The Fourth Appellate District has overturned a Superior Court decision that denied two San Diego brokers a judgment of almost $5 million.
In 2008, Wall Street's Morgan Stanley had recruited Todd Vitale and John Paladino from UBS Securities. According to the court, the firm had promised that Vitale would become a branch manager within a year and Paladino would take over Vitale's book of brokerage business. But neither happened and the pair sued for breach of oral and written contract.
Superior Court ruled against the two brokers, agreeing with Morgan Stanley that one of the arbitrators had not revealed conflicts of interest. Judge Richard Huffman, writing for the appellate court, agreed that an arbitrator did not make certain disclosures, but that the arbitrator's impartiality couldn't be questioned. Huffman noted that Morgan Stanley had asked the same arbitrator to sit on three other arbitration panels.
A spokesperson for Morgan Stanley told the publication Investment News that the firm disagrees with the appellate court's judgment and is considering how to proceed.