Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

Articles Posted in Trusts & Estates

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Intervenors, financial institutions that held junior notes issued by trust defendant Soloso, appealed the district court's grant of summary judgment in favor of plaintiff, the senior noteholder of Lansuppe. Intervenors also appealed the district court's denial of their cross-motion for summary judgment and the dismissal of their cross-claims. The Second Circuit held that the district court erred in finding that section 47(b) of the Investment Company Act of 1940 does not provide a private right of action. However, the court agreed with the district court that Lansuppe has demonstrated that it is entitled to summary judgment ordering distribution of Soloso's assets according to the terms of the indenture and that Intervenors' cross‐claims failed. Accordingly, the court affirmed the district court's order distributing the assets of the trust according to the terms of the trust's governing indenture. View "Oxford University Bank v. Lansuppe Feeder, Inc." on Justia Law

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Plaintiff filed a pro se action against Phillip Morris, alleging Connecticut state law liability claims on behalf of her late husband's estate. The district court dismissed some of plaintiff's claims based on its determination that Connecticut law would not allow her to represent the estate pro se. In this case, Connecticut law and federal law conflict on the issue of whether plaintiff can represent the estate pro se. The Second Circuit held that the district court misread both Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), and Guest v. Hansen, 603 F.3d 15 (2d Cir. 2010), in concluding that Connecticut's rule controlled the circumstances in which a party may appear pro se in federal court. The court held that 28 U.S.C. 1654, and federal rules interpreting it, are procedural in nature and therefore must be applied by federal courts in diversity cases. The court explained that, who may practice law before a federal court is a matter of procedure—which Congress and the federal courts have the power to regulate—notwithstanding contrary state law. In this case, Connecticut's substantive law will not be affected by permitting plaintiff to file motions, conduct depositions, or represent the estate at trial. Accordingly, the court vacated the district court's judgment insofar as it dismissed plaintiff's claims under Connecticut law and the derivative consortium claims. The court affirmed the dismissal of the remaining claims based on statute of limitation grounds. View "Pappas v. Philip Morris, Inc." on Justia Law

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Pangea challenged the district court's order granting in part and denying in part the company's motion for writ of execution upon the proceeds from the sale of a property previously owned by appellees. The Second Circuit certified questions of New York law for which no controlling decisions of the New York Court of Appeals exist: (1) If an entered divorce judgment grants a spouse an interest in real property pursuant to D.R.L. Section 236, and the spouse does not docket the divorce judgment in the county where the property is located, is the spouse's interest subject to attachment by a subsequent judgment creditor that has docketed its judgment and seeks to execute against the property? (2) If the answer to Question (1) is "no," then: If a settlor creates a trust solely for the purpose of holding title to property for the benefit of himself and another beneficiary, and the settlor retains the unfettered right to revoke the trust, does the settlor remain the absolute owner of the trust property relative to his creditors, or is the trust property conveyed to the beneficiaries? View "Pangea Capital Management, LLC v. Lakian" on Justia Law

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Plaintiff filed suit under the Racketeer Influenced and Corrupt Organizations Act (RICO), seeking to recover the loss of the inheritance she would have received from her mother's estate if not for her brother's fraudulent schemes, and the approximately $200,000 in legal expenses that she incurred in the course of Connecticut state court proceedings in which she sought to remove her brother as executor. The district court dismissed the complaint for failure to state a claim and declined to exercise supplemental jurisdiction over the related state law claims. The Second Circuit vacated and remanded, holding that plaintiff's claim for distribution of her inheritance and that of her mother's estate was not ripe under RICO because the Estate was not closed and the amount of the lost inheritance was too speculative; her claim under RICO for legal expenses incurred in pursuing her grievances against her brother and other defendants was ripe; she plausibly alleged that her legal expense injuries were proximately caused by defendants' RICO violations; she adequately pleaded that her brother, and Defendant Garvey, and Red Knot violated 18 U.S.C. 1962(b); and she adequately pleaded that all six defendants violated 18 U.S.C. 1962(c). View "D'Addario v. D'Addario" on Justia Law

Posted in: Trusts & Estates

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This appeal involved an intra‐family dispute over who owns a residential house. The Second Circuit held that the district court properly granted defendants' motion for summary judgment on the pleadings with respect to plaintiffs' adverse possession claim where the affirmative complaint did not contain any affirmative facts that plaintiffs did anything that constituted a distinct assertion of a right hostile to defendants. However, with regard to the constructive trust claim, the court held that there may be a genuine dispute of material fact as to whether an implied promise was made and as to whether defendants' refusal to honor this promise unjustly enriched them. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Jaffer v. Hirji" on Justia Law

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The Second Circuit held that it need not decide whether the presence of the same person, in two different capacities, on both sides of a case caption, defeats diversity because the challenged judgment here rests on a misapprehension as to the particular irrevocable trusts named as plaintiffs. In this case, the four party trusts have no distinct juridical identity allowing them to sue or be sued in their own names; each was a traditional trust, establishing a mere fiduciary relationship and, as such, incapable of suing or being sued in its own name; because the party trusts can only sue or be sued in the names of their trustees, pleadings in the names of the trusts themselves do not require that these parties' citizenship, for purposes of diversity, be determined by reference to all their members; rather, these traditional trusts' citizenship was that of their respective trustees; because trustee Roland Loubier's Canadian citizenship is only suggested, not demonstrated, in the record, further inquiry was required on remand conclusively to determine diversity. Accordingly, the court vacated and remanded. View "Raymond Loubier Irrevocable Trust v. Loubier" on Justia Law

Posted in: Trusts & Estates

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This case concerns a lease and a purported joint venture agreement entered into between defendant and his now-deceased father, the former president and majority shareholder of a real estate development corporation. The lease granted defendant control over a multi-million-dollar property for a period of 20 years in exchange for a payment of $20. AHC sought damages for defendant's use and occupancy of the property and a judgment declaring the lease and joint venture agreement void. Defendant counterclaimed. The district court granted AHC’s motion for partial summary judgment on its declaratory judgment claims and denied defendant's requests for additional discovery. The court concluded that the district court did not abuse its discretion in denying defendant's FRCP 56(d) motion seeking more discovery materials where none of the items defendant specifically requested is germane to the issues before the court; the court applied Pennsylvania law to its analysis of the joint‐venture dispute and New York law to the lease dispute; and the district court correctly concluded that the business judgment rule should not apply to the lease and thus the lease was void as a gift or act of corporate waste. As to the joint venture agreement, the court declined to certify the issue of parol evidence to the state court. The court concluded that the parol evidence rule applies in this case and that the integration clause in the lease retains its preclusive effect. Accordingly, the court affirmed the judgment. View "Alphonse Hotel Corp. v. Tran" on Justia Law

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Plaintiffs filed suit against defendants, contending that they were entitled to Frederica Thea's Trust's assets and seeking declaratory and equitable relief. On appeal, plaintiffs challenged the district court's denial of their motion seeking leave to file a second amended complaint. The court affirmed the district court's conclusion that the claims alleged in the proposed second amended complaint would not withstand a motion to dismiss. In this case, plaintiffs lacked standing to sue in their individual capacities. Further, a California statute with a one-year statute of limitations applies to plaintiffs claims and, while the district court did not apply the statute of limitations to plaintiffs' individual claims, all of plaintiffs' claims on behalf of the estate are time-barred. View "Thea v. Kleinhandler" on Justia Law

Posted in: Trusts & Estates

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Reverend Flesher participated in benefits plans administered by the Ministers and Missionaries Benefit Board (MMBB), a New York not‐for‐profit corporation. Flesher entered into the plans while married to Snow. Snow, also a reverend and MMBB policyholder, was listed as the primary beneficiary on both of Flesher’s plans. Snow’s father was the contingent beneficiary. When Flesher and Snow divorced in 2008 they signed a Marital Settlement Agreement; each agreed to relinquish rights to inherit from the other and was allowed to change the beneficiaries on their respective MMBB plans. Flesher, then domiciled in Colorado, died in 2011 without changing his beneficiaries. MMBB , unable to determine how to distribute the funds, and filed an interpleader suit. The district court discharged MMBB from liability, applied New York law, and held that Flesher’s estate was entitled to the funds. The Second Circuit certified to the New York Court of Appeals the question: whether a governing‐law provision that states that the contract will be governed by and construed in accordance with the laws of New York, in a contract not consummated pursuant to New York General Obligations Law 5‐1401, requires the application of New York Estates, Powers & Trusts Law 3‐5.1(b)(2), which may, in turn, require application of the law of another state. View "Ministers & Missionaries Benefit Bd. v. Snow" on Justia Law

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The Trustee for the Bernard L. Madoff Investment Securities LLC (BLMIS) under the Securities Investor Protection Act (SIPA), 15 U.S.C. 78aaa et seq., filed suit against hundreds of BLMIS customers who withdrew more from their accounts than they had invested and profited from Madoff's scheme. Defendants moved to dismiss the actions on the ground that the payments received by BLMIS customers were securities-related payments that cannot be avoided under 11 U.S.C. 546(e). Section 546(e) establishes an important exception to a trustee's clawback powers and provides that certain securities-related payments, such as transfers made by a stockbroker in connection with a securities contract, or settlement payments cannot be avoided in bankruptcy. The court affirmed the district court's conclusion that the payments were shielded by section 546(e) and dismissal of the relevant claims under Rule 12(b)(6). View "In re: Bernard L. Madoff Investment Securities LLC" on Justia Law