SJC: no fiduciary duty owed to IRA beneficiary.

Byline: Kris Olson

The commercial custodian of non-discretionary individual retirement accounts did not owe a fiduciary duty to a named beneficiary of those accounts, but the beneficiary could maintain a suit under G.L.c. 93A by credibly alleging that the custodian had unreasonably withheld the proceeds of those accounts, the Supreme Judicial Court has decided.

The decision split the difference between the conclusions reached by the trial judge and Appeals Court.

The SJC noted that fiduciary duties may arise either as a matter of law if the parties have an "archetypal" relationship, or when there is "evidence indicating that one person is in fact dependent on another's judgment in business affairs or property matters."

But the plaintiff-in-counterclaim could not support the existence of a fiduciary duty under either theory, the SJC found.

While the circumstances that may create a fiduciary relationship are varied, here the amended counterclaim did not allege that the plaintiff ever "reposed trust and confidence" in the defendant's judgment or advice, Justice David A. Lowy wrote for the court.

Nor did the contract between the original account holder and the defendant contain any express or implicit assumption of any fiduciary responsibility, Lowy said.

On the other hand, the counterclaim plaintiff could assert her Chapter 93A claim, having met her burden to allege plausibly that the defendant was operating in a "business context" and that the defendant's conduct was "unfair" within the meaning of Chapter 93A.

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UBS Financial Services, Inc. v. Alibert, Lawyers Weekly 10-167-19 (35 pages)

THE ISSUE: Does the commercial custodian of non-discretionary IRAs owe a fiduciary duty to a named beneficiary of those accounts, and can the beneficiary maintain a suit under G.L.c. 93A by credibly alleging that the custodian had unreasonably withheld the proceeds of those accounts?

DECISION: No and yes, respectively (Supreme Judicial Court)

LAWYERS: Carmen A. Frattaroli of Salem (plaintiff-in-counterclaim/appellant)

John K. Wells and Cliff G. Anderson, of Greenberg Traurig, Boston (defendant-in-counterclaim/appellee)[/box]

'Fundamental transformation' avoided

John K. Wells of Boston, attorney for defendant-in-counterclaim UBS, declined to comment on the SJC's decision, as did lawyers who crafted an amicus brief on behalf of the Securities Industry and Financial Markets Association.

But the association is likely relieved that the court failed to recognize the potential existence of a fiduciary duty to IRA beneficiaries, as...