UBS Financial Services, Inc. v. Thompson
217 Md. App. 500
| Md. Ct. Spec. App. | 2014Background
- Policy purchased Sept. 28, 1990 was a second-to-die Manulife life policy, with parents as owners and kids as beneficiaries.
- Parents funded premiums via cash gifts to children; UBS and Witherspoon coordinated premium payments through those gifts.
- Premiums were unpaid for several years; Manulife borrowed about $900,000 against the policy to cover them.
- Appellees (Kathy Thompson and Barbara Clements) sued for negligence, negligent misrepresentation, deceit, conversion, and constructive fraud; UBS and Witherspoon denied liability.
- Jury awarded substantial compensatory damages and $150,000 in punitive damages against Witherspoon; circuit court denied post-trial motions.
- Maryland Court of Special Appeals reverses and remands for new trial on negligence, negligent supervision, negligent misrepresentation, and deceit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Conversion viability | Appellees owned policy rights; conversion occurred via mishandling notices. | No dominion over the policy; no identifiable funds; not convertible. | Conversion claim rejected; no liability for Witherspoon. |
| Constructive fraud viability | Confidential relationship existed; concealment harmed appellees. | No fiduciary/confidential duty; claims fail absent nexus to parents. | Constructive fraud not established; no clear and convincing evidence. |
| Evidence on equalizing gifts | Equalization intent showed motive and context for conduct. | Evidence irrelevant and prejudicial; court properly limited it. | Court erred in excluding equalization evidence; prejudice to defense. |
| Jury instructions and duty | Duty to appellees owed by Witherspoon and UBS; pattern instructions needed. | No broad duty; correct law; pattern instructions inappropriate. | Trial court erred by not defining Witherspoon's duty; remand for new trial on several claims. |
| Damages framework | Present value of unpaid premiums should be accounted; recoveries tied to bargain. | Damages proper under misrepresentation rules; punitive damages permissible if malice proven. | Jury award flawed; remand for recalculated damages reflecting bargain and proper measures. |
Key Cases Cited
- Jasen v. Lasater, 354 Md. 547 (Md. 1999) (limits conversion to documents and transferred intangibles; intangible rights not broadly converted)
- Lasater v. Guttmann, 194 Md. App. 431 (Md. App. 2010) (economic claims in conversion require identifiable funds or transfer of a document)
- 100 Investment Ltd. Partnership v. Columbia Town Center Title Co., 430 Md. 197 (Md. 2013) (intimate nexus doctrine; privity/economic damages with close relationship)
- Noble v. Bruce, 349 Md. 730 (Md. 1998) (strict privity in attorney malpractice; third-party beneficiary limits)
- Ward Development Co., Inc. v. Ingrao, 63 Md. App. 645 (Md. 1985) (negligent misrepresentation damages: flexibility theory; subtract contract charges from damages)