United States District Court, D. Vermont
FREDERIC S. SHAFFER III, Plaintiff,
DANA L. KAPLAN and DANIEL N. KAPLAN, Defendants.
OPINION AND ORDER
WILLIAM K. SESSIONS, III, District Judge.
Plaintiff Frederic Shaffer III brings this civil action against Co-Defendants Dana and Daniel Kaplan regarding the alleged mishandling of the estate of Jean W. Morgan. Shaffer has brought claims for breach of fiduciary duty, conversion, unjust enrichment, and professional malpractice; he seeks injunctive relief and damages. Currently before the Court are the Co-Defendants' two motions for summary judgment, Shaffer's motion for partial summary judgment, Shaffer's motion to strike, and Dana Kaplan's motion for leave to take de bene esse deposition, or in the alternative, to extend the discovery schedule/order. The Court hereby denies Frederic Shaffer's Motion to Strike, ECF No. 108, and for Partial Summary Judgment, ECF No. 104; grants Dana Kaplan's Motion for Summary Judgment, ECF No. 102; and grants Daniel Kaplan's Motion for Summary Judgment, ECF No. 105, thereby dismissing the case. Dana Kaplan's motion for leave to take de bene esse deposition, or in the alternative, to extend the discovery schedule/order, ECF No. 113, is denied as moot.
This suit concerns the estate of Jean W. Morgan, now deceased. Plaintiff Frederic Shaffer and Defendant Dana Kaplan ("Dana") are half siblings and the only children of Mrs. Morgan, who passed away in March 2011. Mrs. Morgan maintained her primary residence in Florida, but toward the end of her life, Mrs. Morgan spent her summers living with the Kaplans at their home in Burlington, Vermont.
It is undisputed that Mrs. Morgan had a close relationship with her daughter, and spent a significant amount of time with her. Perhaps reflective of this fact, Mrs. Morgan designated Dana as her fiduciary on numerous occasions. Mrs. Morgan gave Dana a power of attorney under New York law in 1994 and again in 2000 gave her a power of attorney under New York ("NYPOA"), Florida, and Vermont law. She also gave Dana two health care proxies: one in 1994 under New York law, and one in 2000 under Vermont law.
Shaffer's relationship with Mrs. Morgan contrasted sharply with his sister's. It is undisputed that Shaffer had a poor relationship with his mother, and did not speak to her for at least the last seven years of her life, though the parties dispute the cause of this estrangement.
Daniel Kaplan ("Daniel") is Dana's now-ex-husband. He is a Certified Financial Planner for Ameriprise Financial. At all times relevant to this proceeding, Daniel managed Mrs. Morgan's assets and accounts as her financial planner. According to Defendants, Daniel never executed transactions without specific direction from Mrs. Morgan, and Dana was not involved in any of Mrs. Morgan's financial decisions.
I. Will of Jean W. Morgan
Mrs. Morgan originally executed a will in 1994 that split her estate equally between Dana and Shaffer. In August 2005, Mrs. Morgan executed a new Will and Testament ("Will") while residing in Florida. The Will specifically bequeaths a watch and an antique bed to Shaffer and bequeaths the balance of Mrs. Morgan's tangible personal property to Dana. It then dictates that the "residue and remainder" of her property is to be given to the "Trustees of The Jean W. Morgan Trust ("Trust"), dated August 22, 2005, ' to be held and administered pursuant to the terms thereof." In other words, the 2005 Will provided that all residual property owned by Mrs. Morgan's Estate would pass to the Trust at the time of her death. The Will appoints Dana the Executrix of the Will.
That same year, Mrs. Morgan created the aforementioned Jean W. Morgan Trust. The Trust names Mrs. Morgan as the Trustee and is revocable until her death, when it becomes irrevocable. Dana is named as the Successor Trustee, to serve as Trustee in the event of Mrs. Morgan's incapacitation or death. The original 2005 Trust names Dana Kaplan as the sole Beneficiary of the Trust, with all of the Trust Assets to be distributed to her upon Mrs. Morgan's death. According to Shaffer, Daniel attended meetings with Mrs. Morgan and her attorney, Bert Cicchetti, to help with her estate planning in 2005 when she established the Will and Trust.
In February of 2006, Mrs. Morgan executed an amendment to the Trust that changed the distribution of the Trust Property as follows:
Upon my death, the entire Trust Property, as it then exists, shall be distributed in the following manner:
A. To my daughter, Dana, per stirpes, my personal residence and all of the contents therein.
B. The remaining Trust Property shall be distributed equally to my children, Dana, per stirpes, and Ricky, per stirpes. If either of my children shall predecease me without issue surviving them, their share shall be distributed to my surviving child, per stirpes.
Second Trust Amendment 2.1, ECF No. 1-5. The Trust was not amended after the 2006 revisions. Thus, at the time of Mrs. Morgan's death in 2011, the Will and Trust directed that Mrs. Morgan's residual estate was to "pour over" into the Trust and be distributed equally between her two children.
II. Investment Accounts
At the time of her death, Mrs. Morgan owned several investment accounts at Ameriprise Financial. Mrs. Morgan first established these accounts in 1997 with Daniel's help as her financial advisor. The quantity, ownership, and beneficiaries of these accounts changed several times between 1997 and 2011. Initially, all of the accounts named Mrs. Morgan as the sole owner and Dana and Shaffer as joint beneficiaries. Shortly after Mrs. Morgan revised her Will and created the Trust in 2005 (when the Trust still named Dana as the sole inheritor), Mrs. Morgan changed the beneficiary on all but one of the existing Ameriprise accounts from Dana and Schaffer to "Trust." She also changed the named owner on two of the Accounts from herself to the Trust. Thus by the end of 2005, there were two Ameriprise accounts held in the Trust's name, four in Mrs. Morgan's name, and all six of the accounts listed the Trust as the sole beneficiary.
Midway through 2009, Mrs. Morgan took several actions that ultimately led to a complete defunding of the Trust. In August 2009, Mrs. Morgan closed one of the Ameriprise accounts owned by the Trust. In October 2009, she transferred ownership of the remaining Trust-owned Ameriprise account back to her own name. She also emptied two of the accounts in her name. She then changed the transfer/payable on death ("TOD") beneficiary on the remaining three accounts from the Trust to Dana. Mrs. Morgan also opened two new Ameriprise accounts, one in September 2009 and one in September 2010, both listing Dana as the sole TOD beneficiary. Thus, by the end of 2010, Mrs. Morgan owned five Ameriprise Accounts that all listed Dana as the sole TOD beneficiary. The Trust was no longer listed as an owner or beneficiary on any of the accounts.
The parties dispute the impetus behind these changes. Daniel and Dana contend that Mrs. Morgan wished to disinherit Plaintiff, and sought out advice from her attorney, Bert Cicchetti, on how this could be accomplished. According to Cicchetti's deposition, one of the options that he discussed with Mrs. Morgan was to defund the Trust, rather than making changes to the Trust itself. Daniel states that Mrs. Morgan preferred this option because it was simple and free, whereas changing the Trust would incur legal fees. Shaffer contends that these account changes were suggested by Daniel Kaplan as a way to disinherit Shaffer due to his personal dislike of Plaintiff. However, it is undisputed that following the conversation with Attorney Cicchetti, Mrs. Morgan herself took the actions that resulted in defunding the trust. The TOD beneficiary forms are all signed by Mrs. Morgan and Shaffer makes no allegation that Mrs. Morgan was under duress or incompetent when she made these changes in 2009.
In addition to the accounts described above, Mrs. Morgan and Dana opened a joint account in September 2009, referred to as the "Binky" account. Dana concedes that she signed her mother's name to the application. This account was funded with an initial deposit of $10, 000 that came from another joint account owned by Dana and Mrs. Morgan. After the creation of the account, Dana made another deposit of $6, 000 from her own bank account, and Mrs. Morgan personally deposited an additional $325. Mrs. Morgan received statements at her home in Florida regarding this account until her death.
III. Jane V. Wallace Inheritance
In 2010, Mrs. Morgan received a significant inheritance from her step-mother, Jane V. Wallace. Mrs. Wallace died in May 2010, leaving significant assets to Mrs. Morgan - namely, stock in the Crab Orchard Land and Local Company ("Crab Orchard stock") and funds in an escrow account. At the time of her death, Mrs. Wallace owned 482 shares of Crab Orchard stock, all of which was devised to Mrs. Morgan. Mrs. Morgan also inherited $135, 197 held in an escrow account.
Around the time of Mrs. Wallace's death, Dana went to Ohio to help facilitate Mrs. Morgan's distributions from Mrs. Wallace's estate. Dana states that while her mother was mentally competent, she was physically unable to handle the requirements of the trip. A lifelong smoker, Mrs. Morgan was on an oxygen tank at this time. Dana explains that she went out to Cincinnati "with [her] mother's blessings and to be her eyes and ears." While in Cincinnati, Dana provided her NYPOA to James Chalfie, Esq., the attorney representing Mrs. Wallace's Estate, to confirm that she was authorized to direct the manner of distributions to Mrs. Morgan.
According to Shaffer, Dana represented to Chalfie that Mrs. Morgan was ill and that the distributions should be hastened. However, the only support Shaffer provides for this assertion is Dana's deposition. In her deposition, Dana Kaplan makes it very clear that Mrs. Morgan was physically unable to travel to Cincinnati, but makes no representation as to mental incapacity. Instead, all of the evidence on the record indicates that Mrs. Morgan remained mentally sound until her death in 2011. This is confirmed by a letter from Mrs. Morgan's physician, James O'Brien, which states that, despite her lung disease and emphysema, Mrs. Morgan was in excellent mental health while in his care, that she was "fully competent and fully capable of managing her own personal and financial affairs, " and "[a]t no time was there any indication that anyone but herself was in charge!"
The Crab Orchard stock proceeds, in the amount of $390, 280, were delivered to Mrs. Morgan by check dated July 14, 2010. Mrs. Morgan endorsed the Crab Orchard stock proceeds check "for deposit only" to AMER Enterprise Investment Services. At Mrs. Morgan's direction, Daniel deposited $240, 280 into an Ameriprise account in Dana Kaplan's name, and split the remaining $150, 000 into two of Mrs. Morgan's brokerage accounts. Mrs. Morgan also received the proceeds from the escrow account owned by Mrs. Wallace valued at $135, 197. The ...