JR.,
ROBERT M. GARDINER, PETER BYRNE AND
DEAN WITTER REYNOLDS INC. IN OPPOSITION

OPINIONS BELOW
The order of the court of appeals
(Pet. App. A.5-A.6) is unreported. A prior
1

2
opinion of the court of appeals (Pet. App.A)
is reported at 735 F.2d 751. The order of the
district court (Pet. App. B) is unreported.
JURISDICTION

The order of the court of appeals
was entered on March 25, 1985, and the peti-
tion for a writ ef certiorari was filed on
June 24, 1985. The jurisdiction of this Court
is invoked under 28 U.S.C. 1254(1).

STATEMENT

In October 1982, Petitioner Evelyn
Zerman filed suit against Respondents for
alleged wrongs committed by them in connection
with her securities account at Dean Witter
Reynolds Inc. ("Dean Witter"). Respondents'

subsequent motion to dismiss was granted by

1 The two other cases to which the petition
relates do not involve Respondents but
will be addressed infra, in connection
with Respondents’ request for an award of
damages.

3

the district court (Pet. App. B) and the
dismissal affirmed by the court of appeals
(Pet. App. A-A.4). A petition for rehearing
was denied by the court of appeals (Pet. App.
A.5-A.6). |

Petitioner's claims against Respon-
dents arose primarily out of her purchase of a
Government National Mortgage Association
("GNMA") Certificate and United States Trea-
sury Bonds (Pet. App. B.3). Her numerous
claims, made under a variety of federal and
state laws, were primarily dismissed for
failure to satisfy Rule 9(b) of the Federal
Rules of Civil Procedure, Fed. R. Civ. P. 9(b)
(Pet. App. A.2-A.4). The district court
dismissed the claim made under section 12(2)
of the Securities Act of 1933 (the "Securities
Act"), 15 U.S.C. §$771(2) because, for that
purpose as well as others, GNMA Certificates

and U.S. Treasury Bonds are exempt securities

+
and thus not susceptible to a sestion 12(2)
Claim (Id.). Neither the correctness of the
section 12(2) decision, nor the validity of
the statute pursuant to which it was made,
ever was addressed in the court of appeals
(Pet. App. A-A.4).

Because of the “repetitive actions
alleging similar fraud by various brokerage
houses" which she and her husband had fiied
over a period of time long enough to have
instructed them in the "complexities of their
investment transactions" and their "peculiar
vulnerability to fraudulent conduct," the
court of appeals denied Mrs. Zerman the “usual
opportunity" to amend her complaint before

dismissal under Fed.R.Civ.P. 9(b) (Pet. App.

A-3, A-4).

eee ir °

5
ARGUMENT

1. The considerations governing the
granting of a writ of certiorari are contained
in Rule 17 of this Court, and make clear that
review will be granted "only when there are
special and important reasons therefor."
Reasons given by the Rule, not an exclusive
listing, include a conflict among courts of
appeals and an egregious departure by such a
court from "the accepted and usual course of
judicial proceedings." Review may also be
granted when a court of appeals has decided
"an important question of federal law" which
either has not Létn but should be determined
by this Court, or which conflicts with a
decision of this Court.

The petition meets none of these
requirements. Moreover, to the extent that

the petition raises an issue regarding the

availability of a private cause of action

6

under §17(a) of the Securities Act, 15 U.S.C.
§77q, not only was it not raised in the court
of appeals (Pet. App. A-A.4), but it is
largely irrelevant to Petitioner's case. Mrs.
zerman's fraud claims were dismissed because
they were not pleaded with the particularity
required by Fed. R. Civ. P. 9(b) (Pet. App.
B - B.4). Since any claim under §17(a) is a
fraud claim also subject to the requirements
of Fed. R. Civ. P. 9(b), the availability of
such a remedy would have been and is of no
matter to her. The court of appeals agreed
with the district court that none of
Mrs. Zerman's fraud claims were pleaded with
sufficient particularity, and denied to her
the opportunity to amend prior to dismissal
(Pat. App. A.3-A.4).

As to the issue raised by Petitioner
concerning the exemption of securities issued

Or guaranteed by the United States from

i

Fi
various provisions of the Securities Act, that
issue was not raised by the petitioner in
either the district court or the court of
appeals (Pet. App. B -B.4, A = A.4) and
should thus not be reviewed in this Court.

Bivens v. Six Unknown Fed. Narcotics Agents,

403 U.S. 388, 397 (1970). Petitioner's
attempt to use the current publicity this
question has received as an afterthought for
obtaining review by this Court should not be
countenanced. Moreover, the exemption only
prevented Mrs. Zerman from asserting a claim
pursuant to §12(2) of the Securities Act. Her
claims asserted pursuant to other federal as
well as state laws, regulating securities and

otherwise, were fully considered below. She

-was thus in no manner prevented from recover-

ing for perceived wrongs. The petition should

be denied.

8

ae In addition to denial of the
petition, damages should be awarded to Respon-
dents based upon the frivolous nature of this
petition.

The case involving Respondents is
but one of three lawsuits, all filed in the
United States District Court for the Southern
District of New York against brokerage houses,
which Petitioners would have this Court
review. The two matters not involving Respon-
dents concerned Petitioner Ernest Zerman's
securities account at Prudential-Bache Securi-
ties, Inc. ("Prudential"). The conduct of
their litigation may be described as follows.

Petitioners are husband and wife,
the former an attorney (Pet. App. A.2, D.2).
In June of 1980 Mr. Zerman commenced an action
against Prudential and was ordered to arbi-
trate his claims after Prudential moved to

compel arbitration. (Pet. App. D.2-D.3). The

9

order to arbitrate was affirmed by the court
of appeals (Id.). Thereafter, Ernest Zerman
filed a series of motions to resist arbitra-
tion and, after twenty months, was enjoined by
the district court from filing any further
motions until arbitration was had (Id.). Mr.
Zerman failed to appear at the arbitration
hearing, an award was rendered against him
and, on March 8, 1983, the award was confirmed
by the district court and a judgment entered
thereupon (Id.).

Over a year later Mr. Zerman moved
before the district court to set aside that
final judgment (Id.). That motion was denied
as patently frivolous and, on December 13,
1984, that denial was affirmed by the court of
appeals (Pet. App. + oe D.3-D.4, D.6,
D.9-D.10). Zerman was assessed double costs
plus $2,500 damages for taking a frivolous

appeal (Pet. App. D.5-D.6). Two prior

10

petitions for writs of certiorari filed by
Zerman in that matter had been denied by this
Court on October 3 and November 7, 1983.
german v. Jacobs, 104 S.Ct. 183 (1983); Zerman
v. Jacobs, 104 S.Ct. 399 (1983). His motion
to direct the Clerk of this Court to file his
petition had been denied on October 2, 1982.
zerman v. Jacobs, 459 U.S. 811 (1982).

In early November, 1983, suspicious-
ly close in time to when Mr. Zerman's second
petition had been denied by this Court, his
second litigation against Prudential was filed
in the United States District Court for the
Southern District of New York (Pet. 6). The
New York Stock Exchange, under whose auspices
Prudential had conducted its court-ordered
arbitration against Mr. Zerman, was included
as a defendant (Id.). By Order dated May 7,
1984, the district court granted the defen-

dants' motions to dismiss (Id. at 6-7). The

emery

11

court of appeals affirmed by decision dated
January 31, 1985 (Id. at 7) and assessed
attorneys’ fees of all appellees against
zZerman (Pet. App. C.2,C.4). Claims for
attorneys’ fees of $7,937.50 and $4,000 were
approved accordingly in favor of The New York
Stock Exchange, and Prudential, Loren P. Lyon
and Irene Schonzeit, respectively (Id.). A
petition for rehearing was denied by the court
of appeals on March 20, 1985 (Pet. App.
C.5,.6}.

It was on October 22, 1980, shortly
after her husband filed suit against Pruden-
tial, that Evelyn Zerman opened her account
with Respondent Dean Witter and, two years
later, filed suit against it as well as the
three remaining Respondents (Pet. App. B,
S.a)-

Thus, the court of appeals’ has

assessed double costs, damages of $2,500. and

12
a total of $11,937.50 in attorneys' fees
against Petitioner Ernest Zerman for the
filing of frivolous appeals. This occurred
because Zerman failed to heed the warning
given to him in his wife's case by that Court,
in affirming the dismissal obtained by Respon-
dents, that "repetitive and baseless claims
brought to recoup investment losses may lead
to such an award" (Pet. App. A.4; D.6, n. 2).
Rule 49 of the Rules of this Court
provides in pertinent part that:
é. When an appeal or petition for writ
of certiorari is frivolous, the
Court may award the appellee or the
respondent appropriate damages.
It is respectfully submitted that the Zermans'
petition supports an award of damages against

them and in favor of Respondents. This Court

is requested to do so.

as

CONCLUSION

For the foregoing reasons, the
petition for a writ of certiorari should be
denied, with an award of attorneys’ fees to

Respondents.

September 26, 1985

Respectfully submitted,

John F.X. Peloso
Sage Gray Todd & Sims
Dorothy E. Hughes Two World Trade Center
of Counsel 100th Floor
New York, New York
(212) 466-9000
Counsel for Respondents

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