Jakobiec v. Merrill Lynch Life Ins. CV-10-223-PB 8/2/12 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Thaddeus J. Jakobiec et a l .
v. Case No. 10-cv-223-PB Opinion No. 2012 DNH 134 Merrill Lynch Life Insurance Co.
MEMORANDUM AND ORDER
Former attorney Thomas Tessier represented a trust that was
designated as a beneficiary of a life insurance policy purchased
from Merrill Lynch Life Insurance Company ("Merrill Lynch"). With
the aid of his brother, whom the probate court appointed as the
trustee, Tessier misappropriated the proceeds of the policy.
Thaddeus Jakobiec, the sole beneficiary of the trust, Audry Lum and
Frederick Jakobiec, co-trustees of the trust, and Edmund S. Hibbard,
administrator of the policy owner's estate, jointly bring suit
against Merrill Lynch for breach of the insurance contract. Their
claim is premised on the assumption that Merrill Lynch breached the
insurance contract by making the insurance policy proceeds check
payable to a fraudulent trust created by Tessier to perpetuate his
misappropriation scheme. Because I determine that plaintiffs cannot
prove that the alleged breach caused their injury, I deny their
motion for summary judgment and grant Merrill Lynch's motion.
1 I. BACKGROUND
Beatrice Jakobiec, mother of plaintiffs Frederick and Thaddeus
Jakobiec, applied to Merrill Lynch for a life insurance policy in
1989. The application listed as beneficiaries "50% Frederick A.
Jakobiec, Son, and 50% Frederick A. Jakobiec, Trustee for Thaddeus
J. Jakobiec - IRS ID XX-XXXXXXX." The taxpayer identification
number listed on the application corresponded to an unnamed
testamentary trust established a year earlier under the will of
Beatrice's sister, Lillian Smillie (the "Smillie Trust"). Thaddeus
was named the sole beneficiary of that trust, and Frederick was
designated as the trustee. Thomas Tessier was the attorney retained
to represent the trust.
Beatrice died in May 2001. At her wake, Frederick asked
Tessier to serve as administrator of her estate. Tessier agreed and
Frederick said he would contact him with further instructions. When
he did not hear from Frederick, Tessier made numerous attempts to
contact him without success. Subsequently, Tessier decided to sort
through Beatrice's financial statements and unread mail, and learned
that she had purchased a Merrill Lynch life insurance policy.
On June 11, 2002, Tessier filed an ex-parte petition in probate
court requesting that Frederick be removed as trustee of the Smillie
Trust and that his own brother, Michael Tessier, be appointed as
successor trustee. He represented that Frederick had stopped paying
2 for Thaddeus's care and had failed to respond to Tessier's multiple
attempts to contact him. The probate court granted the petition the
next day.
On June 24, approximately two weeks later, Tessier prepared a
fraudulent trust document that purported to create the "Thaddeus J.
Jakobiec Irrevocable Inter Vivos Trust," naming Michael Tessier as
the trustee and the death beneficiary (the "Fraudulent Trust").
That same day, Thomas Tessier filed a petition for administration of
Beatrice's estate naming Thaddeus as the petitioner and himself as
the administrator. He forged Thaddeus's signature on the petition
and on a durable power of attorney form. He also forged Frederick's
signature on a declination of interest form. Although he was
required to report all assets of the estate, Tessier did not list
the life insurance policy on the petition, nor did he subsequently
inform the probate court of its existence.
Less than a week later, Tessier notified Merrill Lynch that
Beatrice had died and that he was representing her son Thaddeus, who
he assumed was a beneficiary under her policy. In a letter
requesting the production of certain forms, Merrill Lynch identified
the "Thaddeus J. Jakobiec Trust" as a designated beneficiary.
Tessier's reply explained that the trust had been established under
the will of Lillian Smillie and that Michael Tessier had been
substituted as trustee for Frederick Jakobiec. He enclosed the
3 certificate of appointment issued by the probate court bearing
Michael's name as the trustee of the Smillie Trust. Inexplicably,
however, Tessier listed the Fraudulent Trust rather than the Smillie
Trust as the claimant on the claim form and identified the
Fraudulent Trust both by its tax identification number and its date
of creation.
Merrill Lynch responded on August 2 with a request for
clarification. Its letter explained that the trust designated in
the insurance policy had been established years before June 24,
2002, and had a different taxpayer number than the one Tessier had
listed on the claim form. In follow-up letters, Tessier explained
that he had provided the wrong taxpayer number, which corresponded
to a "totally separate and distinct" trust that "once again [had]
Michael E. Tessier serving as Trustee." Doc. No. 36-11. He then
supplied Merrill Lynch with the correct taxpayer number for the
Smillie Trust, as well as probate court documents appointing Michael
Tessier as successor trustee of that trust. He directed Merrill
Lynch to pay the proceeds of the policy to "Michael Tessier,
Successor Trustee of the Lillian Smillie Trust for the benefit of
Thaddeus Jakobiec."
Notwithstanding the foregoing correspondence, Merrill Lynch
issued a check payable to the "Thaddeus J. Jakobiec Trust." Michael
endorsed the check as "Michael Tessier, Trustee of Thaddeus J.
4 Jakobiec Trust" and released the check to his brother, who deposited
the check into his personal account and later paid half of the
proceeds to Michael.The Tessier brothers have since been convicted
and sentenced to prison in connection with their theft of funds from
this and other victims.
II. STANDARD OF REVIEW
Summary judgment is appropriate when the record reveals "no
genuine dispute as to any material fact and that the movant is
entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
The evidence submitted in support of the motion must be considered
in the light most favorable to the nonmoving party, drawing all
reasonable inferences in its favor. See Navarro v. Pfizer Corp.,
261 F .3d 90, 94 (1st Cir. 2001).
A party seeking summary judgment must first identify the
absence of any genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986) . The burden then shifts to the
nonmoving party to "produce evidence on which a reasonable finder of
fact, under the appropriate proof burden, could base a verdict for
it; if that party cannot produce such evidence, the motion must be
granted." Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 94
(1st Cir. 1996); see Celotex, 477 U.S. at 323.
5 On cross motions for summary judgment, the standard of review
is applied to each motion separately.
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Jakobiec v. Merrill Lynch Life Ins. CV-10-223-PB 8/2/12 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Thaddeus J. Jakobiec et a l .
v. Case No. 10-cv-223-PB Opinion No. 2012 DNH 134 Merrill Lynch Life Insurance Co.
MEMORANDUM AND ORDER
Former attorney Thomas Tessier represented a trust that was
designated as a beneficiary of a life insurance policy purchased
from Merrill Lynch Life Insurance Company ("Merrill Lynch"). With
the aid of his brother, whom the probate court appointed as the
trustee, Tessier misappropriated the proceeds of the policy.
Thaddeus Jakobiec, the sole beneficiary of the trust, Audry Lum and
Frederick Jakobiec, co-trustees of the trust, and Edmund S. Hibbard,
administrator of the policy owner's estate, jointly bring suit
against Merrill Lynch for breach of the insurance contract. Their
claim is premised on the assumption that Merrill Lynch breached the
insurance contract by making the insurance policy proceeds check
payable to a fraudulent trust created by Tessier to perpetuate his
misappropriation scheme. Because I determine that plaintiffs cannot
prove that the alleged breach caused their injury, I deny their
motion for summary judgment and grant Merrill Lynch's motion.
1 I. BACKGROUND
Beatrice Jakobiec, mother of plaintiffs Frederick and Thaddeus
Jakobiec, applied to Merrill Lynch for a life insurance policy in
1989. The application listed as beneficiaries "50% Frederick A.
Jakobiec, Son, and 50% Frederick A. Jakobiec, Trustee for Thaddeus
J. Jakobiec - IRS ID XX-XXXXXXX." The taxpayer identification
number listed on the application corresponded to an unnamed
testamentary trust established a year earlier under the will of
Beatrice's sister, Lillian Smillie (the "Smillie Trust"). Thaddeus
was named the sole beneficiary of that trust, and Frederick was
designated as the trustee. Thomas Tessier was the attorney retained
to represent the trust.
Beatrice died in May 2001. At her wake, Frederick asked
Tessier to serve as administrator of her estate. Tessier agreed and
Frederick said he would contact him with further instructions. When
he did not hear from Frederick, Tessier made numerous attempts to
contact him without success. Subsequently, Tessier decided to sort
through Beatrice's financial statements and unread mail, and learned
that she had purchased a Merrill Lynch life insurance policy.
On June 11, 2002, Tessier filed an ex-parte petition in probate
court requesting that Frederick be removed as trustee of the Smillie
Trust and that his own brother, Michael Tessier, be appointed as
successor trustee. He represented that Frederick had stopped paying
2 for Thaddeus's care and had failed to respond to Tessier's multiple
attempts to contact him. The probate court granted the petition the
next day.
On June 24, approximately two weeks later, Tessier prepared a
fraudulent trust document that purported to create the "Thaddeus J.
Jakobiec Irrevocable Inter Vivos Trust," naming Michael Tessier as
the trustee and the death beneficiary (the "Fraudulent Trust").
That same day, Thomas Tessier filed a petition for administration of
Beatrice's estate naming Thaddeus as the petitioner and himself as
the administrator. He forged Thaddeus's signature on the petition
and on a durable power of attorney form. He also forged Frederick's
signature on a declination of interest form. Although he was
required to report all assets of the estate, Tessier did not list
the life insurance policy on the petition, nor did he subsequently
inform the probate court of its existence.
Less than a week later, Tessier notified Merrill Lynch that
Beatrice had died and that he was representing her son Thaddeus, who
he assumed was a beneficiary under her policy. In a letter
requesting the production of certain forms, Merrill Lynch identified
the "Thaddeus J. Jakobiec Trust" as a designated beneficiary.
Tessier's reply explained that the trust had been established under
the will of Lillian Smillie and that Michael Tessier had been
substituted as trustee for Frederick Jakobiec. He enclosed the
3 certificate of appointment issued by the probate court bearing
Michael's name as the trustee of the Smillie Trust. Inexplicably,
however, Tessier listed the Fraudulent Trust rather than the Smillie
Trust as the claimant on the claim form and identified the
Fraudulent Trust both by its tax identification number and its date
of creation.
Merrill Lynch responded on August 2 with a request for
clarification. Its letter explained that the trust designated in
the insurance policy had been established years before June 24,
2002, and had a different taxpayer number than the one Tessier had
listed on the claim form. In follow-up letters, Tessier explained
that he had provided the wrong taxpayer number, which corresponded
to a "totally separate and distinct" trust that "once again [had]
Michael E. Tessier serving as Trustee." Doc. No. 36-11. He then
supplied Merrill Lynch with the correct taxpayer number for the
Smillie Trust, as well as probate court documents appointing Michael
Tessier as successor trustee of that trust. He directed Merrill
Lynch to pay the proceeds of the policy to "Michael Tessier,
Successor Trustee of the Lillian Smillie Trust for the benefit of
Thaddeus Jakobiec."
Notwithstanding the foregoing correspondence, Merrill Lynch
issued a check payable to the "Thaddeus J. Jakobiec Trust." Michael
endorsed the check as "Michael Tessier, Trustee of Thaddeus J.
4 Jakobiec Trust" and released the check to his brother, who deposited
the check into his personal account and later paid half of the
proceeds to Michael.The Tessier brothers have since been convicted
and sentenced to prison in connection with their theft of funds from
this and other victims.
II. STANDARD OF REVIEW
Summary judgment is appropriate when the record reveals "no
genuine dispute as to any material fact and that the movant is
entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
The evidence submitted in support of the motion must be considered
in the light most favorable to the nonmoving party, drawing all
reasonable inferences in its favor. See Navarro v. Pfizer Corp.,
261 F .3d 90, 94 (1st Cir. 2001).
A party seeking summary judgment must first identify the
absence of any genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986) . The burden then shifts to the
nonmoving party to "produce evidence on which a reasonable finder of
fact, under the appropriate proof burden, could base a verdict for
it; if that party cannot produce such evidence, the motion must be
granted." Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 94
(1st Cir. 1996); see Celotex, 477 U.S. at 323.
5 On cross motions for summary judgment, the standard of review
is applied to each motion separately. See Am. Home Assurance Co. v.
AGM Marine Contractors, Inc., 467 F.3d 810, 812 (1st Cir. 2006)
(applying the standard to each motion where cross motions were
filed); see also Mandel v. Boston Phoenix, Inc., 456 F.3d 198, 205
(1st Cir. 2006) ("The presence of cross-motions for summary judgment
neither dilutes nor distorts this standard of review."). Hence, I
must determine "whether either of the parties deserves judgment as a
matter of law on facts that are not disputed." Adria Int'l Group,
Inc. v. Ferre Dev., Inc., 241 F.3d 103, 107 (1st Cir. 2001) .
Ill. ANALYSIS
Plaintiffs argue that Merrill Lynch breached the insurance
contract by making the insurance policy proceeds check payable to
the "Thaddeus J. Jakobiec Trust." This description of the
beneficiary was improper, they argue, because it allowed Tessier to
use the Fraudulent Trust to complete his misappropriation scheme.
Although plaintiffs have suffered an obvious injustice at the hands
of a dishonest lawyer, I conclude that they cannot recover their
losses from Merrill Lynch because they cannot prove that its alleged
breach caused the damages they seek.
In a breach of contract action, a plaintiff must demonstrate
more than simply that the defendant breached its contract and that
6 the plaintiff suffered damage. In order to recover, the plaintiff
"must, by a preponderance of the evidence, show that the damages he
seeks were caused by the alleged [breach] . . . Robert E.
Tardiff, Inc. v. Twin Oaks Realty Trust, 130 N.H. 673, 679 (1988)
(quoting Grant v. Town of Newton, 117 N.H. 159, 162 (1977)). In
other words, the plaintiff can recover contract damages "only for
loss that would not have occurred but for the breach." Restatement
(Second) of Contracts § 347 cmt. E (1981); see Gemini Investors Inc.
v. AmeriPark, Inc., 643 F.3d 43, 48 (1st Cir. 2011) ("The causation
element generally requires the plaintiff to prove that but for the
defendant's breach the plaintiff would have realized some gain or
avoided some loss."); Riofrio Anda v. Ralston Purina, Co., 959 F.2d
1149, 1153 (1st Cir. 1992) (quoting Restatement (Second) of
Contracts § 347 cmt. e (1981) to explain that in breach of contract
actions "[t]he injured party is limited to damages based on his
actual loss caused by the breach" (emphasis added)). The plaintiff
cannot recover, then, if he would have suffered the same harm
regardless of the defendant's breach.
Applying this well established principle to the facts of the
present case, I conclude that plaintiffs cannot prevail on their
breach of contract claim because the undisputed facts demonstrate
that they would have suffered the same harm regardless of Merrill
Lynch's alleged breach of the insurance contract. Unfortunately for
7 plaintiffs, the Tessiers had positioned themselves to steal the
proceeds of the insurance policy regardless of whether the check for
the insurance proceeds had been made payable to the Fraudulent Trust
or the Smillie Trust. Because Tessier concealed the insurance
policy from the probate court and succeeded in having his brother
Michael substituted as trustee of the Smillie Trust, he was in a
position to complete his criminal scheme even if Merrill Lynch had
made the policy proceeds payable to the correct trust. Further, we
know that Thomas Tessier intended to use the power he had obtained
over the Smillie Trust to complete his criminal scheme because his
final communication with Merrill Lynch instructed the company to
make the insurance proceeds check payable to Michael Tessier,
Successor Trustee of the Lillian Smillie Trust for the Benefit of
Thaddeus Jakobiec. Thus, Tessier would have completed his criminal
scheme regardless of whether Merrill Lynch had correctly listed the
Smillie Trust as the payee on the insurance policy proceeds check.
Plaintiffs seek to overcome this problem by speculating that,
had Merrill Lynch designated the correct payee, the Tessiers would
have properly accounted for the check. " [U]nsupported speculation,"
however, "is insufficient to forestall summary judgment." Lockridge
v. Univ. of Me. Sys., 597 F.3d 464, 471 n.6 (1st Cir. 2010) . I
therefore have no choice but to enter summary judgment in favor of
Merrill Lynch. IV. CONCLUSION
For the foregoing reason I deny plaintiffs' motion for summary
judgment (Doc. No. 36) and grant Merrill Lynch's motion (Doc. No.
42). The clerk shall enter judgment accordingly and close the case.
SO ORDERED.
/s/Paul Barbadoro Paul Barbadoro United States District Judge
August 2, 2 012
cc: Steven M. Latici, Esq. Emily G. Rice, Esq. Martha Van Oot, Esq.