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Gadaire v. Orchin

United States District Court, District of Columbia

June 15, 2016

ELIZABETH GADAIRE, Plaintiff,
v.
JEREMY D. ORCHIN, Defendant.

          MEMORANDUM OPINION AND ORDER

          RANDOLPH D. MOSS United States District Judge.

         This diversity action concerns a life insurance policy covering Dr. Eugene C. Gadaire, which was assigned to a trust for the benefit of his wife, Elizabeth Gadaire. Dr. Gadaire’s close friend, Dr. Jeremy D. Orchin, served as trustee. See Orchin v. Great-W. Life & Annuity Ins. Co., 133 F.Supp. 3d 138, 140-41 (D.D.C. 2015). After Dr. Orchin missed a semi-annual premium payment due July 1, 2009, the policy lapsed on August 1, 2009. Id. at 143. Dr. Orchin missed a second payment due January 1, 2010. Id. He did not realize that he had failed to make payments until after Dr. Gadaire died on January 15, 2010. Id. Mrs. Gadaire and Dr. Orchin previously sought relief against the issuer of the life insurance policy, Great-West Life & Annuity Insurance Company, but the Court granted summary judgment in favor of Great-West. Id. at 141. The remaining dispute is between Mrs. Gadaire and Dr. Orchin.

         Presently before the Court is Mrs. Gadaire’s renewed motion for summary judgment against Dr. Orchin on her claims for negligence and breach of fiduciary duty. See Dkt. 57. Mrs. Gadaire contends that (1) Dr. Orchin violated the standard of care as a matter of law and (2) the defense of contributory negligence is inapplicable to claims that a trustee breached his duties to a beneficiary. See Dkt. 57-1. Dr. Orchin responds that Mrs. Gadaire cannot prevail because, under the terms of the trust, he was under no obligation to make payments if the trust contained insufficient funds, and, at the time he failed to pay the premiums, the trust lacked sufficient funds. See Dkt. 58 at 7-10. He further contends that under the terms of the trust, he did not have a duty to notify Mrs. Gadaire that the trust lacked sufficient funds. Id. at 11-14. Finally, he contends that the trust includes an exculpatory clause precluding liability for nonpayment. Id. at 8-9.

         As explained below, the Court holds that genuine issues of material fact remain regarding whether Dr. Orchin met the applicable standard of care, and it rejects Mrs. Gadaire’s contention that the defense of contributory negligence is unavailable as a matter of law. The Court, accordingly, DENIES Mrs. Gadaire’s renewed motion for summary judgment. Dkt. 57.

         I. BACKGROUND

         The full history of the case is familiar to the parties and is explained in-depth in the Court’s prior opinion. See Orchin, 133 F.Supp. 3d 138. For present purposes, the Court recounts only those portions of the background relevant to Mrs. Gadaire’s renewed motion for summary judgment.

         From 1993 through January 1, 2009, Dr. Orchin made every semi-annual insurance premium payment on behalf of the trust. Id. at 142. During this time, whenever Dr. Orchin received a premium statement, he would call Mrs. Gadaire and tell her. Id. She would then deposit money in the trust’s checking account, and Dr. Orchin would in turn write a check from the trust to Great-West. Id. Dr. Orchin did not, however, receive a premium statement for the payment due July 1, 2009 or a subsequent lapse notice. Id. at 143. He had moved twice, most recently in April 2009, and, although he did submit change-of-address forms to the U.S Postal Service, he did not provide his new addresses to Great-West. Id. at 142-43.

         In October 2012, after Great-West refused to pay the proceeds of the insurance policy to the trust, Dr. Orchin brought suit against Great-West. Dkt. 1. In January 2013, Mrs. Gadaire brought suit against Dr. Orchin and Great-West, see No. 13-cv-55, Dkt. 1, and the cases were consolidated. Feb. 1, 2013 Min. Order. All three parties moved for summary judgment: Dr. Orchin sought summary judgment against Great-West, Dkt. 29; Mrs. Gadaire sought summary judgment on two of her three claims against Dr. Orchin, Dkt. 30; and Great-West sought summary judgment against both Dr. Orchin and Mrs. Gadaire, Dkt. 31. The Court granted Great-West’s motion and denied Dr. Orchin’s motion and, accordingly, dismissed Dr. Orchin and Mrs. Gadaire’s claims against Great-West. See Orchin, 133 F.Supp. 3d at 141.

         At the same time, however, the Court denied Mrs. Gadaire’s motion for summary judgment on her negligence and breach of fiduciary duty claims against Dr. Orchin, holding that she had failed to demonstrate the absence of genuine issues of material fact for the jury. Id. at 153-54. As the Court explained, the record established that Dr. Orchin requested that the U.S. Postal Service forward his mail but did not update his address with Great-West and did not pay the insurance premiums in a timely manner. Beyond that, however, the record included no evidence of Dr. Orchin’s care-or lack of care-in administering the trust. Id. Nor did the record establish-as a matter of law-the degree of “diligence” that was required of Dr. Orchin. Id.

         In addition, Dr. Orchin had raised a number of potential defenses in his opposition to Mrs. Gadaire’s motion. Id. He argued, for example, that Mrs. Gadaire was at least partially responsible for the lapse of the insurance because she

failed to provide him with the money required for payments; did not notify him that she had not provided the necessary funds for two insurance periods; failed to “institute any sort of calendar system” to track her obligation to provide the funds; and failed to notify Great-West that she was not receiving copies of premium notices.

Id. (quoting Dkt. 37 at 11-12). In reply, Mrs. Gadaire then asserted for the first time that the defense of contributory negligence is inapplicable to a claim by a beneficiary of a trust. Id. The Court declined to decide that issue because it was not raised in Mrs. Gadaire’s opening brief and, in any event, it was inadequately briefed. Id. And, because the Court had already concluded that Mrs. Gadaire had not established her entitlement to summary judgment, the Court did not address Dr. Orchin’s further arguments that exculpatory clauses in the trust agreement precluded Mrs. Gadaire’s claims for negligence and for breach of fiduciary duty; that under the terms of the trust, he lacked a duty to pay the premiums in the absence of sufficient funds in the trust account; that Mrs. Gadaire’s damages were not proximately caused by him; and that the defense of assumption of risk barred Mrs. Gadaire’s claim for negligence. See Dkt. 37.

         In order to provide Mrs. Gidaire with the opportunity to address these issues, the Court denied her motion “without prejudice to Mrs. Gidaire filing a renewed motion addressing (1) whether D.C. law permits a trustee to assert the defense of contributory negligence against the trust’s beneficiary, and (2) whether or in what circumstances a court can conclude as a matter of law that a defendant’s conduct violated the applicable standard of care.” Orchin, 133 F.Supp. 3d at 154-55. Mrs. Gadaire’s renewed motion for summary judgment is presently before the Court. Dkts. 57-59.

         II. ANALYSIS

         Mrs. Gadaire contends that Dr. Orchin violated the applicable standard of care as a matter of law and that the defense of contributory negligence is unavailable to a trustee. Dr. Orchin, in turn, argues that, under the terms of the trust agreement, he did not have the duties alleged by Mrs. Gadaire; that contributory negligence is indeed available as a defense, giving rise to a question of fact for the jury; and that an exculpatory clause in the trust agreement bars Mrs. Gadaire’s claims. The Court addresses each argument in turn.[1]

         A. Standard of Care

         Mrs. Gadaire first contends that she is entitled to summary judgment on her negligence and breach of fiduciary duty claims because Dr. Orchin violated the standard of care as a matter of D.C. law.[2] In a negligence action, “[t]he plaintiff bears the burden of presenting evidence ‘which establishes the applicable standard of care, demonstrates that this standard has been violated, and develops a causal relationship between the violation and the harm complained of.’” Morrison v. MacNamara, 407 A.2d 555, 560 (D.C. 1979). “[A] claim for breach of fiduciary duty under D.C. law” requires the plaintiff to show “that the defendant: (1) owed ...


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