Rafert v. Meyer

859 N.W.2d 332 (2015)

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Nature of the Case

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Facts

P executed an irrevocable trust for the benefit of her four adult daughters. D prepared the trust instrument and named himself as the trustee. D did not meet with Ps to explain the provisions of the trust or who would be responsible for monitoring the insurance policies owned by the trust.

D signed three applications for life insurance that named P as the insured and the trust as the owner of the policies. D gave the insurer a false address in South Dakota for D as trustee. D was a resident of Falls City, Nebraska, and never received mail at the South Dakota address. The insurers were TransAmerica Life Insurance Company (TransAmerica), Lincoln Benefit Life Company (Lincoln Benefit), and Lincoln National Life Insurance Company (Lincoln National). In 2009, Rafert paid initial premiums on each of the policies in the amounts of $97,860, $63,916, and $100,230, respectively. TransAmerica sent a notice to D at the false address that premiums of $97,860 were due and a subsequent notice that the policy was in danger of lapsing. In November 2010, a final notice and letter were sent to Meyer stating that the policy had lapsed effective August 11, 2010, but that the policy allowed for reinstatement. Lincoln Benefit sent a notice to D at the false address that a premium of $60,150 was due on May 26, 2010, and a subsequent letter to inform Meyer that the policy was in its grace period and was in danger of lapsing. On February 23, 2011, a final notice was sent stating that the grace period had expired but that the policy could be reinstated. Ps allege that D breached his fiduciary duties as trustee and the policies lapsed, resulting in the loss of the initial premiums. And after the policies had lapsed, P paid additional premiums in the amount of $252,841.03. These premiums were paid directly to an insurance agent by issuing checks to a corporation owned by the agent. However, the premiums were never forwarded to the insurers by the agent or his company, and Ps do not know what happened to the premiums. D moved to dismiss asserting that he did not cause the nonpayment of the premiums, that he had no notice from the insurers of nonpayment, and that his failure to submit annual reports to the beneficiaries had no causal connection to the damages claimed because the lapses had occurred after his report would have been submitted. The district court agreed and dismissed the case. Pursuant to the terms of the trust, D did not have a duty to pay the premiums or to notify anyone of the nonpayment of the premiums. Ps appealed.