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Belanger v. Bny Mellon Asset Management, LLC

United States District Court, D. Massachusetts

March 28, 2017

LISA SIEGEL BELANGER and DEVORA C. KAISER, Plaintiffs,
v.
BNY MELLON ASSET MANAGEMENT, LLC, et al., Defendants.

          MEMORANDUM AND ORDER

          ALLISON D. BURROUGHS, U.S. DISTRICT JUDGE

         Lisa Siegel Belanger and Devora Kasier (“Plaintiffs”), two daughters of Marvin H. Siegel (“Siegel”), have filed suit against various defendants[1] involved in their father's estate planning and medical care, including BNY Mellon Asset Management, LLC (“BNY Mellon”); Brian Nagle; Tarlow Breed Hart & Rodgers, PC (the “Law Firm”); Edward Tarlow; Albert DeNapoli; Catherine Watson; William Austin, CPA; Beverly Hospital; Maxa Berid;[2] Elder Services of Merrimack Valley, Inc. (“ESMV”); Whittier Health Network, Inc. (d/b/a “Whittier Pavilion”); and Richard Garmil (collectively, “Defendants”). Plaintiffs allege breach of fiduciary duty against BNY Mellon and Nagle (Count I); fraud against BNY Mellon, Nagle, Tarlow, Watson, the Law Firm, Whittier Pavilion, and Garmil (Count II); fraudulent conspiracy in violation of 42 U.S.C. § 1985 against all defendants (Count III); and violation of 42 U.S.C. § 1983 against ESMV (Count IV). Defendants have moved to dismiss the complaint in its entirety pursuant to Federal Rules of Civil Procedure Rule 12(b) [ECF No. 154]. For the reasons explained below, the Court GRANTS Defendants' Joint Motion to Dismiss, and dismisses all counts.

         I. BACKGROUND

         Plaintiffs initiated this action against Defendants on February 12, 2015. [ECF No. 1]. Since then, the Court has twice dismissed Plaintiffs' complaints for failing to comply with Federal Rule of Civil Procedure 8. See [ECF Nos. 86, 108]. On September 30, 2015, Plaintiffs filed their Second Amended Complaint (“SAC”) with 33 exhibits. [ECF No. 128]. On March 21, 2016, Defendants filed a joint motion to dismiss the SAC [ECF No. 154], an Omnibus Brief in support of the motion [ECF No. 160], and several supplemental briefs specific to each defendant [ECF Nos. 155, 157, 158, 159]. On April 8, 2016, Plaintiffs opposed the motion to dismiss [ECF No. 171].[3]

         The following facts are taken from Plaintiffs' Second Amended Complaint. [ECF No. 128]. While Plaintiffs have shortened the most recent version of the SAC, the Court continues to find it challenging to follow, but has endeavored to accurately summarize its core allegations. Plaintiffs Belanger and Kaiser are two of Siegel's three biological daughters.[4] On January 5, 1982, Siegel originated a trust “to provide for the disposition and holding of the Donor's estate and for the benefit of the Donor and his said children.” SAC ¶ 9. The Trust was known as the “D.S.L. Trust of 1982.” Siegel's three daughters, Kaiser, Belanger, and Sheryl Sidman, were beneficiaries of the DSL Trust of 1982. In February 1999, Siegel hired Defendant BNY Mellon to provide investment management services for three accounts: the DSL Trust of 1982, Siegel's IRA, and Siegel's profit sharing account. At inception, the accounts contained approximately $3.7 million, $426, 000, and $55, 000, respectively. Defendant Nagle was employed by BNY Mellon during the relevant period and was the direct and primary investment manager for the D.S.L. Trust.

         On February 11, 2003, after re-marrying, Siegel, through experienced attorneys, transformed the DSL Trust of 1982 into a new DSL Trust. According to Plaintiffs, Siegel intended that the existing property in the DSL Trust of 1982 be merged into the newly created DSL Trust of 2003. Siegel was designated as settlor and trustee, and his three daughters, including both Plaintiffs, were designated as co-trustees.

         That same day, Siegel, through an attorney, executed a durable power of attorney (hereinafter, the “2003 DPOA”) naming Belanger as his attorney-in-fact. Devora Kaiser was designated as the successor attorney-in-fact. The 2003 DPOA specified, in relevant part, that “in the event that protective proceedings are instituted at any time in any court of the Commonwealth of Massachusetts to appoint a conservator, guardian of the estate, or guardian of the person for me, I hereby nominate Lisa Siegel Belanger.” [ECF No. 128, Ex. 6].

         On May 19, 2011, Siegel was involuntarily committed to Defendant Beverly Hospital based on a 911 call that suggested that he was a danger to himself and others. Plaintiffs allege that the 2003 DPOA was in effect during this time period. A clinical evaluator at Beverly Hospital committed Siegel to a psychiatric facility, which Plaintiffs allege was done without Belanger's input despite the fact that the clinical evaluator had actual knowledge that Belanger was the attorney-in-fact for her father. On May 20, 2011, Siegel was transferred from Beverly Hospital to Defendant Whittier Pavilion, a psychiatric facility in Haverhill, Massachusetts. Belanger was not told that Siegel was admitted to Whittier Pavilion for an involuntary psychiatric commitment, but rather was informed that he was being admitted based on a diagnosis of Alzheimer's and dementia. Belanger was also not told that Whittier Pavilion was a psychiatric facility or that anti-psychotic drugs might be administered to her father. Plaintiffs allege that Whittier Pavilion and Whittier Pavilion's outside private counsel, Defendant Garmil, were aware of the value of Siegel's estate and had a copy of Siegel's 2003 DPOA. Plaintiffs further allege that Garmil prohibited Belanger from seeing Siegel at the inception of his involuntary admission.

         On May 24, 2011, Garmil, without notifying Belanger, filed a petition with the Haverhill District Court to have Siegel involuntarily committed for an additional six months at a psychiatric facility. Plaintiffs allege that Whittier Pavilion financially benefits from long-term civil commitments. Once Belanger became aware of the petition, [5] she attempted to retain private legal counsel to fight the involuntary commitment and requested that Nagle instruct BNY Mellon to transfer funds to Siegel's account for such representation. BNY Mellon failed to do so for reasons Plaintiffs do not explain. Plaintiffs claim that Siegel spoke with Defendant Nagle to confirm the validity of the 2003 DPOA in April 2011, and that these communications were faxed to BNY Mellon on April 6, 2011.

         On May 24, 2011, Nagle called Siegel at Whittier Pavilion. According to Plaintiffs, he testified before the Essex Probate and Family Court in Massachusetts that he had called Siegel to obtain permission for Belanger to act as attorney-in-fact and for her to withdraw funds from BNY Mellon. Plaintiffs claim that Nagle gave Siegel the impression that Belanger wanted to withdraw Siegel's funds for her own use. On the May 24, 2011 call, Siegel orally revoked the 2003 DPOA. That same day, Nagle called attorneys at the Law Firm, with whom he had prior business dealings, regarding potentially needing their services.

         On May 25, 2011, Nagle and Tarlow visited Siegel at Whittier Pavilion. According to Plaintiffs, Siegel was on anti-psychotic drugs at the time. At this meeting, Siegel executed a written revocation of the 2003 DPOA, a new durable power of attorney that named Siegel's CPA, Defendant William Austin of Braver, as his attorney-in-fact, and a retainer agreement for the legal services of Tarlow (hereinafter, the “May 25, 2011 Documents”). Plaintiffs allege that the Law Firm “through fraud and deception became privately-retained counsel for” Siegel. SAC ¶ 53. The SAC specifically names as defendants the following Law Firm attorneys: Edward Tarlow, Albert DeNapoli, and Catherine Watson.[6]

         On May 27, 2011, Belanger filed a Petition for Guardianship and Conservatorship of her father in Essex Probate & Family Court (the “Probate Court”). Belanger v. Cuffe, 464 Mass. 1016 (2013) (hereinafter, the “Probate Action”).[7] At some point, Siegel retained Attorney Marsha Kazarosian, who participated in the Probate Action. Plaintiffs claim that the individual attorneys at the Law Firm misrepresented to the judge in the Probate Action the nature of their relationship with Siegel, but go on to detail how the judge was able to correct his understanding. Plaintiffs further allege that Defendant DeNapoli tried to “bribe” Belanger, in the guise of a thinly veiled settlement offer, to withdraw her petitions from the Probate Action by offering her $100, 000 from Siegel's estate, which she refused. In November 2011, DeNapoli submitted an affidavit detailing the settlement offer in the Probate Action. Plaintiffs allege that there was never a “specific evidentiary hearing” on the validity of the 2003 DPOA in the Probate Action. On October 22, 2012, following a five-day trial in June and July 2012, the Probate Court issued “Findings of Fact and Conclusion of Law” (the “Probate Order”). [ECF No. 160, Ex. 1]. The Probate Court found, among other things, that Belanger financially exploited Siegel and that it would be unsuitable for her to act as his guardian or conservator. Following the Probate Order, Belanger filed a petition pursuant to Mass. Gen. Laws ch. 211 § 3 with the Massachusetts Supreme Judicial Court (“SJC”), and the SJC declined to exercise its supervisory powers because she had “adequate alternative remedies” for relief related to the Probate Court's rulings. Belanger v. Cuffe, 985 N.E.2d 114, 115 (Mass. 2013). The SJC noted that Belanger did not show that she pursued alternative remedies in the trial court or the Appeals Court. Id. at 116.

         Several years later, Plaintiffs filed the instant action. In Count I of the SAC, Plaintiffs allege breach of fiduciary duty against BNY Mellon and Nagle; specifically, that BNY Mellon “knowingly and fraudulently engaged in acts of deceptively obtaining [Siegel's] signature on written instruments, ” which the Court understands to refer to the May 25, 2011 Documents. Plaintiffs claim that BNY Mellon and Nagle owed them a fiduciary duty in connection with the 2003 DPOA, as co-trustees of the DSL Trust, and as co-beneficiaries of Siegel's estate. Further, they allege that BNY Mellon and Nagle breached that duty when Nagle engaged in self-dealing by “soliciting the legal services of Defendant Attorney Tarlow and Defendant Law Firm in purported representation of [Siegel]; collud[ing] with counsel of Defendant Law Firm TBHR in purportedly revoking [Siegel's] 2003 DPOA; [including] Defendant BNY Mellon in the durable power of attorney signed by [Siegel] on May 25, 2011; [including] Defendant BNY Mellon in the retainer agreement signed by [Siegel] on May 25, 2011; converting funds belonging to DSL Trust (which Plaintiff Daughters are co-trustees and co-beneficiaries) to its own use; creating false documentation to obtain funds from DSL Trust; engaging in acts to conceal fraudulent and deceptive activity of other Defendants.” SAC ¶ 281. Plaintiffs argue that BNY Mellon was put on notice of Nagle's misconduct when Belanger sent copies of a 93A Demand Letter to BNY Mellon's board of directors and president.

         In Count II, Plaintiffs allege fraud by BNY Mellon, Nagle, Tarlow, Watson, the Law Firm, Whittier Pavilion, and Garmil because they obtained a new durable power of attorney on May 25, 2011 that granted BNY Mellon and the Law Firm unfettered discretion to use the funds of the DSL Trust for their own personal use, which was not permitted under the 2003 DPOA. Further, Plaintiffs allege that Siegel had informed Nagle that he did not want to give BNY Mellon unfettered discretion over the funds. Moreover, certain defendants prevented Belanger from seeing Siegel while he was committed, during which time he revoked the 2003 DPOA.

         In Count III, Plaintiffs allege fraud conspiracy under 42 U.S.C. § 1985 against all defendants. They claim that Beverly Hospital misled Belanger as to the nature of Siegel's admission at Whittier Pavilion. The SAC further alleges that Defendants knowingly engaged in an agreement to fraudulently and deceptively obtain Siegel's signature on the May 25, 2011 Documents, and that Berid, as General Counsel for ESMV (Elder Services of Merrimack Valley) engaged in deceptive acts to aid and abet Tarlow and BNY Mellon by covering up for them.[8]Plaintiffs state that ESMV is a “quasi-private nonprofit corporation that provides various services geared to the elderly . . . . [that] functions as a State designated protective service agency.” SAC ¶ 61.

         In Count IV, Plaintiffs allege violations of 42 U.S.C. § 1983 against ESMV. They argue that ESMV acted “under color of law” when it violated Plaintiffs' federal constitutional rights. SAC ¶ 307. In order to make sense of Count IV, which is largely filled with conclusory legal allegations, the Court must look to other portions of the SAC. Prior to Count IV, the SAC only makes reference to federal constitutional rights in the jurisdictional statement. In the jurisdictional statement, the SAC alleges that the Court has jurisdiction over this case because Plaintiffs' substantive and procedural due process rights have been violated under the Fourth, Fifth, and Fourteenth Amendments. Plaintiffs do not mention these rights anywhere else in the SAC. In an earlier section discussing each defendant, the SAC claims that ESMV served as a representative for the Commonwealth of Massachusetts during the relevant time period, which the Court infers to be relevant to the allegation in Count IV that ESMV somehow acted with the state or engaged in conduct that was “chargeable” to the state. Plaintiffs allege that ESMV and Berid, its General Counsel, refused to take legal action against Tarlow and the Law Firm despite having knowledge of, among other things, the fact that Siegel was on anti-psychotic drugs while at Whittier Pavilion and during the execution of the May 25, 2011 Documents. Plaintiffs aver that this is because Berid had a prior working relationship with Tarlow.

         As relief, Plaintiffs request compensatory damages, punitive damages, attorney's fees and costs of litigation pursuant to 42 U.S.C. § 1988; and statutory interest.

         II. LEGAL STANDARD

         On a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), the Court must accept as true all well-pleaded facts, analyze those facts in the light most hospitable to the Plaintiffs' theory, and draw all reasonable inferences from those facts in favor of the Plaintiffs. United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 383 (1st Cir. 2011). In ruling on a motion under Rule 12(b)(6), the Court “must consider the complaint, documents annexed to it, and other materials fairly incorporated within it, ” which “sometimes includes documents referred to in the ...


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