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TEAMSTERS LOCAL 282 PENSION TRUST FUND v. ANGELOS

June 8, 1984

TEAMSTERS LOCAL 282 PENSION TRUST FUND, PLAINTIFF,
v.
ANTHONY SEE G. ANGELOS, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Teamsters Local 282 Pension Trust Fund ("Fund") sues ten defendants,*fn1 charging them with:

    1. violation of Securities Act of 1933 § 17(a),
  15 U.S.C. § 77q(a) ("Section 17(a)") (Count I);
    2. violation of Securities Exchange Act of 1934
  § 10(b), 15 U.S.C. § 78j(b) ("Section 10(b)") and
  related SEC Rule 10b-5 (Count II);

3. common law fraud (Count III); and

4. negligent misrepresentation (Count IV).

Several of the defendants now move for summary judgment under Fed.R.Civ.P. ("Rule") 56, contending the present action is barred by collateral estoppel.*fn2 For the reasons stated in this memorandum opinion and order, that motion is granted and the action is dismissed as to all defendants.

Facts*fn3

In 1981 certain Fund beneficiaries sued Fund's Trustees ("Trustees") under 29 U.S.C. § 1104(a) for breach of their fiduciary duty, challenging Trustees' actions in connection with a loan to Bancorporation and its wholly-owned subsidiary, Des Plaines Bank ("Bank"). In 1982 the Secretary of Labor commenced an action against Trustees alleging the same breach of duty.*fn4 In both actions Fund was joined as a defendant, and after the actions were consolidated for pretrial purposes both Fund and Trustees brought third-party actions in each case against Directors and their law firm, alleging the same claims set forth in this action.*fn5

In July 1983 District Judge Jacob Mishler issued his findings and conclusions based upon the evidence adduced during his bench trial, Katsaros v. Cody, 568 F. Supp. 360 (E.D.N.Y. 1983). Several findings were plainly relevant for current purposes (id. at 367):

    1. Trustees violated their fiduciary duty by
  failing to make an independent investigation of
  Bancorporation's and Bank's financial situation.
    2. Such duty to make an independent
  investigation included the duty not to rely on
  Directors' "representations, predictions and
  hopes."
    3. If Trustees had made an independent
  investigation, they would have discovered it was
  imprudent to make the loan to Bancorporation and
  Bank based upon the financial information
  presented by Directors.

If those determinations adverse to Trustees are similarly binding as to Fund here, this action must fail for obvious reasons. All Fund's claims rest on asserted misrepresentations on which Fund claims to have relied. If Fund had no right to rely on those representations (indeed had the duty not to do so), an essential linchpin to all its claims is missing. Hence this opinion turns to a ...


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