1 I describe the facts in the light most favorable to

Gilbert, the nonmovant.

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

Jeffrey D. Gilbert

v. Case No. 04-cv-327-PB

Atlantic Trust Company, N.A. 

d/b/a Atlantic Trust/Pell Rudman

MEMORANDUM AND ORDER

Jeffrey D. Gilbert has filed a complaint alleging that

Atlantic Trust Company, N.A. d/b/a Atlantic Trust/Pell Rudman

(“Atlantic Trust”) mismanaged his investment portfolio. Atlantic

Trust seeks summary judgment (Doc. No. 70). For the reasons set

forth below, I grant Atlantic Trust’s summary judgment motion in

part and deny it in part.

I. FACTUAL BACKROUND1

Gilbert is an attorney. He has also worked as a corporate

officer and an investment banker specializing in mergers and 

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 1 of 26
2 Atlantic Trust Company, N.A. is the successor in interest

to Pell Rudman Trust Company, N.A. 

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acquisitions. Gilbert Ans. to Interrog. at 6. Atlantic Trust is

an investment management firm with its principal place of

business in Boston, Massachusetts.2 Third Amend. Compl. ¶ 2. 

During the late 1990s, Gilbert successfully litigated a

statutory appraisal suit in Delaware’s Chancery Court. Gilbert

Dep. at 39-41. In anticipation of the expected multi-milliondollar payout from the litigation, Gilbert determined that he

needed the services of a financial advisor to manage his wealth. 

In 1998, he began interviewing investment management companies. 

Gilbert Ans. to Interrog. at 13. On February 26, 1998, Gilbert

met with Edward Rudman to discuss Atlantic Trust’s financial

advisory services. During that meeting, Rudman told Gilbert that

Atlantic Trust provided “full-service financial advisory”

services and offered “a broad range of services which included

financial advice on any topic.” Gilbert Dep. at 81-82. Rudman

also explained that the company had expertise in asset allocation

and used a “proprietary asset allocation model” to design

investment strategies for clients. Id. at 238. On June 4, 1998,

Gilbert tentatively selected Atlantic Trust as his financial

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 2 of 26
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advisor and “agreed to [a] proposed asset allocation” of 60

percent stock in mid-cap companies, 25 percent stock in large-cap

companies, and 15 percent stock in foreign companies. Id. at

110-13. 

In discussions with Gilbert, Atlantic Trust described the

proposed all-equity asset allocation as “aggressive but not

unreasonably so.” Gilbert Ans. to Interrog. at 19. Although

Rudman thought a portfolio including 70 percent equities and 30

percent bonds would have been appropriate for Gilbert, Rudman

Dep. at 46, and Atlantic Trust’s internal investment policy

manual suggested diversification among asset classes, Atlantic

Trust Policy Manual at 86, Atlantic Trust did not tell Gilbert

that the company ordinarily recommended a more balanced

portfolio. Gilbert Ans. to Interrog. at 19. Instead, Atlantic

Trust stated that “[a]ny risks would be mitigated by

diversification of equity classes and of specific stocks within a

class.” Gilbert Ans. to Interrog. at 19. In addition, Atlantic

Trust supplied Gilbert with “a recent, rosy history of doubledigit increases in the stock market, not a comprehensive history,

which would allow [him] to understand the likelihood and effects

of a prolonged bear market.” Pl’s Obj. to Mot. for Summ. J. at

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14. 

In February of 1999, Gilbert officially retained Atlantic

Trust and agreed to implement the proposed all-equity asset

allocation for the entire litigation proceeds, including money

that he expected to owe for his 1999 taxes. Feb. 12, 1999 Trimby

Ltr. On February 26, 1999, he signed Atlantic Trust’s investment

management agreement. On August 4, 1999, he received the

proceeds from the statutory appraisal suit. He entered into a

revocable trust agreement with Atlantic Trust the next day. 

Gilbert Ans. to Interrog. at 19. The revocable trust agreement

gave Atlantic Trust the power “to make any investments [Atlantic

Trust] deems wise even if of a kind or in proportions that

without this power might not be considered suitable for trust

investments.” Rev. Trust Agr. ¶ 8(b). By September of 1999,

Atlantic Trust had invested $13.4 million on Gilbert’s behalf. 

Gilbert Ans. to Interrog. at 19.

During the early spring of 2000, Gilbert discussed his

impending 1999 tax liability with Atlantic Trust. Gilbert Ans.

to Interrog. at 20. The value of Gilbert’s stock portfolio had

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 4 of 26
3 In September 2000, the portfolio was worth approximately

$19 million. Third Amend. Compl. ¶ 17; Def.’s Mot. for Summ. J.

at 7.

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increased considerably,3 and Gilbert proposed borrowing to pay

his tax bill so as to avoid the hefty tax on short-term capital

gains that he would incur if he sold some of his holdings. Id.

Atlantic Trust did not counsel Gilbert against this strategy and

contacted Mellon Bank on Gilbert’s behalf. Id. On April 11,

2000, Gilbert established a $5 million line of credit with Mellon

Bank, which was secured by his account at Atlantic Trust. Id. 

By June 1, 2001, Gilbert had borrowed $5,283,000 from Mellon

Bank and wanted to borrow more. Id. at 21. Gilbert and Atlantic

Trust decided to sell Gilbert’s foreign holdings, which did not

qualify as collateral for the Mellon Bank line of credit, and

reinvest the proceeds in mid-cap companies. Id. Atlantic Trust

did not suggest that Gilbert should use the cash from the sale of

the foreign stocks to pay down his Mellon Bank debt, id., instead

advocating “a hold and hope approach.” Id. 

In June 2002, Gilbert determined that he needed another

increase on his line of credit at Mellon Bank. Id. at 22. By

that time, the value of Gilbert’s holdings had declined, and

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Mellon Bank refused to offer additional credit unless he made

Mellon Bank the custodian of his assets. Id. Atlantic Trust did

not counsel Gilbert against this transaction. Id. On July 1,

2002, Gilbert transferred custody of his assets and Mellon Bank

increased his line of credit to $8.5 million. Id. 

The bear market continued, and by August 2002, Gilbert was

in danger of a margin call by Mellon Bank. Id. On August 4,

2002, he converted his Atlantic Trust assets to approximately

$10.2 million in cash. Id. Later in August, following a market

rally, Gilbert decided to purchase $470,000 of equities through

Atlantic Trust. Id. at 23. He sold that portfolio the following

November, and terminated the revocable trust agreement on July

23, 2003. Id.; Def.’s Mot. for Summ. J. at 10. 

II. STANDARD OF REVIEW

Summary judgment is appropriate “if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law.” Fed. R. Civ. P.

56(c). In ruling on a motion for summary judgment, I construe

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 6 of 26
4 I apply Massachusetts law to Gilbert’s common law claims. 

Gilbert and Atlantic Trust are parties to the revocable trust

agreement and the investment management agreement, both of which

contain choice of law provisions selecting Massachusetts law. 

New Hampshire courts generally honor choice of law provisions in

contracts and in trusts. Allied Adjustment Serv. v. Heney, 125

N.H. 698, 700 (1984) (contracts); Flaherty v. Flaherty, 138 N.H.

337, 339 (1994) (trusts). Moreover, neither party contends that

another state’s law should govern Gilbert’s common law claims. 

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the evidence in the light most favorable to the nonmovant. 

Navarro v. Pfizer Corp., 261 F.3d 90, 94 (1st Cir. 2001). 

The party moving for summary judgment “bears the initial

responsibility of . . . identifying those portions of [the

record] which it believes demonstrate the absence of a genuine

issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317,

323 (1986). Once the moving party has met its burden, the burden

shifts to the adverse party to “produce evidence on which a

reasonable finder of fact, under the appropriate proof burden,

could base a verdict for it; if that party cannot produce such

evidence, the motion must be granted.” Ayala-Gerena v. Bristol

Myers-Squibb Co., 95 F.3d 86, 94 (1st Cir. 1996). 

III. ANALYSIS4

The crux of Gilbert’s complaint is that Atlantic Trust

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 7 of 26
5 Atlantic Trust’s fiduciary duties arose from the

revocable trust agreement as well as from its discretionary

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invested his portfolio solely in equities when it would have been

prudent to invest in diverse classes of assets. He claims that

Atlantic Trust failed to advise him that the all-equity strategy

was imprudent from the outset and neglected to reconsider the

strategy as the stock market entered a steep decline and Gilbert

borrowed heavily against his portfolio. Gilbert repeats this

general allegation in a variety of forms, asserting claims for

breach of trust, breach of contract, breach of fiduciary duty,

breach of the implied covenant of good faith and fair dealing,

negligence, securities fraud, and unfair and deceptive trade

practices. I discuss each in turn. 

A. Breach of Trust/Breach of Fiduciary Duty

The revocable trust agreement created a fiduciary

relationship between Atlantic Trust, as trustee, and Gilbert, as

beneficiary. Under Massachusetts law, this fiduciary

relationship subjected Atlantic Trust to certain equitable

duties, including the duty of good faith and loyalty, the duty of

reasonable care, and the duty to invest trust assets prudently

(the “prudent investor rule”).5 Quinton v. Gavin, No. 98-860-B,

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 8 of 26
control of Gilbert’s assets (which control was granted to it by

the revocable trust agreement). See Patsos v. First Albany

Corp., 433 Mass. 323, 330-33 (2001) (broker managing a

discretionary account owes client fiduciary duties). The parties

treat Atlantic Trust’s duties as trustee and fiduciary as

coextensive, so I will do the same. 

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2001 Mass. Super. LEXIS 402, at *65-74 (February 15, 2001),

aff’d, Quinton v. Gavin, Mass. App. Ct. 792 (2005). Gilbert

alleges that Atlantic Trust violated the prudent investor rule by

(1) investing Gilbert’s funds solely in equities and failing to

advise him that it would be prudent to diversify; and (2) failing

to adjust the asset allocation as market conditions and Gilbert’s

financial situation changed. Atlantic Trust responds by claiming

that it cannot be held liable for either breach of trust or

breach of fiduciary duty because Gilbert consented to its

investment strategies. 

A fiduciary or trustee ordinarily will not be held liable

for breach of the prudent investor rule if the beneficiary 

consented to the challenged conduct. Reynolds v. Remick, 333

Mass. 1, 10 (1955) (“If a beneficiary consents to an act by the

trustee which would constitute a breach of trust toward the

beneficiary, the beneficiary cannot hold the trustee liable for

the consequences of the trustee’s acts.”); see also Marcucci v.

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Hardy, 65 F.3d 986, 992 (1st Cir. 1995); Marine Contractors Co.

v. Hurley, 365 Mass. 280, 286 n.4 (1974). Gilbert concedes that

he “agreed to [the] proposed asset allocation and it was a joint

agreement between [Atlantic Trust and Gilbert].” Gilbert Dep. at

113. In addition, Gilbert received a letter from Atlantic Trust

detailing the all-equity asset allocation and did not contact the

company to request a change either before the plan was

implemented or at any point thereafter. Thus, I conclude that

Gilbert consented to the all-equity asset allocation and at no

time retracted his consent.

The general rule that a beneficiary’s consent bars his

claims for breach of trust and breach of fiduciary duty is

subject to several exceptions. At issue here is the exception

that applies if 

the beneficiary, when he gave his consent,

did not know of his rights and of the

material facts which the trustee knew or

reasonably should have known and which the

trustee did not reasonably believe that the

beneficiary knew.

Restatement (Second) of Trusts § 216(2)(b). To be entitled to

relief under this exception, the beneficiary must prove that: (1)

he was not aware of his rights or facts material to his consent;

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(2) the trustee or fiduciary knew or reasonably should have known

of the material facts; and (3) the trustee or fiduciary did not

reasonably believe that the beneficiary was aware of the material

facts. 

Gilbert argues that the exception applies here because he 

did not know - and Atlantic Trust did not disclose - that (1)

Atlantic Trust’s proposal to invest all of his assets in equities

exposed him to greater market risk than portfolios that included

investments in other asset classes; (2) leverage magnified the

risk of the all-equity asset allocation, particularly in light of

the declining market; (3) Atlantic Trust ordinarily recommended

diversification among asset classes; (4) very few Atlantic Trust

clients had all-equity portfolios; and (5) Atlantic Trust did not

use a proprietary asset allocation model in managing its clients’

investments. Pl.’s Obj. at 14-15. Gilbert also argues that each 

of the undisclosed facts were material to his investment

decision, that Atlantic Trust was aware of the undisclosed facts,

and that Atlantic Trust did not reasonably believe that Gilbert

knew of the facts when he agreed to place his investments with

Atlantic Trust. 

At this stage of the proceedings, I must accept as true

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Gilbert’s claim that he did not have actual knowledge of the

above-cited facts. Further, because reasonable jurors could

disagree as to whether the cited facts were material and whether

Atlantic Trust reasonably believed that Gilbert was aware of the

facts, Atlantic Trust is not entitled to summary judgment with

respect to Gilbert’s breach of trust and breach of fiduciary duty

claims.

B. Breach of Contract

According to Gilbert, the revocable trust agreement is a

contract under which Atlantic Trust was obligated “to manage

[Gilbert’s] funds,” Third Amend. Compl. ¶ 30, and to “provide

comprehensive financial advisory services to the Gilbert family.” 

Pl.’s Obj. at 21-22. Gilbert contends that Atlantic Trust

breached its contractual duty to “use its expertise and

experience to manage the Gilberts’ investments prudently and to

achieve [their] investment goals.” Id. at 22. 

Under Massachusetts law, the terms in a written contract

must “be taken in their plain and ordinary sense unless otherwise

indicated by the contract.” Rogaris v. Albert, 431 Mass. 833,

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 12 of 26
6 I assume for the purpose of analysis that the revocable

trust agreement is in fact a contract. John H. Langbein, The

Contractarian Basis of the Law of Trusts, 105 Yale L.J. 625, 627

(1995) (emphasizing contractarian basis of trust law). Cf.

Restatement (Second) of Trusts § 197(b) (“The creation of a trust

is conceived of as a conveyance of the beneficial interest in the

trust property rather than as a contract.”). 

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835 (2000).6 Gilbert has not identified any language in the

revocable trust agreement to support his claim that Atlantic

Trust contracted to provide “comprehensive financial advisory

services.” The revocable trust agreement transferred Gilbert’s

property to Atlantic Trust and gave Atlantic Trust broad

discretion to invest on Gilbert’s behalf. See Rev. Trust Agr. ¶

8(b). Any additional obligations that Atlantic Trust acquired as

a result of the formation of the revocable trust were fiduciary,

not contractual, in nature. Accordingly, Atlantic Trust’s motion

for summary judgment as to this claim is granted. 

C. Breach of Implied Covenant of Good Faith and Fair Dealing

Gilbert next contends that Atlantic Trust breached the

implied covenant of good faith and fair dealing by failing to

adjust his portfolio’s asset allocation when his financial

situation changed. Third Amend. Compl. ¶ 40. 

“Every contract in Massachusetts is subject, to some extent,

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7 Gilbert’s allegations that Atlantic Trust failed to

provide comprehensive financial advisory services, Pl.’s Obj. at

22, and promoted an all-equity asset allocation despite internal

policies to the contrary, id. at 22-23, are not sufficient to

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to an implied covenant of good faith and fair dealing.” Ayash v.

Dana-Farber Cancer Inst., 443 Mass. 367, 385, cert. denied, 126

S. Ct. 397 (2005). “The core of the covenant is to ensure that

one party does not deprive another of the ‘fruits of the

contract.’” McAdams v. Mass. Mut. Life Ins. Co., 391 F.3d 287,

301 (1st. Cir. 2004) (quoting Anthony’s Pier Four, Inc. v. HBC

Assoc., 411 Mass. 451, 471-72 (1991)). Its purpose “is not to

add terms to a contract; indeed, it may not do so.” Id. In

order to establish a breach of the implied covenant, a plaintiff

must demonstrate that the defendant had “a dishonest purpose,

consciousness of wrong, or ill will in the nature of fraud.” 

Equip. & Sys. for Indus. v. Northmeadows Constr. Co., 59 Mass.

App. Ct. 931, 932 (2003). 

Gilbert’s only allegation of “dishonest purpose,

consciousness of wrong, or ill will” is an accusation that

Atlantic Trust failed to discourage Gilbert from leveraging his

portfolio “in order to keep more funds under its management and

thus garner higher management fees.”7 Pl.’s Obj. at 23. Given

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support his claim that Atlantic Trust acted in bad faith.

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that it was Gilbert’s suggestion to borrow against the portfolio

in the first place, and that increases in the line of credit came

at his request, no reasonable jury could infer that Atlantic

Trust acted in bad faith by failing to dissuade him. 

Accordingly, Atlantic Trust’s motion for summary judgment as to

this claim is granted. 

D. Negligence

Gilbert alleges that Atlantic Trust violated its duty to use

due care in the management of his investment portfolio by failing

to diversify his portfolio, failing to adjust the portfolio as

Gilbert’s financial situation and market conditions changed, and

failing to warn Gilbert that investing exclusively in equities is

risky. I discuss the applicable statute of limitations before

turning to the substance of Gilbert’s claim.

1. Statute of Limitations

Atlantic Trust argues that Gilbert’s negligence claim is

time-barred. New Hampshire ordinarily classifies statutes of

limitations as procedural rules and therefore applies its own

statute of limitations even in cases where a foreign state’s

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substantive law applies to the dispute. Keeton v. Hustler, 131

N.H. 6, 12 (1988). New Hampshire’s three-year statute of

limitations for negligence claims includes a “discovery rule.” 

Thus, the statute does not begin to run until “the plaintiff

discovers, or in the exercise of reasonable diligence should have

discovered, the injury and its causal relationship to the act or

omission complained of.” N.H. Rev. Stat. Ann. (“RSA”) §

508:4(I). 

Gilbert filed this action in August 2004, so his negligence

claim is timely if it accrued after August 2001. Although

Atlantic Trust first advised Gilbert to invest in an all-equity

portfolio in 1999 and the value of his portfolio began to decline

nearly a year before August 2001, Gilbert argues that his

negligence claim is not time-barred because he could not

reasonably have discovered that his losses were Atlantic Trust’s

fault until November 2002, when he first “began to suspect the

soundness of the advice he was getting.” Pl.’s Obj. at 26. 

Whether Gilbert reasonably should have known before August 2001

that Atlantic Trust’s conduct proximately caused his injury is a

question of fact. Kelleher v. Marvin Lumber & Cedar Co., Nos.

2002-300, 2003-376, 2005 N.H. LEXIS 177, at *13 (“Whether the

Case 1:04-cv-00327-PB Document 76 Filed 04/19/06 Page 16 of 26
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plaintiff exercised reasonable diligence in discovering the

causal connection between the injury and the defendant’s alleged

act or omission is a question of fact.”). Because the facts that

bear upon this question remain in genuine dispute, Atlantic Trust

is not entitled to summary judgment based on its statute of

limitations defense. 

2. Duty of Care

The Massachusetts Prudent Investor Act, Mass. Gen. Laws ch.

203C, § 3, sets forth the applicable duty of care as follows:

A trustee shall invest and manage trust assets as a prudent

investor would, considering the purposes, terms, and other

circumstances of the trust, including . . . . (1) general

economic conditions; (2) the possible effect of inflation or

deflation; (3) the expected tax consequences of investment

decisions or strategies; (4) the role that each investment

or course of action plays within the overall trust

portfolio; (5) the expected total return from income and the

appreciation of capital; (6) other resources of the

beneficiaries; (7) needs for liquidity, regularity of

income, and preservation or appreciation of capital; and (8)

an asset’s special relationship or special value, if any, to

the purposes of the trust or to one of the beneficiaries.

Id. § 3(a)-(c). 

Gilbert claims that Atlantic Trust violated this duty of

care by failing to diversify his asset allocation and to reexamine the asset allocation on a regular basis. Third Amend.

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Compl. ¶ 44. Atlantic Trust responds that Gilbert’s losses were

caused by his own negligence in deciding to borrow against the

portfolio in a declining market. See Def.’s Mot. for Summ. J. at

23. 

Massachusetts’ comparative negligence statute, Mass. Gen.

Laws ch. 231, § 85, bars recovery only where the plaintiff’s

negligence is greater than the defendant’s. Here, Gilbert seeks

to recover for Atlantic Trust’s failure to diversify the

portfolio, particularly in light of increasing leverage. A

reasonable jury could find that Atlantic Trust failed to comply

with the duty of care set forth by the Prudent Investor Act. In

addition, a reasonable jury could find that Atlantic Trust’s

negligence was greater than any negligence attributable to

Gilbert. Accordingly, Atlantic Trust’s motion for summary

judgment as to this claim is denied.

E. Securities Fraud

Gilbert alleges that Atlantic Trust violated New Hampshire’s

Blue Sky law, RSA § 421-B:4, by: (1) misrepresenting that it used

a proprietary asset allocation model to counsel clients about

asset allocation; (2) misrepresenting that diversification among

different classes of stocks, rather than different classes of

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assets, would control Gilbert’s risk; and (3) failing to

recommend suitable investments, which Gilbert contends is fraud

per se. Compl. ¶ 47. 

Before I can reach the merits of Gilbert’s claim, I must

determine whether Atlantic Trust’s conduct is governed by New

Hampshire’s Blue Sky laws. 

1. Choice of Law

The revocable trust agreement’s choice of law provision

states that “[t]he situs of this trust shall be Massachusetts,

and the laws of that commonwealth shall govern the interpretation

and validity of the provisions of this instrument and all

questions relating to management, administration, and investment

of the [trust].” Rev. Trust Agr. ¶ 13. Massachusetts securities

fraud law does not give Gilbert a private right of action. See

Fenoglio v. August, 50 F. Supp. 2d 46, 59 (D. Mass. 1999). Thus,

if I enforce the choice of law provision and apply Massachusetts

law to Gilbert’s securities fraud claim, Atlantic Trust is

entitled to summary judgment.

New Hampshire courts generally honor choice of law

provisions in trusts. Flaherty, 138 N.H. at 339. Nevertheless,

I decline to enforce the trust’s choice of law clause insofar as

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it applies to Gilbert’s Blue Sky law claim because to do so would

be contrary to public policy.

 The United States Supreme Court generally disapproves of 

choice-of-law clauses that operate “as a prospective waiver” of

statutory remedies, noting that such clauses are “against public

policy.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473

U.S. 614, 637 (1985) (right to pursue statutory remedies for

antitrust violations). The principle has specific application in

the securities fraud context, as courts have held that it is

“‘against public policy to permit the use of choice of law

clauses to circumvent [the] legislatively created shield’” of

state Blue Sky laws. In re Infocure Secs. Litig. v. Infocure

Corp., 210 F. Supp. 2d 1331, 1362 (N.D. Ga. 2002) (quoting

Alberts v. Davis, No. C75-2483A, 1978 U.S. Dist. LEXIS 15207, at

*19 (N.D. Ga. Sep. 29, 1978)). 

Enforcement of the choice of law clause is particularly illadvised in this case because New Hampshire has a strong public

policy in favor of protecting investors. The New Hampshire Blue

Sky law “appl[ies] when any act instrumental in effecting

prohibited conduct is done in this state, whether or not either

party is then present in this state.” RSA § 421-B:30(VI)

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(emphasis added). The New Hampshire legislature drafted chapter

421-B to furnish extensive remedies to investors who have been

defrauded. Application of the choice of law clause to bar

Gilbert’s remedy under the statute would be inconsistent with 

this broad remedial scheme. Accordingly, I reject Atlantic

Trust’s argument that Gilbert’s New Hampshire Blue Sky law claim

is barred by the Trust’s choice of law provision. 

2. Misrepresentations

RSA § 421-B:4(I) provides that:

It is unlawful for any person who receives any consideration

from another person primarily for advising the other person

as to the value of securities or their purchase or sale

whether through the issuance of analyses or reports or

otherwise:

(a) To employ any device, scheme, or artifice to defraud

another person; or

(b) To engage in any act, practice, or course of business

which operates or would operate as a fraud or deceit upon

the other person.

Gilbert contends that Atlantic Trust violated this section of the

statute when it made misrepresentations about a “proprietary

asset allocation model” and about control of market risk. 

Atlantic Trust vigorously argues in its summary judgment

briefs that these alleged misrepresentations are not actionable

under RSA § 421-B:3, the portion of the Blue Sky law that

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prohibits fraud “in connection with the offer, sale, or purchase

of any security.” Gilbert concedes that the alleged

misrepresentations were not made “in connection with the offer,

sale, or purchase of any security” under RSA § 421-B:3, but

correctly observes that Atlantic Trust has not addressed the

statements in the context of RSA § 421-B:4(I).

The language of RSA § 421-B:4(I) differs from the language

of RSA § 421-B:3. It prohibits fraud by “any person” who advises

another person “as to the value of securities or their purchase

or sale.” RSA § 421-B:4(I). This significant difference

prevents me from concluding that Atlantic Trust is entitled to

summary judgment under RSA § 421-B:4(I) merely because it is

entitled to summary judgment under RSA § 421-B:3. 

Atlantic Trust has not developed any other argument as to

why I should grant summary judgment with respect to Gilbert’s

misrepresentation claim under RSA § 421-B:4(I). Accordingly,

Atlantic Trust’s motion for summary judgment is denied as to this

claim.

3. Recommendation of Unsuitable Investments

Gilbert contends that Atlantic Trust also violated RSA §

421-B:4(I) when it allegedly recommended unsuitable investments

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for his portfolio. Although RSA § 421-B:4(I) expressly applies

only to conduct that operates as a fraud or deceit, RSA § 421-

B:4(V)(a) makes it a violation of § 421-B:4(I) for an “investment

adviser” or “investment advisor agent” to make unsuitable

investment recommendations. Gilbert relies on this provision in

arguing that Atlantic Trust is liable under RSA § 421-B:4(I) for

its allegedly unsuitable investment recommendations.

The short answer to this argument is that RSA § 421-B:4(V)

is inapplicable because the parties agree that Atlantic Trust is

neither an “investment adviser” nor an “investment adviser agent”

as those terms are defined in chapter 421-B. See RSA § 421-

B:2(IX)(a) (trust companies are not investment advisers). Thus,

Atlantic Trust is entitled to summary judgment with respect to

this claim. 

F. Unfair and Deceptive Trade Practices

Gilbert argues that Atlantic Trust’s allegedly false

statements that it used a “proprietary asset allocation model”

and that market risk would be mitigated by a diversified stock

portfolio also constitute violations of the Massachusetts

consumer protection statute, Mass Gen. Laws ch. 93A. The statute

prohibits “[u]nfair methods of competition and unfair or

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deceptive acts or practices in the conduct of any trade or

commerce.” Mass. Gen. Laws ch. 93A, § 2.

Under Massachusetts law, “[a] practice is unfair or

deceptive [if] it (1) is within the penumbra of some common law,

statutory, or other established concept of fairness; (2) is

immoral, unethical, oppressive, or unscrupulous; or (3) causes

substantial injury to competitors.” Cablevision of Boston, Inc.

v. Public Improvement Comm’n, 38 F. Supp. 2d 46, 60 (D. Mass.

1999). “‘The objectionable conduct must attain a level of

rascality that would raise an eyebrow of someone inured to the

rough and tumble of the world of commerce.’” Id. at 61 (quoting

Quaker State Oil Refining Corp. v. Garrity Oil Co., 884 F.2d

1510, 1513 (1st Cir. 1989)). 

Atlantic Trust first contends that its activities are not

subject to chapter 93A. The statute exempts from coverage

“transactions or actions otherwise permitted under laws as

administered by any regulatory board or officer acting under

statutory authority of the commonwealth or of the United States.” 

Mass. Gen. Laws ch. 93A, § 3. Atlantic Trust argues that this

provision bars Gilbert’s chapter 93A claim because Atlantic Trust

is “subject to comprehensive regulation by the Officer of the

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Comptroller of the Currency, as well as the Commonwealth of

Massachusetts.” Def.’s Mot. for Summ. J. at 31. I disagree. 

To be entitled to relief under §3, Atlantic Trust “‘must

show more than the mere existence of a related or even

overlapping regulatory scheme that covers the transaction.’” 

Cablevision, 38 F. Supp. 2d at 61 (quoting Bierig v. Everett

Square Plaza Assocs., 34 Mass. App. Ct. 354, 367 n.14 (1993)).

“‘Rather, a defendant must show that such scheme affirmatively

permits the practice which is alleged to be unfair or

deceptive.’” Id. Atlantic Trust has not shown that any state or

federal regulation “affirmatively permits” the actions of which

Gilbert complains. Accordingly, it may not claim the benefit of

the § 3 exception.

Atlantic Trust next argues that even if it is subject to

chapter 93A, the alleged misrepresentations are not unfair or

deceptive. I decline to rule on the merits of this argument

because the issue has not been adequately briefed. Accordingly,

I deny Atlantic Trust’s motion for summary judgment with respect

to this claim without prejudice to its right to raise the issue

again at trial. 

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IV. CONCLUSION

For the reasons set forth above, Atlantic Trust’s motion for

summary judgment (Doc. No. 70) is granted as to Gilbert’s claims

for breach of contract, breach of the implied covenant of good

faith and fair dealing, and recommendation of unsuitable

investments under RSA § 421-B:4(I). Atlantic Trust’s motion is

denied as to Gilbert’s claims for breach of trust, breach of

fiduciary duty, negligence, misrepresentations under RSA § 421-

B:4(I), and violation of Mass. Gen. Laws ch. 93A. 

SO ORDERED.

/s/Paul Barbadoro 

Paul Barbadoro

United States District Judge

April 19, 2006

cc: Martha Van Oot

 Michael C. Harvell

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