Fed. Sec. L. Rep. P 93,608 Robert e.watson and Lois J. Watson v. Roberts, Scott & Co., Inc., a Corporation

Invoking section 15(c) (1) of the Securities Exchange Act of 1934, 15 U.S.C. § 78o(e) (1), Robert E. Watson and Lois J. Watson, his wife, brought this action against Roberts, Scott & Co., Inc. (the broker) and five Does, to recover damages in the amount of twenty-five thousand dollars, and for other relief. The broker moved for summary judgment dismissing the action, asserting that the Watsons are collaterally es-topped to bring this action because the same issues were litigated in a breach of contract action brought by the broker against the Watsons in the California state courts.

The district court accepted the broker’s collateral estoppel argument, granted the motion for summary judgment, and dismissed the action. The Watsons appealed to this court arguing, among other things, that since the state action was still pending on appeal, there could be no collateral estoppel based on the state litigation. Because a California state judgment has no collateral estoppel effect while an appeal is pending. (Cal.Code Civ.Proc. § 1049), we determined that the district court had erred in dismissing the action and, on June 29, 1972, filed an opinion reversing, and remanding the cause for…