Jan. 5 (Bloomberg) -- Financier Ronald Perelman asked a Florida court to reopen an almost $1.6 billion case against Morgan Stanley over the sale of Coleman Co. to one of the investment bank’s clients.

Perelman, who controls cosmetics maker Revlon Inc., wants the state appeals court to let him investigate whether Morgan Stanley’s mishandling of e-mails about the 1998 sale warrants a new trial. In March 2007, the same court threw out a $1.57 billion damage award against the bank over the deal. Perelman sold camping-equipment maker Coleman to Sunbeam Corp., which had hired Morgan Stanley as its financial adviser.

The New York-based bank’s efforts to hide e-mail evidence amounted to “a classic example of fraud on the court,” Perelman’s lawyers said in court filings on Nov. 24. That wrongdoing provides the basis to challenge Morgan Stanley’s appellate victory, the lawyers said.

Morgan Stanley posted a $2.2 billion fourth-quarter loss last month as it wrote down the value of its fixed-income businesses. Chief Executive Officer John Mack agreed to forgo his 2008 bonus as part of the firm’s moves to deal with the U.S.’s economic downturn and the global credit crisis.

Revlon also has struggled with the faltering economy. The New York-based company’s stock plunged 26 percent on Nov. 5 after it reported a third-quarter operating loss. Perelman held more than 58 percent of Revlon’s Class A shares as of August, according to data compiled by Bloomberg.

The billionaire turned to Florida’s 4th District Court of Appeal after the trial judge rejected his request to retry the case in September.

Morgan Stanley ‘Confident’

“The motion to reopen this case was already denied by the trial court,” Mark Lake, a Morgan Stanley spokesman, said in an interview today. “We are confident that ruling will be upheld by the appellate courts.”

Morgan Stanley officials declared Perelman’s suit dead after the Florida Supreme Court rejected the financier’s bid to resurrect the case over the Coleman sale in December 2007.

Perelman claimed Morgan Stanley duped him into selling Coleman for cash and what turned out to be millions of worthless Sunbeam shares.

The value of Perelman’s Sunbeam stock plummeted after the consumer-goods maker admitted it inflated sales figures and misstated revenue. Sunbeam sought Chapter 11 protection in 2001. Perelman filed a fraud suit in state court in West Palm Beach, Florida, in 2003.

Jury Award

After a monthlong trial, jurors awarded Perelman $1.45 billion in actual and punitive damages in May 2005. A judge increased the award to $1.57 billion after adding interest.

Perelman began the case with an advantage: the trial judge ordered jurors to assume Morgan Stanley helped Sunbeam inflate its earnings, seeking to punish the bank for its repeated failures to turn over e-mail evidence.

That sanction came after Morgan Stanley’s lawyers made misstatements in a 2004 court filing certifying that they had thoroughly searched the company’s computer system and turned over all relevant e-mails to Perelman’s lawyers.

The Florida appellate courts didn’t take issue with the sanction. They instead threw out the award because jurors heard improper expert testimony about Perelman’s damages.

After the trial, Morgan Stanley officials admitted in court filings that their in-house attorneys knew that e-mails about the Coleman deal hadn’t been turned over and launched a cover- up, Perelman’s lawyers said.

‘Ultimately Irrelevant’

That new evidence of wrongdoing could have helped Perelman justify the award, his lawyers said. They asked Circuit Judge Robin Rosenberg to order a new trial on damages. She rejected the request in September, saying the evidence wouldn’t have changed the appeals courts’ view of the award.

“Whatever information MS’s in-house legal counsel told CPH and the court, deceitful or not, was ultimately irrelevant,” Rosenberg said in a 28-page decision.

The case is Coleman Holdings Inc. v. Morgan Stanley Inc., 4D08-4022, District Court of Appeal, Fourth District of Florida (West Palm Beach).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Phil Milford in Wilmington at 7615 or pmilford@bloomberg.net.

Last Updated: January 5, 2009 16:14 EST