FKB successfully obtained a pre-answer dismissal on a Rule 12(b)(6) motion to dismiss from United States District Judge Vernon S. Broderick in the United States District Court of the Southern District of New York.
In this matter, FKB’s client was retained to prepare an irrevocable survivors’ trust for a married couple with one asset, a $5 million “last to die” life insurance policy. FKB’s client acted as the trustee and the beneficiaries included the couple’s children, one of whom was the plaintiff, their estranged son. Instead of paying the premium on the policy, the couple chose to sell the policy in July 2008. Despite the sale, plaintiff asserted that he was still a beneficiary of the policy upon his parents’ deaths. Plaintiff commenced the instant action in 2015 against FKB’s client and the purchaser of the insurance policy alleging “a civil conspiracy between and among the defendants” to sell the life insurance policy without plaintiff’s consent. The complaint alleges causes of action for: (1) breach of fiduciary duty; (2) conversion; (3) conspiracy, constructive trust and resulting trust; (4) constructive fraud; (5) interference with economic advantage and conspiracy; and (6) accounting.
FKB’s pre-answer motion to dismiss the complaint pursuant to Fed. R. Civ. P. § 12(b)(6) argued that the complaint was filed beyond the respective statutes of limitations for all causes of action and that the claims were otherwise improperly pleaded. In opposing FKB’s motion, plaintiff argued that the doctrine of equitable estoppel tolls the statutes of limitations for all causes of action because, as plaintiff alleged, FKB’s client failed to obtain plaintiff’s permission to sell the insurance policy and further did not inform him that the trust was dissolved.
In reply, FKB pointed out that for the doctrine of equitable estoppel to apply, the party invoking it must establish that he reasonably relied on an opposing party’s “subsequent and specific actions” of deception, fraud, misrepresentation, or other misconduct preventing timely commencement of the suit. Zumpano v. Quinn, 6 N.Y.3d 666, 674 (2006). Here, plaintiff had not alleged any affirmative subsequent or specific conduct by FKB’s client which would toll the statutes. FKB also argued that plaintiff admits in his complaint that he was aware of the sale of the life insurance policy and therefore was “under a duty to make inquiry and ascertain all the relevant facts prior to the expiration of the applicable Statute of Limitations.” St. John’s Univ., N.Y. v. Bolton, 757 F. Supp. 2d 144, 188 (E.D.N.Y. 2010). FKB also points out that despite affirmatively admitting that he knew of, and objected to, the sale as of July 2008, plaintiff contends that he should be allowed to bring these claims seven and a half (7 ½) years later without offering any support or argument to excuse his inordinate delay.
In the Court’s decision, Judge Broderick agreed with our argument that each of the causes of action are time-barred and that the doctrine of equitable estoppel cannot be applied to toll the relative statutes of limitations because “(1) plaintiff fails to allege active misrepresentations on the part of defendants, aside from certain conclusory statements, (2) any fiduciary relationship with [FKB’s client] ended on or about the end of 2008, and (3) plaintiff was informed of the facts underlying his claims, but waited seven years before bringing his Complaint. Thus, even had there had been an ongoing fiduciary relationship and active misrepresentations on the part of [FKB’s client], plaintiff failed to demonstrate that he exercised the due diligence required when bringing his claims.”