Shervin v. Huntleigh Securities Corp.

• Decision Date: 17 September 2002
• Docket Number: No. ED 80271.,ED 80271.
• Citation: 85 S.W.3d 737
• Parties: Rodab SHERVIN, Plaintiff/Respondent, v. HUNTLEIGH SECURITIES CORP., Defendant/Appellant.
• Court: Missouri Court of Appeals

85 S.W.3d 737

Rodab SHERVIN, Plaintiff/Respondent, v. HUNTLEIGH SECURITIES CORP., Defendant/Appellant.

No. ED 80271.

Missouri Court of Appeals, Eastern District, Division Four.

September 17, 2002.

COPYRIGHT MATERIAL OMITTED

Thomas J. Magee, Robyn Fox, Moser, Marsalek, & P.C, St. Louis, MO, for Respondent.

Edward Meyer, Rabbitt, Pitzer & Snodgrass, St. Louis, MO, for Appellant.

SHERRI B. SULLIVAN, Judge.

Introduction

Huntleigh Securities Corp. (Appellant) appeals from the Amended Judgment of the trial court in favor of Rodab Shervin (Wife) and against Appellant in the amount of $545,084.00 based on her petition for breach of fiduciary duty and negligence. We affirm.

Factual and Procedural Background

On November 27, 1996, Wife's marriage to Dr. Adel Shervin (Husband) was terminated by a Judgment of Dissolution. On March 3, 1997, the trial court entered an amended Judgment that awarded Wife "100% of Respondent's (Husband's) pension benefits accrued from the date of the marriage to the date of the entry of the Judgment/Decree in this cause, in Retirement Plan # 2 with Huntleigh Securities Acct. # 74-059585." After entry of the amended Judgment, Wife sent a copy of the amended Judgment to Appellant's Chief Financial Officer Thomas Davidson (Davidson), and the trial court signed a Qualified Domestic Relations Order (QDRO), prepared by Wife, which assigned 100% of Husband's benefits to Wife. Davidson testified that upon receiving the amended Judgment, he froze the account to prevent Husband from taking money from the account.

On July 23, 1997, Wife was notified that Husband, in his capacity as administrator for Retirement Plan # 2, attempted to liquidate the plan, even though it had been wholly awarded to Wife by the amended Judgment. On July 25 and October 1, 1997, Wife obtained restraining orders preventing Husband from removing, transferring, withdrawing from or liquidating the plan. Wife sent copies of these orders to Appellant.

On December 30, 1999, Appellant received written instructions from Husband, as administrator and trustee of Retirement Plan # 2, to transfer the assets contained therein to Mercantile Bank. Appellant consulted with its legal counsel, Terry Lister (Lister), as to whether there was a legal basis for stopping transfer of the funds. Lister advised Appellant that there was no legal basis for stopping transfer of the funds.

On January 11, 2000, Cathy Marshall (Marshall), a representative of Appellant, informed Wife that Husband had submitted the transfer request. Wife delivered a letter to Appellant reminding Appellant that it possessed certified copies of the court orders awarding Retirement Plan # 2 to Wife and requesting that Wife be notified if Appellant intended to honor the request to transfer the funds.

On January 14, 2000, Appellant transferred the assets in Retirement Plan # 2 by check to Mercantile Bank. After the transfer, Mercantile Bank wired the funds to Harris International Bank to be deposited in Husband's bank account with Lloyd's of London in the United Kingdom. After the assets were transferred overseas, Wife was unable to capture the funds through judicial restraining orders. Husband ultimately took the funds for his own personal use.

Wife filed suit against Appellant alleging that Appellant breached a fiduciary duty and a duty of ordinary care to her when it transferred the funds contained in Retirement Plan # 2 to Mercantile Bank in January 2000. After a bench trial, the trial court entered judgment, and ultimately an Amended Judgment, in favor of Wife in the amount of $545,084.00. This appeal follows. Appellant presents six points on appeal.

Standard of Review

The appellate court will sustain the decree or judgment of the trial court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). The trial court's judgment will be set aside only with a firm belief that the judgment is wrong. Id. In reviewing the evidence, we view the evidence, along with all reasonable inferences, in the light most favorable to the trial court's judgment and disregard all contrary evidence and inferences. McRentals, Inc. v. Barber, 62 S.W.3d 684, 696 (Mo.App. W.D.2001). As the trier of fact, the trial court determines the credibility of witnesses and is free to believe or disbelieve all or part of the witnesses' testimony. Id.

Point I

In its first point, Appellant maintains that the trial court erred in finding that Appellant had a fiduciary duty to Wife because the evidence at trial was insufficient to establish the existence of a special relationship necessary for the imposition of a fiduciary duty in that there was no evidence of a voluntary act by Appellant which reasonably encouraged Wife to repose trust in it. Appellant also contends that it was not a party to the prior civil proceedings between Wife and Husband.

Discussion

When breach of fiduciary duty is asserted as a tort claim, the proponent must establish that a fiduciary duty existed between it and the defending party, that the defending party breached the duty, and that the breach caused the proponent to suffer harm. Zakibe v. Ahrens & McCarron, Inc., 28 S.W.3d 373, 381 (Mo.App. E.D.2000).

A fiduciary relationship may arise as a matter of law by virtue of the parties' relationship, e.g., attorney-client, or it may arise as a result of the special circumstances of the parties' relationship where one places trust in another so that the latter gains superiority and influence over the former. A.G. Edwards & Sons, Inc. v. Drew, 978 S.W.2d 386, 394 (Mo. App. E.D.1998). The question in determining whether a fiduciary or confidential relationship exists is whether or not trust is reposed with respect to property or business affairs of the other. Schimmer H.W. Freeman Const. Co., Inc., 607 S.W.2d 767, 770 (Mo.App. E.D.1980).

Wife cites In re Marriage of Gardner, 973 S.W.2d 116, 124 (Mo.App. S.D.1998), for the proposition that a plan administrator's obligation to an alternate payee arises when a plan receives a domestic relations order. In this case Husband is the plan administrator, not Appellant. Accordingly, Gardner does not support the existence of a fiduciary duty to Wife on the part of Appellant not to transfer the funds at Husband's request.

Walter Robinson (Robinson), Wife's expert, testified that upon receipt of the court order, Appellant should have changed the name of the account to Wife. However, Robinson's opinion testimony does not establish the existence of a fiduciary duty as a matter of law. See Drew, 978 S.W.2d at 394 (A fiduciary relationship may arise as a matter of law by virtue of the parties' relationship).

Wife cites Arnold v. Erkmann, 934 S.W.2d 621, 629 (Mo.App. E.D.1996), for the proposition that one of the key elements of a fiduciary relationship is the fiduciary's control of the supervised party's property. Wife asserts that Appellant had control over her property, since the court orders established her ownership of the funds in Retirement Plan # 2. We agree. Wife sent copies of the court orders to Appellant that said that she was given the entire interest of the funds in the account. These actions gave Appellant notice that Wife had been awarded ownership of the funds in the account.

Wife further argues that Appellant, by its own assurances to Wife that the money would not be transferred, had a duty not to transfer the funds at the sole request of Husband, who no longer had a legal right to, or interest in, those funds. Here we disagree, for the following reasons.

A confidential relationship exists when one person relies upon and trusts the other with the management of his property and attendance to his business affairs, thereby creating some degree of fiduciary obligation. Erkmann, 934 S.W.2d at 629. However, we do not believe Appellant's duty to Wife in this case was to refuse to transfer the money upon Husband's request. Rather, we find that Appellant had a limited duty to inform Wife when it intended to transfer the funds in the account.

In looking for a fiduciary relationship, equity does not limit the circumstances under which it may be found, but will look for those instances where a special confidence is reposed on one side with a resulting influence on the other. Robertson v. Robertson, 15 S.W.3d 407, 412 (Mo. App. S.D.2000). The question is always whether or not trust is reposed with respect to property or business affairs of the other. Id. In the instant case, Appellant made a representation to Wife that it would not transfer the funds in the account. Therefore, Wife reposed trust in Appellant that Appellant would not transfer the funds in the account, funds that she owned. Once Appellant determined that it was going to honor Husband's request to transfer the funds, Appellant had a duty to inform Wife of its intention to comply with that request.

Based on the foregoing, we find that Appellant had a limited fiduciary duty to Wife to inform her of its intent to transfer the funds in Retirement Plan # 2 pursuant to Husband's request. Appellant did not have a fiduciary duty to Wife to refuse Husband's request to transfer the funds in Retirement Plan # 2. Therefore, we disagree with the trial court's finding that Appellant breached its fiduciary duty to Wife by transferring the funds, but we do find Appellant breached its fiduciary duty to Wife to inform her when it intended to transfer the funds. If Appellant had done so, Wife could have taken the appropriate action, such as obtaining a temporary restraining order, to prevent such transfer. Because the amount of damages Wife incurred is the same regardless of how we characterize Appellant's fiduciary duty, we find no reason to reverse the trial court's judgment.

Accordingly, Appellant's Point I is denied.

Point II

In its second point, Appellant cl...