49 F. Supp. 3d 123
D. Me.2014Background
- Noveletsky created an irrevocable life insurance trust (ILIT) to fund her son Rosenthal's estate taxes after her death; MetLife policy issued for $5 million, held through ILIT with Temkin as trustee.
- Temkin was appointed trustee for the sole purpose of purchasing the MetLife Policy; Alan Silverman of MetLife recommended the policy.
- The ILIT was funded by annual gifts from Noveletsky, funded by Rose Steel bonuses; Temkin and Silverman shared an $80,000 commission on the sale.
- The Trust Instrument contained provisions (notably sections 11, 12) allowing certain interactions with interested trustees and annual accounting duties, potentially limiting or modifying standard fiduciary duties.
- Dividends on the MetLife Policy declined as economic conditions worsened; in 2012 the ILIT surrendered the MetLife Policy and purchased a Genworth universal life policy; plaintiffs proffer expert damages theories that rely on alternative scenarios.
- The court granted defendants’ summary judgment motions, denied the plaintiffs’ partial cross-motion, and granted Daubert motions in part while denying others as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of loyalty by Temkin | Rosenthal/Heaney claim Temkin violated loyalty by self-dealing and not reporting commission. | Temkin argues § 11 of the Trust Instrument permits dealing with herself and receiving compensation without reporting. | Temkin granted summary judgment on Count I. |
| Breach of fiduciary duty in selecting MetLife policy | Temkin failed to perform needs analysis, underwrote unfavorably, and should have sought alternatives. | ILIT trustee owed loyalty to Rosenthal; Temkin did not violate duties given policy was selected before her trusteeship. | Count II rejected; no breach proven; Temkin entitled to summary judgment. |
| Imprudent administration and reporting obligations | Temkin failed to monitor investment performance and provide annual accounts to Rosenthal. | Section 4(B) relieved Temkin from diversification and recommendations; no damages shown. | Count III and Count IV granted summary judgment for Temkin. |
| Damages for misrepresentation against Temkin | Misrepresentation claim supported by expert models showing damages. | Damages models flawed; no pecuniary loss established. | Count VIII dismissed; no compensable damages established. |
| UTPA claim against Temkin | ILIT's loss from the policy purchase constitutes unfair trade practice. | No proof of loss; UTPA claim fails. | Count VII dismissed. |
Key Cases Cited
- Estate of Wilde, 708 A.2d 275 (Me. 1998) (trustee liability and disgorgement principles under Maine law)
- In re Estate of Stowell, 595 A.2d 1022 (Me. 1991) (fiduciary duties of loyalty and prudence under Maine common law)
- Estate of Whitlock, 615 A.2d 1173 (Me. 1992) (trustee duties to keep beneficiaries reasonably informed)
- State Farm Mut. Auto. Ins. Co. v. Koshy, 995 A.2d 651 (Me. 2010) (principles of statutory interpretation and modifiability in Maine)