Thompson v. UBS Financial Services, Inc.
115 A.3d 125
| Md. | 2015Background
- The Thompson children owned a life insurance policy on their parents; Gordon Witherspoon (broker) received all policy mailings from 1990–1998.
- From 1996–2003 the insurer advanced loans from the policy cash value to cover unpaid premiums (total deducted ≈ $900k); the Thompson children never consented to those loans and were not informed.
- The Thompson parents periodically paid or gifted large sums to Witherspoon and his wife; Witherspoon worked as a UBS financial advisor (1995–2005).
- Petitioners sued Witherspoon (and others) for negligence, negligent misrepresentation, deceit, conversion, and constructive fraud; a jury found Witherspoon liable on several counts.
- The Court of Special Appeals reversed as to conversion and constructive fraud; this certiorari review limited to those two issues.
- Maryland Court of Appeals reaffirms that conversion of intangible property requires conversion of a tangible/transferable document embodying the right, and holds Petitioners failed on both conversion and constructive fraud claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Jasen should be overruled so conversion may reach interference with intangible rights absent conversion of a document | Conversion exists where a defendant interferes with an intangible right (no need to convert a document; modern digital context supports expansion) | Jasen remains correct: conversion of intangible property requires conversion of a tangible/transferable document (paper or digital) embodying the right | Court reaffirmed Jasen; refused to adopt Restatement §242(2); conversion requires conversion of a document embodying the intangible right |
| Whether Witherspoon converted the life insurance policy | Witherspoon effectively deprived Petitioners of their policy rights by withholding notices/statements; conversion of the policy is established even if no document was physically taken | Witherspoon had not converted any document embodying the policy rights; moreover, Petitioners consented to mailings to his address | Petitioners failed to prove Witherspoon converted any document; they had consented to mailings to Witherspoon’s address, so no conversion of policy occurred |
| Whether Petitioners proved constructive fraud based on a confidential relationship | Petitioners argued a confidential relationship existed because Witherspoon was brother‑in‑law, a financial advisor, and the broker who received policy mailings | Witherspoon argued there was no trust/dependence: family tie was not dispositive, Petitioners did not rely on him for finance advice, and parents also knew premium status | No confidential relationship was established (no dependence); constructive fraud claim fails |
| Whether Maryland should adopt Restatement (Second) of Torts §242(2) (liability for preventing exercise of intangible rights even without converting a document) | Petitioners urged adoption to address modern/digital intangible assets | Witherspoon and Court warned such adoption would erode conversion’s common‑law limits and overlap/consume other economic torts; no persuasive jurisdictional trend | Court declined to adopt §242(2); maintained the document requirement to preserve doctrinal boundaries |
Key Cases Cited
- Nickens v. Mount Vernon Realty Grp., LLC, 429 Md. 53 (conversion defined as intentional exertion of ownership or dominion over plaintiff's personal property)
- Allied Inv. Corp. v. Jasen, 354 Md. 547 (1999) (conversion of intangible property limited to cases where a document embodying the right is converted)
- Durst v. Durst, 225 Md. 175 (conversion can extend to documents embodying rights such as life insurance policies)
- Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283 (electronic records can serve as tangible/transferable documents for conversion)
- Medi‑Cen Corp. of Md. v. Birschbach, 123 Md. App. 765 (no distinction between hard copy and electronic data for document conversion purposes)
- Fremont Indem. Co. v. Fremont Gen. Corp., 148 Cal. App. 4th 97 (declined by Court as persuasive authority — held conversion of purely intangible rights without a document may be actionable in California intermediate appellate decision)