Brokerage May Seek Trial Outside O.C.

Merrill Lynch & Co. may try to have Orange County’s multibillion-dollar damage suit transferred out of the county if the case ever goes to trial, lawyers for the brokerage said Monday.

The brokerage’s attorneys believe that jurors from Orange County would have a financial interest in the outcome of the case, said George Garvey, an attorney for Merrill Lynch.

“It’s fair to anticipate that a transfer [of the suit to another court] would be the solution proposed,” Garvey said.

Garvey made the remarks while urging U. S. District Court Judge Gary L. Taylor to remove from U. S. Bankruptcy Court the damage suits Orange County filed against the giant Wall Street brokerage and other financial and accounting firms it blames for its 1994 financial collapse.

Orange County argues in its suits that the heavy borrowings by former Treasurer-Tax Collector Robert L. Citron from the brokerages and investment banks were in violation of the state Constitution, which forbids a county to borrow more money than it has resources to repay.

The defendants, including Merrill Lynch, KPMG Peat Marwick, Standard and Poors, Rauscher Pierce Refnes Inc. and the federal student loan program known as Sallie Mae, have denied any wrongdoing.

In the last 20 months Taylor has twice rejected Merrill Lynch’s request to remove the case from Bankruptcy Court.

But the brokerage and other defendants renewed the request after the county’s recovery plan was approved by U.S. Bankruptcy Judge John E. Ryan in June.

Garvey and lawyers for other defendants argued that well-settled case law demands that the suits be adjudicated by a U.S. District Court judge, not a Bankruptcy Court judge. Bruce Bennett, the county’s bankruptcy counsel, disputed Garvey’s arguments. He said the lawsuits were properly before the Bankruptcy Court judge who was still overseeing the county’s recovery plan.

Taylor said he would take the arguments under submission and issue a written ruling soon.