Cooper v. D'Amore

Filing 167

Judge Richard G. Stearns: ORDER entered denying 156 Defendant's Motion for Summary Judgment; granting Plaintiffs' Motion for Summary Judgment. "For the foregoing reasons, plaintiffs' motion for summary judgment is ALLOWED. Defendant's motion for summary judgment is DENIED. The parties are to submit a joint statement to the court within 21 days of this order identifying any remaining issues this court need decide, and if so, propose an appropriate scheduling order." (RGS, int2)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 14-14041-RGS
CAROL DIANE COOPER and JOHN SCOTT COOPER, as Personal
Representative of the Estate of Peter M. Cooper, Jr., Deceased
v.
ALYSSA JANE D’AMORE, f/k/a Alyssa J. Cooper
MEMORANDUM AND ORDER ON CROSS
MOTIONS FOR SUMMARY JUDGMENT
January 6, 2017
STEARNS, D.J.
Carol Cooper, the mother of Peter Cooper, and John Scott Cooper, the
executor of Peter Cooper’s estate, contend that, after Peter Cooper’s death,
some $228,000 was wrongfully distributed to Alyssa D’Amore, Peter
Cooper’s ex-wife, from his Mesirow Financial IRA account. The undisputed
chronology of relevant events are as follows.
Peter Cooper married D’Amore in 2003. In the same year, Peter
Cooper opened an IRA account with Mesirow. On the application form, Peter
Cooper designated D’Amore as the primary beneficiary of the account. He
also agreed to “appoint Delaware Charter to serve as Trustee. By making this
appointment I/We agree to and acknowledge the following: I/We have read
and understand the Trust Agreement, Disclosure Statement, and Schedule

of Trustee Fees and agree to abide by the terms of the plan documents listed
above.” Dkt. No. 63-1. The Delaware Charter Trust Agreement states that
the Agreement “is made pursuant to and shall be construed in accordance
with the laws of the State of Delaware.” Dkt. No. 95-1 § 5.8K.
In 2006, Peter Cooper and D’Amore divorced. However, Peter Cooper
did not then or at any later time revoke D’Amore’s beneficiary designation
with respect to the Mesirow IRA. In 2010, Mesirow informed Peter Cooper
that Delaware Charter was resigning as the trustee of his IRA, and that it
would instead become the Custodian of the IRA. In 2011, Peter requested
Mesirow to transfer all of the assets in the IRA to a new IRA account at TD
Ameritrade. (Carol Cooper is designated as the primary beneficiary of the
Ameritrade account). Because of a legal complication, Ameritrade was
unable to hold certain bonds deposited in the Mesirow account and those
remained with Mesirow. Peter Cooper passed away in 2012 and Mesirow
distributed the bonds still held in the custodial account to D’Amore
according to the 2003 beneficiary designation.
The court, without having the benefit of a copy of the Delaware Charter
Trust Agreement, ruled initially in Carol Cooper’s favor, reasoning that Peter
Cooper’s IRA account was a trust governed by Illinois state law, and that the
Illinois Trusts and Dissolutions of Marriage Act, 760 Ill. Comp. Stat. 35/1(a),
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automatically revoked D’Amore’s designation as a beneficiary of the trust
upon the couple’s divorce. See Dkt. No. 93. When the court became aware
of the Delaware Charter Trust Agreement, it revised its opinion and awarded
summary judgment to D’Amore, rejecting plaintiffs’ alternate theories of
entitlement to the funds. See Dkt. Nos. 111, 113. Plaintiffs appealed, and the
First Circuit reversed this court’s decision, holding that the Delaware Charter
Trust Agreement did not control the distribution of the IRA assets in 2012
because of Delaware Charter’s resignation of the trusteeship in 2010. Cooper
v. D’Amore, 2016 WL 5800002, at *2 (1st Cir. Oct. 5, 2016).
On remand, the issue remains the same. Peter Cooper did not, during
his lifetime, modify D’Amore’s designation as the primary beneficiary of the
Mesirow IRA. The question is whether some intervening event or operation
of law revoked that designation.
In 2006, when Peter Cooper and D’Amore divorced, they entered into
a Marital Settlement Agreement (MSA) under Florida law in which they each
waived claims to the other’s retirement accounts. See Dkt. No. 63-3 at 5. The
First Circuit agreed that, because the MSA failed to designate a substitute
beneficiary to the Mesirow IRA account, it did not override the original
designation of D’Amore. See Cooper, 2016 WL 5800002, at *2, citing
Crawford v. Barker, 64 So. 3d 1246, 1248 (Fla. 2011).
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The finalization of the divorce decree is also the moment in time when,
if applicable, the Illinois Trusts and Dissolutions of Marriage Act or its
Florida law equivalent, Fla. Stat. § 732.703, would have worked to void
D’Amore’s beneficiary designation. Under 760 Ill. Comp. Stat. 35/1 § 1(a),
[u]nless the governing instrument or the judgment of judicial
termination of marriage expressly provides otherwise, judicial
termination of the marriage of the settlor of a trust revokes every
provision which is revocable by the settlor pertaining to the
settlor’s former spouse in a trust instrument or amendment
thereto executed by the settlor before the entry of the judgment
of judicial termination of the settlor’s marriage, and any such
trust shall be administered and construed as if the settlor’s
former spouse had died upon entry of the judgment of judicial
termination of the settlor’s marriage.
The Illinois statute specifically defines a revocable provision as one revocable
“at the time of the entry of the judgment of judicial termination of the
settlor’s marriage.” Id. § 1(e). Likewise, under Fla. Stat. § 732.703(2),
[a] designation made by or on behalf of the decedent providing
for the payment or transfer at death of an interest in an asset to
or for the benefit of the decedent’s former spouse is void as of the
time the decedent’s marriage was judicially dissolved or
declared invalid by court order prior to the decedent’s death, if
the designation was made prior to the dissolution or court order.
The decedent’s interest in the asset shall pass as if the decedent’s
former spouse predeceased the decedent.
(emphasis added). It makes sense that the revocation of a beneficiary
designation by operation of law would occur only at the kairotic moment –
termination of the marriage – and not continue to apply in perpetuity.
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Where, as here, a trust is outside the purview of state law at the time of a
divorce, revoking a beneficiary designation through a retroactive operation
of law might likely contradict the parties’ then-present intent.
Peter Cooper, in his Mesirow IRA application, agreed to “abide by the
terms of [the Delaware Charter Trust Agreement].” Thus, until Delaware
Charter resigned as trustee in 2010, Delaware state law, pursuant to the
terms of the Trust Agreement, governed Peter Cooper’s Mesirow IRA. At the
time of 2006 divorce, neither the Illinois nor the Florida statute was
applicable, and neither therefore operated to revoke D’Amore’s beneficiary
designation.1
The 2010 restatement of the IRA account from a trust to a custodial
account also had no effect on the account’s beneficiary designation. See Dkt.
No. 73-1 at 42 (“This change has no effect on your investments, elections, or
beneficiary designations.”).

The 2011 transfer of assets to Ameritrade,

however, is a different kettle of fish. Following the 2010 account conversion,
the Mesirow Custodial Agreement governed the IRA.

The Custodial

Agreement stated that “[t]his Agreement shall terminate . . . when the
Depositor delivers written direction to the Custodian to transfer all assets of

The Florida statue also expressly excludes trusts whose “governing
instruments is governed by the laws of a state other than [Florida]” from its
reach. Fla. Stat. § 732.703(4)(g).
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the custodial account to a successor trustee, custodian or another retirement
plan or directly to the Depositor.” Dkt. No. 74-1 at 4. When Peter Cooper
opened his Ameritrade account, he indicated on the application that the
account would be funded by a “total transfer” from the Mesirow IRA. Dkt.
No. 69-1 at 3. This directive was subsequently conveyed to Mesirow.
Because the Custodial Agreement expressly reserved to Mesirow “all
the powers provided herein as are necessary or desirable for the orderly
liquidation and distribution of the assets of the custodial account,” Dkt. No.
74-1 at 4, this court had held that the failure to properly distribute IRA assets
must be a claim brought against Mesirow, and not against D’Amore alone.
Dkt. No. 113. The First Circuit disagreed. “D’Amore now holds funds from
the IRA and was a proper defendant against whom plaintiffs could assert the
claim of wrongful distribution.”

Cooper, 2016 WL 5800002, at *2.

Consequently, because Peter Cooper’s written direction for a total asset
transfer terminated the Custodial Agreement, it also terminated the
beneficiary designation associated with the custodial account.2 Thus, in the

That Peter Cooper was aware that certain assets could not be
transferred to Ameritrade and did not make provisions for their liquidation
is immaterial – the Custodial Agreement required only the delivery of an
instruction for a transfer. It says nothing about the execution of the
instruction.
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absence of a continuing beneficiary designation, the Mesirow IRA assets
became part of Peter Cooper’s estate upon his death.
ORDER
For the foregoing reasons, plaintiffs’ motion for summary judgment is
ALLOWED. Defendant’s motion for summary judgment is DENIED. The
parties are to submit a joint statement to the court within 21 days of this
order identifying any remaining issues this court need decide, and if so,
propose an appropriate scheduling order.
SO ORDERED.
/s/ Richard G. Stearns
___________________________
UNITED STATES DISTRICT JUDGE

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