Revaz v. Fleet, N.H.

• Court: District Court, D. New Hampshire
• Decided: November 12, 1996
• Docket: CV-96-379-M
• Status: Published

Opinion

Revaz v. Fleet, N.H. CV-96-379-M 11/12/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Suzanne Y. Revaz, Individually and as Co-Trustee of the Frederic E. Revaz Revocable Trust and Jacqueline White

v. Civil No. 96-379-M

Fleet, N.H., formerly Shawmut Bank, N.A., Fred Edward Revaz, and Anna Revaz

O R D E R

Two members of the Revaz family question the apparent

depletion of a family trust by two other members. The

plaintiffs, Suzanne Y. Revaz, both individually and in her

capacity as a trustee of her late husband's trust, and her

daughter, Jacqueline White, formerly Jacqueline Revaz, bring

claims against Fred E. Revaz (Suzanne's son and Jacqueline's

brother), Fred's wife, Anna Revaz, and Fleet N.A., the successor

to Shawmut Bank, N.A., as trustee of the Revaz trust. The

individual defendants, Fred and Anna Revaz, move to dismiss the

plaintiffs' claims against them. The defendants' motion is

resolved as follows. STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure

12(b)(6) is one of limited inquiry, focusing not on "whether a

plaintiff will ultimately prevail but whether the claimant is

entitled to offer evidence to support the claims." Scheuer v.

Rhodes, 416 U.S. 232, 236 (1974). Ordinarily, if parties submit

materials outside the pleadings on a motion to dismiss, the court

must either exclude those materials from consideration or treat

the motion as one for summary judgment under Federal Rule of

Civil Procedure 56. See Fed. R. Civ. P. 12(b). A narrow

exception permits consideration of documents that are central to

the plaintiffs' claim, that are referred to in the plaintiffs'

complaint, and when the parties do not dispute the authenticity

of the submitted documents. Watterson v. Page, 987 F.2d 1, 3

(1st Cir. 1993); Fudge v. Penthouse Intern., Ltd., 840 F.2d 1012,

1014-15 (1st Cir.), cert, denied, 488 U.S. 821 (1988).

In this case, the defendants have submitted copies of the

trust instrument and powers of attorney granted by Frederic and

Suzanne Revaz to their son, Fred Revaz. The submitted documents

pertain to the plaintiffs' claims that the defendants

fraudulently acquired the powers of attorney and then depleted

the trust and the parents' bank accounts for the defendants' own

2 use. The plaintiffs have not objected to the authenticity of the

submitted copies, nor have they requested that the documents not

be considered. Therefore, the submitted documents will be

considered without converting the defendants' motion into one for

summary judgment.

In considering a motion to dismiss, the court must take all

well-pleaded facts in the complaint as true and draw reasonable

inferences in favor of the plaintiff, but the court need not

credit "bald assertions" or legal conclusions. Washington Legal

Found, v. Massachusetts Bar Found., 993 F.2d 962, 971 (1st Cir.

1993). "A complaint must contain 'factual allegations, either

direct or inferential, respecting each material element necessary

to sustain recovery under some actionable legal theory.'"

Classman v. Computervision Corp., 90 F.3d 617, 628 (1st Cir.

1996) (quoting Goolev v. Mobil Oil Corp., 851 F.2d 513, 515 (1st

Cir. 1988)). A claim will not be dismissed unless it appears

beyond a doubt from the allegations in the complaint, taken in

the proper light, that the plaintiffs cannot prove facts that

would entitle them to relief. Negron-Gaztambide v. Hernandez-

Torres, 35 F.3d 25, 27 (1st Cir. 1994), cert, denied, 115 S.Ct.

1098 (1995).

3 BACKGROUND1

Frederic Eugene Revaz executed the Frederic E. Revaz

Revocable Trust on March 1 9 , 1984, naming both the Shawmut First

Bank and Trust Company (now Fleet, N.A., and referred to in this

Order as "Fleet") and his wife, Suzanne Y. Revaz, as co-trustees.

He established the trust when he was elderly, for his own benefit

during the remainder of his life, for the benefit of his wife,

should she survive him, and eventually for their children, Fred

and Jacgueline. The trust instrument provided that during

Frederic Revaz's lifetime Fleet would pay him net income or

principal from the trust as he reguested in a signed writing, and

that if Fleet determined that Revaz was incapable of handling his

affairs, it would pay income and principal for Revaz's benefit or

for the benefit of his wife or his children as Fleet "deems

advisable."

From March 1985 through August 13, 1992, Frederic Revaz

withdrew guarterly disbursements of interest in amounts of $2,000

to $2,500, and withdrew principal only twice, in a total amount

of $7,700. The Revazes' son, Fred Revaz, obtained a durable

power of attorney dated August 15, 1992, from each of his

1 The background facts are presented in accordance with the applicable standard — most favorably to plaintiffs.

4 parents. The powers of attorney appear to have been signed in

the names of each parent, and Anna and Fred Revaz signed each

document as witnesses. Neither power of attorney is acknowledged

by a notary public, although the blank form for acknowledgment is

printed at the end of each document. The plaintiffs allege that

the powers of attorney were "either forged or otherwise

wrongfully obtained by Defendants Fred Revaz and Anna Revaz."

Beginning in mid-August 1992, Fred Revaz began to withdraw

funds from the trust. A withdrawal of $30,000 on April 12, 1995,

finally exhausted the trust. Fred Revaz withdrew, and used for

his own and his wife's benefit, an aggregate amount of

approximately $170,000 from the principal of the trust, and an

additional unknown amount representing accumulated interest.

Fred also depleted his parents' bank accounts for his own use.

When Suzanne Revaz and her daughter, Jacgueline White, first

learned, on April 24, 1995, of Fred's withdrawals from the trust

and other accounts, they promptly contacted Fleet. After

receiving some information about Fred's dealings with the trust,

but generally finding Fleet uncooperative, the plaintiffs

attempted to terminate Fleet as trustee and name a different bank

under the terms of the trust. Fleet refused to honor plaintiffs'

5 requests. Frederic Revaz died on May 3, 1995. This action was

filed in July 1996.

DISCUSSION

Among other counts, plaintiffs assert a claim of breach of

fiduciary duty against Fred Revaz, and claims of fraud and

intentional and negligent infliction of emotional distress

against both Fred and Anna Revaz. Fred and Anna Revaz move to

dismiss all claims against them.

The parties have not addressed a potential choice-of-law

issue in this diversity case, and seemingly rely on a combination

of New Hampshire law, law from other jurisdictions, and citations

from treatises to support their respective positions. The trust

document specifies that it is to be governed by Massachusetts

law; the referenced powers of attorney were apparently executed

in Massachusetts; the trust funds and bank accounts apparently

were located in and funds were withdrawn in Massachusetts; and

the defendants are all Massachusetts residents. On the other

hand, both plaintiffs reside in New Hampshire. As choice of law

is not jurisdictional, however, the parties may waive the issue.

See Violette v. Smith & Nephew Dvonics, Inc., 62 F.3d 8, 11 (1st

Cir. 1995), cert, denied, 116 S.Ct. 1568 (1996); LaPlante v.

6 American Honda Motor Co., Inc., 27 F.3d 731, 740 (1st Cir. 1994) .

Accordingly, for purposes of the present motion, the court will

deem the issue waived, and apply New Hampshire law, assuming that

no material conflict exists with Massachusetts law.

A. Breach of Fiduciary Duty

Fred Revaz argues that the plaintiffs have failed to state a

claim of breach of fiduciary duty against him because he owed no

such duty to either of them. Determining what duties were owed,

if any, necessarily reguires sorting out the parties'

relationships with each other and their actions, paying

particular attention to Fred Rev a z 's obligations under the

various roles he played.

Plaintiffs allege that under the terms of his father's

trust, Fred Revaz was a beneficiary along with his sister,

Jacgueline, and their mother, Suzanne.2 As a beneficiary, Fred

may have owed a duty to his co-beneficiaries, his mother and

sister, not to participate in a breach of the trust's provisions

or to attempt to obtain a preferential advantage over them. See

2 It is beyond the scope of this Order to construe terms of the trust to determine what, if any, interest was conveyed to each of the parties. See, e.g., Austin W. Scott and William F. Fratcher, Scott on Trusts, § 128 (4th ed. 1989) (discussing extent of beneficiaries' interests).

7 Scott on Trusts, § 257A. The plaintiffs allege specifically,

however, that Fred withdrew the assets of the trust under the

power of attorney, ostensibly granted by his father, so that Fred

was acting in his father's stead, as settlor, and was not acting

in his capacity as co-beneficiary. However, plaintiffs also

acknowledge that Frederic Revaz, as settlor, had "unfettered

withdrawal discretion." The plaintiffs do not allege that the

trust itself imposed any continuing duty on the settlor to act

for the benefit of the trust beneficiaries, nor have they pointed

to any such duty imposed by law.3

Plaintiffs also allege that Fred breached fiduciary duties

owed to his parents arising under the powers of attorney when he

withdrew funds from the trust and from his parents' bank accounts

and applied those funds to his own use. Under New Hampshire law,

one who holds a power of attorney does owe a fiduciary duty to

the principal. In re Estate of War d , 129 N.H. 4, 10 (1986);

accord St. Joseph's Hospital of Nashua v. Rizzo, 676 A. 2d 98, 100

(N.H. 1996). Thus, Fred was legally obligated to exercise his

authority under each parent's power of attorney strictly for the

benefit of the parent whose authority he was exercising. War d ,

3 Fred was not a trustee so he cannot be held to the fiduciary duty of a trustee. 129 N.H. at 10. As his father is now deceased, and the estate i

not a party to this suit, no claims may be made by the present

plaintiffs for breach of a fiduciary duty owed by Fred to his

father under the power of attorney. Plaintiffs have cited no

authority to support their theory that the fiduciary duty owed

under a power of attorney protects the interests of third

parties.

Fred's mother, Suzanne, also alleges that Fred breached his

fiduciary duty to her by taking the funds in the trust and in he

bank accounts under her power of attorney. It is unclear what

plaintiffs claim Fred did under the authority of Suzanne's power

of attorney, or what the power of attorney would or would not

have authorized him to do relative to the trust. However, those

infirmities raise factual issues (or gaps) that are beyond the

scope of this Order, which is limited to the motion to dismiss.

Taking the facts as alleged, Suzanne, but not Jacgueline, has

stated a claim against Fred Revaz for breach of fiduciary duty.

The breach of fiduciary duty claim is dismissed as to plaintiff

Jacgueline White.4

4 Plaintiffs do not allege any fiduciary duty owed by Fred to them based on any relationship other than that imposed by the trust and by the powers of attorney. B. Intentional and Negligent Infliction of Emotional Distress

Suzanne Revaz also asserts claims against Fred and Anna

Revaz for intentional and negligent emotional distress, which the

defendants move to dismiss as insufficient.

Under New Hampshire law, to state a claim for intentional

infliction of emotional distress, a plaintiff must allege facts

showing that the defendants intentionally or recklessly caused

her severe emotional distress by extreme and outrageous conduct.

See Morancv v. Morancv, 134 N.H. 493, 495-96 (1991) (guoting

Restatement (Second) Torts §46 (1965)). The plaintiffs allege

that the defendants' "systematic and wrongful taking" of funds

from the trust and bank accounts "was intentional, knowing,

willful and wanton in its disregard of the severe emotional

injury inflicted upon Plaintiff Suzanne Revaz who, at 90 years

old, widowed and in failing health, would be left without

sufficient financial support in her declining years." They

further allege that the defendants were aware of Suzanne's

"fragile physical, mental and emotional condition" and knew or

should have known of the effects of taking the money. They

allege that the effects of the defendants' conduct on Suzanne

were "extreme emotional upset, severe anxiety and fright and

intense mental distress and apprehension." These conclusions are

10 not, however, supported by any factual allegations. For example,

what facts support the allegations of "fright" and "mental

distress," etc?

Plaintiffs' allegations may be sufficient to meet the first

element, that the defendants acted recklessly (although not

intentionally (that is, not with the intent to inflict emotional

distress), thereby causing Suzanne emotional distress. However,

plaintiffs do not allege facts that show or would permit an

inference as to the severity or duration of Suzanne's distress.

See, e.g. Morancv, 134 N.H. at 496. As the defendants point out,

mere statements of legal conclusion are insufficient to state the

elements of a claim. See Glassman v. Computervision Corp., 90

F.3d 617, 628 (1st Cir. 1996). Accordingly, the claim for

intentional infliction of emotional distress is necessarily

dismissed for failure to adeguately plead facts supporting the

claim.

To state a claim for negligent infliction of emotional

distress, Suzanne must allege "physical manifestations" of her

distress. Thorpe v. New Hampshire Dept, of Corrections, 133 N.H.

299, 303 (1990); accord Morancv, 134 N.H. at 495. The complaint

includes no allegations that Suzanne has suffered any "physical

manifestations" of the distress allegedly caused by the

11 defendants' depletion of the trust and her bank accounts.

Therefore, the claim for negligent infliction of emotional

distress must also be dismissed as to Fred and Anna Revaz.

C. Sufficiency of the Fraud Claim

Defendants also argue that the plaintiffs' claim based on

"Fraud, Deceit, Misrepresentation and Conversion" fails to allege

fraud with sufficient particularity to meet the reguirements of

Federal Rule of Civil Procedure 9(b). Rule 9(b) provides: "In

all averments of fraud or mistake, the circumstances constituting

fraud or mistake shall be stated with particularity. Malice,

intent, knowledge, and other conditions of mind of a person may

be averred generally." The purposes of Rule 9(b)'s particularity

reguirement are to provide the defendants with notice of the acts

forming the bases for claims against them to allow them to

prepare meaningful responses; to prevent "strike suits" or

retaliatory claims based on conclusory allegations; and to

protect against groundless claims that would injure the

defendants' reputations. New England Data Servs., Inc. v.

Becher, 829 F.2d 286, 292 (1st Cir. 1987); Havduk v. Lanna, 775

F.2d 441, 443 (1st Cir. 1985). To fulfill Rule 9(b)'s purposes,

plaintiffs must specify "particular times, dates, places or other

12 details of the alleged fraudulent involvement of the actors."

Serabian v. Amoskeaq Bank Shares, Inc., 24 F.3d 357, 361 (1st

Cir. 1994); accord Havduk, 775 F.2d at 444 (conclusory

allegations of fraud insufficient even if repeated several

times).

Plaintiffs allege that on August 15, 1992, Fred Revaz

acguired "what purported to be" powers of attorney from his

mother and father. They further allege "upon information and

belief" that Fred and Anna Revaz drafted the power-of-attorney

forms and then either forged Frederic and Suzanne's signatures or

induced them to sign the forms by falsely promising that they

"would selflessly and responsibly care for their parents'

financial affairs including the Trust." Plaintiffs further

allege that Frederic and Suzanne relied on Fred and Anna with

respect to the trust and their personal financial accounts' as

they were elderly and becoming infirm, and that Fred and Anna

used Frederic's power of attorney to take the funds in the trust

and bank accounts for their own use from August 1992 until April

1995. In support of their forgery claim, the plaintiffs allege

that Frederic's apparent signature on the power of attorney form

does not disclose the enfeeblement that had made him unable to

legibly sign bank checks, they also point to the lack of

13 acknowledgement by a notary public, and they note that Fred and

Anna signed as witnesses to the parents' signatures.

When plaintiffs allege fraud based on "matters peculiarly

within the knowledge of the opposing party" and rely on

information and belief rather than first-hand knowledge, "the

complaint must set forth the source of the information and the

reasons for the belief." Romani v. Shearson Lehman Hutton, 929

F.2d 875, 878 (1st Cir. 1991). The defendants' point, that

Suzanne might be expected to know whether her signature was

forged or whether she signed the form in reliance on the

defendants' representations, is well taken although it is

certainly possible that her advanced age or infirmities may have

clouded her memory. Further, plaintiffs have not specifically

identified the source of their "information and belief."

Nevertheless, the complaint adeguately puts defendants on

notice that they are charged with obtaining forged powers of

attorney on August 15, 1992, or obtaining powers through

duplicating and false representations made to Frederic and

Suzanne Revaz to induce them to provide the powers. The

complaint explains that the "information and belief" regarding

forgery is based on the lack of acknowledgement, the identity of

the witnesses, and the inconsistency between Frederic's legible

14 "signature" on his power of attorney and his infirmity at the

time. The complaint discloses representations allegedly made by

Fred and Anna, although the source of that information is not

given, and it describes fund withdrawals for Fred's and Anna's

personal benefit between August 1992 and April 1995 as proof that

the representations of fealty were false when made. Under the

circumstances, the court will presume that the source of the

substance of defendants' representations is Suzanne. If that is

not the case, the plaintiffs are directed to amend their

complaint to clarify the basis for their "information and belief"

allegations as to the representations made to Suzanne and

Frederic.

Despite the pleading deficiencies, the fraud claim is not

obviously based on groundless conclusory allegations, and does

not seem to be aimed at coercing settlement or an attempt to

damage the defendants' reputations, and therefore the purposes of

Rule 9 (b) would not be undermined if the fraud claim is allowed

to stand, at least through discovery. See Boston & Maine Corp.

v. Town of Hampton, 987 F.2d 855, 866 (1st Cir. 1993). No doubt

plaintiffs will consider filing a motion to appropriately amend

their complaint in light of applicable law to remove any doubt

relative to pleading deficiencies. As the allegations of fraud

15 are minimally sufficient to meet the requirements of Rule 9 (b),

defendants' motion to dismiss the fraud claim is denied.

CONCLUSION

The defendants' motion to dismiss (document # 6) is granted

as to plaintiffs' claims of intentional and negligent infliction

of emotional distress, and granted as to the breach of fiduciary

duty claim brought by Jacqueline White, but is otherwise denied.

Accordingly, Count VI is dismissed as to Jacqueline White's

claim; and Counts VII and VIII are dismissed entirely.

Plaintiffs may amend their complaint as necessary to clarify

their fraud claim and to correct any other deficiencies subject

to applicable law.

SO ORDERED.

Steven J. McAuliffe United States District Judge November 12, 1996

cc: David P. Cullenberg, Esq. Lawrence M. Edelman, Esq. Diane R. Bech, Esq.