Jakobiec V. Merrill Lynch Life Insurance Co.

Filing 23

ORDER denying without prejudice 21 Motion to Dismiss. So Ordered by Judge Paul J. Barbadoro. (jna)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Thaddeus Jakobiec, et al.
v.

Case No. 10-cv-223-PB

Merrill Lynch Life Ins. Co.

O R D E R
The ultimate question raised by this case is whether
Merrill Lynch Life Insurance Co. can be held liable for the
misappropriation of the proceeds of a life insurance policy by
an attorney who claimed to represent a trust that was designated
as a beneficiary under the policy.

Thaddeus Jakobiec, the sole

beneficiary of that trust, Audry Lum and Frederick Jakobiec, cotrustees of the trust, and Edmund S. Hibbard, administrator of
the policy owner’s estate, have jointly sued Merrill Lynch for
breach of contract and negligence.

Merrill Lynch has responded

with a motion to dismiss contending that: (1) plaintiffs’ claims
are barred by the statute of limitations; (2) Thaddeus Jakobiec
lacks standing as a trust beneficiary to sue on behalf of the
trust; and (3) the complaint fails to state a claim for relief

even if it is not barred by the statute of limitations and the
plaintiffs have standing to sue.

BACKGROUND
Thaddeus Jakobiec was a beneficiary of a testamentary trust
established by Lillian Smillie (the “Smillie Trust”).
Thaddeus’s brother, Frederick Jakobiec, was named as trustee.
The attorney for the Smillie Trust was Thomas J. Tessier.
In 1999, Thaddeus’s mother, Beatrice Jakobiec, applied to
Merrill Lynch for a life insurance policy.

The application

listed “Frederick A. Jakobiec, Trustee for Thaddeus J. Jakobiec”
as a 50% beneficiary and included the taxpayer identification
number for the Smillie Trust.
Beatrice Jakobiec died on May 11, 2001 and Frederick
Jakobiec asked Tessier to serve as the
mother’s estate.

administrator for his

On June 24, 2002, Tessier prepared a

fraudulent trust document that purported to create the “Thaddeus
J. Jakobiec Irrevocable Inter Vivos Trust.”

The fraudulent

trust named Tessier’s brother, Michael Tessier, as trustee.
Shortly before he created the fraudulent trust, Tessier filed
ex-parte petition in probate court that resulted in the removal
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of Frederick Jakobiec as trustee of the Smillie Trust and the
substitution of Michael Tessier as successor trustee.
Thomas Tessier notified Merrill Lynch of Beatrice
Jakobiec’s death on or about July 1, 2002.

Merrill Lynch’s

response identified the “Thaddeus J. Jakobiec Trust” as the
beneficiary under the policy.

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.

Inexplicably, however, Tessier gave Merrill

Lynch the identification number for the fraudulent trust rather
than the Smillie Trust.

When Merrill Lynch informed him of the

discrepancy, Tessier supplied the correct identification number
for the Smillie Trust and 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 Tessier’s instructions, Merrill Lynch
issued a check payable to “The Thaddeus J. Jakobiec Trust.”
Michael Tessier endorsed the check as “Michael Tessier, Trustee
of Thaddeus J. Jakobiec Trust” and released the check to his
brother.

Thomas Tessier then deposited the check into his

personal account and later paid half of the proceeds to Michael.
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None of the plaintiffs discovered the fact that Tessier had
misappropriated the proceeds of the life insurance policy until
2009, when Merrill Lynch produced a copy of its file on the
matter pursuant to a subpoena.

RULINGS
I deny the motion to dismiss for the following reasons:
(1)

Whether plaintiffs’ claims are barred by the statute

of limitations is an issue that requires factual development.
Defendant may renew its argument in a properly supported motion
for summary judgment after discovery has been completed.
(2)

Whether Thaddeus Jakobiec can sue in his capacity as a

beneficiary is an issue that I need not resolve at the present
time.

Even if Merrill Lynch is correct on this point, the case

would continue as the standing of the other plaintiffs has not
been challenged.
(3)

Although it is by no means apparent that plaintiffs

will be able to marshal sufficient evidence to support their
contentions that defendant’s alleged breach of contract and
negligence were proximate causes of plaintiffs’ injuries, I can

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more reliably resolve this matter after the relevant facts have
been developed.
Merrill Lynch’s motion to dismiss (Doc. No. 21) is denied
without prejudice.
SO ORDERED.

/s/Paul Barbadoro
Paul Barbadoro
United States District Judge

May 4, 2011
cc:

Steven M. Latici, Esq.
Emily Rice, Esq.

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