56 A.3d 323
Md. Ct. Spec. App.2012Background
- Millstone and an employee sued Address and Address & Associates for negligence, breach of contract, and misrepresentation related to life insurance policies sold by Address.
- Millstone owned seven Phoenix whole life policies; one policy was owned by Millstone’s daughters; ILIT was created in 2001 to own policies for estate planning.
- Seven Phoenix policies were surrendered in 2001 to fund the ILIT, producing cash values paid to Millstone; two unmarked surrender checks were large and inconsistent with loans, leading to disputes over treatment.
- The ILIT purchased a new Security Connecticut universal life policy, later replaced by a Phoenix universal life policy owned by the ILIT; ownership of policies shifted away from Millstone over time.
- Millstone sought damages for losses from premature surrender, misdirected premiums, and related tax consequences; Address asserted standing and other defenses, and the case proceeded to trial.
- The circuit court ruled on some counts; the jury found negligence and negligent misrepresentation against Address, and breach of contract in Millstone’s favor; Millstone’s daughters’ claims were dismissed. The Court of Appeals reversed and remanded with instructions to enter judgment for Address.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue for breach of contract. | Millstone asserts damages from Address’s conduct; ILIT/daughters own relevant policies. | Millstone lacked standing because he did not own the policies and suffered no direct damages. | Millstone lacked standing; damages tied to ILIT/daughters; standing to sue denied. |
| Sufficiency of evidence for implied contract breach. | There was an implied contract for advisory services and policy guidance, yielding damages from premature surrender. | No mutual assent or definite terms; no implied contract between Millstone and Address. | No evidence of a valid implied contract; judgment for Address on this claim affirmed as to lack of basis. |
Key Cases Cited
- Krauch v. Krauch, 179 Md. 423 (1941) (settlor’s lack of interest after trust creation affects proper party status)
- Pike v. New York Life Insurance Company, 72 A.D.3d 1043 (N.Y.App.Div.2010) (standing required for policies owned by a third party or custodian)
- Berardino v. Ochlan, 2 A.D.3d 556 (N.Y.App.Div.2003) (trustee has title to trust property; cannot base action on failure to disclose to settlor)
- Slick v. Reinecker, 154 Md.App. 312 (2003) (implied contracts require mutual assent; meeting of minds not necessary for all contexts)
- Canaras v. Lift Truck Servs., Inc., 272 Md. 337 (1974) (signatory bound by written instrument when capable of understanding)
- National Fire Ins. Co. v. Tongue, Brooks & Co., 61 Md.App. 217 (1985) (insurance contracts formed under objective standard for assent)
- James v. Gen. Motors Corp., 74 Md.App. 479 (1988) (when evidence permits only one conclusion, grant directed verdict)
- Schaub v. Cmty. Cab, Inc., 198 Md. 216 (1951) (duty to grant judgment where no rational ground supports plaintiff’s claim)