Summary
The Nebraska Supreme Court reviewed the dismissal of a breach-of-trust action against a trustee who allegedly provided insurers with a false address for an irrevocable life-insurance trust. The court held that the complaint plausibly alleged breaches of the trustee’s mandatory duties to act in good faith, protect beneficiaries’ interests, and keep them reasonably informed, notwithstanding exculpatory trust provisions. The court reversed the dismissal and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the second amended complaint plausibly alleged that Meyer breached fiduciary and statutory duties to administer the trust in good faith and in the interests of the beneficiaries.
- Whether the trust provisions disclaiming duties concerning payment and notice of insurance premiums barred the breach-of-trust claims at the pleading stage.
- Whether the complaint plausibly alleged that Meyer's conduct proximately caused the claimed damages.
Holdings
- The second amended complaint alleged sufficient facts to state a plausible claim that Meyer breached his fiduciary duties as trustee.
- The trust's provision stating that Meyer had no obligation to pay premiums or notify anyone of nonpayment could not abrogate his mandatory statutory duties to act in good faith and keep beneficiaries informed of material facts necessary to protect their interests.
- The complaint plausibly alleged that Meyer's conduct proximately caused the claimed damages.
- A plaintiff opposing dismissal must allege sufficient facts to state a claim for relief that is plausible on its face.
Key quotations
“Such a position is clearly untenable and challenges the most basic understanding of a trustee’s duty to act for the benefit of the beneficiaries under the trust.” (227)
“The second amended complaint alleged sufficient facts to state a plausible claim against Meyer for breach of fiduciary duty.” (229)
Factual background
Rafert created an irrevocable trust for her four adult daughters and named her attorney, Robert J. Meyer, as trustee. The trust owned three life-insurance policies totaling $8.5 million, and Meyer signed the policy applications while providing the insurers with a false address for the trust. The policies later lapsed for nonpayment, and the appellants alleged that Meyer's failure to provide accurate contact information and keep the beneficiaries informed prevented them from protecting the policies and contributed to a subsequent payment of $252,841.03 to an insurance agent whose company did not forward the funds to the insurers.
Procedural history
Rafert and her daughters sued Meyer for breach of fiduciary duties as trustee after life-insurance policies owned by the trust lapsed and additional premiums were allegedly lost. The district court granted Meyer's motion to dismiss under Neb. Ct. R. Pldg. § 6-1112(b)(6), concluding that the trust instrument eliminated any duty to pay or notify anyone about premiums and that Meyer's conduct did not cause the alleged damages. The Nebraska Supreme Court reversed and remanded for further proceedings.
Remand instructions
The cause was remanded for further proceedings consistent with the opinion on the appellants' breach-of-trust claims.