United States District Court, D. Maryland
BRANDON BERKENFELD, BARBARA HOLLAND-EYTAN, and SANDRA RICKI DIAMOND
GARY R. LENET and MORGAN STANLEY & CO., LLC
Xinis United States District Judge
Brandon Berkenfeld, Barbara Holland-Eytan, and Sandra Ricki
Diamond bring this lawsuit against defendants Gary R. Lenet
and Morgan Stanley & Co., LLC seeking damages for alleged
negligence, breach of fiduciary duty, and professional
negligence. Now pending is Defendants' Motion for Summary
Judgment, ECF No. 47. The parties have fully briefed the
motion, and no hearing is necessary. See Local R.
105.6. For the reasons set forth below, Defendants'
Motion for Summary Judgment is GRANTED.
dispute arises out of Gary R. Lenet's
(“Lenet”) and Morgan Stanley & Co., LLC's
(“Morgan Stanley”) alleged negligence in advising
Brandon Berkenfeld (“Berkenfeld”), Barbara
Holland-Eytan (“Holland-Eytan”), and Sandra Ricki
Diamond (“Diamond”) about their options for
annuity disbursements. ECF No. 2 at ¶¶ 3-10.
Defendant Lenet is an employee of defendant Morgan Stanley.
ECF No. 47 at 4. Lenet was an investment advisor for
plaintiffs Berkenfeld, Holland-Eytan, and Diamond.
Id. At issue is Lenet's advice to Plaintiffs
regarding their distribution options for two annuities of
which Plaintiffs were equal beneficiaries. ECF No. 2 at
are the daughters and grandson of Claire Blumberg
(“Blumberg”), who passed away in February 2014.
ECF No. 2 at ¶ 3. Prior to Blumberg's passing,
Blumberg owned annuities issued by Lincoln Financial
(“Lincoln”) and Commonwealth/Scudder
(“Commonwealth”). ECF No. 47 at 3. When Blumberg
died, each plaintiff elected a lump-sum distribution for the
annuities. ECF Nos. 47-17 & 47-18. Each plaintiff also
elected not to have federal income tax withheld from their
lump sum distributions. ECF Nos. 47-17 & 47-18. If
Plaintiffs had elected different distribution options, they
could have saved in excess of $200, 000 in overall tax
liability. ECF No. 2 at ¶ 9. Plaintiffs allege they
elected lump-sum distributions because Lenet advised them
that lump-sum distribution was the only distribution option.
ECF No. 2 at ¶¶ 4-6.
contract or agreement existed between the parties obligating
Defendants to give tax advice or an opinion concerning
Plaintiffs' available distribution options. ECF No. 47 at
7. Plaintiffs, however, claim that Lenet lump-sum
distribution advice was an opinion, the error of which is
actionable. ECF No. 2 at ¶ 5. Plaintiffs also aver that
Lenet advised Plaintiffs to seek independent tax advice
concerning their distribution options. ECF Nos. 2 at ¶
8. Plaintiffs did not seek such advice despite having
financial advisors and tax experts at their disposal.
See ECF Nos. 2 at ¶ 8 & 47-2, Berkenfeld
Tr. at 243:4-10).
also did not contact Lincoln or Commonwealth to discuss their
options. ECF No. 47-2, Berkenfeld Tr. at 197:21-22, 198:1-2,
228:16-22; ECF No. 47-5, Holland-Eytan Tr. at 151:21-22,
152:1-9, 184:9-13; ECF No. 47-9 at No. 17. Each plaintiff
also signed a statement for each annuity electing a lump-sum
disbursement which expressly notified them of all available
distributions. ECF Nos. 47-17 & 47-18. Id.
Plaintiffs additionally elected not to have federal income
tax withheld from their lump-sum distributions despite having
been warned in writing, “If you opt out of tax
withholding, you are still liable for applicable taxes on
your distribution . . . .You may want to discuss your
withholding election with a qualified tax advisor.” ECF
No. 47-17 at 7.
filed suit in the Circuit Court for Baltimore City on
February 25, 2016, alleging against Lenet negligence (Count
I), breach of fiduciary duty (Count II), and professional
negligence (Count III), and vicarious liability against
Morgan Stanley. ECF No. 2. Defendants removed the case to
this Court on April 25, 2016. ECF No. 1. On May 2, 2016,
defendants filed a motion to dismiss. ECF No. 6. This court
denied that motion on January 23, 2017. ECF No. 37.
Defendants moved for summary judgment on September 25, 2017.
ECF No. 47.
Federal Rule of Civil Procedure 56(c), a court must grant
summary judgment “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 judgment as a matter of law.” Anderson
v. Liberty Lobby Inc., 477 U.S. 242, 247 (1986). A
genuine issue of material fact exists where “the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Id. The
party seeking summary judgment bears the initial burden of
demonstrating the absence of a genuine dispute of material
fact. See Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986). When reviewing a motion for summary judgment, the
court must take all facts and inferences in the light most
favorable to the non-moving party. Scott v. Harris,
550 U.S. 372, 378 (2007).
party opposing summary judgment must, however, “do more
than simply show that there is some metaphysical doubt as to
the material facts.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986); see
also In re Apex Express Corp., 190 F.3d 624, 633 (4th
Cir. 1999). The non-movant “‘may not rest upon
the mere allegations or denials of [his] pleadings, ' but
rather ‘set forth specific facts showing that there is
a genuine issue for trial.'” Bouchat v.
Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522
(4th Cir. 2003) (alteration in original) (quoting
Fed.R.Civ.P. 56(e)); see also Adickes v. S. H. Kress
& Co., 398 U.S. 144, 160 (1970). A court should
enter summary judgment when a party fails to make a showing
sufficient to establish elements essential to a party's
case, and on which the party will bear the burden of proof at
trial. Celotex Corp., 477 U.S. at 322.
Negligence (Count I) and Professional Negligence (Count
argue that summary judgment is warranted because no
reasonable trier of fact could find in Plaintiffs' favor
on these counts. Alternatively, Defendants argue that even if
they were negligent, Plaintiffs' contributory negligence
and assumption of the risk bar recovery. Although genuine
disputes of fact exist regarding Defendants' negligence,
the evidence construed in the light most favorable to
Plaintiffs demonstrate that their claims ...