Court Opinion

ID: 9848998
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:32:22.881662+00
Date Added: 2024-06-11T09:18:56.593759
License: Public Domain

LOUIS J. CECI, J.
(dissenting). I agree with the majority that the court of appeals' decision must be reversed; however, I disagree with that part of the majority's opinion which holds that Merrill Lynch had no fiduciary duty to Boeck to disclose material investment information. I would reinstate the jury's verdict which determined that Merrill Lynch failed to provide Boeck with material information in its possession.
Although no express contract existed between Merrill Lynch and Boeck regarding investment advisory services, there is no doubt that Merrill Lynch undertook to provide such advice and market information to Boeck as an incident to the commodities account agreement. Dis*152puted testimony indicates that Merrill Lynch's soybean expert subsequently reduced sharply his previous estimate of the Brazilian soybean crop.
It is undisputed, however, that Merrill Lynch never denied telling Boeck that the crop estimate was going down (majority op. 132.) Nor is it questioned that Merrill Lynch failed to inform Boeck that the Brazilian government had increased its estimate to the country's soybean crop. And no one, not even the majority, disputes that "the size of the Brazilian soybean crop was a significant, material factor affecting the price of soybean futures." (Majority opinion at 132.)
Boeck established that he sustained over ninety-eight percent of his losses in soybean futures as a result of investments made after the critical date of May 17, 1978, the date when Boeck asserts that Terrill first learned that the Brazilian government's soybean estimate directly varied with the Merrill Lynch estimate. Merrill Lynch, through Terrill, never relayed this critical information to Boeck. In other words, the jury found, and nowhere does the majority disagree, that Merrill Lynch undertook to provide its client Boeck with material investment advice and failed to provide Boeck with critical information in its possession which varied with its earlier information. This constitutes a breach of Merrill Lynch’s fiduciary duty owed to Boeck. The breach caused Boeck to sustain substantial losses in the soybean market.
The extent of a broker's fiduciary duty in this situation would require that it disclose to the client all significant, material information in its possession regarding the transactions involved. See, Schweiger v. Loewi & Co., 65 Wis. 2d 56, 64, 221 N.W.2d 882 (1974). Here, Merrill Lynch would be required to disclose to Boeck all significant, material information regarding the status of the Brazilian soybean crop. Merrill Lynch's fiduciary duty subsumes, at the very least, a responsibility to disclose in*153formation it possesses which is contrary to the significant, material information it originally gave to the client. A finding that Merrill Lynch breached its fiduciary duty owed to Boeck would not make Merrill Lynch "a guarantor of [Boeck's] investments." (Majority opinion at 137.) Rather, such a finding would merely make a broker liable for its fiduciary breaches.
A finding that a client's account is nondiscretionary is irrelevant in determining the existence of a fiduciary duty, especially where the majority concedes, as it does here, that special circumstances may give rise to fiduciary obligations. Although Boeck's account with Merrill Lynch was nondiscretionary, there are special circumstances in this case which give rise to a relationship of trust and confidence between Merrill Lynch and Boeck; namely, Merrill Lynch initially disclosed to Boeck significant, material market information, upon which Boeck was entitled to rely.
Boeck testified that he reposed his trust and confidence in Merrill Lynch based on its full-page advertisement in a national newspaper and its reputation of a strong research program in commodities. Indeed, Merrill Lynch, like other major brokers, has promoted itself through radio and television advertisements. Merrill Lynch proclaims itself to be a "breed apart" and asserts that it works hard to keep its clients informed! Obviously, no part of this herd would admit, or even imply, that they withhold significant and material information from the client, or that their clients' trust and confidence is misplaced.
The majority's invocation of Robinson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 337 F.Supp. 107 (N.D. Ala. 1971), aff'd, 453 F.2d 417 (5th Cir. 1972), is unpersuasive. Robinson held that a broker does not have a duty to inform the client of all facts and opinions concerning a particular market absent an express contract to furnish *154such information. Boeck and Merrill Lynch did not have such a contract here. But neither does Boeck assert a right to receive "all facts and opinions" of and from the broker. Instead, he only asserts Merrill Lynch's duty to disclose significant and material information regarding the Brazilian soybean market. I do not advocate allowing a client to "recover damages from his broker merely by proving [a broker's] non-transmission of some fact. . . ." Id. at 113 (emphasis in original). Rather, the broker has a duty to relate to the client significant, material factors affecting the relevant market.
I do not doubt that Boeck was an experienced investor, as the majority claims. But even an experienced investor without full information will make poor investment decisions. He or she certainly cannot make reasoned judgments based upon information initially provided when contrary, significant, and material information is subsequently withheld. Investment experience merely allows an investor to better interpret and analyze market information; it is not a substitute for market information.
The trust and confidence which Boeck placed in Merrill Lynch became legally significant when Merrill Lynch undertook to inform Boeck of the status of the soybean commodities market and of its own decreased projections for the Brazilian soybean crop. Merrill Lynch breached its fiduciary duty when it failed to inform Boeck of the significant, material information of the Brazilian government's promising forecasts for the crop. The jury was correct in its verdict determination regarding breach of fiduciary duty; I disagree with the majority's contrary conclusion.