Cooper v. D'Amore

Filing 93

Judge Richard G. Stearns: ORDER entered granting 58 Motion for Summary Judgment; denying 60 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 accounting to the court within 21 days, and the court will issue the necessary final judgment thereafter." (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
November 10, 2015
STEARNS, D.J.
Plaintiffs – Carol Diane Cooper, the mother of Peter M. Cooper, Jr.,
who is deceased, and Peter Cooper’s estate (represented by John Scott
Cooper) – seek to recover from defendant Alyssa Jane D’Amore, who is Peter
Cooper’s ex-wife, assets distributed to her from an individual retirement
account (IRA) that Peter Cooper had owned.

Discovery having been

concluded on September 14, 2015, the parties now move for summary
judgment.
BACKGROUND
Peter Cooper and D’Amore were married in September of 2003. At all
times relevant to this action, Peter Cooper and D’Amore were residents of
Florida. In October of 2003, Peter Cooper established an IRA with Mesirow

Financial Inc. (where he was then employed). He designated D’Amore as the
primary IRA beneficiary, and his mother, Carol Cooper, as the contingent
beneficiary.
Peter Cooper and D’Amore divorced in Fort Lauderdale, Florida, in
November of 2006.

The Final Judgment of Dissolution of Marriage

incorporated a Marital Settlement Agreement (MSA) reached between Peter
Cooper and D’Amore. Among its provisions, the MSA stipulated that “[e]ach
party shall continue to own as his or her own separate property any
Individual Retirement Account (IRA), pension or retirement plan in his or
her name, and each does hereby waive any claim to such account of the
other.” Am. Compl. Ex. 3-A – MSA at 4.
In August of 2011, Peter Cooper established a second IRA with TD
Ameritrade. He designated his mother (plaintiff Carol Cooper) as the sole
beneficiary. He transferred the assets in the Mesirow IRA to the new
Ameritrade IRA. Because of a quirk in the securities law, Ameritrade was
unable to hold certain bonds contained in the Mesirow account. These
securities remained with Mesirow. Peter Cooper died in July of 2012. He
did not change the 2003 designation of D’Amore as the beneficiary of the
Mesirow IRA prior to his death. In January of 2013, Mesirow distributed the

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remaining IRA assets to D’Amore pursuant to the 2003 beneficiary
designation.
Plaintiffs filed this case against D’Amore in October of 2014 alleging
six claims – Conversion (Count I), Money Had and Received (Count II),
Breach of the Marital Settlement Agreement (Count III), Breach of the IRA
Trust Agreement (Count IV); Constructive Trust (Count V); and Accounting
(Count VI). Plaintiffs seek summary judgment awarding the Mesirow IRA
assets to either Carol Cooper or Peter Cooper’s estate. D’Amore seeks
summary judgment confirming her legal entitlement to the assets.
DISCUSSION
Summary judgment is warranted where “the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56. As recited above, the
essential underlying events are not disputed. Consequently, the court may
resolve the contested legal issues, all of which involve interpretation of
contracts and statutes, as a matter of law. See Weiss v. DHL Express, Inc.,
718 F.3d 39, 44 (1st Cir. 2013); Hernandez-Miranda v. Empresas Diaz
Masso, Inc., 651 F.3d 167, 170 (1st Cir. 2011).
D’Amore relies on her unrevoked designation as the primary
beneficiary on the Mesirow IRA as the basis for her claim. Plaintiffs in turn
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tender four alternative legal theories challenging the validity of D’Amore’s
designation as a beneficiary. Plaintiffs first contend that D’Amore waived
her interest to the Mesirow IRA by entering the MSA; second, that the
governing Illinois law automatically revoked D’Amore’s designation; third,
that Peter Cooper’s 2011 transfer of the assets to the Ameritrade IRA
effectively cancelled the beneficiary designation; and fourth, that Florida law
operated to void the designation after the transfer. Because the court finds
that under Illinois state law, Peter Cooper’s designation of D’Amore as the
beneficiary was revoked at the time of their divorce, it is unnecessary to
address the other three theories.
The parties agree that the Mesirow IRA, pursuant to the terms of the
Mesirow Financial Client Agreement in effect at the time of Peter Cooper and
D’Amore’s divorce, was governed by Illinois state law. Plaintiffs assert that
the Mesirow IRA was at the time of the divorce a trust within the meaning of
the Illinois Trusts and Dissolutions of Marriage Act. That Act provides that
[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.
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760 Ill. Comp. Stat. 35/1(a). Plaintiffs reason that upon the entry of the
divorce decree, the Act revoked D’Amore’s designation as the primary
beneficiary on the Mesirow IRA “as if [D’Amore] had died.” Consequently,
the right to the IRA assets passed immediately to Carol Cooper as the
contingent beneficiary.
D’Amore disputes that the Merisow IRA was an express trust governed
by the Act. The Act, by its own terms, operates on
trust[s] created by a nontestamentary instrument executed after
the effective date of this Act, except that, unless in the governing
instrument the provisions of this Act are made applicable by
specific reference, the provisions of this Act do not apply to any
. . . (f) instrument under which a nominee, custodian for property
or paying or receiving agent is appointed.
760 Ill. Comp. Stat. 35/1(c). D’Amore contends that the IRA was created as
a custodial account, and that plaintiffs have no evidence that Peter Cooper
ever executed the necessary documents to establish a trust. D’Amore also
argues that to the extent that Mesirow labeled the IRA a trust, it was only to
take advantage of favorable treatment under the Internal Revenue Code.1
See Tucker v. Soy Capital Bank & Trust Co., 2012 IL App (1st) 103303, ¶ 37

Section 408 of the Internal Revenue Code provides that “[f]or
purposes of this section, the term “individual retirement account” means a
trust created or organized in the United States for the exclusive benefit of an
individual or his beneficiaries . . . .” (emphasis added).
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(“[S]ection 408 of the Code does no more than establish a framework
whereby individuals may obtain favorable tax treatment [for their retirement
savings].” (citation omitted)).
Under Illinois law, an IRA may be established either as a custodial
account or as an express trust. “A custodial account IRA is not an express
trust because there is no intent to establish a trust.” In re Estate of Davis,
225 Ill. App. 3d 998, 1007 (1992).
In order to find there is a valid express trust, these conditions
must be present: an intent to create a trust which may be shown
by a declaration of trust by the settlor or circumstances which
show the settlor intended to create a trust; a definite trust res;
ascertainable beneficiaries; a trustee; specification of the
purpose of the trust and how it is to be performed; and delivery
of the trust property to the trustee.
Id. The Court in Davis grappled with the applicability of the Trusts and
Dissolution of Marriage Act in a fact pattern identical for all practical
purposes to this one. Michael Davis designated his wife Carol as the sole
beneficiary of his IRA and never undertook to change the designation after
they divorced. Following Michael’s death, both Carol and Michael’s estate
claimed the IRA proceeds.

The Court found that the requirements to

establish an express trust were met because
there was an intent to establish a trust as evidenced by decedent’s
execution of the IRA retirement plan adoption agreement which
incorporated the trust agreement. The trust res was the IRA;
“ascertainable beneficiaries” were Carol Davis, or if that
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designation was not valid, decedent’s surviving spouse or, if
none, his estate; Lake Shore National Bank was appointed
trustee and decedent’s contributions to the IRA were delivered to
the bank.
Id. By way of contrast, in Tucker the Court found that the IRAs in question
did not constitute trusts giving rise to a fiduciary duty because
the IRAs in this case specifically state that they are only custodial
accounts. The disclosure statement specifically provided that
Soy would merely be “considered” plaintiffs’ “agent.” The
agreement between plaintiffs and Soy provided that Soy was the
custodian and would allocate plaintiffs’ funds as they indicated.
Plaintiffs do not point to any explicit language creating a trust in
any of the documents they rely upon.
Tucker, 2012 IL App (1st) 103303 ¶ 34.
The record reflects that Peter Cooper expressly authorized the creation
of a trust when he opened the Mesirow IRA. On the October of 2003
beneficiary designation form that serves as the only basis for D’Amore’s
claim to the IRA assets, Peter Cooper “appoint[ed] Delaware Charter to serve
as Trustee.” Am. Compl. Ex. 2-A. 2 He indicated that he “ha[d] read and
underst[oo]d the Trust Agreement . . . and agree[d] to abide by the terms of
the plan documents above.” Id. The remaining elements for establishing a

The beneficiary designation form, the 2003 Mesirow Financial Client
Agreement, and the August of 2010 conversion letter and Mesirow Financial
Custodial Agreement and Disclosure Statement, discussed infra, were
authenticated by Mesirow as business records. Pls.’ Ex. 2 (Mesirow
Certification for Subpoenaed Business Records).
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valid express trust are easily met – the res was the IRA, and D’Amore and
Carol Cooper were designated as primary and contingent beneficiaries.
That Peter Cooper authorized the assets to be held in trust by Delaware
Charter is further supported by the 2003 Mesirow Financial Client
Agreement he executed when he opened the IRA. The Client Agreement
indicated that the “Institution Type” was “Delaware Charter Retirement
Account (IRA, SEP, etc).”3 Am. Compl. Ex. 1-A at 2. That the IRA existed in
the form of a trust at the time of the 2006 divorce is conclusively confirmed
by the letter sent in August of 2010 by Mesirow to Peter Cooper informing
him that because of the resignation of Delaware Charter as the Trustee, his
IRA would be converted from a trust to a custodial account.
Delaware Charter Guarantee & Trust Company, doing business
as Principal Trust Company (“Principal Trust”) is currently
Trustee for your individual retirement account (“LRA”) invested
with Mesirow Financial, Inc. We are writing to inform you that,
effective October 2, 2010, Principal Trust Company is resigning
as Trustee. At that time Mesirow Financial, Inc. will restate the
IRA to the Mesirow Financial, Inc. Custodial Agreement and
Disclosure Statement for Traditional or Roth Individual
Retirement Accounts (“Custodial Agreement”) and will become
Custodian of the IRA.

Unlike the IRAs in Tucker, neither the beneficiary designation form
nor the Mesirow Financial Client Agreement describes the IRA as a custodial
account.
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Decl. of Ketan Shah Ex. C-1. 4 These documents conclusively rebut D’Amore’s
contention that the Mesirow IRA (at the time of the 2006 divorce) was
considered a trust only for tax purposes.
In sum, the court holds that by operation of the Illinois Trusts and
Dissolutions of Marriage Act, D’Amore’s designation as the IRA beneficiary
was revoked “as if [she] had died upon entry of the judgment of judicial
termination of the settlor’s marriage.”

The remaining assets therefore

belong to Carol Cooper as the contingent beneficiary.
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 accounting to the court within 21 days, and the
court will issue the necessary final judgment thereafter.
SO ORDERED.
/s/ Richard G. Stearns
___________________________
UNITED STATES DISTRICT JUDGE

In contrast to the 2003 Client Agreement, the 2010 Custodial
Agreement states clearly that it is a custodial account. See Shah Decl. Ex. C2 at 1.
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