Cathy Daniels, Ltd. v. Weingast

• Decision Date: 05 January 2012
• Citation: 91 A.D.3d 431,936 N.Y.S.2d 44,2012 N.Y. Slip Op. 00025
• Court: New York Supreme Court — Appellate Division
• Parties: CATHY DANIELS, LTD., et al., Plaintiffs–Appellants, v. Robin S. WEINGAST, et al., Defendants–Respondents,Designs for Finance, Inc., Defendant.

2012 N.Y. Slip Op. 00025
91 A.D.3d 431
936 N.Y.S.2d 44

CATHY DANIELS, LTD., et al., Plaintiffs–Appellants,
v.
Robin S. WEINGAST, et al., Defendants–Respondents,Designs for Finance, Inc., Defendant.

Supreme Court, Appellate Division, First Department, New York.

Jan. 5, 2012.

[936 N.Y.S.2d 45]

Goldberg Weprin Finkel Goldstein LLP, New York (Kevin J. Nash of counsel), for appellants.

[936 N.Y.S.2d 46]

Kaufman Dolowich Voluck & Gonzo LLP, Woodbury (Janene M. Marasciullo of counsel), for Weingast respondents.

Kelley Drye & Warren LLP, New York (Neil Merkl of counsel), for John Hancock Life Insurance Company of New York, respondent.TOM, J.P., ANDRIAS, ACOSTA, FREEDMAN, RICHTER, JJ.

[91 A.D.3d 431] Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered September 10, 2010, which granted the motions [91 A.D.3d 432] of defendants Robin S. Weingast and Robin S. Weingast & Associates, Inc. and John Hancock Life Insurance Company of New York to dismiss the complaint, unanimously modified, on the law, the cause of action for breach of contract reinstated as against the Weingast defendants, and otherwise affirmed, without costs.

Plaintiff Cathy Daniels, Ltd. is a women's clothing business owned and managed by plaintiffs Herbert L. Chestler, Daniel Chestler, and Steven M. Chestler. Defendants Robin S. Weingast and Robin S. Weingast & Associates, Inc. (the Weingast defendants) are insurance agents authorized to sell insurance for defendant John Hancock Life Insurance Company of New York. At some point before June 15, 2005, plaintiffs engaged the Weingast defendants as their insurance advisors and consultants.

According to the complaint, the Weingast defendants told plaintiffs that a § 419(e) Single Employer Trust Employee Welfare Benefits Plan (BETA plan) would enable them to purchase life insurance where the premiums would be fully tax deductible. Plaintiffs, in alleged reliance upon the Weingast defendants' representations, purchased BETA plan life insurance policies from John Hancock.

On June 15, 2005, each of the individual plaintiffs signed a one-page Acknowledgment and Disclosure form; individual defendant Weingast signed the forms on behalf of John Hancock. Each form states:

“John Hancock has not made a determination that this plan achieves any specific tax or other objectives ... [I]t is important that you speak with your independent tax/legal advisors before you complete the purchase of the policy and go forward with your plan. (An Independent tax/legal advisor is one that is not provided, recommended, chosen or paid for by your John Hancock representative.) ... John Hancock has not authorized its representatives to provide you with tax or legal advice, and you may not rely on any such advice provided by your John Hancock representative ... By signing this form you are stating that you understand this information, and that you have obtained from your independent advisors whatever advice you deem necessary or appropriate concerning your plan's risks and benefits.”

On September 15, 2005, the corporate plaintiff, Cathy Daniels, Ltd., signed a BETA Individual Employer Welfare Benefit Plan Waiver and Representation Agreement wherein it acknowledged and agreed that claims of deductibility may be subject to challenge by the Internal Revenue Service, that the BETA plan has not been ruled on by the IRS, and that any tax deductions taken [91 A.D.3d 433] in connection with participation in the Plan may be subject to challenge or disallowance. Several other forms signed that day included similar acknowledgments.

In October 2007, the IRS...