Date: 02-11-2018

Case Style:

Case Number: 17-1442

Judge: Stahl

Court: United States Court of Appeals for the First Circuit on appeal from the District of Massachusetts (Suffolk County)

Plaintiff's Attorney: Robert O'Regan

Defendant's Attorney: Keith P. Carroll and Andrew Nathanson

Description: In 2003, Peter M. Cooper, Jr.
("decedent") established an Individual Retirement Account ("IRA")
with Mesirow Financial ("Mesirow IRA"), and designated his then
wife, Alyssa Jane D'Amore ("D'Amore"), as beneficiary. In 2006,
the couple divorced, but decedent never revoked the beneficiary
designation. In 2011, decedent transferred the majority of his
Mesirow IRA assets to a TD Ameritrade IRA. In 2012, upon
decedent's death, Mesirow distributed the assets remaining in the
Mesirow IRA to D'Amore. Carol Diane Cooper, the mother and primary
beneficiary of decedent, and John S. Cooper, the executor of
decedent's estate, (collectively "the Coopers") sued D'Amore,
claiming that the Mesirow assets should have been distributed to
decedent's estate. The district court ultimately granted summary
judgment for the Coopers.
After careful consideration, we conclude that the
district court improperly granted summary judgment for the Coopers
because decedent's transfer did not terminate the Mesirow IRA.
I. Background
In 2003, decedent, an investment executive/bond trader
at Mesirow Financial Inc., established a Mesirow IRA through his
employer. The Mesirow Custodial Agreement governed the IRA.1 At
1 The IRA was originally governed by a Trust Agreement with
Delaware Charter Trust. In 2010, Mesirow took over as the
custodian and the Mesirow Custodial Agreement subsequently
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the time, decedent was married to D'Amore and designated her as
the beneficiary. Decedent managed multiple financial investments
for himself as well as other family members. In 2006, decedent
and D'Amore divorced and entered into a Martial Settlement
Agreement which provided, in part, that "[e]ach party shall
continue to own as his or her own separate property any Individual
Retirement Account (IRA), pension or retirement plan in his or her
name, and each does hereby waive any claim to such account of the
other." Notwithstanding the Martial Settlement Agreement,
decedent did not revoke the beneficiary designation for the Mesirow
IRA.
On August 18, 2011, decedent completed a TD Ameritrade
"Account Transfer Form" in order to transfer his assets from the
Mesirow IRA to a TD Ameritrade IRA. One provision in the form
stated: "This is a total transfer from a brokerage account."
Decedent checked the box next to this provision. Another provision
in the form, entitled "Transfer Agreement," provided: "Unless
otherwise indicated, I authorize the Transferor to liquidate any
nontransferable proprietary money market fund assets and mutual
fund assets that are part of my account and to transfer the
resulting credit balance to my account with TD Ameritrade."
Decedent did not initial this portion of the form.
governed the IRA. This change had no effect on the beneficiary
designation.
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On September 7, 2011, decedent received a letter from
Mesirow Financial, entitled "Non-Deliverable Assets(s)." The
letter provided that certain assets in decedent's account were
"not transferable." The letter also provided that if a "request
is not received within 60 days your account will be reestablished."
On September 24, 2011, decedent sent an email to a
financial advisor at Mesirow Financial, asking if he could keep
the nontransferable assets in the account.
Decedent continued to receive financial statements for
the Mesirow IRA until he died. Decedent's Mesirow statements posttransfer
included the same account number listed on his statements
pre-transfer. Unlike the earlier statements which listed D'Amore
as the primary beneficiary, the statements post-transfer indicated
that the primary beneficiary designation was "not provided."
On July 21, 2012, decedent died. Thereafter, Mesirow
distributed the assets that remained in the Mesirow IRA to D'Amore
pursuant to the beneficiary designation.
In October of 2014, the Coopers sued D'Amore, seeking to
recover the assets distributed by Mesirow to D'Amore. The parties
filed cross-motions for summary judgment. On November 10, 2015,
the district court granted summary judgment for the Coopers,
finding that upon divorce, D'Amore's beneficiary designation was
revoked pursuant to the Illinois Trusts and Dissolutions of
Marriage Act. Cooper v. D'Amore, No. CV 14-14041-RGS, 2015 WL
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6962834, at *4 (D. Mass. Nov. 10, 2015). On November 20, 2015,
D'Amore filed a motion for reconsideration. Thereafter, the court
determined that its summary judgment decision was improper because
Delaware law, not Illinois law, governed the IRA. On December 4,
2015, the court imposed sanctions on the Coopers' counsel for the
failure to turn over an authenticated copy of the Delaware Charter
Trust document, and granted D'Amore's motion for summary judgment.
The Coopers appealed and this Court vacated the district
court's entry of summary judgment on behalf of D'Amore because it
found that the Delaware Charter IRA Trust Agreement was not in
effect at the time the assets were distributed in 2012. Cooper v.
D'Amore, 663 F. App'x 1, 2–3 (1st Cir. 2016).2
On remand, the parties again moved for summary judgment.
This time, the district court granted summary judgment for the
Coopers. The court explained that from 2006, when the couple
divorced, until August 2011, when the decedent transferred his
assets, D'Amore was the beneficiary, but when decedent requested
a transfer of all of his assets in 2011, the beneficiary
designation was automatically revoked and the account terminated.
2 The Court nonetheless found that the district court did not
abuse its discretion when it sanctioned plaintiffs' counsel for
"misleading the court during summary judgment by failing to produce
or discuss a document." Cooper, 663 F. App'x at 2–3 (1st Cir.
2016).
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Cooper v. D'Amore, No. CV 14-14041-RGS, 2017 WL 74279, at *4-*5
(D. Mass. Jan. 6, 2017). This timely appeal followed.
II. Analysis
We review de novo a district court's grant of summary
judgment. Jakobiec v. Merrill Lynch Life Ins. Co., 711 F.3d 217,
223 (1st Cir. 2013). "Where the parties file cross-motions for
summary judgment, we employ the same standard of review, but view
each motion separately, drawing all inferences in favor of the
nonmoving party." Fadili v. Deutsche Bank Nat'l. Tr. Co., 772
F.3d 951, 953 (1st Cir. 2014).
Before considering the merits of the appeal, we first
address the Coopers' contention that D'Amore failed to properly
raise her arguments before the district court on summary judgment.3
"[I]t is a virtually ironclad rule that a party may not advance
for the first time on appeal either a new argument or an old
argument that depends on a new factual predicate." Cochran v.
Quest Software, Inc., 328 F.3d 1, 11–12 (1st Cir. 2003). We find
that D'Amore argued before the district court that the Mesirow IRA
never terminated.4 Because that issue is dispositive, we need not
3 The Coopers claim that "[a]lthough she could have done so
earlier, [D'Amore] brought [her] arguments [that she now makes on
appeal] to the District Court's attention only in the papers
supporting her Motion for Reconsideration of the Court's grant of
summary judgment to the Coopers."
4 In Defendant's Renewed Motion for Summary Judgment and
Incorporated Memorandum of Law, D'Amore argued that "[b]ecause the
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consider whether D'Amore's other arguments raised on appeal were
properly preserved before the district court.
In granting summary judgment for the Coopers, the
district court determined that "because Peter Cooper's written
direction for a total asset transfer [in 2011] terminated the
[Mesirow] Custodial Agreement, it also terminated the beneficiary
designation associated with the custodial account." Cooper, 2017
WL 74279, at *3. The court noted that "the [Mesirow] Custodial
Agreement required only the delivery of an instruction for a
transfer. It says nothing about the execution of the instruction."
Id. at *3 n.2. As such, "in the absence of a continuing beneficiary
designation, the Mesirow IRA assets became part of Peter Cooper's
estate upon his death." Id. at *3.
On appeal, all parties agree, as does this Court, that
the Mesirow Custodial Agreement was governed by Illinois law at
the time of decedent's transfer request in 2011. Further, all
parties agree that the beneficiary designation was never revoked
prior to the transfer request. Thus, the only question to resolve
on appeal is whether decedent's transfer request resulted in the
termination of the Mesirow IRA in a manner that revoked the
designation of D'Amore as beneficiary before decedent died.
transfer instructions did not direct that all assets were to be
transferred . . . it could not have terminated the account."
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Pursuant to Illinois law, "[t]he primary objective in
construing a contract is to give effect to the intent of the
parties." Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007). "A
court must initially look to the language of a contract alone, as
the language, given its plain and ordinary meaning, is the best
indication of the parties' intent." Id.; see also Air Safety,
Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999)
("[A] court initially looks to the language of a contract
alone . . . . If the language of the contract is facially
unambiguous, then the contract is interpreted by the trial court
as a matter of law without the use of parol evidence."). "If
[however] the language of the contract is susceptible to more than
one meaning, it is ambiguous," and in that case, "a court may
consider extrinsic evidence to ascertain the parties' intent."
Gallagher, 874 N.E.2d at 58.
The Mesirow Custodial Agreement, in Article XI,
Termination of Account, provides as follows:
This Agreement shall terminate upon the distribution of
all of the assets of the custodial account in accordance
with Article IV, or, if earlier, when the Depositor
delivers written direction to the Custodian to transfer
all assets of the custodial account to a successor
trustee, custodian of another retirement plan or
directly to the Depositor. Upon completion of such
distribution, the Custodian shall be relieved from all
further liability with respect to all amounts so paid
and shall be fully acquitted and discharged from its
responsibilities hereunder.
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The Coopers claim that pursuant to Article XI, "while
the Custodial Agreement could terminate upon distribution of all
the assets, . . . the contract would in fact terminate earlier"
when the "Depositor delivers written direction to transfer all
assets." D'Amore argues that the "Mesirow Custodial Agreement
could not have 'terminated' while any securities remained at
Mesirow because by its terms, the Mesirow Custodial Agreement
continued in force until the entire account was distributed."
The plain language of Article XI is clear. Setting aside
the distribution of assets provision, in order to terminate the
account via a request to transfer, there must be a request for a
transfer of "all assets."
An IRA is composed of a variety of assets. Some of the
assets may not be transferable in their current form. In order to
transfer nontransferable assets, a depositor must sell the
nontransferable security and transfer the cash.
In providing that a depositor must request a transfer of
all assets, Article XI does not distinguish between transferable
and nontransferable assets. The only reasonable construction of
this clause is that a request to transfer all assets must be
precisely that: a request to transfer the transferable assets as
well as the nontransferable ones. Had the contract meant to
provide otherwise, it could have stated that a transfer of all
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assets means the transfer of only those assets that are
transferable.
In completing his transfer request, decedent had the
opportunity to transfer all of his assets out of the Mesirow
account, but he chose to direct a transfer of only those assets
that were transferable. Were the Court to find that decedent
provided a request to transfer "all assets" by only checking the
one box on the TD Ameritrade Form, the rest of the form,
specifically the Transfer Agreement section which required
decedent's initials, would be rendered meaningless. Decedent is
assumed to have known that certain assets in the IRA were
transferable, while others were nontransferable in their current
form. See Hawkins v. Capital Fitness, Inc., 29 N.E.3d 442, 446
(Ill. App. Ct. 2015) ("[T]he act of signing legally signifies that
the individual had an opportunity to become familiar with and
comprehend the terms of the document he or she signed."). If
decedent wanted to direct a transfer of "all assets," he had to
authorize a change of the nontransferable assets so that they could
be transferred. Rather than doing that, however, decedent chose
to transfer only those assets that were transferable. Thereafter,
his agreement with Mesirow continued for the remaining
nontransferable assets in the account.
And if there were any doubt about whether decedent wanted
the nontransferable assets to be sold and transferred, his
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communications with Mesirow on September 7 and 24, 2011 (ten months
before his death) make clear that he wanted to keep the account
open. Simply put, there is no doubt that the Mesirow account
remained in place on the day decedent died.
While we acknowledge that the Mesirow IRA statements
post-transfer failed to list D'Amore as the beneficiary, the
statements simply stated that the beneficiary was "not provided."
This does not establish that the beneficiary designation was
revoked. Furthermore, the Plaintiffs' basis for their claim is
that when the Mesirow IRA terminated, D'Amore's beneficiary
designation was revoked. Because we find that the account did not
terminate, the Coopers' argument that the beneficiary designation
was revoked by account termination necessarily fails.

Outcome: For these reasons, we reverse the grant of summary
judgment for the Coopers. A request to transfer all assets was
never made; therefore, the beneficiary designation was never
revoked and D'Amore was entitled to the remaining assets in the
account upon decedent's death. Because this issue is
determinative, and there are no other material facts in dispute,
we remand the case to the district court with directions to enter
summary judgment for D'Amore.

Plaintiff's Experts:

Defendant's Experts:

Comments: