Ronald Perelman’s lawsuit against Morgan Stanley is not in fact over yet, as the investment bank’s appeal against the ruling of Judge Elizabeth Maass has serious grounds, in the opinion of the lawyers.

On Monday the jury ruled that Morgan Stanley will pay $604 million in damages to Ronald Perelman, chairman of cosmetics group Revlon Inc. who previously sought $2.7 billion from the investment bank, that, in his words, deceived him on the sale of his business Coleman Co. to appliance maker Sunbeam Corp. In 1998.

Morgan Stanley received about $30 million in advisory fees for the transaction. The stake in Sunbeam Corp. Perelman quickly lost its value after the buyer filed for bankruptcy protection in 2001 amid a massive accounting scandal. Perelman claims that the investment bank was aware of the problems with Sunbeam’s balances but covered them up so as to receive advisory fees.

The compensation the billionaire will receive is lower than what he initially sought. Punitive damages can according to the Florida law three times greater than the actual damages. Perelman is unlikely to seek an increase in payouts, jeopardizing the verdict of the court.

Morgan Stanley has promised to appeal claiming that the trial from Circuit Court Judge Elizabeth Maass in West Palm Beach, Florida was not fair. The judge was exasperated by the failure of the company to deliver e-mail evidence and ordered it to prove its innocence. The default judgement issued by Maass is a logical development of the recent measures taken by courts to step up corporations’ efforts to retrieve documentation in time to show compliance with the court proceedings. After the default judgement was issued, Perelman was able to win the case merely by proving that he relied on Morgan in evaluating the sale and that he lost money.

"The judge ... became incensed by Morgan Stanley’s handling of e-mails during the discovery process, and sanctioned the firm for these failures with a presumption of fraud," said Fox-Pitt, Kelton analyst David Trone.