Hawkins v. MERRILL LYNCH, PIERCE FENNDER & SMITH, INC.
Plaintiffs, Takako Hawkins, Clive Hawkins, and Stan Mandell, the conservator of the Estate of Thelma Jean Fenter, appeal from a final judgment resulting from the entry of two orders in favor defendants: Merrill Lynch, Pierce, Fenner & Smith, Inc.; Merrill Lynch Co. Inc.; Merrill Lynch Life Agency, Inc.; Merrill Lynch Insurance Group Services, Inc. (sometimes referred to collectively as the Merrill Lynch defendants); and John H. Pardee. Plaintiffs challenge an order sustaining the demurrer to certain causes of action in the first amended complaint. Plaintiffs also challenge a later order granting defendants summary judgment motion. This litigation involves Treasury Investment Growth Receipts. The Third Circuit described Treasury Investment Growth Receipts as follows: Zero-coupon bonds are debt securities on which no interest is paid prior to maturity. At maturity, a one-time payment incorporating the principal repayment and accrued interest is made. These securities are therefore sold at a discount from face value. [] [Treasury Investment Growth Receipts] . . . are a proprietary product of Merrill Lynch. [Treasury Investment Growth Receipts] consist of United States Treasury bonds that have been repackaged by Merrill Lynch into zero-coupon securities. Specifically, a [Treasury Investment Growth Receipt] is a receipt that evidences ownership of a future payment of interest or principal on Treasury bonds which are purchased by Merrill Lynch and are held by a custodian for the benefit of the [Treasury Investment Growth Receipt] holder. (Ettinger v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (3rd Cir. 1987) 835 F.2d 1031, 1032, fn. 1.) We conclude: the demurrers to the first amended complaint should not have been sustained as to the sixth, seventh, eighth, and eleventh causes of action; the order granting summary judgment as to the Merrill Lynch defendants should not have been entered; and the order granting summary judgment as to Mr. Pardee must be deemed to be an order entering summary adjudication of the fifth cause of action in the second amended complaint. Court affirm the judgment.
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