Dayan-Varnum v. Dayan

Decision Date12 May 2023
Docket Number23-CV-00052-GKF-MTS
PartiesMARY ELLEN DAYAN-VARNUM, ADMINISTRATOR OF THE ESTATE OF JOHN HORTON DAYAN, DECEASED, Plaintiff, v. KATHRYN DAYAN, an individual, DAVA DAYAN, an individual, MERRILL LYNCH PIERCE FENNER & SMITH, INC., a foreign corporation, and STIFEL, NICOLAUS & CO., INC., a foreign corporation, Defendants.
CourtU.S. District Court — Northern District of Oklahoma

Gregory K. Prizzell, United States District Judge Northern District of Oklahoma

This matter comes before the court on the Motion to Dismiss Plaintiff's Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6) [Doc. 6; Doc. 7] of defendant Stifel Nicolaus & Co., Inc. For the reasons set forth herein the motion is granted in part and denied in part.

Background and Procedural History

This case arises from a dispute regarding the administration of the estate of John Horton Dayan, deceased. On December 13 2022, plaintiff Mary Ellen Dayan-Varnum, Administrator of the Estate of John Horton Dayan, deceased, initiated this litigation in the District Court in and for Tulsa County, State of Oklahoma, against defendants Kathryn Dayan; Dava Dayan; Merrill Lynch Pierce Fenner & Smith, Inc., and Stifel, Nicolaus & Co, Inc. [Doc. 2-2]. The Complaint includes twenty causes of action.[1][Id.]. Relevant to Stifel, the Complaint includes the following causes of action: (1) civil conspiracy; (2) unjust enrichment; (3) negligence; (4) negligent supervision; and (5) constructive trust. [Doc. 2-2, pp. 19-21].

On February 13, 2023, defendants Dava Dayan and Kathryn Dayan removed the case to this court. [Doc. 2].

On February 17, 2023, Stifel filed the motion seeking dismissal of the civil conspiracy, unjust enrichment, negligence, and negligent supervision claims. [Doc. 6; Doc. 7]. Dayan-Varnum responded in opposition [Doc. 22], and Stifel filed a reply. [Doc. 27]. Thus, the motion to dismiss is ripe for the court's determination.

Allegations of the Complaint

The twenty-two page Complaint includes 179 paragraphs, which the court will not summarize. Instead, the court limits its summary to the factual allegations relevant to Stifel and the motion to dismiss. The Complaint includes the following allegations:

Decedent John Horton Dayan married defendant Kathryn Dayan on September 2, 1994. [Doc. 2-2, p. 2, ¶ 12]. John owned at least two Merrill Lynch accounts, one account number ending in 6219, and the other ending in 6384. [Id. ¶ 13]. On or about July 7, 2016, John designated Kathryn as the beneficiary of the Merrill Lynch account ending in 6219; however, plaintiff alleges that [i]n examining the handwriting . . . it appears that Kathryn signed, dated, and submitted this document acting as John.” [Id. ¶ 14]. On or about March 11, 2017, John designated Kathryn as the beneficiary of the Merrill Lynch account ending in 6384. [Id. at p. 3, ¶ 15].

On or about May 21, 2019, Kathryn filed for a dissolution of marriage against John in Napa County, State of California. [Id. ¶ 16]. On July 12, 2019, John and Kathryn were divorced by virtue of their filing a Marital Termination Agreement. [Id. ¶ 17].

John passed away on January 10, 2021. [Id. at p. 4, ¶ 22]. On January 11, 2021, Kathryn filled out, signed, and dated a State of Oklahoma Death Certificate Information Form, in which she listed herself as John's spouse. [Id. ¶ 25]. As a result, the Certified Death Certificate, issued by the State of Oklahoma, listed the “Informant's Name” as Kelly Dayan, her “Relationship to Decedent” as “Wife,” and herself, Kathryn E. Brehm as the “Surviving Spouse.” [Id. ¶ 27].

Plaintiff alleges that Merrill Lynch's IRA Disclosure Statements provide that, if you are divorced, any IRA beneficiary designation will be void unless the Decree of Divorce designates the spouse as beneficiary, you re-designate your spouse as the beneficiary, or such spouse is redesignated to receive proceeds or benefits in trust for, on behalf of, or for the benefit of your child or dependent. [Id. at p. 7, ¶ 45]. As a result, plaintiff asserts that “Kathryn . . . knew that by virtue of Merrill Lynch's own policies and procedures, she must obtain the falsified death certificate listing herself as the surviving spouse in order to ensure she could take the funds [from the Merrill Lynch accounts] into her own possession, custody and control.” [Id. ¶ 47].

On February 8, 2021, Kathryn instructed John's brother, Michael, to send the certified death certificate copies to “Merrill Lynch Attn: Will Bertron, 3700 Buffalo Speedway, Houston, TX 77098.” [Id. ¶ 48]. Between March 19, 2021 and March 29, 2021, Merrill Lynch executed the relative roll-over and transferred certain monies into Kathryn's name, exclusively. [Id. ¶ 49].

In or around March 2021, Kathryn rolled the IRA over into the custody and control of Stifel, “presumably to be managed by Ms. Ellen Harless.” [Id. ¶ 50].

Ellen Harless is alleged to be an investment advisor employed at Stifel as of January 2021. Prior to her employment at Stifel, Ellen Harless was employed at Merrill Lynch from approximately October 2001 to January 2021. [Id. at p. 8, ¶ 54]. Plaintiff alleges that Ellen Harless managed the assets for both John and Kathryn until her departure from Merrill Lynch. [Id. ¶ 55].

Plaintiff further alleges that Ellen Harless and Kathryn shared a close relationship “insofar as she is apparently willing to testify on behalf of Kathryn.” [Id. ¶ 56].

In a pleading in the California probate case, defendant Dava Dayan stated, “While much has been made of John and [Kathryn's] divorce decree and that it might prevent [Kathryn] from receiving the account as the designated beneficiary, at least one witness from the brokerage that managed John's account will testify that John specifically told her, in response to more than one inquiry she made after his divorce, that he intended [Kathryn] to remain the beneficiary of the account.” [Id. ¶ 57]. Dava previously attempted to depose Mr. Harless, “presumably to obtain testimony regarding the ‘intent' of the Decedent.” [Id. ¶ 58]. A Notice of Deposition on behalf of Dava was sent to plaintiff's counsel on or about September 21, 2021 in the Napa County probate matter. [Id.].

Ellen Harless knew that John and Kathryn were divorced. [Id. at p. 9, ¶ 60]. Ellen Harless knew or should have known Merrill Lynch's own policies and procedures in relation to beneficiary designations and the revocation of the same resulting from a divorce. [Id. ¶ 61]. Ellen Harless, acting as a Stifel employee, took over the management of these assets knowing that they were wrongfully and fraudulently obtained and knowing that John never revised his beneficiary designation. [Id. ¶ 62]. Plaintiff alleges that Ellen Harless conspired to and with Kathryn to defraud the estate of John Horton Dayan for the benefit of having the funds rolled into Kathryn's name and under Ellen Harless's management.” [Id. ¶ 63].

Legal Standard

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a claim that “fail[s] to state a claim upon which relief can be granted.” “To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead sufficient factual allegations ‘to state a claim to relief that is plausible on its face.' Brokers' Choice of Am., Inc. v. NBC Universal, Inc., 861 F.3d 1081, 1104 (10th Cir. 2017) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.' Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “Mere ‘labels and conclusions' and ‘a formulaic recitation of the elements of a cause of action' are insufficient.” Estate of Lockett ex rel. Lockett v. Fallin, 841 F.3d 1098, 1107 (10th Cir. 2016) (quoting Twombly, 550 U.S. at 555). The court accepts as true all factual allegations, but the tenet is inapplicable to legal conclusions. Iqbal, 556 U.S. at 678. “Accordingly, in examining a complaint under Rule 12(b)(6), [the court] will disregard conclusory statements and look only to whether the remaining, factual allegations plausibly suggest the defendant is liable.” Waller v. City & Cnty. of Denver, 932 F.3d 1277, 1282 (10th Cir. 2019) (quoting Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012)). The court “must determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (quoting Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007)).


As previously stated, Dayan-Varnum asserts the following causes of action against Stifel: (1) civil conspiracy; (2) unjust enrichment; (3) negligence; (4) negligent supervision; and (5) constructive trust. [Doc. 2-2, pp. 19-21]. Stifel filed the motion seeking dismissal of the civil conspiracy, unjust enrichment, negligence, and negligent supervision claims. [Doc. 6; Doc. 7]. The court separately considers each cause of action.

A. Civil Conspiracy

Under Oklahoma law, [a] civil conspiracy consists of a combination of two or more persons to do an unlawful act, or to do a lawful act by unlawful means.” Brock v Thompson, 948 P.2d 279, 294 (Okla. 1997). [C]ivil conspiracy itself does not create liability. To be liable the conspirators must pursue an independently unlawful purpose or use an independently unlawful means.” Brock, 948 P.2d at 294. Thus, [a] conspiracy between two or more persons to injure another is not enough; an underlying unlawful act is necessary to prevail on a civil conspiracy claim.” Roberson v. PaineWebber, Inc., 998 P.2d 193, 201 (Okla.Civ.App. 1999).[2]...

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