In Berkowitz v. Berkowitz, Civil Action No.
11-10483-DJC, 2012 U.S. Dist. LEXIS 31487 (D. Mass. March 9, 2012),
the U.S. District Court denied a motion to dismiss a complaint
alleging breach of an oral trust.
In 1998, Samuel Berkowitz gave a general power of attorney to his
daughter Bonnie. One year later, he conveyed certain real estate to
Bonnie, allegedly instructing her that if he were to die, then she
was to use the value of the real estate to take care of his wife
Barbara for her lifetime, and thereafter that Bonnie was to share
the remaining value with her brother. Samuel characterized this as
an "express oral trust" for the benefit of his wife for
life, with the remainder for Bonnie's brother and Bonnie
herself.
Over the next two or three years, there were a series of transfers
by Bonnie involving accounts in Samuel's name, to which he
acquiesced after-the-fact because he allegedly believed the
transfers were initiated by Bonnie in furtherance of his wishes as
expressed in the oral trust agreement.
In June 2008, Samuel asked Bonnie for an accounting of the oral
trust assets. Bonnie repudiated holding any assets in trust for
Samuel. He filed suit in March 2011, claiming breach of fiduciary
duty and requesting an accounting. Bonnie filed a motion to dismiss
the complaint on three grounds: (1) that the complaint fails to
state a claim upon which relief can be granted; (2) that the breach
of fiduciary duty claim is barred by the three-year statute of
limitations; and (3) that this claim is also barred by the statute
of frauds. The Court denied the motion.
The Court held that the complaint states an actionable claim for
breach of fiduciary duty under the alleged oral trust. Quoting
Cooney v. Montana, 347 Mass. 29, 34-35 (1964), the Court explained
that "[t]o create an oral trust sufficient to impose a
fiduciary duty on a would-be trustee, '[n]o particular form of
words is necessary but the words employed must unequivocally show
an intention that the legal estate be vested in one person to be
held in some manner or for some purpose on behalf of
another.'"
Regarding the statute of limitations defense, the Court took as
true Samuel's allegation that Bonnie did not repudiate the
trust until June 2008, and noted that a cause of action for breach
of fiduciary duty does not accrue until the trustee repudiates the
trust and the beneficiary has actual knowledge of the
repudiation.
Finally, as to Bonnie's argument under the statute of frauds
that agreements concerning the conveyance, sale or lease of
property, and agreements establishing a legacy trust, must be in
writing to be legally enforceable, the Court explained that the
question of whether the statute of frauds applies is best answered
at summary judgment or at trial on the basis of discovered
facts.
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