PHILADELPHIA – A federal appeals court has ruled against a former Major League Baseball pitcher who sued his financial advisors for allegedly making fraudulent investments.
The U.S. Court of Appeals for the Third Circuit affirmed the dismissal of Jaret Wright’s motions to compel arbitration and for reconsideration in his fraud action versus SunTrust Bank, Inc. Other defendants, such as SunTrust Investment Services, Inc., SunTrust Mortgage, Inc., CSI Capital Management, Todd LaRocca and Taylor & Faust, have already been dismissed from the case.
Wright, whose Major League Baseball career spanned all or part of 11 seasons with five Major League teams from 1997 to 2007, alleges he is one in a group of professional athletes who lost millions of dollars from fraudulent, high-risk investments the defendants made on their behalf.
Wright alleges he initially made clear he wanted to pursue a conservative investment strategy, but LaRocca instead allegedly invested Wright’s money in “unsuitable, high-risk, illiquid, alternative investments for which LaRocca received commissions, kickbacks, gifts, and other monetary benefits,” according to the suit.
Subsequent to a 2012 review of his accounts, Wright claimed LaRocca’s investments lost him more than $7.5 million in assets and filed suit for negligence in allowing the fraudulent investments to be made, for failure to monitor LaRocca’s financial management, failure to follow industry standards for same, failure to seek Wright’s informed consent before making the investments, failing to disclose the high-risk nature of the investments and intentionally misrepresenting the true value of the portfolio.
At trial, the U.S. District Court for the Eastern District of Pennsylvania dismissed the first two counts of the complaint against SunTrust Bank without prejudice and dismissed the remaining counts with prejudice, because Wright did not contest their dismissal in his response to SunTrust’s motion – at the same time, the District Court denied Wright’s motion to compel arbitration as moot. Wright then filed a motion for reconsideration, which the District Court denied.
The District Court addressed the merits of Wright’s motion to compel arbitration, and held the allegations of Wright’s complaint arose out of a 2003 agreement with CSI and Taylor & Faust, not out of a 2010 Agreement with SunTrust (SunTrust acquired the business assets of CSI managed by LaRocca in November 2009).
The District Court denied Wright further leave to amend his complaint because he had not amended when afforded previous opportunities to do so, and had failed to provide a proposed amended complaint with his motion for reconsideration.
On appeal, Wright made three arguments, the first being that the District Court erred when denying his motion to compel arbitration as moot. However, since Wright’s claims arose from the 2003 agreement (which did not have an arbitration clause) versus the 2010 agreement (which did contain an arbitration clause), the Third Circuit believed the District Court decided that point properly.
“Wright fails to challenge the District Court’s merits decision in any respect. In fact, his appellate brief is almost a verbatim ‘cut and paste’ of the brief he filed in the District Court in support of his motion for reconsideration,” Third Circuit Judge Thomas M. Hardiman said.
Wright’s second argument is that the District Court failed to decide his case using precedent decisions, but the Third Circuit reiterated the lower court’s opinion that Feeley v. SunTrust Bank and Terry v. SunTrust Bank involved different arbitration clauses and different plaintiffs – hence, Hardiman said they could not be used to decide Wright’s case.
Finally, Wright argued that the District Court erred in dismissing the majority of his claims with prejudice.
“Wright again makes the exact same arguments on appeal as he did in support of his motion for reconsideration and, in any event, fails to explain in either brief why the complaint stated plausible claims for relief against SunTrust. For the reasons stated, we will affirm the orders of the District Court,” Hardiman said.
The plaintiff is represented by Andrew Marshall Smith of Smithbridge, in Philadelphia.
The defendant is represented by Nipun J. Patel and Henry F. Reichner of Reed Smith, also in Philadelphia.
U.S. Court of Appeals for the Third Circuit case 15-1365
U.S. District Court for the Eastern District of Pennsylvania case 2:13-cv-05633