Court Opinion

ID: 4179101
Source: CourtListenerOpinion
Date Created: 2017-06-20 15:16:23.176926+00
Date Added: 2024-06-11T14:38:48.427262
License: Public Domain

[J-102-2016]
                    IN THE SUPREME COURT OF PENNSYLVANIA
                                  WESTERN DISTRICT

   SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

EUGENE R. YENCHI AND RUTH           I.          :   No. 8 WAP 2016
YENCHI, HUSBAND AND WIFE,
                                                :   Appeal from the Order of the Superior
                     Appellees                  :   Court entered September 15, 2015 at
                                                :   No. 753 WDA 2014, vacating the
                                                :   Judgment of the Court of Common
               v.                               :   Pleas of Allegheny County entered May
                                                :   5, 2014 at No. GD 01-006610, and
                                                :   remanding.
AMERIPRISE FINANCIAL, INC.,
AMERIPRISE FINANCIAL SERVICES,                  :   ARGUED: November     1,   2016
INC., RIVERSOURCE LIFE INSURANCE
COMPANY AND BRYAN GREGORY
HOLLAND,

                     Appellants

                                          OPINION

JUSTICE DONOHUE                                     DECIDED: JUNE 20, 2017
      In   this discretionary appeal, we must decide whether a fiduciary duty can arise in

a consumer transaction for the purchase of a whole life insurance policy based upon the

advice of a financial advisor where the consumer purchasing the policy does not cede

decision -making control over the purchase to the financial advisor. We conclude that,

consistent with our jurisprudence, no fiduciary duty arises in such a situation.

Consequently, we reverse the Superior Court's decision to the contrary.

      In   1995, Bryan Holland ("Holland"), a financial advisor for IDS Life Insurance

Corporation, made an unsolicited telephone contact, a "cold call," to Eugene and Ruth

Yenchi (the "Yenchis") and asked to meet with them regarding their "financial stuff." At
the initial meeting, Mr. Yenchi informed Holland that he had a long-term disability policy,

and Holland asked him to bring it with him to their next meeting.               At this second

meeting, Holland reviewed the disability policy and advised the Yenchis to keep it, as it

was a good policy and he could not offer them a comparable product.

        At a subsequent meeting in December 1995, for a fee of $350, Holland

presented the Yenchis with a financial management proposal (the "Proposal").              The

Proposal contained a notice that it had been prepared by "your American Express

financial advisor" (Holland) and that "[alt your request, your American Express financial

advisor can recommend products distributed by American Express Financial Advisors

and    its affiliates   as   investment alternatives for existing securities."      Complaint,

11/13/2003, Exhibit      1, at 3.   The Proposal offered the Yenchis a number of general

recommendations, including that they monitor monthly expenses, consolidate their debt,

consider various savings plans, consolidate current life insurance policies into one

policy, review long-term care coverage,          keep accurate records for tax purposes

(medical expenses and charitable contributions), transfer 401(k) funds into mutual

funds, and continue estate planning with an attorney and their financial advisor. Id. at 7-

8.    The Yenchis implemented some of these recommendations, saving money in an

investment certificate and opening an IRA account.

        With respect to the consolidation of life insurance policies, the Yenchis provided

Holland with relevant information regarding their current policies with Met Life (five held

by Mr. Yenchi and two by Ms. Yenchi). In January 1996, Holland proposed a whole life

insurance policy for Mr. Yenchi with an initial $115,000 death benefit.    In   June 1996, he

proposed a similar policy for Mr. Yenchi with an initial $100,000 death benefit, plus a

$25,000 rider for Ms. Yenchi. Mr. Yenchi purchased the latter policy, cashing out his

five Met Life policies to make the initial payment. Because Mr. Yenchi also purchased

                                         [J-102-2016]   -   2
the rider for Ms. Yenchi, she did not need to cash in her existing life insurance policies

for a new one.    Instead, in 1997 Ms. Yenchi used the proceeds from her two Met Life

policies to purchase a deferred variable annuity.           In   1998, Holland proposed that the

Yenchis increase their life insurance coverage to $300,000, but they rejected Holland's

advice on this occasion, deciding that they had enough life insurance.

       In   2000, the Yenchis had their portfolio independently reviewed. Through this

process, they were advised that the 1996 whole life insurance policy Mr. Yenchi had

purchased was underfunded, destined to lapse, and that additional premiums beyond

those allegedly represented by Holland,' at substantially high rates increasing over

time, would have to be paid.      They also learned that Ms. Yenchi's 1997 deferred

variable annuity would not mature until 2025, when she was eighty-four years old

(rather than sixty-five, as had allegedly been represented by Holland).

       In   April 2001, the Yenchis initiated suit by writ of summons, naming as

defendants American Express Financial Services Corporation, American Express

1  In their complaint, the Yenchis admitted that Holland presented them with a "Life
Protection Plus Illustration" (the "Illustration") that provided the essential terms of the
whole life policy. Complaint, 11/13/2003, ¶ 147. These terms included: (1) an initial
death benefit of $100,000, decreasing to $90,000 at age 70, and to $80,000 at age 80;
and (2) an initial payment of $17,500, with monthly premium payments of $240 in years
one through eight, of $2390.45 in year nine, $784.65 in year ten, and $2887 in year
eleven. Motion for Summary Judgment, Exhibit 1, Deposition of Eugene Yenchi at 105
(Dep. Ex. 2). The Illustration included separate columns for interest at the current
(5.85%) and guaranteed (4%) interest rates, and further indicated that there would be
no surrender value at age 82. Id. In connection with the purchase of the policy, Mr.
Yenchi signed a disclosure statement which indicated that current interest rates were
not a prediction of future policy performance. Id. at 105-07.

At his deposition, Mr. Yenchi testified that Holland represented to him that the monthly
premiums on the policy would be $240 for eight years, at which time the policy would be
paid off. Id. at 125-26. At trial, Mr. Yenchi testified that he understood that if he paid
the $240 monthly premium, the payout would be "guaranteed." N.T., 1/28/2014, at 720.
The Illustration was introduced at trial as Exhibit 20. Id. at 705.

                                     [J-102-2016]   -   3
Financial Advisors Corporation, IDS Life Insurance Company,2 and Holland (collectively,

"Appellants").   The Yenchis' complaint, filed in November 2003, asserted claims of

negligence/willful disregard,3 fraudulent misrepresentation, violation of the Uniform

Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. §§ 201-1-201-9.3,

bad faith, negligent supervision, and breach of fiduciary duty.

       By order dated March 21, 2013, the trial court granted summary judgment to

Appellants on all claims relating to the 1997 purchase of the deferred variable annuity,

and dismissed the claims for bad faith, negligent supervision and breach of fiduciary

duty relating to the 1996 purchase of the whole life insurance policy. Of relevance here,

with respect to the breach of fiduciary duty claim, the trial court held that no fiduciary

relationship was established between the Yenchis and Holland because the Yenchis

continued to make their own investment decisions.             Trial Court Memorandum,

7/28/2014, at 3. The trial court cited to its own prior decision in Ihnat   v.   Pover, 146

P.L.J. 299, 303-10 (1999), in which it held that no fiduciary duty arises between an

insurance agent and a policyholder unless the policyholder delegates decision -making

2  American Express Financial Services Corporation is now known as Ameriprise
Financial, Inc. American Express Financial Advisors Corporation is now known as
Ameriprise Financial Services, Inc. IDS Life Insurance Company is now known as
RiverSource Life Insurance Company.

3  The first count of the Yenchis' complaint commingles allegations relating to both
professional negligence (e.g., that Appellants breached a duty to exercise reasonable
care, skill and diligence in advising and recommending an insurance program
appropriate for the needs of the Yenchis), and negligent misrepresentation (e.g., that
Appellants failed to disclose full, correct and material information regarding the products
being offered). Complaint, 11/13/2003, ¶¶ 190-98. At oral argument on Appellants'
motion for summary judgment, counsel for the Yenchis identified this claim as one for
negligent misrepresentation and advised the trial court that the Yenchis had not
asserted a claim for professional malpractice. N.T., 3/27/2013, at 7. The trial court did
not grant summary judgment on this claim. At some point prior to trial, however, the
Yenchis either abandoned or voluntarily dismissed the claim, although the case docket
does not so reflect. The Yenchis raised no issues with regard to this count on appeal.

                                     [J-102-2016]   -   4
control to the insurance agent.   In   applying its lhnat decision, the trial court rejected the

notion that there was any material difference between an insurance agent and a

financial advisor.   The trial court further indicated that the Yenchis "knew they were

dealing with a representative of American Express who was recommending purchases

of American Express investments." Trial Court Memorandum, 7/28/2014, at 4. While

the trial court noted that this fact may be relevant to the Yenchis' fraudulent

misrepresentation and UTPCPL claims, it did not provide support for a fiduciary duty

claim, since "a breach of fiduciary duty claim requires a policyholder to give up control."

Id.

       The case proceeded to trial on the Yenchis' fraudulent misrepresentation and

UTPCPL claims in connection with the purchase of the 1996 whole life insurance policy.

At trial,   the jury returned a verdict in favor of Appellants on the fraudulent

misrepresentation claim and, based upon the same evidentiary record, the trial court

found in Appellants' favor on the UTPCPL claim.4

4   The Yenchis' UTPCPL claim, like their claim for fraudulent misrepresentation,
required proof of common law fraud. Their UTPCPL claim, which related to the 1996
whole life insurance policy, accrued on or around August 15, 1996, the date Mr. Yenchi
purchased the policy. At that time, the catchall provision of the UTPCPL prohibited one
from "engaging in any other fraudulent conduct which creates a likelihood of confusion
or of misunderstanding." See Prime Meats, Inc. v. Yochim, 619 A.2d 769, 773 (Pa.
Super. 1993) (quoting 73 P.S. § 201-2(4)(xvii)). On December 4, 1996, this provision
was amended to prohibit one from "engaging in any other fraudulent or deceptive
conduct which creates a likelihood of confusion or of misunderstanding." 73 P.S. § 201-
2(4)(xxi) (emphasis added). See generally Walkup v. Santander Bank, N.A., 147
F. Supp. 3d 349, 361 (E.D. Pa. 2015).

The Superior Court affirmed the trial court's determination that the pre -amendment
version of the UTPCPL applied to the Yenchis' claim, thus requiring proof of fraudulent,
as opposed to merely deceptive, conduct. Yenchi, 123 A.2d at 1083. The Yenchis did
not seek review of that ruling by this Court.

                                        [J-102-2016]   -   5
       The Yenchis appealed. Among the issues presented to the Superior Court was

the dismissal of the breach of fiduciary duty claim.          With respect to this issue, the

Superior Court agreed with the Yenchis that the trial court erred in focusing exclusively

on the nature of the relationship in question (that of a buyer and seller of insurance) and

the Yenchis' retention of decision -making authority over their investments.           Yenchi     v.

Ameriprise Fin., Inc., 123 A.3d 1071, 1080-81 (Pa. Super. 2015). The Superior Court

acknowledged     that Pennsylvania appellate courts have always                  considered     the

existence of a confidential relationships to be dependent upon the facts of each

particular case, as it cannot be "reduced to a catalogue of specific circumstances,

invariably falling to the left or right of a definitional line." Id. at 1080 (citing In re Estate

of Scott, 816 A.2d 883, 885 (Pa. 1974)). As such, the Superior Court held that the trial
court's focus on the insurance aspect of the relationship in this case "eliminates

wholesale an entire category of commercial relationships without properly accounting

for the fact -sensitive inquiry required by our case law."      Id.   In   addition, the Superior

Court held that the trial court's insistence that a fiduciary relationship may be

established only when one party cedes decision -making control to the other was too

rigid, as prior cases have recognized fiduciary relationships upon a showing of an "over-

mastering influence," and thus the standard for the establishment of a fiduciary

relationship "can be met with evidence less absolute than a complete cession of

decision -making authority." Id.

       Judge Lazarus filed a dissenting opinion, indicating that the "relationship created

by a commercial, arm's -length transaction" is "not ordinarily confidential by law."          Id. at

1085 (Lazarus, J., dissenting) (citing Wisniski v. Brown & Brown Ins. Co., 906 A.2d 571,

5   The terms "fiduciary relationship" and "confidential relationship" may be used
interchangeably. Stewart v. Hooks, 94 A.2d 756, 759 (Pa. 1953).

                                       [J-102-2016]   -   6
578-79 (Pa. Super. 2006)).             Judge Lazarus noted that the Yenchis knew and

understood that they were developing a relationship with an American Express

employee who sold insurance and financial products and provided fee -based financial

planning advice. Id. at 1085. Because the Yenchis made each decision to purchase a

product from Holland, as indicated by their signatures authorizing the purchases, they

never ceded decision -making authority to him. Id. at 1086.

        This Court granted discretionary review to consider whether the Superior Court

erred in reversing the decision of the trial court to grant summary judgment in favor of

Appellants on the grounds that the Yenchis had not adduced sufficient evidence to

establish a prima facie case that a fiduciary relationship existed between the parties.

Yenchi      v.   Ameriprise Fin., Inc., 134 A.3d 51   (Pa. 2016) (per curiam).6   On this issue,

Appellants contend that the Superior Court erred in determining that the Yenchis

presented sufficient evidence to create an issue of fact as to whether a fiduciary

relationship existed with Holland. Appellants argue that in connection with consumer

transactions, fiduciary relationships may exist only if one party cedes decision -making

control to the other party. Appellants claim that if, as the Yenchis suggest, a fiduciary

relationship may be created any time one party relies upon the superior skill, knowledge

or expertise of the other party, then fiduciary relationships would arguably exist in

virtually        every consumer    transaction,    including with   plumbers,   mechanics     and

salespeople.          According to Appellants, no such protections are necessary, since

6  We also granted allocatur with respect to an evidentiary issue, namely whether the
Superior Court erred in reversing the decision of the trial court with respect to
Appellants' motions in limine and granting the Yenchis' request for a new trial on their
fraudulent misrepresentation and UTPCPL claims. Yenchi v. Ameriprise Fin., Inc., 134
A.3d 51 (Pa. 2016) (per curiam). Upon further review of the submissions of the parties
and the certified record on appeal, we have made a determination that the appeal as to
this issue was improvidently granted.

                                          [J-102-2016] - 7
consumers have available to them other tort, contract, and statutory remedies,

including, in particular, the UTPCPL.

       The Yenchis, conversely, argue that the Superior Court did not err, as decisions

about the existence of fiduciary relationships are fact -intensive inquiries. The Yenchis

contend that Appellants held themselves out as experts in financial and retirement

planning matters, and that, by contrast, they had only high school educations and no

experience working with a financial advisor.        This substantial difference of relevant

knowledge, the Yenchis insist, created a question of material fact as to whether their

relationship with Holland was one so marked by dependence and inequality that it

permitted him to take advantage of them.        The Yenchis claim that they reasonably

believed and trusted that Holland had prepared the Proposal, and later recommended

the purchase of the 1996 whole life insurance policy, with their best interests in mind.

       Our scope and standard of review with respect to the grant of a motion for

summary judgment is as follows:

              c[S]ummary judgment is appropriate only in those cases
              where the record clearly demonstrates that there is no
              genuine issue of material fact and that the moving party is
              entitled to judgment as a matter of law.' Atcovitz v. Gulph
              Mills Tennis Club, Inc., 571 Pa. 580, 812 A.2d 1218, 1221
              (2002); Pa. R.C.P. No. 1035.2(1). When considering a
              motion for summary judgment, the trial court must take all
              facts of record and reasonable inferences therefrom in a light
              most favorable to the non-moving party. Toy v. Metropolitan
              Life Ins. Co., 593 Pa. 20, 928 A.2d 186, 195 (2007). In so
              doing, the trial court must resolve all doubts as to the
              existence of a genuine issue of material fact against the
              moving party, and, thus, may only grant summary judgment
              "where the right to such judgment is clear and free from all
              doubt." Id. On appellate review, then

                     an appellate court may reverse a grant of
                     summary judgment if there has been an error
                     of law or an abuse of discretion. But the issue
                     as to whether there are no genuine issues as

                                     [J-102-2016]   -   8
                          to any material fact presents a question of law,
                          and therefore, on that question our standard of
                          review is de novo. This means we need not
                          defer to the determinations made by the lower
                          tribunals.

                   Weaver v. Lancaster Newspapers, Inc., 592 Pa. 458, 926
A.2d 899, 902-03 (2007) (internal citations omitted). To the
                  extent that this Court must resolve a question of law, we
                  shall review the grant of summary judgment in the context of
                  the entire record. Id. at 903.

Summers     v.   Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010).

      A motion for summary judgment is based on an evidentiary record that entitles

the moving party to a judgment as a matter of law. Pa.R.C.P. 1035.2, Note. Pursuant

to Rule 1035.2(2), a court must enter judgment in favor of the moving party whenever

the non-moving party, with the burden of proof at trial, fails to produce sufficient

evidence to create a genuine issue of material fact as to a necessary element of the

cause of action or defense that could be established by additional discovery. Barnish           v.

KWI Bldg. Co., 980 A.2d 535, 543 (Pa. 2009).

       In   their motion for summary judgment, Appellants contended that insufficient

evidence existed to create a genuine issue of material fact as to whether a fiduciary

relationship existed between the Yenchis and Holland.              In   response, the Yenchis

acknowledged that "[u]nder Pennsylvania law, typically the insurer/insured relationship

is viewed as an arm's -length relationship and fails to create a fiduciary duty."         Brief in

Response         to   [Appellants']   Motion   for   Summary Judgment,       2/6/2013,    at   20.

Nevertheless, the Yenchis' contended that "the nature of the insurer/insured relationship

changed and a confidential relationship was created because [Appellants] acted as a

financial advisor providing investment planning advice for a fee." Id.        In   their response

to the motion for summary judgment, the Yenchis cited to scant evidence in the

summary judgment record in support of this claim. As evidence of their trust in Holland,

                                          [J-102-2016]   -   9
they referenced their decisions, based upon his advice, to cash out their Met Life

policies and to use those proceeds to purchase the 1996 whole life insurance policy and

the 1997 deferred variable annuity policy.7 Id. at 8. The Yenchis' also referenced their

lack of sophistication regarding finances or the language used in insurance policies and

legal documents, although they did not cite to any particular deposition testimony or

other evidence to support this claim.8 Finally, again without citing to any record support

(including no evidence that Holland ever actually told them that he was acting in their

best interests), the Yenchis claimed that "[b]y charging a fee for independent financial

advice, [they were] justified in believing that the advice was being provided in their best

interests, and was more than an ordinary arm's -length transaction involving the

purchase of insurance."     Id.   Notably, in their response to the motion for summary

judgment, the Yenchis did not contend, or cite to any evidence in support of, any close

personal relationship with Holland.       From their deposition testimony, it would appear

that all of their meetings took place either in Holland's office or over the phone.9

    Although not referenced in the Yenchis' response to the motion for summary
judgment, in her deposition Ms. Yenchi related that she frequently called Holland with
questions after she read her monthly statement. Motion for Summary Judgment, Exhibit
2, Deposition of Ruth Yenchi at 52-53.        She also testified that they often signed
documents based upon Holland's representations with regard to their contents. Id. at
48-49 ("[H]e was my advisor and took his word."). Mr. Yenchi likewise testified to
                                      I

trusting Holland. Id., Exhibit 1, Deposition of Eugene Yenchi at 145 ("[W]e trusted him
that he knew the best.").

8 Again, while not referenced in their response to the motion for summary judgment,
Mr. Yenchi testified at his deposition that he graduated from high school. Id. at 9. Ms.
Yenchi did not testify regarding her educational background.

9   Intheir appellate brief filed with this Court, the Yenchis cite to testimony from Mr.
Yenchi regarding his discussions with Holland, at the beginnings of their meetings,
regarding a variety of topics, including golf and cigars. Yenchis' Brief at 26 n.11. Mr.
Yenchi testified that he "would like to think he had a relationship" with Holland. Id. To
the extent that this testimony could be relevant, it was offered by Mr. Yenchi at trial, and
thus was not a part of the summary judgment evidentiary record.
(continued...)

                                      [J-102-2016]   -   10
       A fiduciary duty is the highest duty implied by law.           Miller   v.   Keystone Ins. Co.,

636 A.2d 1109, 1116 (Pa. 1994) (Cappy, J., dissenting).               A fiduciary duty requires a

party to act with the utmost good faith in furthering and advancing the other person's

interests, including a duty to disclose all relevant information.              See Basile    v.   H & R

Block, Inc., 761 A.2d 1115, 1120 (Pa. 2000); Young             v.   Kaye, 279 A.2d 759, 763 (Pa.

1971) ("When the relationship between persons is one of trust and confidence, the party

in whom the trust and       confidence are reposed must act with scrupulous fairness and

good faith in his dealings with the other and refrain from using his position to the other's

detriment and his own advantage."); Sylvester          v.   Beck, 178 A.2d 755, 757 (Pa. 1962);

McCown      v.   Fraser, 192 A. 674, 676-77 (Pa. 1937); Null's Estate, 153 A. 137 (Pa. 1930),

see also Black's Law Dictionary (10th ed. 2014) (defining a fiduciary duty as "a duty to

act with the highest degree of honesty and loyalty toward another person and in the

best interest of the other person"). This highest duty will be imposed only where the

attendant conditions make it certain10 that a fiduciary relationship exists.                Leedom   v.

Palmer, 117 A. 410, 412 (Pa. 1922) ("[T]he evidence to sustain a confidential relation

must be certain; it cannot arise from suspicion or from infrequent or unrelated acts[.]");

In re Erdeljac's Estate, 131 A.2d 97, 100 (Pa. 1957); In re King's Estate, 87 A.2d 469,

472 (Pa. 1952).

       In   some types of relationships, a fiduciary duty exists as a matter of law.

Principal and agent, trustee and cestui que trust, attorney and client, guardian and

(... continued)

10
    The requirement that evidence be "certain" is an early forerunner of what is now
referred to a "clear and convincing" burden of proof.         In some older cases, the
applicable burden of proof was styled as "definite, certain, clear and convincing." See,
e.g., In re Swenk's Estate, 108 A.2d 825, 827 (Pa. Super. 1954); In re Culhane's Estate,
2 A.2d 567, 572 (Pa. Super. 1938).

                                        [J-102-2016]    - 11
ward, and partners are recognized examples. See, e.g., McCown                 v.    Fraser, 192 A. 674,

676-77 (Pa. 1937); Young, 279 A.2d at 763. The unique degree of trust and confidence

involved in these relationships typically allows for one party to gain easy access to the

property or other valuable resources of the other, thus necessitating appropriate legal

protections.

       Where no fiduciary duty exists as a matter of law, Pennsylvania courts have

nevertheless     long   recognized     the     existence        of   confidential     relationships   in

circumstances where equity compels that we do so. See Darlington's Appeal, 5 W.N.C.

529 (Pa. 1878).     Our courts have found fiduciary duties in circumstances where the

relative position of the parties is such that the one has the power and means to take

advantage of, or exercise undue influence over, the other. The circumstances in which

confidential relationships have been recognized are fact specific and cannot be reduced

to a particular set of facts or circumstances.             Scott, 316 A.2d at 885.           We have

explained that a confidential relationship "appears when the circumstances make it

certain the parties do not deal on equal terms, but, on the one side there is an

overmastering influence, or, on the other, weakness, dependence or trust, justifiably

reposed[.]"    Frowen   v.   Blank, 493 137, 425 A.2d 412, 416-17 (Pa. 1981).                 In   these

cases, which have typically been brought in courts of equity, if a confidential relationship

was found to exist, then the burden shifts and the fiduciary has to demonstrate that

there has been no breach of trust.       Id.    Transactions between persons occupying a

confidential relationship are voidable, and the party seeking to benefit from such a

transaction    must demonstrate that his         or   her actions were at all times "fair,

conscientious, and beyond the reach of suspicion."              Young, 279 A.2d at 766; Matter of

Estate of Evasew, 584 A.2d 910, 913 (Pa. 1990).

                                       [J-102-2016]   -    12
      While cases involving fiduciary relationships are necessarily fact specific, they

usually involve some special vulnerability in one person that creates a unique

opportunity for another person to take advantage to their benefit.               This Court has

recognized that while disease or advancing age "do not by themselves create a

confidential relationship with another," such limitations "may support an inference of

confidentiality" if they bear on a party's "capacity to understand the nature of the

transaction in question." Scott, 316 A.2d at 886. Family relationships or close personal

friendships, while also not dispositive of the existence of a confidential relationship,

have also often played significant roles in particular determinations. Silver       v.   Silver, 219
A.2d 659, 662 (Pa. 1966) (stating that kinship, while not dispositive, is a factor "which

cannot be ignored").

      Where one party lacks the ability to understand the nature and terms of the

transaction and simultaneously reposes their complete trust in the other party based

upon well -established relationships, this circumstance provides an opportunity for the

second party to exercise undue influence over the first and, thus, effectively control the

decision -making process to their advantage. In Frowen, for example, the sale of a farm

for an unreasonably low price was set aside after recognition of a confidential

relationship between, on the one hand, an elderly and infirm eighty -six-year -old widow

with little formal education and, on the other, neighbors who had befriended her.

Frowen, 425 A.2d at 415-16. Similarly, in Brooks       v.   Conston,   51 A.2d 684 (Pa. 1947),

after the unexpected death of her husband, a widow with no experience in business

matters agreed to sell the family's business assets, at an unfair price, to a "warm family

friend" who advised her to do so without any appraisal of their value. Id. at 687-88.

       Undue influence resulting in a loss of control has also been found to exist when

one party places their complete and unhesitating trust in the other party, and in so doing

                                    [J-102-2016]   -   13
effectively cedes their decision -making authority to the other party.              In   Young, for

example, an octogenarian (Young) with no knowledge of the intricacies of state and

federal tax laws, effectively ceded control of the financial aspects of the corporation he

owned to someone (Brooks) he considered to be a close friend and trusted advisor.

Young, 279 A.2d at 761.        Young routinely signed, unquestioningly, corporate (and

individual) income tax returns, corporate financial statements, and other corporate

letters and financial documents, all prepared by Brooks.              Id.   After the IRS issued a

deficiency assessment against the corporation, Brooks advised Young that the

assessment could be avoided if he transferred all of his shares in the corporation to him

(Brooks) "for tax purposes only." Id. Relying solely on Brooks' advice, Young signed a

certificate transferring all 10,000 shares of the corporation to Brooks, which Brooks then

sold to a third party for $50,000.   Id.   This Court held that the transfer of the stock to

Brooks was not an arm's -length transaction, as Young's overwhelming reliance on

Brooks' tax advice created a situation in which Brooks had a unique opportunity to take

advantage of Young. Id. at 763. We accordingly reversed the equity court's decision,

voided the Young -to -Brooks transaction, and held that Young had a superior claim to

the stock than did the third party. Id. at 760.

       Conversely,    even   where special vulnerabilities exist, this Court has not

recognized the existence of a confidential relationship       if   the person continued to act on

his or her own behalf and did not succumb to any "overmastering influence" of another.

For instance, in Jenne v. Kennedy, 109 A.2d 307 (Pa. 1954), this Court refused to void

the sale of a house by an eighty-five year old mother to her daughter, concluding that

there was not "the slightest shred of testimony that she was overpowered, dominated,

or unduly influenced in her judgments by this defendant." Id. at 309. In Scott, we found

no confidential relationship existed between a sister and her brother, even though the

                                      [J-102-2016]   -   14
sister, while in intensive care, had signed a bank card giving her brother access to her

funds.        He also later sold her car.   Id. at 885-86.      This Court determined that even

during her infirmity, she continued to manage her own affairs and knowingly directed

her brother's actions on her behalf, thus negating any possibility of a confidential

relationship. Id. at 886 ("Mrs. Scott's mental powers were undiminished during the time

she was in intensive care."). And in In re Estate of Dunlap, 370 A.2d 314 (Pa. 1977),

this Court found that no confidential relationship existed between a father and son

where the evidence showed that the father conducted his own banking business and

executed the codicil to his will in his son's absence. Id. at 317 ("appellant's evidence

describes an individual independently handling his own affairs").

         The Superior Court, in the case before us, erred in relying on our case law

involving undue influence to support its conclusion that a fiduciary relationship can be

established without evidence that decision -making power was effectively ceded to

another.       Yenchi, 123 A.3d at 1080-81.     Its view misses the point that the exercise of

undue influence, at its core, indicates that an individual so influenced has lost the ability

to make an independent decision.

         In   the present case, the Yenchis do not claim that Appellants' roles as sellers of

insurance or, more generally, as financial advisors, created a fiduciary relationship as a

matter of law. The Superior Court did not so hold.              Yenchi, 123 A.3d at 1080 ("To be

clear, we do not hold that evidence of [Appellants'] purported positions as financial

advisors is sufficient by itself to establish a confidential relationship."). Moreover, while

the Yenchis indicate that they paid a fee for the financial advice received from Holland,

they do not contend that this fact alone creates a fiduciary relationship.            Answer to

Petition for Allowance of Appeal, 12/29/2015, at 9 ("It is understood that a fiduciary

relationship does not arise simply because one party relies and pays for specialized

                                        [J-102-2016]   -   15
knowledge of the other party.").               Instead, the Yenchis claim that a confidential

relationship existed with Holland because he held a "vastly superior" position to them

with respect to his knowledge of insurance products and financial services, and that

over time, they came to trust him and repose confidence in his advice to them. Id. at

10.   The Yenchis highlight the fact that they are only "high school educated" while

Holland is "college educated with a CPA and securities and insurance licenses." Id.

       We conclude that the Yenchis' summary judgment evidentiary record falls far

short of establishing a fiduciary relationship with Holland. Fiduciary duties do not arise

"merely because one party relies on and pays for the specialized skill of the other party."

eToll, Inc.   v.   Elias/Savion Advertising, Inc., 811 A.2d 10, 23 (Pa. Super. 2003).         If   this

were the law in Pennsylvania, "a fiduciary relationship could arise whenever one party

had any marginal greater level of skill and expertise in a particular area than another

party." Id.; see generally Greenberg          v.   Life Ins. Co. of Virginia, 177 F.3d 507, 522 (6th

Cir. 1999) ("To hold otherwise would impose fiduciary obligations on the seller of goods

or services in the vast multitude of ordinary arm's -length transactions simply on the

basis that the seller possessed superior knowledge of the product being sold.").

       The superior knowledge or expertise of a party does not impose a fiduciary duty

on that party or otherwise convert an arm's -length transaction into a confidential

relationship.      In   this regard, the analysis is no different in a consumer transaction than in

other fiduciary duty cases decided by this Court. "[T]he critical question is whether the

relationship goes beyond mere reliance on superior skill, and into a relationship

characterized by 'overmastering influence' on one side or 'weakness, dependence, or

trust, justifiably reposed' on the other side," which results in the effective ceding of

control over decision -making by the party whose property is being taken.                eToll, Inc.,
811 A.2d at 23 (emphasis in original) (holding that although an advertising company

                                            [J-102-2016]   -   16
was a "trusted advisor" to a software developer, no fiduciary relationship existed

between the parties) (citing Basile   v.   H & R Block, 777 A.2d 95, 101 (Pa. Super. 2001)).

A fiduciary duty may arise in the context of consumer transactions only if one party

cedes decision -making control to the other party.             As we indicated in Scott, "a

business transaction may be the basis of a confidential relationship only if one party

surrenders substantial control over some portion of his affairs to the other." Scott, 316
A.2d at 886; see also Valley Forge Convention & Visitors Bureau         v.   Visitor's Services,

Inc., 28 F. Supp. 2d 947, 953 (E.D. Pa. 1998) ("There is a crucial distinction between

surrendering control of one's affairs to a fiduciary or confidant or party in a position to

exercise undue influence and entering an arm's -length commercial agreement[.]").

       The case at bar presents an arm's -length consumer transaction in which the

Yenchis accepted Holland's advice with respect to the purchase of the 1996 whole life

insurance policy.   The Yenchis made the decision to purchase this policy, but also

decided to reject other proffered products and services. While we recognize that the

premium structure and payout terms of the 1996 whole life insurance policy were

complicated, that fact does not change the character of the transaction in question. The

Yenchis purchased an insurance product from a captive financial advisor with whom

they had a business relationship for a little more than a year, initiated by a cold -call.

The Yenchis' lack of post -secondary high school educations is not indicative of a

weakness, dependence, or trust, justifiably reposed, nor is Holland's advanced training

sufficient to establish an overmastering influence.

       The record here establishes that the Yenchis made the decision to purchase

Appellants' advice and financial products.        Reliance on another's specialized skill or

knowledge in making the purchase, without more, does not create a fiduciary

relationship. We acknowledge that the Yenchis may have become comfortable with the

                                      [J-102-2016]    -   17
Appellants' expertise before deciding to purchase the 1996 whole life insurance policy,

which is to be expected when making a financial decision. It is part of the development

of any business relationship -- consumer or otherwise. It does not, however, establish a

fiduciary relationship.        There is no evidence to establish that the Yenchis were

overpowered, dominated or unduly influenced in their judgment by Holland.

          The Yenchis never ceded any decision -making authority to Holland.             Over the

course of the relationship, they followed some of his recommendations and rejected

others.        Prior to the proposal for the whole life policy at issue, Appellants proposed a

different whole life product that the Yenchis did not purchase. As to advice accepted,

the Yenchis purchased the 1996 whole life insurance policy and the 1997 deferred

variable annuity. They began saving money in an investment certificate and opened an

IRA account.         On the other hand, they rejected other recommendations, including, in

particular, Holland's advice in 1998 to increase their life insurance to the $300,000 level,

deciding for themselves that the 1996 whole life policy was a sufficient amount of life

insurance for their needs.11        The evidence does not establish that the Yenchis were

subject to any overmastering influence by Holland. They maintained and exercised

decision -making control over their financial matters.            No confidential relationship was

ever created.

11
          Q.       Do you recall there being a time that [Holland] proposed to
                   you the possibility of buying more insurance?

          A.       We said no.

          Q.       Why is it that you said no at that time?

          A.       We thought we had enough insurance ....

Motion for Summary Judgment, Exhibit 2, Deposition of Ruth Yenchi at 60-61.

                                          [J-102-2016]   -   18
         We note that under current law and appropriate facts, consumers have various

common law tort remedies (with burdens of proof less stringent than those required        in

fiduciary duty cases), as well as claims for common law fraud and the statutory relief

provided by the current version of the UTPCPL, which provides a remedy for deceptive

conduct.    73 P.S. § 201-2(4)(xxi).    We decline to modify the law of fiduciary duty to

encompass the particular pitfalls involved in the sale of insurance products by

commissioned agents or financial advisors to less savvy customers.12 Moreover, we do

not hold that a fiduciary duty cannot arise in a case with facts not present here, but

absent evidence that a consumer of financial services and goods cedes control over the

decision to purchase, either explicitly or implicitly because of over -mastering or undue

influence, no fiduciary relationship arises. Because the Yenchis have not adduced facts

sufficient to establish the indicia of a fiduciary relationship, we must reverse the

Superior Court's decision to reverse the trial court's grant of summary judgment on this

issue.

         For these reasons, we reverse the order of the Superior Court in part, as it

pertains to the issue of fiduciary duty. The balance of the present appeal is dismissed

as improvidently granted, and accordingly, the remainder of the Superior Court's order

remains intact.

12  In their appellate brief, the Yenchis argue that the United States Supreme Court has
recognized that the Investment Advisors Act of 1940, 15 U.S.C. § 40b-6, creates
fiduciary obligations for registered financial advisors to act in the best interest of those
they advise. Yenchis' Brief at 38 (citing S.E.C. v. Capital Gains Research Bureau, 375
U.S. 180, 187 (1963)). As Appellants correctly note, however, this ruling and legislation
have no application here, as the present case does not involve advice regarding the
purchase of securities. These laws, however, illustrate the manner in which legislative
enactments can police an industry. We decline to make a change to the common law of
fiduciary duty with respect to an entire industry. Such a sweeping change should be left
to the Legislature, based upon its consideration of the various policy concerns and the
financial implications of regulations on consumers and the industry.

                                       [J-102-2016]   -   19
Chief Justice Saylor and Justices Baer and Dougherty join the opinion.

Justice Todd files a dissenting opinion   in   which Justice Wecht joins.

Justice Mundy did not participate in the consideration or decision of this case.

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