Source: http://openjurist.org/602/f2d/604/in-the-matter-of-gerald-j-ross
Timestamp: 2015-08-29 00:23:34
Document Index: 730311483

Matched Legal Cases: ['§ 17', '§ 35', '§ 10', '§ 78', '§ 10', '§ 17', '§ 35', '§ 10']

602 F2d 604 In the Matter of Gerald J Ross | OpenJurist
602 F. 2d 604 - In the Matter of Gerald J Ross Home
602 F2d 604 In the Matter of Gerald J Ross 602 F.2d 604
5 Bankr.Ct.Dec. 700, Bankr. L. Rep. P 67,182
In the Matter of Gerald J. ROSS, also known as Jerry Ross, Bankrupt.Gerald J. Ross, Appellant.
Argued June 6, 1979.Decided July 26, 1979.
Lester H. Novack (argued), Cohen & Novack, Philadelphia, Pa., for appellant.
James D. Crawford, David S. Hope, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa. and Mark L. Austrian (argued), Christine Beck, Davis, Polk & Wardwell, New York City, for appellee, Metro-Goldwyn-Mayer, Inc.
Before ALDISERT, VAN DUSEN and GIBBONS, Circuit Judges.
This appeal challenges a district court decision which reversed a bankruptcy judge's order and granted summary judgment in favor of Metro-Goldwyn-Mayer, Inc. (MGM). The final district court order held that a debt of Gerald J. Ross to MGM was not dischargeable in bankruptcy, pursuant to § 17(a)(2) of the Bankruptcy Act, 11 U.S.C. § 35(a)(2), and that it would be improper to litigate this dischargeability issue since a prior decision of the United States Court of Appeals for the Second Circuit1 involving the same parties was dispositive of that issue.2 This court reverses the decision of the district court and remands, so that the bankruptcy court may review the entire record of the earlier action and determine, in light of principles of collateral estoppel,3 Brown v. Felsen, --- U.S. ----, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979), and this opinion, whether the factual record supports the application of the doctrine of collateral estoppel to preclude litigation of this dischargeability question in the bankruptcy court.
The debt found not to be dischargeable by the district court arose out of contract litigation between the parties in the Southern District of New York. MGM brought suit in the United States District Court for the Southern District of New York to rescind its contract with Gerald and Arthur Ross ("Ross brothers").4 The grounds for this suit included contentions that the Ross brothers had made misleading statements and omitted to disclose material facts in violation of § 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder.5 The Ross companies counterclaimed and brought suit against MGM for breach of contract and violation of the federal securities laws.6
After a five-week trial in the Southern District of New York, the court concluded that MGM should have been aware of the 70,000 free records from the documents it reviewed. The court found that MGM had breached its agreement and awarded damages to the Ross brothers. See Metro-Goldwyn-Mayer, Inc. v. Ross, 363 F.Supp. 23 (S.D.N.Y.1973).
The United States Court of Appeals for the Second Circuit reversed and held that the Ross brothers had violated § 10(b) by failing to disclose the 70,000 records. An order on remand was entered directing the Ross brothers to return the MGM stock and pay MGM $303,832. as consequential damages (see 4/30/75 Southern District of New York order at 62a).
On August 6, 1975, Gerald Ross filed a voluntary petition in bankruptcy in the Eastern District of Pennsylvania. MGM claimed that the debt arising out of the New York suit was not dischargeable in bankruptcy under § 17(a)(2) of the Bankruptcy Act, 11 U.S.C. § 35(a)(2), which provides that liabilities for obtaining money or property by false pretenses or false representations are not dischargeable in bankruptcy. MGM sought summary judgment based on its contention that the prior judgment forecloses the relitigation of issues litigated in that proceeding and that the issue of obtaining property by false representations or pretenses was already decided in the § 10(b) suit.