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Galbraith v. A.G. Edwards & Sons

December 22, 2005

GARTH E. GALBRAITH, PLAINTIFF,
v.
A.G. EDWARDS & SONS, INC., DEFENDANT.



The opinion of the court was delivered by: Mitchell, Magistrate Judge

OPINION AND ORDER

Presently before the Court is the defendant's motion for summary judgment on its affirmative defenses of waiver and equitable estoppel.*fn1 For reasons discussed below, the defendant's motion for summary judgment (Docket No. 90) will be denied.

The plaintiff, Garth E. Galbraith, filed a complaint against defendant A.G. Edwards & Sons, Inc. ("A.G. Edwards") in the Court of Common Pleas of Allegheny County, PA, complaining that it was negligent in failing to add his name to a brokerage account owned by its client, Catherine Keeney, as Keeney instructed it to do. The defendant filed a timely notice of removal to this Court, and it is not disputed that the Court has original jurisdiction of this matter pursuant to 28 U.S.C. § 1332.

The complaint sets forth claims against the defendant for negligence, professional negligence, breach of fiduciary duty, and negligent misrepresentation based on the following facts. In mid-October or early November 2001, Catherine Keeney decided to make the plaintiff co-owner of an account she had with A.G. Edwards which contained approximately $940,000 in stocks and other assets. Keeney informed her broker at A.G. Edwards, James Hergenroeder, that she wanted to add the plaintiff as a joint owner on the account, and on November 8, 2001, Hergenroeder sent certain forms to Keeney for her to sign in order to place the plaintiff on her account as a secondary owner. To facilitate the signing of the forms, Hergenroeder indicated on the forms where Keeney and the plaintiff were to sign their names, and on November 15, 2001, the plaintiff personally delivered the signed forms to Hergenroeder which were dated November 14, 2001.

A.G. Edwards never transferred Keeney's account into joint names. It contends that the forms signed by the plaintiff and Keeney were incomplete and insufficient to transfer Keeney's account to joint ownership. According to James Hergenroeder, on November 12, 2001, he spoke to Keeney by telephone, at which time she advised him not to transfer the account into joint names until they could discuss the matter further. Hergenroeder made several attempts to speak to Keeney about the matter, but she never spoke to him about it prior to her death on December 12, 2001.

Unaware that he was not made co-owner on Keeney's account, the plaintiff contends that he wrote to A.G. Edwards on January 18, 2002, requesting that the account be transferred into his sole name due to Keeney's death. Thereafter, the plaintiff learned that A.G. Edwards did not transfer Keeney's account into joint names, and it refused to transfer the account into his sole name. Due to the defendant's actions, the plaintiff contends that it breached its duty of care to him.

On June 14, 2004, A.G. Edwards filed its original answer and affirmative defenses. On November 18, 2005, the defendant amended its answer and affirmative defenses, adding the affirmative defenses of "waiver" and "equitable estoppel". It now moves for summary judgment on its amended defenses. Specifically, A.G. Edwards argues that the plaintiff's claims are barred by the doctrines of waiver and equitable estoppel as a result of the plaintiff's agreement to dismiss it with prejudice from a prior Estate Proceeding brought by the Estate of Catherine Keeney to collect Estate assets.

The record shows that on or about August 5, 2002, PNC Bank, as Executor of the Estate of Catherine Keeney, filed a Petition for Recovery of Assets naming A.G. Edwards and Garth Galbraith, among others, as respondents in the Court of Common Pleas of Allegheny County, Orphans' Court Division (the "Orphans' Court Action").*fn2 In its Petition in the Orphans' Court Action, PNC Bank asserted that Garth Galbraith claimed ownership of Keeney's account at A.G. Edwards, because prior to her death, he attempted to change her account into a joint account with him as co-owner; that A.G. Edwards never changed Keeney's account into joint names, as it believed it had incomplete and insufficient authorization to make such a change; and that due to Mr. Galbraith's claim, Keeney's account was placed on administrative hold on April 12, 2002. In its Petition, PNC Bank sought a citation from the Orphans' Court, directing A.G. Edwards and Garth Galbraith to show cause why A.G. Edwards should not pay all assets in Keeney's brokerage account to it, free of any claim of Mr. Galbraith.

In response to the Petition, Garth Galbraith stated that he became the sole owner of Keeney's account upon her death, as the account should have been transferred to joint names during her lifetime.*fn3 In A.G. Edwards' answer to the Petition, it offered to distribute the funds in Keeney's account to PNC Bank or the Court, subject to deductions for its costs and expenses.*fn4

On October 9, 2002, all parties to the Orphans' Court Action agreed to dismiss any claims against A.G. Edwards in that proceeding in exchange for it paying the funds from Keeney's account into escrow.*fn5 In pertinent part, the October 9, 2002 stipulation of dismissal in the Orphans' Court Action provided:

Any claims against A.G. Edwards in the above-captioned proceeding are discontinued and all parties voluntarily dismiss with prejudice A.G. Edwards from the above-captioned proceeding.

Garth Galbraith avers that he had asserted no claim against A.G. Edwards when he executed the October 9, 2002 stipulation of dismissal, and that the only claims brought against it in that proceeding were those asserted by PNC Bank as Executor of Keeney's Estate. It is true that in Galbraith's response to PNC Bank's Petition, he did not raise any claims pertaining to A.G. Edwards' alleged negligence or breach of fiduciary duty in its handling of Keeney's account, even though Galbraith learned from the Petition that A.G. Edwards had not changed Keeney's account into joint names as he and Keeney instructed it. In responding to the Petition, Galbraith maintained that he had become a joint owner of Keeney's account in accordance with her expressed wishes, and he became the sole owner of the account upon her death.

Following A.G. Edwards' dismissal from the Orphans' Court Action, Garth Galbraith continued to assert his right to the funds from Keeney's account. For instance, in his pretrial statement filed in the Orphans' Court Action, Mr. Galbraith stated:

... In November, 2001, Ms. Keeney signed all the necessary forms ... needed to make Mr. Galbraith a joint owner of [her A.G. Edwards' account]. She also had discussions with her broker in which she ...


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