Court Opinion

ID: 3185125
Source: CourtListenerOpinion
Date Created: 2016-03-14 15:04:49.059524+00
Date Added: 2024-06-11T12:19:15.068170
License: Public Domain

15-1484-cv
Lewis v. Del. Charter Guarantee & Trust Co.

                                  UNITED STATES COURT OF APPEALS
                                     FOR THE SECOND CIRCUIT

                                         SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 14th day of March, two thousand sixteen.

PRESENT:           JOSÉ A. CABRANES,
                   DEBRA ANN LIVINGSTON,
                   GERARD E. LYNCH,
                                Circuit Judges.

KEVIN LEWIS, SUSAN LEWIS,

                             Plaintiffs-Appellants,                  15-1484-cv

                             v.

DELAWARE CHARTER GUARANTEE & TRUST CO.
D/B/A PRINCIPAL TRUST CO., DAVID LERNER
ASSOCIATES, INC.,

                             Defendants-Appellees.

FOR PLAINTIFFS-APPELLANTS:                                L. TIMOTHY FISHER, Bursor & Fisher,
                                                          P.A., Walnut Creek, CA.

FOR DEFENDANT-APPELLEE PRINCIPAL                          MICHAEL D. MULVANEY (Lee E. Bains,
TRUST:                                                    Jr., Edward M. Holt, Thomas J. Butler,
                                                          Prim F. Escalona, on the brief), Maynard,
                                                          Cooper & Gale, P.C., Birmingham, AL.

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FOR DEFENDANT-APPELLEE DAVID                                 KENNETH I. SCHACTER (Dina Kaufman,
LERNER ASSOCIATES, INC.:                                     on the brief), Morgan, Lewis & Bockius
                                                             LLP, New York, NY.

       Appeal from a judgment of the United States District Court for the Eastern District of New
York (Kiyo A. Matsumoto, Judge).

     UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the District Court be and hereby is
AFFIRMED.

         Plaintiffs-appellants appeal from a May 4, 2015 judgment of the U.S. District Court granting
a motion to dismiss by defendants-appellees Delaware Charter Guarantee & Trust Co. (“Principal
Trust”) and David Lerner Associates, Inc. (“DLA”). Plaintiffs argue that the District Court erred (1)
in concluding that neither Principal Trust nor DLA owed them a fiduciary duty; (2) in relying on
extrinsic evidence in dismissing plaintiffs’ breach-of-contract claim; (3) in concluding that plaintiffs’
contract with Principal Trust unambiguously permitted Principal Trust to rely solely on broker-
dealer statements in satisfying its obligation to report the fair-market value of plaintiffs’ assets, even
if those statements did not actually include those assets’ fair-market value; (4) in concluding that
plaintiffs’ claims against Principal Trust for negligence and misrepresentation were coextensive with
their breach-of-contract claim; (5) in concluding that plaintiffs’ misrepresentation claims failed due
to failure to allege reliance or to satisfy the requirements of Rule 9(b) of the Federal Rules of Civil
Procedure; and (6) in denying plaintiffs leave to amend their complaint. We assume the parties’
familiarity with the underlying facts, the procedural history of the case, and the issues on appeal.

        We review de novo the grant of a motion to dismiss pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure. Pacific Inv. Mgmt. Co. LLC v. Mayer Brown LLP, 603 F.3d 144, 150 (2d Cir.
2010). Upon our independent review of the record and the relevant case law, we affirm the
judgment of the District Court, substantially for the reasons stated in its thorough Memorandum
and Order of March 31, 2015, with the following qualifications.

         With respect to Section 5.5(N) of the Trust Agreement, we need not decide whether the
District Court properly construed the contemporaneous but unsigned “Instructions” to be part of
the contract under Delaware law, because, as the District Court held, the plain language of Section
5.5(N) unambiguously permits the Trustee to rely on broker-dealer statements to satisfy its
obligation to render an annual accounting valuing the assets at fair market value. Contrary to
plaintiffs’ suggestion, this reading does not render meaningless the requirement that the Trustee
provide an annual “accounting, valuing the assets at fair market value, to the Account Holder,”
because in the absence of broker-dealer statements, the Trustee remains obligated to render the
accounting in some other manner.

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        With respect to Section 5.8(L) of the Trust Agreement, we need not interpret the various
IRS requirements discussed in the District Court’s opinion. Insofar as Section 5.8(L) addresses IRS
regulations, it is best read to require the Trustee to furnish only “such information concerning
required minimum distribution as is prescribed by the [IRS].” Plaintiffs have not alleged that the
Trustee failed to furnish any required information concerning required minimum distributions, and
declined the district court’s invitation to amend their complaint to amplify their allegations in this
regard.

        Lastly, because the District Court correctly decided that plaintiffs’ fiduciary duty claims must
be dismissed as duplicative of their breach of contract claim, see Nemec v. Shrader, 991 A.2d 1120,
1129 (Del. 2010) (“[W]here a dispute arises from obligations that are expressly addressed by
contract, that dispute will be treated as a breach of contract claim. In that specific context, any
fiduciary claims arising out of the same facts that underlie the contract obligations would be
foreclosed as superfluous.”), we find it unnecessary to decide what, if any, fiduciary duty defendants
owed to plaintiffs.

       We have reviewed all of the arguments raised by plaintiffs-appellants on appeal and find
them to be without merit. For the foregoing reasons, we AFFIRM the judgment of the District
Court.

                                                        FOR THE COURT:
                                                        Catherine O’Hagan Wolfe, Clerk

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