Shaffer v. Kaplan

Filing 128

OPINION AND ORDER Frederic Shaffer's 108 Motion to Strike and 104 Motion for Partial Summary Judgment are denied. Both Dana and Daniel Kaplan's 102 Second Motion for Summary Judgment and 105 Motion for Summary Judgment are granted in full. 113 Motion for Leave to Take de bene esse Deposition, or in the alternative, Motion to Extend the Discovery Schedule/Order are denied as moot. Case dismissed. Signed by Judge William K. Sessions III on 5/15/2014. (pac)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
:
:
:
Plaintiff, :
:
v.
:
:
DANA L. KAPLAN and DANIEL N.
:
KAPLAN,
:
:
Defendants. :
:
FREDERIC S. SHAFFER III,

Case No. 2:11-CV-239

Opinion and Order
Plaintiff Frederic Shaffer III brings this civil action
against Co-Defendants Dana and Daniel Kaplan regarding the
alleged mishandling of the estate of Jean W. Morgan.

Shaffer

has brought claims for breach of fiduciary duty, conversion,
unjust enrichment, and professional malpractice; he seeks
injunctive relief and damages.

Currently before the Court are

the Co-Defendants’ two motions for summary judgment, Shaffer’s
motion for partial summary judgment, Shaffer’s motion to strike,
and Dana Kaplan’s motion for leave to take de bene esse
deposition, or in the alternative, to extend the discovery
schedule/order.

The Court hereby denies Frederic Shaffer’s

Motion to Strike, ECF No. 108, and for Partial Summary Judgment,
ECF No. 104; grants Dana Kaplan’s Motion for Summary Judgment,
ECF No. 102; and grants Daniel Kaplan’s Motion for Summary

Judgment, ECF No. 105, thereby dismissing the case.

Dana

Kaplan’s motion for leave to take de bene esse deposition, or in
the alternative, to extend the discovery schedule/order, ECF No.
113, is denied as moot.
BACKGROUND
This suit concerns the estate of Jean W. Morgan, now
deceased.

Plaintiff Frederic Shaffer and Defendant Dana Kaplan

(“Dana”) are half siblings and the only children of Mrs. Morgan,
who passed away in March 2011.

Mrs. Morgan maintained her

primary residence in Florida, but toward the end of her life,
Mrs. Morgan spent her summers living with the Kaplans at their
home in Burlington, Vermont.
It is undisputed that Mrs. Morgan had a close relationship
with her daughter, and spent a significant amount of time with
her.

Perhaps reflective of this fact, Mrs. Morgan designated

Dana as her fiduciary on numerous occasions.

Mrs. Morgan gave

Dana a power of attorney under New York law in 1994 and again in
2000 gave her a power of attorney under New York (“NYPOA”),
Florida, and Vermont law.

She also gave Dana two health care

proxies: one in 1994 under New York law, and one in 2000 under
Vermont law.
Shaffer’s relationship with Mrs. Morgan contrasted sharply
with his sister’s.

It is undisputed that Shaffer had a poor

relationship with his mother, and did not speak to her for at
2

least the last seven years of her life, though the parties
dispute the cause of this estrangement.
Daniel Kaplan (“Daniel”) is Dana’s now-ex-husband.
Certified Financial Planner for Ameriprise Financial.

He is a
At all

times relevant to this proceeding, Daniel managed Mrs. Morgan’s
assets and accounts as her financial planner.

According to

Defendants, Daniel never executed transactions without specific
direction from Mrs. Morgan, and Dana was not involved in any of
Mrs. Morgan’s financial decisions.
I. Will of Jean W. Morgan
Mrs. Morgan originally executed a will in 1994 that split
her estate equally between Dana and Shaffer.

In August 2005,

Mrs. Morgan executed a new Will and Testament (“Will”) while
residing in Florida.

The Will specifically bequeaths a watch

and an antique bed to Shaffer and bequeaths the balance of Mrs.
Morgan’s tangible personal property to Dana.

It then dictates

that the “residue and remainder” of her property is to be given
to the “Trustees of ‘The Jean W. Morgan Trust (“Trust”), dated
August 22, 2005,’ to be held and administered pursuant to the
terms thereof.”

In other words, the 2005 Will provided that all

residual property owned by Mrs. Morgan’s Estate would pass to
the Trust at the time of her death.
Executrix of the Will.

3

The Will appoints Dana the

That same year, Mrs. Morgan created the aforementioned Jean
W. Morgan Trust.

The Trust names Mrs. Morgan as the Trustee and

is revocable until her death, when it becomes irrevocable.

Dana

is named as the Successor Trustee, to serve as Trustee in the
event of Mrs. Morgan’s incapacitation or death.

The original

2005 Trust names Dana Kaplan as the sole Beneficiary of the
Trust, with all of the Trust Assets to be distributed to her
upon Mrs. Morgan’s death.

According to Shaffer, Daniel attended

meetings with Mrs. Morgan and her attorney, Bert Cicchetti, to
help with her estate planning in 2005 when she established the
Will and Trust.
In February of 2006, Mrs. Morgan executed an amendment to
the Trust that changed the distribution of the Trust Property as
follows:
Upon my death, the entire Trust Property, as it then
exists, shall be distributed in the following manner:
A. To my daughter, Dana, per stirpes, my personal
residence and all of the contents therein.
B. The remaining Trust Property shall be distributed
equally to my children, Dana, per stirpes, and
Ricky, per stirpes. If either of my children
shall predecease me without issue surviving them,
their share shall be distributed to my surviving
child, per stirpes.
Second 1 Trust Amendment 2.1, ECF No. 1-5.
amended after the 2006 revisions.

The Trust was not

Thus, at the time of

Mrs. Morgan’s death in 2011, the Will and Trust directed
1

The Trust was also amended once previously.
amendment has no bearing on this proceeding.

4

The first trust

that Mrs. Morgan’s residual estate was to “pour over” into
the Trust and be distributed equally between her two
children.
II.

Investment Accounts

At the time of her death, Mrs. Morgan owned several
investment accounts at Ameriprise Financial.

Mrs. Morgan first

established these accounts in 1997 with Daniel’s help as her
financial advisor.

The quantity, ownership, and beneficiaries

of these accounts changed several times between 1997 and 2011.
Initially, all of the accounts named Mrs. Morgan as the sole
owner and Dana and Shaffer as joint beneficiaries.

Shortly

after Mrs. Morgan revised her Will and created the Trust in 2005
(when the Trust still named Dana as the sole inheritor), Mrs.
Morgan changed the beneficiary on all but one of the existing
Ameriprise accounts from Dana and Schaffer to “Trust.”

She also

changed the named owner on two of the Accounts from herself to
the Trust.

Thus by the end of 2005, there were two Ameriprise

accounts held in the Trust’s name, four in Mrs. Morgan’s name,
and all six of the accounts listed the Trust as the sole
beneficiary.
Midway through 2009, Mrs. Morgan took several actions that
ultimately led to a complete defunding of the Trust.

In August

2009, Mrs. Morgan closed one of the Ameriprise accounts owned by
the Trust.

In October 2009, she transferred ownership of the
5

remaining Trust-owned Ameriprise account back to her own name.
She also emptied two of the accounts in her name.

She then

changed the transfer/payable on death (“TOD”) beneficiary on the
remaining three accounts from the Trust to Dana.

Mrs. Morgan

also opened two new Ameriprise accounts, one in September 2009
and one in September 2010, both listing Dana as the sole TOD
beneficiary.

Thus, by the end of 2010, Mrs. Morgan owned five

Ameriprise Accounts that all listed Dana as the sole TOD
beneficiary.

The Trust was no longer listed as an owner or

beneficiary on any of the accounts.
The parties dispute the impetus behind these changes.
Daniel and Dana contend that Mrs. Morgan wished to disinherit
Plaintiff, and sought out 2 advice from her attorney, Bert
Cicchetti, on how this could be accomplished.

According to

Cicchetti’s deposition, one of the options that he discussed
with Mrs. Morgan was to defund the Trust, rather than making
changes to the Trust itself.

Daniel states that Mrs. Morgan

preferred this option because it was simple and free, whereas
2

The parties dispute who reached out to Cicchetti on this issue.
While Cicchetti himself states in deposition that Mrs. Morgan called
him to discuss the changes, Shaffer challenges Cicchetti’s testimony
by noting that in an earlier, unsigned affidavit, Cicchetti indicated
that Dana was the initial caller. Cicchetti has explained this
inconsistency as a lapse in memory. It is undisputed, however, that
all of Cicchetti’s sworn testimony (and the only that would be
admissible in evidence) indicates that Mrs. Morgan was the person who
made the call. Furthermore, regardless of who made the call, there is
no allegation that anyone but Mrs. Morgan ultimately made the changes
to her account at issue in this proceeding, and the facts uniformly
indicate that she was in sound mind when doing so.

6

changing the Trust would incur legal fees.

Shaffer contends

that these account changes were suggested by Daniel Kaplan as a
way to disinherit Shaffer due to his personal dislike of
Plaintiff.

However, it is undisputed that following the

conversation with Attorney Cicchetti, Mrs. Morgan herself took
the actions that resulted in defunding the trust.

The TOD

beneficiary forms are all signed by Mrs. Morgan and Shaffer
makes no allegation that Mrs. Morgan was under duress or
incompetent when she made these changes in 2009.
In addition to the accounts described above, Mrs. Morgan
and Dana opened a joint account in September 2009, referred to
as the “Binky” account.

Dana concedes that she signed her

mother’s name to the application.

This account was funded with

an initial deposit of $10,000 that came from another joint
account owned by Dana and Mrs. Morgan.

After the creation of

the account, Dana made another deposit of $6,000 from her own
bank account, and Mrs. Morgan personally deposited an additional
$325.

Mrs. Morgan received statements at her home in Florida

regarding this account until her death.
III.

Jane V. Wallace Inheritance

In 2010, Mrs. Morgan received a significant inheritance
from her step-mother, Jane V. Wallace.

Mrs. Wallace died in May

2010, leaving significant assets to Mrs. Morgan — namely, stock
in the Crab Orchard Land and Coal Company (“Crab Orchard stock”)
7

and funds in an escrow account.

At the time of her death, Mrs.

Wallace owned 482 shares of Crab Orchard stock, all of which was
devised to Mrs. Morgan.

Mrs. Morgan also inherited $135,197

held in an escrow account.
Around the time of Mrs. Wallace’s death, Dana went to Ohio
to help facilitate Mrs. Morgan’s distributions from Mrs.
Wallace’s estate.

Dana states that while her mother was

mentally competent, she was physically unable to handle the
requirements of the trip.

A lifelong smoker, Mrs. Morgan was on

an oxygen tank at this time.

Dana explains that she went out to

Cincinnati “with [her] mother’s blessings and to be her eyes and
ears.”

While in Cincinnati, Dana provided her NYPOA to James

Chalfie, Esq., the attorney representing Mrs. Wallace’s Estate,
to confirm that she was authorized to direct the manner of
distributions to Mrs. Morgan.
According to Shaffer, Dana represented to Chalfie that Mrs.
Morgan was ill and that the distributions should be hastened.
However, the only support Shaffer provides for this assertion is
Dana’s deposition.

In her deposition, Dana Kaplan makes it very

clear that Mrs. Morgan was physically unable to travel to
Cincinnati, but makes no representation as to mental incapacity.
Instead, all of the evidence on the record indicates that Mrs.
Morgan remained mentally sound until her death in 2011.
confirmed by a letter from Mrs. Morgan’s physician, James

This is

8

O’Brien, which states that, despite her lung disease and
emphysema, Mrs. Morgan was in excellent mental health while in
his care, that she was “fully competent and fully capable of
managing her own personal and financial affairs,” and “[a]t no
time was there any indication that anyone but herself was in
charge!”
The Crab Orchard stock proceeds, in the amount of $390,280,
were delivered to Mrs. Morgan by check dated July 14, 2010.
Mrs. Morgan endorsed the Crab Orchard stock proceeds check “for
deposit only” to AMER Enterprise Investment Services.

At Mrs.

Morgan’s direction, Daniel deposited $240,280 into an Ameriprise
account in Dana Kaplan’s name, and split the remaining $150,000
into two of Mrs. Morgan’s brokerage accounts.

Mrs. Morgan also

received the proceeds from the escrow account owned by Mrs.
Wallace valued at $135,197.

The escrow funds ultimately were

provided to Mrs. Morgan by check and deposited into individual
brokerage accounts owned solely by Mrs. Morgan.
IV.

Legal Proceedings

Mrs. Morgan passed away in March 2011.

At the time of her

death, all of her assets were in accounts naming Dana as the TOD
beneficiary and therefore passed immediately to Dana.

As a

result, there was no residual estate remaining to “pour over”
into the Trust.

The only item that remained in the Trust was

Mrs. Morgan’s personal residence in Florida, which was devised
9

solely to Dana by the express terms of the Trust.

Shaffer

therefore received nothing beyond the watch and bed devised to
him in the 2005 Will.

Plaintiff Shaffer filed a Complaint

against Dana Kaplan in October 2011, alleging that the
Ameriprise assets rightfully belong in the Trust, and that he is
entitled to half of these assets.

The Complaint has been twice

amended to add Daniel Kaplan as a Defendant and to add new
claims.

The Second Amended Complaint (“SAC”) includes counts

against Dana Kaplan seeking an Accounting of the Inheritance
Assets, and alleging Breach of Fiduciary Duties as Attorney in
Fact, Breach of Fiduciary Duties as Personal Representative/
Executrix of Estate, Breach of Trust and Fiduciary Duties as
Trustee of Trust, Conversion, and Unjust Enrichment.

The SAC

also brings claims against Daniel Kaplan alleging Conversion,
Unjust Enrichment, Aiding and Abetting a Breach of Fiduciary
Duty, Breach of Fiduciary Duty, and Professional Malpractice.
DISCUSSION
I.

Legal Standard
The parties have filed cross motions for summary judgment

under Rule 56.

Summary judgment is appropriate 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(a).

On a motion for summary judgment,

the moving party bears the burden of showing that it is entitled
10

to summary judgment.
(2d Cir. 2004).

Huminski v. Corsones, 386 F.3d 116, 132

Thus, the Court examines “the evidence in the

light most favorable to, and draw[s] all inferences in favor of,
the non-movant.”

Sheppard v. Beerman, 317 F.3d 351, 354 (2d

Cir. 2003) (citation omitted).

“The non-moving party may not

rely on mere conclusory allegations nor speculation, but instead
must offer some hard evidence showing that its version of the
events is not wholly fanciful.”

D’Amico v. City of New York,

132 F.3d 145, 149 (2d Cir. 1998), cert denied 524 U.S. 911
(1998).

A failure to establish an essential element on which

the non-moving party would have the burden of proof at trial
mandates summary judgment, because there can be no genuine issue
of material fact where there is a “complete failure of proof
concerning an essential element of the nonmoving party’s case.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Where there are “cross-motions for summary judgment, ‘each
party's motion must be examined on its own merits, and in each
case all reasonable inferences must be drawn against the party
whose motion is under consideration.’”

Lumbermens Mut. Cas. Co.

v. RGIS Inventory Specialists, LLC, 628 F.3d 46, 51 (2d Cir.
2010) (quoting Morales v. Quintel Entm't, Inc., 249 F.3d 115,
121 (2d Cir. 2001)).
II.

Plaintiff’s Motion to Strike

11

Before reaching the dispositive motions, the Court will
address Shaffer’s motion to strike.

Shaffer has moved to strike

certain statements in Dana and Daniel’s statements of undisputed
facts, alleging that they are not supported by admissible
evidence because they cite to their own affidavits or
depositions.

Shaffer contends that this testimony is

inadmissible in light of Vermont’s Dead Man’s Statute, which
proscribes a party from testifying in his or her own favor where
the other party to the contract or cause of action is deceased
or insane.

See Vt. Stat. Ann. tit. 12, § 1602.

Shaffer argues

that Dana and Daniel are precluded by the Dead Man’s Statute
from testifying in their own favor regarding the Trust and their
financial transactions with the deceased Mrs. Morgan.
For the statute to apply, two factors must be satisfied:
“(1) the witness must be the surviving party to the contract or
cause of action in issue and on trial and (2) the testimony must
be in his own favor.”

Proulx v. Parrow, 56 A.2d 623, 626 (Vt.

1948); see also Estate of Smith v. United States, 979 F. Supp.
279, 284-85 (D. Vt. 1997).

Contrary to Shaffer’s assertion, the

first factor is not met here because there is no contract or
cause of action with the decedent at issue in this case.

While

Shaffer argues that the Trust itself qualifies as the contract
in issue, the evidence that he seeks to strike has no relation
to the validity, construction, or administration of the Trust.
12

Furthermore, as neither Mrs. Morgan nor her Estate is a party to
this action, it cannot be said that the witness is the surviving
party to a cause of action adverse to the decedent.

Thus, the

Dead Man’s Statute does not apply to any of the statements
Shaffer seeks to strike.
Even if the Statute did apply, however, the motion to
strike still would not be granted because it is the improper
method to challenge this evidence.

While Shaffer may object to

Defendants’ proffered facts offered in support of their motions
for summary judgment, the Federal Rules of Civil Procedure have
an express procedure for how to contest a purported fact as
unsupported by admissible evidence.

See Fed. R. Civ. P.

56(c)(2) (a party may respond to a Rule 56 statement of
undisputed facts by “object[ing] that the material cited to
support or dispute a fact cannot be presented in a form that
would be admissible in evidence”).

Shaffer has already used

this procedure in responding to Daniel and Dana’s motions for
summary judgment, and the Court will not rely on any disputed or
improperly supported facts in ruling on the motions for summary
judgment.

The motion to strike is thus not only unsupported by

law, it is also superfluous and is therefore denied.
III. Plaintiff’s Motion for Partial Summary Judgment
Plaintiff Shaffer has filed a motion for partial summary
judgment with respect to Count II (breach of fiduciary duty
13

under power of attorney against Dana Kaplan) and Count VII
(aiding and abetting breach of fiduciary duty against Daniel
Kaplan).

In addressing Shaffer’s motion, the Court will

consider all evidence in the light most favorable to Defendants
to determine whether Shaffer is entitled to judgment as a matter
of law.
A. Count II — Breach of Fiduciary Duty (Dana Kaplan)
Shaffer first seeks summary judgment as to his claim
against Dana Kaplan for breach of fiduciary duty under a power
of attorney.

His motion is premised solely on the fact that

Dana received gifts “amounting to Mrs. Morgan’s entire estate”
from Mrs. Morgan while holding a power of attorney.

In his

view, the law dictates that any gift or transfer from a
principal to one holding a power of attorney is presumptively
invalid, and that this invalidity can only be overcome by clear
and convincing evidence that the principal waived the conflict.
His motion thus rests on the theory that all of the money Dana
received from Mrs. Morgan constitutes an invalid gift because
Dana cannot present evidence of such a waiver.
It is undisputed that Dana held the power of attorney for
Mrs. Morgan and that this created a fiduciary relationship.
N.Y. Gen. Oblig. Law § 5-1505 (discussing fiduciary duties of

See

agent holding power of attorney).

It is also undisputed that

Defendants cannot provide any evidence of a conflict waiver.
14

However, the parties disagree about whether the law requires
such a waiver.

Shaffer primarily relies upon a case from 1928

in which the Second Circuit states that “the cases establish
that certain relationships in and of themselves give rise to a
presumption of invalidity, [such] as . . . a gift to one holding
a power of attorney[.]”
1928).

Thaw v. Thaw, 27 F.2d 729, 733 (2d Cir.

From this one line, Shaffer extrapolates that because

Dana held a power of attorney for Mrs. Morgan, any gift she
received from her would “give rise to a presumption of
invalidity.”

However, a review of the cases upon which Thaw

relies makes clear that it refers specifically to self-dealing
transactions by one holding the power of attorney, not all
gifts.

See id.; Appeal of Darlington, 147 Pa. 624, 635 (1892);

Dunn v. Dunn, 42 N.J. Eq. 431 (1886)). 3
The facts of Thaw itself do not dictate a different
conclusion.

While Thaw does not concern a power of attorney, it

3

In Darlington, the court held that “in the law of principal and agent
nothing is better settled than that the agent is disqualified from
dealing with the property of the principal for his own advantage,”
explaining that the agent cannot buy the principal’s property, or draw
up papers for his own benefit, and that in such cases, there is a
presumption against the validity of such acts. Darlington, 147 Pa. at
635. Similarly, in Dunn, the court explained that when a sale is made
by the principal to the agent, such sales are looked at with suspicion
and the burden is on the agent to show that the transaction was
conducted in good faith. Dunn, 42 N.J. Eq. at 431. Thus, “the cases”
cited in Thaw demonstrate that the presumption of invalidity does not
apply to all gifts between those in a fiduciary relationship, but
rather to self-dealing transactions and those where the agent uses the
power of attorney to make self-interested transfers of the principal’s
property.

15

discusses when gifts between parties to a confidential
relationship should be found invalid.

In Thaw, the Second

Circuit found that a sizeable gift from an ailing grandmother to
her grandson was invalid where the grandson took advantage of
their confidential relationship.

Thaw is easily distinguishable

from this case, however, because the decision was clearly
grounded in concerns about undue influence and
unconscionability.

The court found that due to her ailing

physical and mental health, the grandmother was “incapable of
grasping fully and clearly the effect and consequences to her of
making so large and important a gift,” thereby rendering the
gift invalid.

Thaw, 27 F.2d at 732.

Thus, Thaw does not stand

for the broad proposition that a gift is presumptively invalid
even without evidence of such influence.
At best, the cases Shaffer cites establish that had Dana
transacted in her own best interest while acting as Mrs.
Morgan’s attorney-in-fact, used the power of attorney to make
transfers to herself, or exerted some undue influence over Mrs.
Morgan, these transactions would be presumptively invalid and
require evidence of a waiver.

This is consistent with the New

York statute governing the power of attorney, which forbids
agents from making gifts of the principal’s property to herself
or others and from using the power of attorney to transfer the
principal’s property in any manner for the agent’s own benefit.
16

N.Y. Gen. Oblig. L. § 5-1505.

Thus, Shaffer will only be

entitled to summary judgment under Count II if the facts
demonstrate that Dana transacted in her own interest or used
Mrs. Morgan’s property for her own benefit.
Shaffer does not allege in his motion for summary judgment
that Dana exerted undue influence over Mrs. Morgan.

Even if he

did, viewing the facts most favorably to Dana, the Court would
infer that no such influence existed, as the evidence indicates
that Mrs. Morgan was fully competent throughout the transactions
in question.

Thus, a breach of fiduciary duty cannot be

established on the grounds of undue influence.
There is also no evidence on the record to indicate that
Dana made self-interested transfers of Mrs. Morgan’s assets.
Shaffer alleges that Dana received gifts from Mrs. Morgan that
implicated a conflict of interest that she was required to
disclose.

However, there is no evidence on the record that Dana

played any role in transferring money to herself.

Shaffer has

not alleged that Dana played a role in the changes to the Trust
or in the $240,280 that Mrs. Morgan gave her from the Crab
Orchard stock, nor does he provide any evidence that she was
involved in those transactions.

While Dana acknowledges that

she helped Mrs. Morgan access the monies she inherited from Mrs.
Wallace, it is undisputed that Mrs. Morgan received her
distribution of the Crab Orchard stock in a check made out to
17

Mrs. Morgan dated July 14, 2010, and there is no evidence or
indication that Dana played any role in the future disbursement
of these funds.

As a result, Shaffer cannot establish as a

matter of law that the gifts to Dana were presumptively invalid.
Summary judgment is therefore denied as to the breach of
fiduciary duty claim under Count II.
B. Count VII — Aiding and Abetting Breach of Fiduciary
Duty (Daniel Kaplan)
Shaffer also seeks summary judgment as to his aiding and
abetting a breach of fiduciary duty claim against Daniel Kaplan.
This claim is based on the theory that Daniel helped Dana breach
her fiduciary duties to Mrs. Morgan.

Under Vermont law, a

person may be liable for aiding and abetting a breach of
another’s fiduciary duties.
127 ¶ 33, 915 A.2d 270, 281.

See Montgomery v. Devoid, 2006 VT
To sustain such a claim, the

plaintiff must show “(1) a breach by the fiduciary of
obligations to another; (2) that the defendant knowingly induced
or participated in the breach; and (3) that the plaintiff
suffered damage as a result of the breach.”

Cooper v. Cooper,

783 A.2d 430, 443 (Vt. 2001).
Shaffer’s claim cannot be sustained under Cooper.

First,

as discussed above, Shaffer cannot demonstrate that Dana is
liable for breach of fiduciary duty at the summary judgment
stage.

Because no breach of fiduciary duty has been

18

established, Daniel necessarily cannot be liable as Dana’s aider
or abettor.

Furthermore, even if a breach had been established

on Dana’s part, viewing the facts in the light most favorable to
Daniel, Shaffer still fails to meet the second Cooper element.
The evidence indicates that all of Daniel’s actions were
directed specifically by Mrs. Morgan and authorized by her.
Mrs. Morgan herself executed all of the TOD Beneficiary forms
and the checks regarding her inheritance from Mrs. Wallace.
Thus, there is no indication that Daniel knowingly induced or
participated in any breach and Shaffer’s motion for partial
summary judgment as to Count VII is also denied.
IV.

Dana Kaplan’s Motion for Summary Judgment

Dana Kaplan moves for summary judgment dismissing all of
Plaintiff’s claims against her.

In assessing Dana’s motion, the

Court will construe all facts and make all reasonable inferences
in favor of Shaffer.
A. Count I — Accounting of Estate
In Count I of the SAC, Shaffer requests an accounting of
Mrs. Morgan’s estate on the grounds that Dana had failed to
communicate information regarding the administration of the
trust and estate.

The Court already granted this relief in an

Order issued January 25, 2013, when it held that Plaintiff was
entitled to a full accounting of all relevant transfers, the
Jean W. Morgan Trust assets, and an inventory of the Estate of
19

Jean W. Morgan.

Order Granting Plaintiff’s Motion to Enforce

Order Regarding Accounting, ECF No. 68.

Pursuant to this order,

Dana filed a complete accounting on February 21, 2013, to which
Shaffer has not objected.

Because the requested accounting has

been provided, this claim is moot.

See Steffel v. Thompson, 415

U.S. 452, 459 n.10 (1974) (“The rule in federal cases is that an
actual controversy must be extant at all stages of review, not
merely at the time the complaint is filed.”).

Count I is

therefore dismissed.
B. Count II — Breach of Fiduciary Duties as Attorney in Fact
under NYPOA
Count II alleges that Dana breached her fiduciary duties
pursuant to her NYPOA by receiving gifts from Mrs. Morgan.

The

settled law, which Dana does not dispute, is that an agent
breaches her fiduciary duty when she uses the principal’s
property for her own purposes.

As described in the discussion

regarding Shaffer’s motion for partial summary judgment, the
case law and statutes make clear that self-interested transfers
of the principal’s assets made by the agent are presumptively
unfair and in those cases that it falls to the agent to show
that the transactions were not a result of undue influence.

See

N.Y. Gen. Oblig. L. § 5-1505 (New York law forbidding one
holding NYPOA from making gifts of principal’s property to self
or others and from using the NYPOA to transfer principal’s

20

property in any manner for agent’s own benefit); Moon v. Darrow,
912 N.Y.S. 2d 850, 853 (2011)(agent breaches her fiduciary duty
when she uses the principal’s property for her own purposes). 4
Thus, Dana could be liable for breach of fiduciary duties
if the evidence suggests that she used her NYPOA to engage in
self-dealing transactions with Mrs. Morgan’s assets.

Shaffer

bases his breach of fiduciary duty claim against Dana on several
events: (1) the changes to the Ameriprise accounts that occurred
in 2009; (2) the distribution of the Crab Orchard stock
proceeds; (3) the disbursement of Mrs. Wallace’s escrow account;
and (4) the formation of the so-called “Binky” account.
However, even viewing the facts in the light most favorable to
Shaffer, there is no evidence on the record to indicate that any
of these incidents constituted self-dealing transactions
amounting to a breach of Dana’s fiduciary duties to her mother.
First, there is no indication that Dana was involved at all
with the 2009 changes to the Ameriprise accounts, much less in a
nefarious capacity.

Shaffer does not provide any evidence that

Dana played any role in these transfers, and both Dana and
4

In opposition, Shaffer again contends that Dana is prohibited from
receiving any gifts from Mrs. Morgan without a conflict waiver, see
Thaw, 27 F.2d at 733, and that she is prohibited from gifting herself
Mrs. Morgan’s assets even without using the NYPOA, see In re Estate of
Elias, 408 Ill. App. 3d 301, 319 (2011) (finding that transaction
between fiduciary parties that benefits agent is presumed to be
fraudulent). However, as the Court has already explained in its
discussion regarding Shaffer’s motion for partial summary judgment,
the presumption of invalidity does not apply to any gift to one in a
fiduciary relationship, but instead to self-interested transactions.

21

Daniel consistently state in deposition that Dana played no role
in any of Mrs. Morgan’s financial decisions.

While the facts

must be construed liberally in Shaffer’s favor at the summary
judgment stage, Shaffer must still “offer some hard evidence
showing that [his] version of the events is not wholly fanciful”
and may not “rely on mere conclusory allegations nor
speculation.”

D’Amico, 132 F.3d at 149 (emphasis added).

There is also no evidence on the record that Dana exerted
any undue influence over Mrs. Morgan when she made the 2009
changes to the Ameriprise accounts.

Shaffer essentially argues

that because (in his view) the changes to the accounts were
inconsistent with Mrs. Morgan’s intent as indicated in her Will
and Trust, this alone is enough to indicate that the transfers
wrongfully constituted a failure to “act upon Mrs. Morgan’s best
interest and avoid conflicts of interest.”
¶ 4.

Pl.’s Disputed Facts

Not only is this very thin evidence to support such an

inference, but these transfers were not expressly contrary to
Mrs. Morgan’s Will and Trust.

Mrs. Morgan’s Will grants to the

Trust all “residue and remainder of my property wheresoever
situate, which I may own or to which I may in any way be
entitled at the time of my death.”

This language is not

inconsistent with Mrs. Morgan’s decisions to eliminate her
residual estate by changing the beneficiaries on her accounts or
directing her assets elsewhere.
22

Thus, Shaffer cannot demonstrate that the 2009 changes were
contrary to Mrs. Morgan’s intent in her Will.

Indeed, as

Defendants pointed out at oral argument, Mrs. Morgan changed her
mind about the beneficiaries of her Ameriprise accounts and her
Trust several times between 2004 and 2009, sometimes in
Shaffer’s favor, sometimes not.

While Shaffer unsurprisingly

declines to challenge the validity of the earlier changes, there
is no evidence to suggest that the 2009 changes are any less
legitimate than the changes that occurred in 2006.
The record also does not indicate that any of Dana’s
transactions relating to Mrs. Wallace’s estate amounted to selfdealing.

According to Shaffer, Dana used the NYPOA in relation

to matters concerning a condo in Cincinnati, the escrow funds
from Mrs. Wallace’s estate, and the Crab Orchard stock.

While

there is some dispute as to whether Dana invoked the NYPOA in
some relation to the Crab Orchard stock, this does not
demonstrate that Dana’s receipt of the $240,280 in Crab Orchard
proceeds constituted a self-dealing transaction.

The undisputed

facts indicate that Mrs. Morgan ultimately received the Crab
Orchard stock sale proceeds in a check made out directly to her.
She then endorsed the check “for deposit only” to Ameriprise and
only then proceeded to distribute the money among different
Ameriprise accounts, including the $240,280 she gave to Dana.

23

Even if Dana did use the NYPOA to facilitate Mrs. Morgan’s
receipt of the Crab Orchard stock proceeds, there is no evidence
to suggest that Dana facilitated the distribution of the stock
proceeds to herself.

In his Facts, Shaffer states that “Daniel

and Dana directed these proceeds to be directed into an
Ameriprise account in Dana Kaplan’s sole name.”
20.

Pl.’s Facts ¶

However, Shaffer’s only citation for this fact is to Dana

and Daniel’s depositions, and both Kaplans state in their
depositions that Dana was not involved in this transaction and
that she did not learn of it until after it occurred.

There is

no evidence on the record inconsistent with this position.
Shaffer also cannot demonstrate that the receipt of the
escrow funds from Mrs. Wallace’s estate constituted a selfdealing transaction.

While Dana did use her NYPOA to facilitate

the transfer of these funds, even Shaffer concedes that all of
the escrow funds “ultimately passed to Mrs. Morgan,” not to
Dana.

Pl.’s Facts ¶ 23.

Thus, even when construing the facts

in the light most favorable to Shaffer, there is no evidence on
the record indicating that Dana Kaplan transferred any of Mrs.
Wallace’s assets to herself.

While she may have aided her

mother in accessing the escrow and Crab Orchard funds, it is
undisputed that these assets were distributed directly to Mrs.
Morgan herself, and not to Dana.

These do not amount to self-

interested transactions constituting a breach of fiduciary duty.
24

Finally, the creation of the “Binky” account does not
support Shaffer’s breach of fiduciary duty claim.

While Dana

concedes that she signed her mother’s name on the account
application, this does not constitute unlawful self-dealing.
The facts indicate that the Binky account was created using
$10,000 from an account jointly owned by Mrs. Morgan and Dana.
After the initial deposit, both Dana and Mrs. Morgan made
additional deposits of their own money into the account.

Thus,

any suggestion that the creation of the account was somehow
fraudulent is undone by Mrs. Morgan’s later deposits, which
amount to a ratification.

In Vermont, when a party avails

herself of an unauthorized act done by another in her name, this
constitutes a ratification.
104 Vt. 183, 186 (1932).

Lewis v. Addison County Trust Co.,

Here, when Mrs. Morgan independently

made deposits into the Binky Account, this ratified Dana’s
earlier actions in establishing the account.

This ratification

belies any claim that Dana breached her fiduciary duties to Mrs.
Morgan by creating the Binky Account.
Thus, Shaffer fails to present evidence of self-dealing to
support his breach of fiduciary duty claim.

Even if there were

facts on the record indicating that any of these transactions
were somehow suspect, Shaffer’s claim still fails because he
cannot demonstrate that any of the transfers caused him harm,
which is an essential element of any claim for breach of
25

fiduciary duty.

See Green Mt. Inv. Corp. v. Flaim, 807 A.2d

461, 464 (Vt. 2002) (breach of fiduciary duty requires proof of
damages).

Even if the opening of the Binky account was somehow

wrongful, the facts indicate that this account was opened using
funds from an account joint-owned by Mrs. Morgan and Dana.

If

the Binky account had not been created, the funds would have
remained in a jointly owned account that would have passed to
Dana upon Mrs. Morgan’s death.

Thus, Shaffer cannot demonstrate

that any of the Binky account money would have reached him if
the account had not been created.

Shaffer similarly cannot show

that any of the Crab Orchard stock proceeds would have gone to
him or to the Trust.

Mrs. Morgan endorsed the Crab Orchard

stock proceeds check for deposit to AMER Enterprise Investment
Services after the Trust had been removed as a beneficiary on
all of Mrs. Morgan’s Ameriprise accounts.

Thus, it is entirely

speculative whether any of the $240,280 would have reached
Shaffer or the Trust had the money not gone to Dana.

As a

result, Shaffer cannot demonstrate that he has been harmed by
the challenged transactions, regardless of whether Dana played a
role in them, and his claims necessarily fail.
Shaffer’s sole evidence that any of this money would have
gone to him is the express language of the Trust, which he
argues demonstrates Mrs. Morgan’s unambiguous intent that her
estate be split equally between Dana and himself.
26

However,

again, the express language of the Trust indicates that Mrs.
Morgan’s residual estate is to be split between her two
children, not that the estate itself is to be split.

In fact,

there is no mention of Shaffer in the Will itself other than the
bequest of the watch and the bed.

Shaffer presents no other

evidence that Mrs. Morgan intended half of the Crab Orchard
stock or the escrow funds to go to him.
C. Counts III and IV — Breach of Fiduciary Duties as
Executrix of Estate of Jean W. Morgan and Breach of
Fiduciary Duties as Trustee of Trust
Under Counts III and IV, Shaffer brings claims against Dana
for breaching her fiduciary duties as executrix of Mrs. Morgan’s
estate, and as trustee of the Jean W. Morgan Trust.

Under Count

III, Shaffer claims that Dana breached her fiduciary duty by
“failing to settle and distribute the Estate of Jean W. Morgan
in accordance with the terms of the Will.”

Under the terms of

the Will and Trust, Shaffer is to receive a bed and a pocket
watch and half of the residuary of Mrs. Morgan’s estate.

The

remainder of Mrs. Morgan’s personal property was to be given to
Dana.

At the time of Mrs. Morgan’s death, all of her assets

named Dana Kaplan as a TOD Beneficiary at her death, so there
was no residual estate.

As a result, the only assets due to

Shaffer upon Mrs. Morgan’s death were the watch and the bed, and
it is undisputed that Shaffer received these items.

While

Shaffer alleges that certain changes to the Ameriprise accounts
27

in 2009 and gifts in 2010 were unlawful, they far precede Dana’s
role as executrix of the will after Mrs. Morgan’s death in 2011.
Thus, all of Shaffer’s allegations against Dana have no relation
to her activities as executrix of her mother’s will, and Count
III is dismissed. 5
Under Count IV, Shaffer contends that Dana breached her
duties as Trustee by failing to administer the Trust in the
interest of the beneficiaries.

However, it is undisputed that

the Trust was defunded while Mrs. Morgan was the Trustee of the
Trust.

By the time Dana was Trustee of the Trust, there was no

Trust Property to administer.

Thus, even construing the facts

in favor of Shaffer, he can sustain no claims against Dana for
breaching her duties as Trustee of the Trust.
D. Count V — Conversion
Under Count V, Shaffer argues that Dana and Daniel
appropriated and wrongfully exercised dominion and control over
Mrs. Morgan’s funds and the Trust by placing them into an
account bearing Dana’s name.
To establish a claim for conversion, Shaffer must
demonstrate that that Dana has “appropriated [his] property to
[her] own use and beneficial enjoyment, has exercised dominion
5

At the summary judgment hearing, the parties made reference to a
dispute currently pending in Florida state court regarding the
proceeds from the sale of Mrs. Morgan’s Florida residence (which was
expressly devised to Dana in the Trust). As this issue has not been
briefed or presented before the Court, it will not be considered in
this action.

28

over it in exclusion and defiance of the [his] right, or has
withheld possession from [him] under a claim of title
inconsistent with [his] title.”
629 A.2d 325, 328 (Vt. 1993).

P.F. Jurgs & Co. v. O'Brien,
To bring a claim of conversion

under Vermont law, a plaintiff must show an immediate right to
possession.
1980).

Miller v. Merchants Bank, 415 A.2d 196, 199 (Vt.

Construing the facts in the light most favorable to

Shaffer — even assuming that Mrs. Morgan’s assets belonged in
the Trust — Plaintiff had no immediate right to the assets in
the Trust at the time of the alleged conversion.

Under its

terms, the Trust was revocable and Mrs. Morgan’s residuary
estate only poured into the Trust at the time of Mrs. Morgan’s
death.
Furthermore, Shaffer has no claim of conversion based on
the Crab Orchard stock, the Binky account, or the escrow funds,
as those assets were at no point even Trust assets, much less
possessed by Shaffer.

Thus, even construing the facts in

Shaffer’s favor, he cannot make out a claim for conversion under
Vermont law against Dana Kaplan.
E. Count VI — Unjust Enrichment
Shaffer’s final claim against Dana is for unjust enrichment
under the theory that Dana received a benefit that should have
been included in Mrs. Morgan’s residual estate and therefore the
Trust.

Unjust enrichment is a claim based on quasi-contract
29

where “[t]he law implies a promise to pay when a party receives
a benefit and the retention of the benefit would be
inequitable.”

In re Estate of Elliott, 542 A.2d 282, 285 (Vt.

1988) (quoting Cedric Electric, Inc. v. Shea, 472 A.2d 757, 757
(Vt. 1984)).

Under Vermont law, unjust enrichment arises where

“(1) a benefit was conferred on defendant; (2) defendant
accepted the benefit; and (3) defendant retained the benefit
under such circumstances that it would be inequitable for
defendant not to compensate plaintiff for its value.”

Reed v.

Zurn, 2010 VT 14 ¶ 11, 992 A.2d 1061, 1066 (quoting Center v.
Mad River Corp., 561 A.2d 90, 93 (Vt. 1989)).

In this case,

Shaffer has not demonstrated that he conferred any benefit on
Dana for which he should be compensated.

In fact, as explained

above, Shaffer had no immediate right to any of the assets in
dispute.

Thus, Shaffer cannot make out a claim under an unjust

enrichment theory and this claim also fails.
V.

Daniel Kaplan’s Motion for Summary Judgment
Daniel Kaplan filed a separate motion for summary judgment

to dismiss all of Shaffer’s claims against him.

In assessing

Daniel’s motion, the Court construes all facts and make all
reasonable inferences in favor of Shaffer.
A. Count V — Conversion
Shaffer’s claim of conversion against Daniel fail for the
same reasons as the conversion claim against Dana.
30

Shaffer

cannot demonstrate any right to possession of the allegedly
converted assets.

The conversion claim against Daniel also

fails for a second reason; that is, a claim of conversion
requires a showing that “another has appropriated the property
to that party’s own use and beneficial enjoyment.”
Co., 629 A.2d 325, 328 (Vt. 1993) (emphasis added).

P.F Jurgs &
Here, it is

undisputed that Daniel never exercised dominion over the Trust
assets.

Even assuming that Mrs. Morgan’s gift to Dana amounted

to conversion, the conversion claim still could not be brought
against Daniel because all of the gifts were made solely to
Dana, and not to Daniel.

Furthermore, at Mrs. Morgan’s death,

none of her assets transferred to Daniel — again, they all
transferred to accounts in Dana’s sole name.

Thus, Daniel never

obtained ownership of any of Mrs. Morgan’s funds, much less
funds owned by the Trust.

As a result, Shaffer cannot show that

Daniel appropriated any of Mrs. Morgan’s assets to his own use
and beneficial enjoyment such to sustain a conversion claim, and
this claim is dismissed as a matter of law.
B. Count VI — Unjust Enrichment
Shaffer’s unjust enrichment claims against Daniel also fail
for the same reasons as the unjust enrichment claims against
Dana.

Not only can Shaffer not demonstrate that he suffered any

specific damages as a result of Daniel’s actions, but he cannot
show that Daniel obtained any benefit from Shaffer that created
31

an implied promise to pay.

Thus, this claim is dismissed

against Daniel as well.
C. Count VII — Aiding and Abetting Breach of Fiduciary
Duty
Shaffer brings a claim against Daniel for aiding and
abetting in Dana Kaplan’s alleged breach of her fiduciary duty
to Mrs. Morgan.

As explained supra, to sustain a claim of

aiding and abetting, the plaintiff must show “(1) a breach by
the fiduciary of obligations to another; (2) that the defendant
knowingly induced or participated in the breach; and (3) that
the plaintiff suffered damage as a result of the breach.”
Cooper, 783 A.2d at 443.

The aiding and abetting claim

therefore necessarily fails because, as noted above, Dana did
not breach her fiduciary duties, and thus, Daniel cannot be
liable for aiding and abetting such a breach.
Furthermore, even if Dana did breach her fiduciary duties,
this claim fails because Shaffer cannot demonstrate that he
suffered damages as a result of Daniel’s actions.

Daniel’s

allegedly wrongful activities all occurred in conjunction with
his role as Mrs. Morgan’s Ameriprise financial advisor, and none
of the Ameriprise assets were included in the Trust such that
they would reach Plaintiff at Mrs. Morgan’s death.

Because none

of the Ameriprise assets constituted Trust assets, Shaffer
cannot demonstrate that Daniel’s alleged wrongdoing caused him

32

any harm.

There is no way to ascertain which assets — or,

indeed, whether any assets — would have reached the Trust absent
Daniel’s involvement; thus, Shaffer cannot make a showing of
specific damages against him.

Because any alleged harm is

merely speculative, this claim must fail.

See My Sister’s Place

v. Burlington, 433 A.2d 275, 281 (Vt. 1981) (finding that
speculative damages cannot be considered in tort actions because
“compensation is provided . . . to restore a person damaged to
the position he would have been in had the wrong not been
committed”).
D. Counts VIII and IX — Breach of Fiduciary Duty and
Professional Malpractice
Shaffer also brings claims against Daniel for breach of
fiduciary duty and professional malpractice.

These claims are

grounded in Daniel’s role as Mrs. Morgan’s financial advisor and
the fiduciary relationship between Daniel and Mrs. Morgan that
arose therefrom.

Shaffer contends that Daniel breached his

fiduciary duty by making improper and unsuitable investments
regarding Mrs. Morgan’s investment accounts.

While it is

undisputed that Daniel owed a fiduciary duty to Mrs. Morgan,
these claims must fail because Daniel’s duties are to Mrs.
Morgan, not to Shaffer.

Shaffer contends that Daniel owed him a

duty because he is a beneficiary of the Trust; however, this
argument is unpersuasive on several bases.

33

It is true that

sometimes a beneficiary of a trust, even one holding only a
contingent interest, may have standing to challenge the
management of trust assets.

See Siegel v. JP Morgan Chase Bank,

71 So.3d 935, 937-38 (Fla. Dist. Ct. App. 4th Dist. 2011)
(applying New York law).

However, in these cases, the

beneficiaries have standing to bring a claim against the trustee
for mismanagement, not third parties.

Thus, to the extent

Shaffer could raise claims regarding improper handling of the
Trust, they would have been directed toward the Trustee (that
is, Mrs. Morgan) and not Daniel.
As to claims against third parties regarding management of
trust property, “the trustee is normally the appropriate person
to bring (and to decide whether to bring) an action against a
third party on behalf of the trust.”

Restatement (Third) of

Trusts § 107 cmt. b (2013); Mammola v. Mt. Washington Co-Op.
Bank, CIV.A. 13-11000-RWZ, 2014 WL 1321099, at *2 & n.5 (D.
Mass. Mar. 31, 2014).

In certain cases, a beneficiary may

maintain a proceeding relating to the trust or its property
against a third party, but only where “the trustee is unable,
unavailable, unsuitable, or improperly failing to protect the
beneficiary's interest.”

Id.

This exception is not implicated

here because the accounts Daniel managed at Ameriprise have long
ceased to be Trust assets.

Thus, Shaffer no longer has any

interest, even a contingent one, in the management of the
34

Ameriprise accounts.

He is therefore unable to bring a claim

against Daniel regarding his management of the Ameriprise
accounts as it would not be related to the trust or its
property.
Furthermore, even if Shaffer did retain an interest in the
Ameriprise accounts, he still would not be able to sustain his
claims because he cannot demonstrate any resulting damages, as
is necessary to claims of negligence and breach of fiduciary
duty.

See Langle v. Kurkul, 510 A.2d 1301, 1304 (Vt. 1986)

(negligence action requires plaintiff to show actual loss or
damage).

While Shaffer contends that Daniel’s financial advice

was improper, he has not alleged that Mrs. Morgan estate
suffered damages as a result.

It is undisputed that Mrs.

Morgan’s accounts were profitable.

Any allegation that Mrs.

Morgan could have made more profit using different advice would
be entirely speculative and could not support a showing of
specific damages.

Because Shaffer cannot demonstrate a duty or

damages as a matter of law, his claims of breach of fiduciary
duty and professional malpractice against Daniel are dismissed.
CONCLUSION
For the reasons stated above, Shaffer’s motions to strike
and for partial summary judgment are denied.

Both Daniel and

Dana Kaplan’s motions for summary judgment are granted in full.
The remaining motions are denied as moot.
35

Case dismissed.

Dated at Burlington, in the District of Vermont, this 15th
day of May, 2014.
/s/ William K. Sessions III
William K. Sessions III
United States District Judge

36