The opinion of the court was delivered by: Joseph F. Bianco, District Judge
Plaintiffs Eugene P. Cimini ("Cimini") and his wife, Joan McLachlan ("McLachlan") bring this diversity action alleging fraud, breach of fiduciary duty, breach of contract, and tortious interference with contract in connection with a $750,000 life insurance policy placed in trust for Cimini, with McLachlan as a beneficiary. Cimini allegedly obtained the policy and entered the trust agreement in 2002 as a result of his position as a partner at the law firm of Jasper Schlesinger Hoffman LLP (the "Firm" or "Jasper"). The defendants are the Firm and Stephen B. Hand ("Hand"), as a trustee and as a member of the Firm, who were allegedly involved in the formation and supervision of the trust, as well as the alleged wrongful termination of the life insurance policy after Cimini retired from the Firm due to a terminal illness.
Defendants move to dismiss the Third Amended Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure.*fn1 For the reasons that follow, the defendants' motion is granted as to the claims asserted by McLachlan because she lacks standing, and denied as to the claims brought by Cimini.
The following facts are taken from the complaint and are not findings of fact by the Court, but rather are assumed to be true for purposes of deciding this motion to dismiss.
Plaintiffs Cimini and McLachlan are married and reside in Centerville, Massachusetts. (Third Am. Compl. ¶ 1.) Cimini is a former member/partner at the Firm who retired on August 31, 2004, due to health reasons relating to cancer. (Id. ¶ 8.) Jasper is a law firm with its principal places of business in Garden City, New York and Wilmington, Delaware. (Id. ¶ 2.) Defendant Hand is a partner at the Firm. (Id. ¶ 3.)
On or about December 2002, the Firm made a group life insurance policy available to its partners with a face value of $750,000, which Cimini purchased. (Id. ¶¶ 9-10.) The Firm allegedly advised Cimini, on or about late December 2002, that there would be a tax benefit to his estate if he placed the policy into an irrevocable trust because it would reduce the amount of federal and state taxes payable by his estate upon his death. (Id. ¶¶ 11, 176-77.) Moreover, the Firm and Hand allegedly advised Cimini at that time that, in order for such an irrevocable trust to be lawful and to achieve the maximum tax benefits to his estate, the trust agreement would have to contain, among other things, provisions that would: (1) grant the trustee the power to designate or change from time to time the beneficiary of any such policy; (2) relieve the trustee of any duty to keep the insurance in force, or to notify the grantor or any other person that any premium or other payment was or would become due, or to forward any premium notice to any person; (3) provide that the trustee would be under no liability to anyone in case such premiums, dues, assessment or other charges were not paid, or for any result of the failure to make such payments; and (4) relieve the trustee of any duties or obligations under the insurance trust agreement. (Id. ¶¶ 178-81.) It is further alleged that these representations were known to be false by the Firm and Hand when made to Cimini, and were made with the intent that Cimini would rely upon them. (Id. ¶¶ 182-83.)
Cimini allegedly relied upon these representations by Hand and the Firm and asked the Firm to draft a trust agreement for him. (Id. ¶¶ 12, 185.) Hand, as the designee of the Firm, drafted an irrevocable life insurance trust agreement for Cimini, which contained the provisions allegedly proposed by defendants. (Id. ¶¶ 14, 186.)
Thereafter, on or about December 27, 2002, Cimini entered into the "Eugene P. Cimini Insurance Trust Agreement" (the "Trust Agreement" or the "Agreement") as grantor with defendant Hand as Trustee, with those provisions. (Id. ¶¶ 15-16, 185.) Cimini named plaintiff McLachlan as the beneficiary of the Trust. (Id. ¶ 17.)
Pursuant to the offer made by the Firm to Cimini in December 2002, the Firm purchased from Massachusetts Mutual Life Insurance Company a Group Flexible Premium Adjustable Life Insurance Policy (the "Policy") for the benefit of Cimini. (Id. ¶ 18.) The Policy named Cimini as the Insured, named the Firm as the Employer, and had a selected face value of $750,000. (Id. ¶ 19.)
According to the Third Amended Complaint, Cimini allowed other life insurance policies to lapse after entering into the Trust Agreement because he intended for the Trust Agreement to replace those other policies. (Id. ¶¶ 27.) The Third Amended Complaint alleges that the Firm and Hand were aware of this fact and of Cimini's reliance upon the Firm obtaining the Policy for him. (Id. ¶¶ 28-29.)
After entering into the Trust Agreement, Hand advised Cimini when the premiums on the Policy were due, and Cimini paid premiums into an escrow account maintained by Hand as Trustee. (Id. ¶ 30.) Hand, as Trustee, paid the premiums due on the Policy from the escrow account to the insurer. (Id. ¶ 31.)
The Policy and Trust Agreement were still in effect on August 31, 2004, when Cimini retired from the Firm due to terminal cancer. (Id. ¶¶ 32, 34.) The Third Amended Complaint alleges that the Firm and Hand were aware that the reason for Cimini's retirement was the terminal illness. (Id. ¶ 33.) For approximately one year after Cimini's retirement, the Firm continued to pay the premiums due on the Policy and Hand remained the Trustee pursuant to the terms of the Trust. (Id. ...