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Kleiman v. Kings Point Capital Management, LLC

United States District Court, E.D. Missouri, Eastern Division

July 6, 2018

LYNN KLEIMAN, Plaintiff,
v.
KINGS POINT CAPITAL MANAGEMENT, LLC and JEFFREY BATES, Defendants.

          OPINION, MEMORANDUM AND ORDER

          HENRY EDWARD AUTREY UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendants' Motion to Transfer Venue to the Eastern District of New York Pursuant to 28 U.S.C. §1404(a) [Doc. No. 21]. Plaintiff opposes the motion. For the reasons set forth below, the Motion is granted.

         Facts [1]

         Plaintiff Lynn Kleiman (“Plaintiff”) is a resident of St. Louis County, Missouri. Plaintiff's father and mother, Ralph and Ora Levine (collectively, “the Levines”), lived in St. Louis County until their deaths in 2013.

         Defendant Kings Point Capital Management L.L.C. (“KPCM”) is a Delaware[2] limited liability company with offices in Great Neck, New York, and in Brentwood, Tennessee. KPCM is a financial services company that manages investment portfolios and provides financial planning services. Defendant Jeffrey Bates (“Bates”) is a member, employee, and agent of KPCM and a citizen of Tennessee. KPCM and Bates are herein referred to as “Defendants” collectively.

         Before their deaths, the Levines entrusted the financial management of “substantially all of their assets” to Defendants. Plaintiff assisted her parents, the Levines, in interacting with Defendants. The relationship between Defendants and Levines was centered around and governed by two Discretionary Investment Management Agreements, the first executed by the Levines on November 19, 2009 (the “2009 Agreement”), and the second executed by Plaintiff as attorney-in-fact for the Levines on July 12, 2013 (the “2013 Agreement”). Both the 2009 and 2013 Agreements includes a forum selection clause wherein the Levines agreed to resolve all disputes “arising out of, under or in connection with this Agreement ... in the appropriate federal or state court in the State of New York and in no other forum.”

         The Levines and Plaintiff “relied upon the express statements, representations and actions of the Defendants and entrusted to them the prudent and responsible management of the financial assets of Ralph and Ora Levine in such a way as to effectuate their estate plan and their desires for distribution after the deaths of each of them.” Accordingly, the Levines provided their Estate Plan documents to Defendants. The Estate Plan included The Ralph and Ora Levine Living Trust dated February 27, 1992 and six amendments to the Living Trust: the First Amendment to the Levine Loving Trust, dated December 9, 1996; the Second Amendment to the Levine Loving Trust, dated March 21, 2001; Third Amendment to the Levine Loving Trust, dated June 6, 2001; (d) Fourth Amendment to the Levine Living Trust, dated February 2, 2005; (e) Fifth Amendment to the Levine Living Trust, dated September 6, 2007; and (f) Sixth Amendment to the Levine Living Trust, dated October 22, 2009. The Estate Plan documents also included the Last Will of Ora Levine, which provided that all assets of Ora's estate at her death will pour over into the Living Trust, to be distributed pursuant to the terms of the Living Trust. The Sixth Amendment to the Living Will made specific distributions to Eric and Leonard Levine, two sons of Ralph and Ora Levine, and amended Article 12 to provide for remaining trust property to be given to Lynn Kleiman and her family. The Living Trust expressed the Levines' intent that after their deaths, specific bequests be made to grandchildren and Jewish Charities, and specific cash distributions of $50, 000 and $25, 000 be made to Eric and Leonard, respectively. Thereafter, the “overwhelming bulk” of the Levine's estate was to be distributed to Plaintiff, making her the primary, identifiable beneficiary of the Estate Plan, something Defendants knew or should have known based on their relationship with the Levines.

         Defendants recommended to the Levines, and to Lynn Kleiman, that most or all of the Levines' financial assets be places into three IRA Custodial Accounts (the “Custodial Accounts”) with Pershing Advisor Solutions, L.L.C. (“Pershing”). The investments with Pershing were held in the Custodial Accounts pursuant to three “Traditional IRA Adoption Agreements” (the “IRA Agreements”). Defendants provided the IRA Agreements to the Levines, and at the recommendation of Defendants, the IRA Agreements were signed by Ralph Levine with Ora Levine named as primary beneficiary. Each IRA Agreement was subject to terms set forth in a “Traditional Individual Retirement Account (IRA) Adoption Agreement and Plan Document Traditional Individual Retirement Custodial Account” (the “Plan Document”). The Plan Document was prepared by Pershing, and Defendants had possession of and were familiar with the terms of the Plan Document. Defendants did not ensure that any contingent beneficiaries were named, and the Custodial Accounts' terms were such that the Ora's beneficiary designation would lapse upon her death. The Levines relied on Defendants' recommendations, as did Plaintiff as the primary beneficiary of the Living Trust.

         Ralph Levine died on October 20, 2013. At that time, the value of the assets in the Custodial Accounts was approximately $1.75 million. Plaintiff “promptly” notified Defendants of Ralph's death. Thereafter, Defendants did not ensure that the assets in the Custodial Accounts were transferred to Ora Levine, who was named as primary beneficiary of those accounts. Nor did they ensure a beneficiary was designated for the Custodial Accounts in the event of Ora's death. When Ora Levine died less than three weeks later, on November 8, 2013, the assets in the Custodial Accounts had not yet been distributed to her. Following the terms of the Custodial Accounts and Plan Document, Pershing refused to distribute the assets in the Custodial Accounts to the Estate of Ora Levine or to the Living Trust. Instead, Pershing distributed the assets to the Levines' children per stirpes, allocating one-third each to Plaintiff, Eric Levine, and Leonard Levine.

         Plaintiff alleges that, as the primary beneficiary of the Estate of Ralph and Ora Levine, Defendants owed to her a duty to “effectuate the expressed intentions” of the Levines as reflected in the Estate Plan, and that they negligently breached said duty. Plaintiff also alleges that Defendants owed her fiduciary duties which they breached. Plaintiff alleges damages of not less than $3.5 million.

         Procedural Background

         Plaintiff originally filed this action individually and as personal representative of the Estate of Ora Levine in the Circuit Court of St. Louis County, Missouri. The case was removed to this Court based on diversity of citizenship between Plaintiff and Defendants. Plaintiff's original complaint alleged three counts against Defendants: negligence, breach of fiduciary duty, and breach of contract. The complaint alleged injury to the Estate of Ora Levine and to Lynn Kleiman, as a beneficiary of Ora and Ralph Levine's estate and living trust.

         Defendant filed a Motion to Transfer [Doc. No. 9] based on a forum selection clause in the 2009 Agreement and 2013 Agreement between the Levines and Defendants. Plaintiff thereafter filed the First Amended Complaint (FAC) [Doc. No. 15] with Lynn Kleiman in her individual capacity as the sole Plaintiff, alleging two counts: negligence and breach of fiduciary duty. Plaintiff voluntarily dismissed the claims made as the personal representative of the Estate of Ora Levine, and a breach ...


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