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Bresler v. Wilmington Trust Co.

United States District Court, D. Maryland

March 28, 2018

FLEUR S. BRESLER, ET AL., Plaintiffs,



         In Civil No. PJM 09-2957, Fleur Bresler and Sidney Bresler, as Co-Personal Representatives of the Estate of Charles (“Charlie”) Bresler, sued Wilmington Trust Company and its subsidiary Wilmington Brokerage Services Company (collectively, “WTC”) for alleged breaches by WTC of certain agreements designed to provide life insurance for Charlie and his wife Fleur.[1][2] Sidney Bresler, the son of Charlie and Fleur, also sued WTC in his individual capacity. In addition to WTC, the Breslers sued Matthew Waschull and Ralph Wileczek, WTC employees, in several tort/fraud counts related to the transaction with WTC.[3]

         In Civil No. PJM 12-3295, Fleur and Sidney, as Co-Personal Representatives of Charlie's Estate, brought a second suit against WTC, claiming that it breached a related agreement- specifically, an Investment Management Agreement-by refusing to return certain collateral to Charlie's estate that it allegedly promised to return upon his death. Because of the overlap of certain counts in PJM 09-2957 and PJM 12-3295, the Court consolidated the cases. ECF No. 481 in the PJM 09-2957 docket.[4] At the same time, claims within the two consolidated cases were bifurcated to address the breach of contract claims against Defendants prior to addressing the non-contract claims against them. Id. The contract claims went forward in PJM 09-2957. The non-contract claims were assigned to a new docket, PJM 15-1557. These non-contract claims are the subject of the present Opinion.

         First, however, some background on the contract claims:

         Following a four-week trial on the contract claims in January, 2014, a jury concluded that WTC had breached its agreements with Charlie and awarded the Bresler Estate total damages in excess of $23 million. The Court also granted the Estate related equitable relief. On appeal, the Fourth Circuit affirmed. WTC's petition for certiorari to the United States Supreme Court was denied.

         The parties now turn their attention to the Breslers' several non-contract claims against WTC, Waschull and Wileczek. On July 17, 2017, Sidney as an individual and Fleur and Sidney as Co-Personal Representatives of the Estate of Charlie, here filed a Motion for Partial Summary Judgment. ECF No. 26. WTC, Waschull, and Wileczek here filed their own Motions for Summary Judgment, ECF Nos. 27, 28, 32.

         For the following reasons, the Breslers' Motion for Partial Summary Judgment (ECF No. 26) is DENIED, and WTC's Motion for Summary Judgment (ECF No. 27), Waschull's Motion for Summary Judgment (ECF No. 28), and Wileczek's Motion for Summary Judgment (ECF No. 32) are all GRANTED.


         A. The Dispute

         The facts of the case are as set forth in the two Opinions authored by this Court (ECF No. 658 & 660 in PJM 09-2957) and the Opinion of the Fourth Circuit Court of Appeals (Bresler v. Wilmington Trust Company, 855 F.3d 178 (4th Cir. 2017); see also ECF No. 708-1 in PJM 09-2957). For purposes of the pending Motions, the relevant facts are as follows.

         In the Spring of 2003, WTC corporate vice presidents Edmond Ianni and Ralph Wileczek introduced Charlie to a life insurance plan known as “premium financing, ” whereby WTC would lend money to a trust owning life insurance policies on the joint lives of Charlie and Fleur, of which Sidney would be beneficiary; where the life insurance trust would pay annual premiums on the policies; WTC would be trustee; and, pursuant to a separate Investment Management Agreement, whereby WTC would manage any assets that Charlie might place with it, including any assets that might be placed as collateral for the loans WTC would make to the trust.

         Negotiations regarding the premium financing plan, primarily involving Ianni and the Breslers' attorney Larry Shaiman, continued throughout 2003. Eventually, at the beginning of 2004, Charlie entered into three written agreements with WTC: (1) the Charles S. Bresler Irrevocable Life Insurance Trust Agreement (the “Trust Agreement” or ILIT); (2) the Investment Management Account (the “IMA”); and (3) the Collateral Pledge Agreement (the “Pledge Agreement, ” the three of which are collectively referred to as the “Agreements”).

         In 2004, the first year of the plan, things went forward without a hitch. WTC loaned funds to the Trust in the amount of $6 million, $5.5 million of which was used to purchase and overfund $50 million in increasing death benefits under three joint survivorship universal life policies on the lives of Charlie and Fleur. Charlie, for his part, posted $3.7 million worth of bonds with WTC as collateral for the first-year loan.

         In 2005, the second year of the plan, a dispute arose over whether Charlie had assumed a continuing obligation to post collateral for the loans and whether WTC was obligated to lend a specific amount to the ILIT each year. In August of 2005, Matthew Waschull, who was a team manager in WTC's wealth advisory services department, notified Charlie that he would be taking over the Bresler account, since Ianni was no longer employed by WTC.[5] ECF No. 27-5 at 126 (Aug. 15, 2005 Letter from M. Waschull to C. Bresler). Wileczek, a member of Waschull's team, continued to be involved in overseeing the Breslers' financing plan and attempting to resolve the dispute regarding collateral.

         For four years, the parties tried to resolve their dispute over collateral, during which time Charlie and WTC signed an agreement to toll the statute of limitations. ECF No. 27-5 at 132. The tolling agreement, initially intended to last some 5 months, was extended several times. Id. at 134-147. Notably, however, neither Sidney nor Waschull nor Wileczek were signatories to the tolling agreement or to any of the extensions. Id. at 132-127.

         In 2009, fearing that the life insurance policies might lapse if WTC refused to lend sufficient funds to the ILIT, Fleur went into the market and obtained “replacement” term insurance on her own life, which required annual payments between $1.4 and $1.5 million. And in 2009, Charlie brought this suit against WTC. After his death, Fleur and Sidney continued its prosecution and subsequently filed a separate suit against WTC (PJM 12-3295), claiming that WTC had breached the Investment Management Agreement by refusing to return certain collateral to Charlie's estate that it allegedly promised to return upon his death. As indicated, because of the overlap of certain counts in PJM 09-2957 and PJM 12-3295, the Court consolidated the cases and bifurcated the breach of contract claims in both cases from the non-contract claims. ECF No. 481 in PJM 09-2957. The breach of contract claims remained in PJM 09-2957, while the non-contract claims went forward in PJM 15-1557.

         B. The Contract Action

         After more than four years in litigation, a jury trial lasting most of January, 2014, was held on the contract claims. The Breslers argued to the jury that the premium financing plan only obligated Charlie to post $3.7 million in bonds as collateral in the first year of the arrangement, in exchange for which WTC would lend $5.5 million annually to the ILIT, both to pay the premiums on the insurance policies and to “overfund” them. Unlike typical life insurance policies, which only provide fixed death benefits, the ILIT policies consisted of two components: (1) a death benefit, and (2) an investment account which would increase in value each year according to an interest rate known as the “crediting rate, ” which in turn would increase the amount of the benefit payable on death. Since the crediting rate that the insurance companies would be paying on the policies was projected to be higher than the borrowing rate WTC proposed to charge for the loans it would make, the ILIT could profit simply by borrowing money from WTC at the lower interest rate while earning higher interest at the crediting rate. All of the “overfunding” would go into the interest-bearing component.[6]

         According to the Breslers, instead of having its loans secured by the annual posting of collateral, WTC's “security” was the very insurance policies carried by the ILIT, the proceeds of which would pay all the accumulated principle and interest of the loans following Charlie's and Fleur's deaths. The beneficiary under the trust would take home the balance that had accrued in the tax-sheltered ILIT (the “Net-in-Trust”). Charlie refused WTC's demands that he post substantial collateral each year. In consequence, WTC limited the amount of its loans. Specifically, after 2004, it loaned only enough to make the minimum premium payments on the policies and provided no overfunding, depriving the Breslers of what they believed they were owed under the plan-namely, the money accrued in the interest-bearing portion of the insurance policies.

         At trial, the Breslers called as their expert accountant Robert E. Pugh, who calculated what the Net-in-Trust would have been had WTC performed as they believed it should have. Pugh offered two sets of numbers. The first calculated what the Net-in-Trust should have been through the date of trial: $10, 668, 667 (the “Present Shortfall”); the second calculated what the Net-in-Trust would be through the end of Fleur's life which, based on mortality tables, was projected through 2019: $8, 793, 005 (the “Future Shortfall”). The Breslers also sought damages to compensate for the approximately $7.75 million Fleur would have spent through the end of 2014 to obtain and maintain her replacement term insurance policies.

         The jury found in favor of the Breslers as to all these components, albeit awarding somewhat less than what Fleur sought for the cost of her term replacement policies, a total of $23, 361, 692 in damages. That amount was composed of three parts: (1) $10, 668, 687 in Present Shortfall damages; (2) $8, 793, 005 in Future Shortfall damages; and (3) $3.9 million for Fleur's replacement insurance policies.

         The jury verdict, however, did not resolve all the issues related to the contract claims. Plaintiffs had also sought various forms of equitable relief to be decided by the Court-including specific performance and the possibility of a “tax gross-up” of the damages.[7] Accordingly, the Court deferred entering Judgment and instead, with the consent of the parties, afforded them an extensive briefing schedule, which was followed by an all-day motions hearing on August 8, 2014. See ECF No. 605 in PJM 09-2957 (Order setting briefing schedule). On March 24 and 25, 2015, the Court issued two separate Opinions and Orders addressing the parties' various post-trial motions, which denied WTC's Motion for Judgment as a Matter of Law, and ordered WTC to return the collateral held to the Breslers pursuant to the Investment Management Agreement. ECF Nos. 658 & 660 in PJM 09-2957.

         On August 18, 2015, the Court entered a Final Order of Judgment in favor of the Breslers in the amount of $28, 274, 253.79, consisting of (a) $19, 461, 692 in damages arising out of WTC's failure to make loans to cover the premiums on three life insurance policies held by the Charles S. Bresler Irrevocable Insurance Trust; (b) $3, 900, 000 in reimbursement of insurance policy premium payments Plaintiffs made with respect to the Fleur S. Bresler 2009 Preservation Trust; and (c) $4, 912, 561.79 as damages attendant to WTC's failure to timely return collateral to the Charles Bresler Estate. 688 in PJM 09-2957. With regard to the jury verdict of $23, 361, 692, the Court awarded post-judgment interest at the federal statutory rate from March 25, 2015-the date of the Court's entry of Partial Judgment in favor of Plaintiffs on the jury's verdict-to August 18, 2015. Id. The Final Order of Judgment awarded post-judgment interest at the federal statutory rate on $28, 274, 253.79 from August 18, 2015-the date of the Court's Final Order of Judgment-until paid or satisfied. Id.

         Following WTC's appeal to the Fourth Circuit, on April 20, 2017, that court affirmed the judgment as well as other rulings this Court had made. Bresler v. Wilmington Trust Company, 855 F.3d 178 (4th Cir. 2017). WTC filed a petition for rehearing and rehearing en banc in the Fourth Circuit, both of which were denied on May 16, 2017. ECF No. 710 in PJM 09-2957. On August 17, 2017, WTC filed a petition for certiorari in the Supreme Court, which was denied on November 28, 2017. Wilmington Trust Company v. Bresler, 138 S.Ct. 470 (2017).

         Following the appeal, WTC advised the Court that it had satisfied the judgment in full. ECF No. 65 (Dec. 20, 2017 Hr'g Tr. at 4:4-21). Specifically, WTC indicated that it had transferred approximately $19.4 million in cash into a WTC-managed account owned by the ILIT, inclusive of interest, and had returned to the Bresler Estate approximately $5 million for the unpaid collateral and approximately $4 million to reimburse Fleur for the cost of her replacement term insurance policy. Id.

         C. The Present Case

         Plaintiffs now seek to pursue their non-contract claims that, severed from the contract claims, were assigned to PJM 15-1557. Those claims include: negligence (Count I); professional negligence (Count II); breach of fiduciary duty (Count III); negligent misrepresentation (Count VII); fraud, deceit and misrepresentation (Count VIII); violation of the Delaware Consumer Fraud Act (“DCFA”) (Count IX); fraudulent concealment (Count X); civil conspiracy (Count XI); and finally, aiding and abetting tortious conduct (Count XII). Second Amended Complaint (“SAC”), ECF No. 1. All these claims, brought on behalf of Charlie's Estate and Sidney individually, are against WTC, Waschull and Wileczek. In addition, Sidney has brought a single claim for breach of fiduciary duty against WTC (Count IV). Id.

         Sidney as an individual, and Fleur and Sidney as representatives of Charlie's Estate, have filed a Motion for Partial Summary Judgment against WTC, asking the Court to find that WTC's employees made actionable misrepresentations to Charlie during the negotiations and performance of the Agreements. ECF No. 26. WTC has filed a Motion for Summary Judgment on the grounds that the Estate's remaining claims have been extinguished both by the trial on the contract claim and by the Estate's subsequent acceptance of payment of the judgment on the contract claim following that trial, and that, as to Sidney's claims, they are barred by the statute of limitations. ECF No. 27. Finally, Waschull and Wileczek have filed their own Motions for Summary Judgment on the grounds that all claims against them are barred by the statute of limitations. ECF Nos. 28 & 32. The Court heard oral argument on all the Motions on December 20, 2017.


         Under Rule 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). This does not mean, however, that “some alleged factual dispute between the parties” defeats the motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). Rather, “the requirement is that there be no genuine issue of material fact.” Id. (emphasis in original).

         III. ANALYSIS

         As the Court observed in an earlier hearing, the “the ultimate issue in this case is what's the contract.” Aug. 14, 2013 Hr'g Tr. at 21:9, ECF No. 551 in PJM 09-2957. A jury has now definitively held that the contract between the parties is precisely what Charlie always believed it to be; that is, WTC agreed to lend funds to the Bresler Life Insurance Trust to cover annual premiums on policies on Charlie and Fleur's lives for the duration of their joint lives, and that this commitment was not contingent upon Charlie posting collateral each year. Furthermore, WTC now has paid, and the Breslers have accepted, the full amount of the Judgment entered on the Jury Verdict, including interest, that was entered against WTC on the contract claim. The core issue for the Court at this juncture is whether any of the non-contract claims survive. In the Court's judgment, none do.

         A. Sidney Bresler's Claims

         The Court begins by addressing what is perhaps the easier of the remaining claims- those brought by Sidney Bresler as an individual.

         1. Damages

         Sidney is seeking punitive damages, treble damages under Delaware statutory law, and attorneys' fees, which he suggests are tied to the fact that he deferred filing his own law suit, suffered emotional damages during the pendency of the dispute, and was required to compensate his attorneys for years of litigation. During oral argument, Sidney's counsel clarified that these damages are not “independent of the damages . . . asserted elsewhere on behalf of the estate, ” but rather that Sidney is an “additional plaintiff who with respect to some of those claims arising out of the relationship between Wilmington as trustee on the one hand and Sidney Bresler as beneficiary on the other hand flow to him as well as to the estate.” ECF No. 65 (Dec. 20, 2017 Hr'g Tr. at 8:8-14). Defendants respond that Sidney ...

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