Turley v. U.S. Bancorp

2005 MT 162N

• Court: Montana Supreme Court
• Decided: June 28, 2005
• Docket: 04-531
• Status: Published

Opinion

No. 04-531

IN THE SUPREME COURT OF THE STATE OF MONTANA

2005 MT 162N

SHIRLEY A. TURLEY,

Plaintiff and Respondent,

v.

U.S. BANCORP PIPER JAFFRAY, INC., and THOMAS J. O’NEILL, and JOHN DOES I through X,

Defendants and Appellants.

APPEAL FROM: District Court of the Second Judicial District, In and for the County of Silver Bow, Cause No. DV 2002-54 The Honorable John W. Whelan, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Stanley T. Kaleczyc, Brand G. Boyar, Browning, Kaleczyc, Berry & Hoven, P.C., Helena, Montana; John S. Lutz, Fairfield and Woods, P.C., Denver, Colorado

For Respondent:

William P. Joyce, Joyce & Johnson, PLLP, Butte, Montana; Geralyn Driscoll, Driscoll & Allen, Butte, Montana

Submitted on Briefs: April 20, 2005

Decided: June 28, 2005 Filed:

__________________________________________ Clerk

Justice Patricia O. Cotter delivered the Opinion of the Court. ¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal

Operating Rules, the following decision shall not be cited as precedent. It shall be filed as

a public document with the Clerk of the Supreme Court and shall be reported by case title,

Supreme Court cause number and result to the State Reporter Publishing Company and to

West Group in the quarterly table of noncitable cases issued by this Court.

¶2 U.S. Bancorp Piper Jaffray, Inc., (“Piper”) appeals an Order of the District Court for

the Second Judicial District, Silver Bow County. Defendant Thomas J. O’Neill is a former

Piper employee and is not a party to this appeal. The District Court denied Piper’s motion

to compel arbitration of claims filed against Piper by Shirley A. Turley (“Turley”). We

affirm.

¶3 This case is one of twenty-three different lawsuits filed by individual investors of

Piper involving the alleged mismanagement of the investors’ accounts in Piper’s branch

office in Butte. The facts behind this particular action are that Turley and her husband, Roy

Turley, opened an investment account with Piper, Jaffray & Hopwood in 1986, with O’Neill

serving as their investment advisor. The account agreement did not contain a provision

regarding binding pre-dispute arbitration. In 1990, at her husband’s urging, Turley opened

an IRA account with O’Neill and Piper. The agreement in that account likewise did not

contain an arbitration provision.

¶4 Roy Turley passed away in December 1995. In October 1996, Turley visited O’Neill

at the Piper office in Butte in an effort to wrap up the affairs concerning her husband’s

2 estate. The Turleys had maintained their account with Piper as a joint tenancy. O’Neill

advised Turley that she needed to sign a form to place the account in her name, and he

presented her with a PAT Plus Account Agreement which someone had already filled in with

Turley’s information. Turley signed and dated the form without reading it because she relied

upon O’Neill to explain the significance of any forms he presented for her signature, and she

believed she was simply transferring the account which she had held jointly with her husband

into her name. O’Neill did not explain the significance or consequences of the arbitration

provision. O’Neill later purchased and sold securities in this account without Turley’s

knowledge or authorization.

¶5 These facts and the issues arising from them are substantially identical to those

presented in Willems v. U.S. Bancorp Piper Jaffray, Inc., 2005 MT 37, ¶ 22, 326 Mont. 103,

¶ 22, 107 P.3d 465, ¶ 22, in which we held that a clause in a PAT Plus Account Agreement

granting Piper broad discretion over an investor’s holdings creates a fiduciary duty. That

clause, in addition to an arbitration clause, was included in the pre-filled form which Turley

signed when she attempted to transfer the account she had held jointly with her husband into

her name. Willems further held that because of the fiduciary duty, Piper was obligated to

advise the investor of the consequences of the arbitration clause prior to the formation of the

contract, and that because Piper did not, the arbitration clause was unenforceable. Willems,

¶¶ 25, 28.

3 ¶6 We have determined to decide this case pursuant to our Order dated February 11,

2003, amending Section 1.3 of our 1996 Internal Operating Rules and providing for

memorandum opinions.

¶7 We conclude that, in light of Willems, this case is clearly controlled by settled

Montana law. Therefore, we affirm the District Court’s conclusion that Piper owed a

fiduciary duty to explain the arbitration provision to Turley, that it breached that duty, and

therefore, the pre-dispute arbitration provisions are unenforceable.

/S/ PATRICIA O. COTTER

We Concur:

/S/ JAMES C. NELSON /S/ W. WILLIAM LEAPHART /S/ JOHN WARNER /S/ BRIAN MORRIS