A Florida appeals court has thrown out Ronald Perelman’s $1.58 billion jury award against Morgan Stanley, which stemmed from the 1998 sale of his share in camping-equipment company Coleman to appliance maker Sunbeam, according to published reports.
Wednesday’s 2-1 decision, by Florida’s Fourth District Court of Appeal in West Palm Beach, determined that the trial judge erred by not requiring Perelman to show any “legally cognizable damage” arising from the investment bank’s actions, according to Reuters.
“Because there was no proof presented at trial on the correct measure of damages,” Judge Carole Taylor reportedly wrote for the majority, “the trial court should have granted Morgan Stanley’s motion for directed verdict.”
The billionaire financier and Revlon chairman had claimed that when he sold his 82 percent stake in Coleman to Sunbeam for $1.5 billion in stock and cash, he had been defrauded by Morgan Stanley, his adviser in the deal. Shortly afterward, Sunbeam became embroiled in a massive accounting scandal, which sunk its stock as well as Perelman’s investment. Sunbeam eventually filed for bankruptcy protection.
In March 2005, Florida State Judge Elizabeth T. Maass, who presided over the case, ruled that because Morgan Stanley failed to turn over e-mails related to the Coleman deal, jurors should assume that Morgan Stanley helped Sunbeam inflate its earnings. As a result, Perelman needed to prove only that he relied on Morgan Stanley’s advice and not that the bank was complicit in any fraud.
Two months later, jurors found in Perelman’s favor, awarding him $604 million in actual, or compensatory, damages and $850 million in punitive damages, for a total of $1.45 billion. That total rose to $1.58 billion with interest, noted Reuters.
The wire service also observed that the financier had originally sued for $2.7 billion, but according to The Wall Street Journal, Morgan Stanley turned down Perelman’s 2003 offer to settle for just $20 million.
Perelman will ask for a rehearing and, if necessary, appeal the decision to Florida’s Supreme Court, a spokeswoman told Reuters.