113 N.E.3d 335
Mass. App. Ct.2018Background
- Patrick Kenney maintained three nondiscretionary IRAs at UBS under a client relationship agreement that required transfer to named beneficiaries at his death; Kenney originally named Donna Aliberti sole beneficiary of all three.
- In late 2013 Kenney returned defective beneficiary-update forms for two smaller IRAs naming four people with ambiguous shares; he returned no update for the largest IRA. Kenney died December 2, 2013.
- Aliberti repeatedly requested distribution and information; UBS sent no timely, substantive responses and distributed the two smaller IRAs pro rata among the four named on the defective forms.
- UBS received a demand from another claimant (Gillespie) on the largest IRA and withheld distribution; Gillespie’s claims were later dismissed by agreement and UBS waited over three months after dismissal to distribute the largest IRA to Aliberti.
- Aliberti sued (as counterclaims) for breach of contract, breach of fiduciary duty, intentional infliction of emotional distress (IIED), and violation of G. L. c. 93A § 2; the trial court granted judgment on the pleadings for UBS on all counts; Aliberti appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (IRAs) | UBS breached the client agreement by failing to distribute funds and provide information to the sole named beneficiary | UBS contends no contractual breach: either Kenney’s later (defective) forms changed beneficiaries or UBS had reason to withhold during dispute | Reversed as to these counts — pleadings plausibly show UBS breached duties under the client agreement and Aliberti has third-party beneficiary standing under New York law |
| Breach of fiduciary duty | As custodian/trustee after Kenney’s death, UBS owed fiduciary duties to the beneficiary and breached them by withholding funds and failing to inform her | UBS argues nondiscretionary broker accounts do not create fiduciary duties to the account owner | Reversed as to these counts — court finds trustee status of IRA and UBS’s control/reliance support a fiduciary duty to beneficiary; pleadings state claim |
| Intentional infliction of emotional distress | UBS’s conduct (insults by UBS employee, repeated ignoring, withholding funds) caused extreme distress | UBS argues allegations are conclusory and insufficient | Affirmed dismissal — allegations of extreme emotional distress were conclusory and inadequate to survive judgment on the pleadings |
| G. L. c. 93A § 2 (unfair or deceptive acts) | UBS engaged in unfair/deceptive commercial practices by denying funds, ignoring requests, causing litigation and fees | UBS argues trustee status or private dispute rule bar c. 93A; also that conduct is not in trade or commerce | Reversed as to this count — UBS’s financial services are in trade or commerce and the alleged conduct (and fiduciary/contract breach) suffices to plead a c. 93A claim |
Key Cases Cited
- EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11 (N.Y. 2005) (defines fiduciary relationship and duty to act for another's benefit)
- Barron v. Fidelity Magellan Fund, 57 Mass. App. Ct. 507 (Mass. App. Ct. 2003) (custodian’s wrongful handling of an account can support a c. 93A claim by a beneficiary)
- Quinton v. Gavin, 64 Mass. App. Ct. 792 (Mass. App. Ct. 2005) (trustee providing services in the marketplace may be sued under c. 93A)
- Baker v. Wilmer Cutler Pickering Hale & Dorr LLP, 91 Mass. App. Ct. 835 (Mass. App. Ct. 2017) (professional services and fiduciary breaches can support c. 93A claims)
- Schleifer v. Yellen, 158 A.D.3d 512 (N.Y. App. Div. 2018) (nominal damages available for contract claims, including delayed disbursements)