Opinion
CIVIL ACTION NO. 03-3757
January 28, 2004
MEMORANDUM ORDER
Presently before this Court are Defendant Anil Minocha's Motion to Dismiss (Dkt. No. 3) and Defendants New England Life Insurance Company, New England Financial Group and Robert P. Wermuth's Motion to Dismiss (Dkt. No. 4). For the reasons discussed below, Defendants' Motions are GRANTED.
I. Factual Background and Procedural History
Plaintiff Jay Sonecha ("Sonecha") is the Trustee of the Dua Family Multiple Powers Liquidity Trust (the "Dua Family Trust" or the "Trust"). Compl. ¶ 1. The Dua Family Trust was established on May 17, 1990 by Jayant Kamar Dua, M.D. ("Dr. Dua") to hold and manage various assets, including the proceeds of certain life insurance policies on Dr. Dua's life. Compl. ¶ 6. The original trustees of the Dua Family Trust were Dr. Dua's sister, Sangeeta Minocha ("Mrs. Minocha"), and his cousin, Roop Kumar Dua ("Roop Dua"). Compl. ¶ 7. Sonecha replaced Mrs. Minocha and Roop Dua as trustee in March 2003. Compl. ¶ 26.
While she was trustee, Mrs. Minocha was responsible for paying the premiums on the insurance policies of which the Dua Family Trust was the beneficiary. Compl. ¶ 9. Defendant Anil Minocha ("Mr. Minocha") assisted Mrs. Minocha by writing the checks and mailing the premium payments. Mr. Minocha also received all incoming mail related to the Dua Family Trust. Compl. ¶ 12.
One of the life insurance policies for which the Dua Family Trust was beneficiary was a Valley Forge Life Insurance Company ("VFLIC") policy with a $500,000 death benefit (the "Valley Forge Policy" or the "Policy"). Compl. ¶ 14. The Policy was sold to Dr. Dua by Defendant Robert P. Wermuth ("Wermuth"). Compl. ¶ 15. The premium on the Valley Forge Policy was due to be paid on or before March 15, 2001, but was not paid by that date or within the 30-day grace period. Compl. ¶ 16. As a result, the Policy lapsed.
When Wermuth received notice that the Valley Forge Policy had lapsed, he contacted Dr. Dua about reinstating the policy. Compl. ¶ 18. Wermuth arranged for Dr. Dua and Mrs. Minocha to sign an application for reinstatement, which was approved by VFLIC on June 20, 2001, subject to receipt of the delinquent premium by July 10, 2001. Compl. ¶ 19. Mrs. Minocha failed to remit the premium to VFLIC, and the Valley Forge Policy was not reinstated. Compl. ¶ 20.
In February 2002, Dr. Dua and his wife, Meena Dua ("Mrs. Dua") had conversations with Wermuth about additional life insurance coverage. Compl. ¶ 21. Because Wermuth did not suggest otherwise, Dr. Dua and Mrs. Dua assumed that the Valley Forge Policy had been reinstated and remained in full force and effect. Compl. ¶ 21. In July 2002, Mrs. Dua contacted Wermuth to ensure that all of the policies on Dr. Dua's life, including the Valley Forge Policy, were in full force and effect. Compl. ¶ 23. Several days later, at Wermuth's direction, his assistant advised Mrs. Dua that all of the policies were in effect and in order. Compl. ¶ 24.
Dr. Dua died on October 15, 2002. Compl. ¶ 25. Shortly thereafter, the Dua Family Trust learned that the Valley Forge Policy had never been reinstated and, as a result, the Trust had $500,000 less in insurance coverage than had been assumed. Compl. ¶ 26.
On May 19, 2003, Sonecha filed a four count Complaint in the Chester County Court of Common Pleas. Count One alleges negligence against Wermuth. Count Two alleges that New England Life Insurance Company ("New England Life") and New England Financial Group ("NEFG") are vicariously liable for Wermuth's acts. Count Three alleges that New England Life, NEFG and Wermuth are vicariously liable for the acts of Wermuth's assistant and Count Four, which is misnumbered as Count Three, alleges negligence against Mr. Minocha. Defendants New England Life, NEFG and Wermuth removed the Complaint to this Court on June 20, 2003. Defendants now move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the Complaint for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6).
II. Standard of Review
A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the complaint. See Markowitz v. Northeast Land Co., 906 F.2d 100, 103(3d Cir. 1990): Sturm v. Clark, 835 F.2d 1009. 1011(3d Cir. 1987). In considering a motion to dismiss, the court must accept as true all factual allegations of the complaint and draw all reasonable inferences in the light most favorable to the plaintiff. Board of Trs. of Bricklayers and Allied Craftsmen Local 6 of N.J. v. Wettlin Assoc., Inc., 237 F.3d 270, 272 (3d Cir. 2001). A court therefore "may dismiss a [claim] only if it is clear that no relief could be granted under any set of facts that could be proven consistent with the allegations." Ramadan v. Chase Manhattan Corp., 229 F.3d 194, 195-96 (3d Cir. 2000) (citing Alexander v. Whitman, 114 F.3d 1392, 1398 (3d Cir. 1997)).
III. Analysis
Sonecha admits that Mrs. Minocha was the trustee of the Dua Family Trust and the person responsible for paying the premium on the Valley Forge Policy of which the Dua Family Trust was the beneficiary. He further admits that Mrs. Minocha's failure to pay the premium caused the Policy to lapse, resulting in a loss of $500,000 to the Trust. Notwithstanding these admissions, Sonecha attempts to impose liability on Defendants by alleging that said loss was caused by the negligence of Mr. Minocha, Wermuth and Wermuth's assistant.
The threshold question in any negligence action is whether the defendant owed a duty or obligation to the plaintiff. See Atcovitz v. Gulph Mills Tennis Club, Inc., 571 Pa. 580, 586, 812 A.2d 1218, 1222 (2002). It is undisputed that "[u]pon acceptance of the trust by the trustee, he [or she] is under a duty to the beneficiary to administer the trust." Restatement (Second) of Trusts § 169 (1959). Sonecha cites no authority, however, for the proposition that someone other than the trustee owes any duty arising out of the trust to the trust beneficiaries. Instead, Sonecha relies on cases which are clearly inapposite.
In Pascarella v. Kelley, 378 Pa. 18, 105 A.2d 70 (1954), Kelley supervised the dredging of a creek adjacent to the plaintiffs' building. During the course of operations, the building's foundation was damaged. Kelley promised plaintiffs that he would have it repaired. Kelley, however, did nothing more than have some gravel pushed up against the side of the building. After the foundation gave way, resulting in severe damage to the building, plaintiffs brought an action against Kelley for failing to properly repair the foundation. Id. at 19-20, 105 A.2d at 72. The court, after noting that Kelley " could be held accountable" for repairs negligently performed, though gratuitously undertaken, reversed the jury's verdict and ordered a new trial because the trial court's charge amounted to "fundamental error." Id. at 22-24, 105 A.2d at 73-74.
In Rehder v. Miller, 1908 WL 3580 (Pa.Super. 1908), the landlord, at the tenant's request, had the porch floor of the leased premises repaired. About six months after the work was done, while the tenant was walking across the porch, the floor gave way and she was severely injured. The tenant brought an action against the landlord sounding in negligence. Id. at * 1. The court held that "where, at the request of a tenant, [the landlord] does make repairs which he is under no obligation to do, he is responsible for such negligence in the performance of his undertaking as causes damage to the tenant." Id. at *2.
Apart from the significant factual dissimilarities between those cases and the instant one, Pascarella and Rehder are premised on the existence of a duty owed by one party to another. Pascarella, 378 Pa. at 22, 105 A.2d at 73; Rehder, 1908 WL 3580, at *2. Here, Mr. Minocha owed no duty to the beneficiaries of the Dua Family Trust because he was not a trustee. Even assuming arguendo that Mrs. Minocha entrusted Mr. Minocha with writing the checks and mailing the premium payments, see Compl. ¶ 12, Mrs. Minocha, not Mr. Minocha, is liable to the Trust's beneficiaries for Mr. Minocha's alleged failure to pay the premium on the Valley Forge Policy. See Restatement (Second) Torts §§ 225(2), 264 comment b. Regardless, Mrs. Minocha could not have properly committed that aspect of the Trust's administration to Mr. Minocha, as it implicated her "primary duty . . . to preserve the trust assets and to ensure the safety of the trust principle." In re Main, Inc., No. 98-158, 1999 WL 330239, *5 (E.D. Pa. May 24, 1999); see also Restatement (Second) of Trusts § 171.
In Pirocchi v. Liberty Mutual Insurance Co., 365 F. Supp. 277 (E.D. Pa. 1973), upon which Sonecha also relies, the court did not even reach the question of duty. Id. at 281-82.
Similarly unavailing is Sonecha's reliance on Jarvis v. Workmen's Comp. Appeal Bd., 497 Pa. 379, 441 A.2d 1189 (1982). In Jarvis, the plaintiff brought an action against a workmen's compensation insurer to recover benefits for her husband's death. Id. at 380-81, 441 A.2d at 1189-90. The court held that the workmen's compensation insurer, which breached its duty to provide a renewal premium notice to the insured, was estopped from asserting expiration of the policy as a bar to recovery.Id. at 383, 441 A.2d at 1191. In the instant case, however, Wermuth not only notified Mrs. Minocha that the policy had lapsed, but also arranged for her to have it reinstated.
Finally, in Al's Cafe. Inc. v. Sanders Ins. Agency, 820 A.2d 745 (Pa.Super. 2003), the court stated the basic proposition that "an insurance agent or broker has a duty not to misrepresent [to insureds] the coverage procured." Id. at 749. Al's Cafe, however, is inapplicable here because the insured, Mrs. Dua, to whom Wermuth's assistant made the alleged negligent misrepresentations, is not a plaintiff. Rather, Sonecha, as trustee, brings this action in his representative capacity on behalf of the Dua Family Trust. But like Mr. Minocha, neither Wermuth nor his assistant were trustees and, therefore, they owed no duty to the Trust's beneficiaries. Even if Wermuth and his assistant owed a duty to the Trust's beneficiaries and breached that duty, Sonecha has failed to allege that Wemurth's acts or the acts of his assistant caused any damage to the Trust. Mrs. Minocha's failure to pay the premium on the Valley Forge Policy is the reason the Policy lapsed.
Al's Cafe is also factually distinguishable. In Al's Cafe, the plaintiff insured commenced an action against its insurance agent, Sanders Insurance Agency ("Sanders"), alleging that Sanders was negligent in procuring a liquor liability policy from Pine Top Insurance Company, an unlicensed and financially unstable carrier. The trial court granted Sanders' motion for summary judgment and the plaintiff appealed. 820 A.2d at 747. After finding that "an insurance agent's/broker's recognized duty to act with reasonable care, skill, and judgment extends to selection of the insurer and ascertaining whether it is reputable and financially sound and informing the insured of findings if investigation reveals evidence of financial infirmity," the Superior Court of Pennsylvania held that the plaintiff had established that there existed a genuine issue of material fact and, therefore, reversed the grant of summary judgment and remanded the case for further proceedings.Id. at 751-53. Here, Sonecha does not allege that Wermuth procured a life insurance policy on Dr. Dua's life from an unlicensed and financially unstable carrier.
In sum, the Court concludes that Mr. Minocha, Wermuth and Wermuth's assistant owed no duty to the beneficiaries of the Dua Family Trust. Absent a duty, there can be no breach, and thus, no basis for recovery under a theory of negligence. Accordingly, Counts One and Four, which purport to sound in negligence, are dismissed. Because Sonecha's vicarious liability claims hinge on a finding of negligence against Wermuth and his assistant, Counts Two and Three are also dismissed.
ACCORDINGLY, this day of January, 2004, upon consideration of Defendant Anil Minocha's Motion to Dismiss (Dkt. No. 3), Defendants New England Life Insurance Company, New England Financial Group and Robert P. Wermuth's Motion to Dismiss (Dkt. No. 4), and Plaintiff Jay Sonecha's response thereto, it is hereby ORDERED that said Motions are GRANTED. The Clerk is directed to statistically close this matter.