Justia U.S. 1st Circuit Court of Appeals Opinion SummariesArticles Posted in Trusts & Estates
Bingham v. Supervalu, Inc.
Appellant, acting in the capacity as the executor of the estate of Marion Bingham, brought this lawsuit against Supervalu, Inc., alleging that Supervalu acted as an insurer of one of its subsidiaries and violated Mass. Gen. Laws ch. 176D and Mass. Gen. Laws ch. 93A by failing to promptly and equitably resolve prior litigation between the subsidiary and the State. Supervalu removed the action to federal court, arguing that it was not in the business of insurance and was thus not subject to regulation under Chapter 176D. The district court granted summary judgment in favor of Supervalu, ruling that Supervalu was not in the business of insurance. The First Circuit affirmed, holding that the district court did not err in concluding that Supervalu was not in the business of insurance. View "Bingham v. Supervalu, Inc." on Justia Law
FPE Found. v. Cohen
The litigation resulting in these consolidated appeals stemmed from disputes within the Cohen family. Maurice placed his assets the “Maurice Trust,” and after he died, the trust assets were passed to trust (“the QTIP Trust”), and to a charitable organization (“Fund”). After Maurice’s wife died, the remaining assets of the QTIP Trust rolled over to the Fund. Later, half of the Fund’s assets were given to a new charity, the C-S Foundation (“C-S”). The Fund’s successor, the FPE Foundation (“FPE”) filed this federal case against the Cohens’ two children, one of their spouses, and the advisor to the co-trustees of the QTIP Trust. FPE filed this federal case against members of the Cohen family, alleging that certain Defendants exceeded their powers as co-trustees of the QTIP trust and that the co-trustees’ advisor breached his fiduciary duty to that trust. C-S intervened and counterclaimed against FPE. Defendants filed a motion to dismiss and to compel arbitration, relying on an arbitration clause contained in the Maurice Trust. The district court allowed the motion. The First Circuit affirmed, holding (1) Defendants did not waive their right to arbitration, and thus, dismissal was appropriate; and (2) C-S’s counterclaim was subject to the arbitration clause in the Maurice Trust. View "FPE Found. v. Cohen" on Justia Law
Barraford v. T&N Ltd.
T&N Limited (T&N), an asbestos manufacturer, chose to address the liability it faced after the deadly qualities of asbestos were discovered through a Chapter 11 bankruptcy reorganization plan (the Plan). Then Plan transferred to a Trust certain of T&N’s assets and rights, with which the Trust was to pay asbestos claims brought by persons who could have sued T&N but for T&N's bankruptcy. The Plan provided that T&N’s asbestos liability would continue after plan confirmation and that the Trust would bring asbestos suits against T&N as the agent of the actual claimants. In this lawsuit, the Trust brought an asbestos claim that had accrued a decade earlier. The district court dismissed the Trust’s suit on statute of limitations grounds, thus rejecting the Trust’s argument that it was allowed to bring asbestos claims that had not become stale prior to T&N’s filing for bankruptcy protection whenever it wished to do so. The First Circuit affirmed, holding that the Trust’s argument failed because the Plan unambiguously terminated the automatic stay and contained no provision that provided for any further tolling of the limitations period beyond that granted by the Bankruptcy Code. View "Barraford v. T&N Ltd." on Justia Law
Aguayo-Cuevas v. P.R. Elec. Power Auth.
The decedent died from electrocution while working on a telephone pole that was the purported partial responsibility of Puerto Rico Electric Power Authority (PREPA). Appellants, the decedent’s sisters, filed a wrongful death suit against PREPA and others in federal district court. PREPA filed a motion to dismiss for lack of subject matter jurisdiction, arguing that an additional, non-diverse member of the decedent’s estate, who was not made a party to the action, was indispensable, and his joinder destroyed the parties’ complete diversity. The district court agreed and dismissed the entire action, including the decedent’s estate survivorship action as well as individual actions by estate members and Appellants, who were not the decedent’s heirs. The First Circuit reversed, holding that the district court erred in dismissing Appellants’ personal actions, as the non-diverse absent party was not required to adjudicate the action because the members of the estate requested voluntary dismissal of their claims, which eliminated the survivorship action, leaving only Appellants’ claims, which were jurisdictionally sound. View "Aguayo-Cuevas v. P.R. Elec. Power Auth." on Justia Law
Newman v. Krintzman
Defendant and his company (Defendants) borrowed money from Trust by executing promissory notes in favor of Trust. One note said it was governed by Massachusetts law, and the others said they were governed by New York law. The Trust's trustees (Plaintiffs) subsequently sued Defendants in New York state court for breach of contract. The New York trial court eventually granted Defendants' motion to dismiss based on the expiration of the New York statute of limitations. Plaintiffs subsequently sued Defendant in Massachusetts federal court to recover on the note controlled by Massachusetts law. Although Plaintiffs filed suit within the Massachusetts statute of limitations, the district judge concluded that the dismissal of the New York lawsuit barred Plaintiffs' current claim because the dismissal was on the merits and claim preclusive. The First Circuit Court of Appeals affirmed, holding that the limitations dismissal under New York law was a judgment on the merits, and thus, the current claim was barred. View "Newman v. Krintzman" on Justia Law
Pruco Life Ins. Co. v. Wilmington Trust Co.
Pruco Life Insurance Company sought rescission of a life insurance policy, owned by the Paul E. L'Archevesque Special Revocable Trust on the life of Paul L'Archevesque, after it discovered that the policy application contained material misrepresentations about the health of Paul. Pruco tendered to Wilmington Trust Company, a co-trustee of the trust, a check in the amount of the policy premiums paid along with a letter stating Pruco was rescinding the policy. Wilmington cashed the check. Pruco subsequently filed a complaint seeking a rescission of the policy and a declaration that the policy was void ab initio. The district court granted summary judgment to Pruco, concluding that, under the circumstances, a mutual rescission had taken place as a matter of law. The First Circuit Court of Appeals affirmed, holding (1) the district court properly interpreted Rhode Island law regarding the standard for mutual rescission; (2) there were no genuine issues of material fact concerning whether Pruco made material misrepresentations in its rescission letter that could have prevented summary judgment; and (3) the district court did not err in finding that the issue of whether Pruco acted in bad faith was irrelevant to the rescission analysis. View "Pruco Life Ins. Co. v. Wilmington Trust Co." on Justia Law
PHL Variable Ins. Co. v. Bowie 2008 Irrevocable Trust
Plaintiff, an insurance company, filed an equitable action in the U.S. district court for Rhode Island seeking a declaratory judgment that a life insurance policy was rescinded ab initio due to the fraudulent misrepresentations of Defendant, an irrevocable trust. Plaintiff also sought to retain the premium paid by the trust as an offset against the damages it had suffered in connection with the policy. The district court (1) found that Defendant, by and through its trustee, had made false representations to induce Plaintiff to issue the policy and that this fraud caused Plaintiff damages that would not be fully compensated by rescission alone; and (2) allowed Plaintiff to retain the policy premium paid by Defendant. The First Circuit Court of Appeals affirmed, holding that the district court (1) did not err, under Rhode Island law, in allowing Plaintiff to both rescind the policy and retain the premium; (2) did not err in finding that Plaintiff was a victim of a fraudulent insurance scheme; and (3) appropriately exercised its equity powers. View "PHL Variable Ins. Co. v. Bowie 2008 Irrevocable Trust " on Justia Law
Frank Sawyer Trust of May 1992 v. Comm’r of Internal Revenue
Four corporations acknowledged they owed the federal government more than $24 million in taxes and penalties, but before the IRS could collect its dues, the corporations transferred all of their assets to other entities. At issue was whether the previous owner of the four corporations, a trust (Trust), was liable to the IRS for the corporations' unpaid taxes and penalties. The tax court looked to state substantive law to determine the Trust's liability and concluded that the Trust could not be held liable because the IRS (1) failed to prove the Trust had knowledge of the new shareholders' asset-stripping scheme, and (2) did not show that any of the corporation's assets were transferred directly to the Trust. The First Circuit Court of Appeals reversed, holding (1) the tax court correctly looked to Massachusetts law to determine whether the Trust could be held liable for the corporations' taxes and penalties; but (2) the tax court misconstrued Massachusetts fraudulent transfer law in making its decision. Remanded for a determination of whether the conditions for liability were met in this case. View "Frank Sawyer Trust of May 1992 v. Comm'r of Internal Revenue" on Justia Law
Jakobiec v. Merrill Lynch Life Ins. Co.
Brothers Thomas and Michael Tessier allegedly swindled brothers Frederick and Thaddeus Jakobiec and the estate of their mother out of millions of dollars. This lawsuit covered the Tessiers' theft of almost $100,000 in life insurance proceeds due to a trust benefitting Thaddeus. Thaddeus and various persons affiliated with the trust and estate (collectively, Plaintiffs) filed this action against Merrill Lynch, the company that issued the life insurance policy, claiming that Merrill Lynch made out the insurance proceeds check to the wrong trust entity in breach of the insurance contract, thus allowing the Tessiers to steal the money. The First Circuit Court of Appeals granted summary judgment for Merrill Lynch, concluding that even if Merrill Lynch did breach the contract, its breach was not the cause of Plaintiffs' losses because the Tessiers would have stolen the money even if the check had been made out correctly. The First Circuit Court of Appeals affirmed, holding (1) because the extensive groundwork laid by the Tessiers for their criminal scheme, they could have and would have stolen the insurance money regardless of how Merrill Lynch made out the check; and (2) therefore, the district court correctly granted summary judgment for Merrill Lynch. View "Jakobiec v. Merrill Lynch Life Ins. Co." on Justia Law
Posted in: Contracts, Injury Law, Insurance Law, Trusts & Estates, U.S. 1st Circuit Court of Appeals
Nystedt v. Nigro
This case required the First Circuit Court of Appeals to explore the parameters of the doctrine of quasi-judicial immunity. The underlying litigation was a will contest turned conspiracy case. The plaintiff prevailed in probate court after two and a half years of legal wrangling. By the time Plaintiff was found to be the sole lawful heir of the decedent, the estate's assets were depleted. Seeking retribution, the plaintiff sued several persons involved in the will contest, alleging a wide-ranging conspiracy. In a preliminary ruling, the district court concluded that two of the defendants, a lawyer who had served as a court-appointed discovery master and the lawyer's firm, were immune from suit by reason of quasi-judicial immunity. The court certified this ruling as a partial final judgment. The First Circuit affirmed, holding (1) the district court did not err in certifying the ruling; and (2) the court-appointed discovery master was entitled to share in the judge's immunity from suit, and the law firm whose partner enjoyed quasi-judicial immunity was entitled to share in that immunity for helping the partner to perform his judicial tasks. View "Nystedt v. Nigro" on Justia Law