United States District Court, E.D. Pennsylvania
January 28, 2004.
JAY SONECHA, Trustee of the Dua Family Multiple Powers Liquidity Trust
NEW ENGLAND LIFE INSURANCE COMPANY t/a NEW ENGLAND FINANCIAL, NEW ENGLAND FINANCIAL GROUP, ROBERT P. WERMUTH, and ANIL MINOCHA
The opinion of the court was delivered by: LEGROME DAVIS, District Judge
Presently before this Court are Defendant Anil Minocha's Motion to
Dismiss (Dkt. No. 3) and Defendants New England Life Insurance Company,
New England Financial Group and Robert P. Wermuth's Motion to Dismiss
(Dkt. No. 4). For the reasons discussed below, Defendants' Motions are
I. Factual Background and Procedural History
Plaintiff Jay Sonecha ("Sonecha") is the Trustee of the Dua Family
Multiple Powers Liquidity Trust (the "Dua Family Trust" or the "Trust").
Compl. ¶ 1. The Dua Family Trust was established on May 17, 1990 by
Jayant Kamar Dua, M.D. ("Dr. Dua") to hold and manage various assets,
including the proceeds of certain life insurance policies on Dr. Dua's
life. Compl. ¶ 6. The original trustees of the Dua Family Trust were
Dr. Dua's sister, Sangeeta Minocha ("Mrs. Minocha"), and his cousin, Roop
Kumar Dua ("Roop Dua"). Compl. ¶ 7. Sonecha replaced Mrs. Minocha and
Roop Dua as trustee in March 2003. Compl. ¶ 26.
While she was trustee, Mrs. Minocha was responsible for paying the
premiums on the insurance policies of which the Dua Family Trust was the
beneficiary. Compl. ¶ 9. Defendant Anil Minocha ("Mr. Minocha")
assisted Mrs. Minocha by writing the checks and
mailing the premium payments. Mr. Minocha also received all incoming mail
related to the Dua Family Trust. Compl. ¶ 12.
One of the life insurance policies for which the Dua Family Trust was
beneficiary was a Valley Forge Life Insurance Company ("VFLIC") policy
with a $500,000 death benefit (the "Valley Forge Policy" or the
"Policy"). Compl. ¶ 14. The Policy was sold to Dr. Dua by Defendant
Robert P. Wermuth ("Wermuth"). Compl. ¶ 15. The premium on the Valley
Forge Policy was due to be paid on or before March 15, 2001, but was not
paid by that date or within the 30-day grace period. Compl. ¶ 16. As a
result, the Policy lapsed.
When Wermuth received notice that the Valley Forge Policy had lapsed,
he contacted Dr. Dua about reinstating the policy. Compl. ¶ 18.
Wermuth arranged for Dr. Dua and Mrs. Minocha to sign an application for
reinstatement, which was approved by VFLIC on June 20, 2001, subject to
receipt of the delinquent premium by July 10, 2001. Compl. ¶ 19. Mrs.
Minocha failed to remit the premium to VFLIC, and the Valley Forge Policy
was not reinstated. Compl. ¶ 20.
In February 2002, Dr. Dua and his wife, Meena Dua ("Mrs. Dua") had
conversations with Wermuth about additional life insurance coverage.
Compl. ¶ 21. Because Wermuth did not suggest otherwise, Dr. Dua and
Mrs. Dua assumed that the Valley Forge Policy had been reinstated and
remained in full force and effect. Compl. ¶ 21. In July 2002, Mrs. Dua
contacted Wermuth to ensure that all of the policies on Dr. Dua's life,
including the Valley Forge Policy, were in full force and effect. Compl.
¶ 23. Several days later, at Wermuth's direction, his assistant advised
Mrs. Dua that all of the policies were in effect and in order. Compl. ¶
Dr. Dua died on October 15, 2002. Compl. ¶ 25. Shortly thereafter,
Family Trust learned that the Valley Forge Policy had never been
reinstated and, as a result, the Trust had $500,000 less in insurance
coverage than had been assumed. Compl. ¶ 26.
On May 19, 2003, Sonecha filed a four count Complaint in the Chester
County Court of Common Pleas. Count One alleges negligence against
Wermuth. Count Two alleges that New England Life Insurance Company ("New
England Life") and New England Financial Group ("NEFG") are vicariously
liable for Wermuth's acts. Count Three alleges that New England Life,
NEFG and Wermuth are vicariously liable for the acts of Wermuth's
assistant and Count Four, which is misnumbered as Count Three, alleges
negligence against Mr. Minocha. Defendants New England Life, NEFG and
Wermuth removed the Complaint to this Court on June 20, 2003. Defendants
now move pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure to dismiss the Complaint for failure to state a claim upon
which relief can be granted. Fed.R.Civ.P. 12(b)(6).
II. Standard of Review
A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure tests the legal sufficiency of the complaint. See
Markowitz v. Northeast Land Co., 906 F.2d 100, 103(3d Cir. 1990): Sturm
v. Clark, 835 F.2d 1009. 1011(3d Cir. 1987). In considering a motion to
dismiss, the court must accept as true all factual allegations of the
complaint and draw all reasonable inferences in the light most favorable
to the plaintiff. Board of Trs. of Bricklayers and Allied Craftsmen Local
6 of N.J. v. Wettlin Assoc., Inc., 237 F.3d 270, 272 (3d Cir. 2001). A
court therefore "may dismiss a [claim] only if it is clear that no relief
could be granted under any set of facts that could be proven consistent
with the allegations." Ramadan v. Chase Manhattan Corp., 229 F.3d 194,
195-96 (3d Cir. 2000) (citing Alexander v.
Whitman, 114 F.3d 1392, 1398 (3d Cir. 1997)).
Sonecha admits that Mrs. Minocha was the trustee of the Dua Family
Trust and the person responsible for paying the premium on the Valley
Forge Policy of which the Dua Family Trust was the beneficiary. He
further admits that Mrs. Minocha's failure to pay the premium caused the
Policy to lapse, resulting in a loss of $500,000 to the Trust.
Notwithstanding these admissions, Sonecha attempts to impose liability on
Defendants by alleging that said loss was caused by the negligence of
Mr. Minocha, Wermuth and Wermuth's assistant.
The threshold question in any negligence action is whether the
defendant owed a duty or obligation to the plaintiff. See Atcovitz v.
Gulph Mills Tennis Club, Inc., 571 Pa. 580, 586, 812 A.2d 1218, 1222
(2002). It is undisputed that "[u]pon acceptance of the trust by the
trustee, he [or she] is under a duty to the beneficiary to administer the
trust." Restatement (Second) of Trusts § 169 (1959). Sonecha cites no
authority, however, for the proposition that someone other than the
trustee owes any duty arising out of the trust to the trust
beneficiaries. Instead, Sonecha relies on cases which are clearly
In Pascarella v. Kelley, 378 Pa. 18, 105 A.2d 70 (1954), Kelley
supervised the dredging of a creek adjacent to the plaintiffs' building.
During the course of operations, the building's foundation was damaged.
Kelley promised plaintiffs that he would have it repaired. Kelley,
however, did nothing more than have some gravel pushed up against the
side of the building. After the foundation gave way, resulting in severe
damage to the building, plaintiffs brought an action against Kelley for
failing to properly repair the foundation. Id. at 19-20, 105
A.2d at 72. The court, after noting that Kelley "could be held
accountable" for repairs negligently performed, though gratuitously
undertaken, reversed the jury's verdict and ordered a new trial because
the trial court's charge amounted to "fundamental error." Id. at 22-24,
105 A.2d at 73-74.
In Rehder v. Miller, 1908 WL 3580 (Pa. Super. 1908), the landlord, at
the tenant's request, had the porch floor of the leased premises
repaired. About six months after the work was done, while the tenant was
walking across the porch, the floor gave way and she was severely
injured. The tenant brought an action against the landlord sounding in
negligence. Id. at * 1. The court held that "where, at the request of a
tenant, [the landlord] does make repairs which he is under no obligation
to do, he is responsible for such negligence in the performance of his
undertaking as causes damage to the tenant." Id. at *2.
Apart from the significant factual dissimilarities between those cases
and the instant one, Pascarella and Rehder are premised on the existence
of a duty owed by one party to another.*fn1 Pascarella, 378 Pa. at 22,
105 A.2d at 73; Rehder, 1908 WL 3580, at *2. Here, Mr. Minocha owed no
duty to the beneficiaries of the Dua Family Trust because he was not a
trustee. Even assuming arguendo that Mrs. Minocha entrusted Mr. Minocha
with writing the checks and mailing the premium payments, see Compl. ¶
12, Mrs. Minocha, not Mr. Minocha, is liable to the Trust's beneficiaries
for Mr. Minocha's alleged failure to pay the premium on the Valley Forge
Policy. See Restatement (Second) Torts §§ 225(2), 264 comment b.
Regardless, Mrs. Minocha could not have properly committed that aspect of
the Trust's administration to Mr. Minocha, as it
implicated her "primary duty . . . to preserve the trust assets and to
ensure the safety of the trust principle." In re Main, Inc., No. 98-158,
1999 WL 330239, *5 (E.D. Pa. May 24, 1999); see also Restatement (Second)
of Trusts § 171.
Similarly unavailing is Sonecha's reliance on Jarvis v. Workmen's
Comp. Appeal Bd., 497 Pa. 379, 441 A.2d 1189 (1982). In Jarvis, the
plaintiff brought an action against a workmen's compensation insurer to
recover benefits for her husband's death. Id. at 380-81, 441 A.2d at
1189-90. The court held that the workmen's compensation insurer, which
breached its duty to provide a renewal premium notice to the insured, was
estopped from asserting expiration of the policy as a bar to recovery.
Id. at 383, 441 A.2d at 1191. In the instant case, however, Wermuth not
only notified Mrs. Minocha that the policy had lapsed, but also arranged
for her to have it reinstated.
Finally, in Al's Cafe. Inc. v. Sanders Ins. Agency, 820 A.2d 745 (Pa.
Super. 2003), the court stated the basic proposition that "an insurance
agent or broker has a duty not to misrepresent [to insureds] the coverage
procured." Id. at 749. Al's Cafe, however, is inapplicable here because
the insured, Mrs. Dua, to whom Wermuth's assistant made the alleged
negligent misrepresentations, is not a plaintiff. Rather, Sonecha, as
trustee, brings this action in his representative capacity on behalf of
the Dua Family Trust. But like Mr. Minocha, neither Wermuth nor his
assistant were trustees and, therefore, they owed no duty to the Trust's
beneficiaries.*fn2 Even if Wermuth and his assistant owed a duty to the
Trust's beneficiaries and
breached that duty, Sonecha has failed to allege that Wemurth's acts or
the acts of his assistant caused any damage to the Trust. Mrs. Minocha's
failure to pay the premium on the Valley Forge Policy is the reason the
In sum, the Court concludes that Mr. Minocha, Wermuth and Wermuth's
assistant owed no duty to the beneficiaries of the Dua Family Trust.
Absent a duty, there can be no breach, and thus, no basis for recovery
under a theory of negligence. Accordingly, Counts One and Four, which
purport to sound in negligence, are dismissed. Because Sonecha's vicarious
liability claims hinge on a finding of negligence against Wermuth and his
assistant, Counts Two and Three are also dismissed.
ACCORDINGLY, this day of January, 2004, upon consideration of Defendant
Anil Minocha's Motion to Dismiss (Dkt. No. 3), Defendants New England
Life Insurance Company, New England Financial Group and Robert P.
Wermuth's Motion to Dismiss (Dkt. No. 4), and Plaintiff Jay Sonecha's
response thereto, it is hereby ORDERED that said Motions are GRANTED. The
Clerk is directed to statistically close this matter.