UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

____________________________________ )

MIIA C. D’AGOSTINO, ) )

Plaintiff, ) )

v. ) CIVIL ACTION NO. 1:12-cv-11628-DJC ) )

FEDERAL INSURANCE COMPANY and ) BANK OF AMERICA, N. A. )

) Defendants. )

____________________________________) PLAINTIFF’S OPPOSITION TO DEFENDANT BANK OF AMERICA, N. A.’S

MOTION TO DISMISS

Plaintiff Miia C. D’Agostino (“Plaintiff” or “Ms. D’Agostino”) opposes the Motion

to Dismiss filed by Defendant Bank of America, N. A. (the “Bank”). Plaintiff’s Second

Amended Complaint (“SAC”), which adds the Bank as defendant, alleges more than

enough evidence to maintain a claim against the Bank for breach of fiduciary duty. There

are also two independent trial worthy claims under G.L. c. 93A §9(1) for: (i) unfair and

deceptive acts in trade or commerce undertaken by the Bank qua bank and/or in its role as

a professional trustee; and, (ii) unfair claims settlement practices taken by the Bank in the

business of insurance in violation of G.L. c. 176D §3(9).1

All the claims against the Bank arise out of the Bank’s failure as trustee to act in

the best interests of the Plaintiff-beneficiary in pursuing an insurance claim against co-

1 Chapter 93A §9(1) has two prongs. The first prong makes actionable “unfair or deceptive acts or practices in the conduct of any trade or commerce,” and the second prong makes actionable a variety of unfair insurance settlement practices which violate G.L. c. 176D, § 3(9). Wheatley v. Mass. Insurers Insolvency Fund, 456 Mass. 594, 598-99 (2010). The Plaintiff alleges that the Bank violated the first prong of §9(1) and also that the Bank committed unfair claims settlement practices while engaged in the business of insurance. This latter conduct violates both prongs of §9(1). See Wheatley v. Massachusetts Insurers Insolvency Fund, 465 Mass. 297, 300-01 (2013).

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 1 of 21

2

defendant Federal Insurance Company (“Chubb”) following a fire at real property held in

trust by the Bank. The Bank subordinated its duties of good faith and loyalty to the

Plaintiff to its commercial relationship with Chubb. The Bank arranged a master insurance

program with Chubb to insure over 5,000 properties which it held in trust. Although the

policy governed the Plaintiff’s rights after the fire, the Bank did not disclose this policy to

the Plaintiff until forced to do so. The Bank acted in its own interests and in Chubb’s

while leaving the Plaintiff to her own devices.

Accepting the Bank’s argument that its trusteeship in this case is immune from c.

93A liability would require this Court to conclude that the Bank’s $2.6 billion private

wealth management and trust administration business does not constitute “trade or

commerce.” This argument is faulty both in fact and law. Massachusetts law is quite clear

that parties, like the Bank, who “[sell their] trustee services in the marketplace to

consumers . . . should [not] be treated any differently from similarly situated business

professionals who are subject to the reach of G.L. c. 93A, § 9.” Quinton v. Gavin, 64 Mass.

App. Ct. 792, 799 (2005).

Circumstances where trustees have been shielded from c. 93A liability are not

present here. This is not a dispute between two partners or shareholders about their

common venture’s internal governance. Szalla v. Locke, 421 Mass. 448, 451-52 (1995).

Nor is this a case of a nonprofessional executor settling his mother’s estate. Gannett v.

Lowell, 16 Mass. App. Ct. 325, 328 (1983). As Quinton demonstrates, the label of trustee

or the nominal role of the actor is not dispositive, rather the focus must be whether the

alleged wrongful actions occurred in a business context. Linkage Corp. v. Trustees of

Boston University, 425 Mass. 1, 24 (1997).

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 2 of 21

3

As to the Bank’s activities in the business of insurance, the SAC more than

adequately alleges claims of unfair settlement practices by the Bank under c. 176D. The

allegations are material because the SAC raises a plausible allegation that the Bank acted

as agent, co-venturer with, or partner of, Chubb in providing insurance coverage to the

Trust and/or collaboratively seeking to control or minimize the exposure of the party with

an affirmative claim settlement duty. See Miller v. Risk Mgt. Foundation of Harvard Med.

Insts., Inc., 36 Mass. App. Ct. 411 (1994).

The SAC alleges that the Bank provided insurance to or for the benefit of the

Plaintiff by engaging in an undisclosed business venture with Chubb. SAC ¶¶19, 20, 25.

As part of this venture, the Bank would be insured for up to $10 million for any loss to one

of the 5,000 plus trust properties administered by the Bank’s private wealth management

business but under which the Bank would issue to each trust certificates of insurance

coverage for much less. Id. The SAC alleges that pursuant to its agreement with Chubb the

Bank sold to itself as trustee of Plaintiff’s Trust a certificate of insurance that materially

understated the replacement cost values of both the Trust’s property and the Plaintiff’s

individual property. Id. ¶28. The SAC alleges the Bank charges and collects premiums on

those certificates. Id. ¶116.

The SAC also alleges that the Bank collaborated with Chubb on the adjusting of the

loss and did so without consideration of the coverage under the $10 Million master policy.

See, e.g., SAC ¶32. The SAC alleges that in collaboratively adjusting the loss the Bank

falsely represented the coverages and refused to give the Plaintiff a copy of the master

policy. Id. ¶31, 32. The SAC alleges that in collaboration with Chubb the Bank sought to

control or minimize the ultimate exposure of Chubb. See, e.g, SAC ¶54. The SAC alleges

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 3 of 21

4

that the Bank refused to provide the Plaintiff with any documentation of the relationship of

the certificate of insurance to the master policy, of its dealings with Chubb concerning the

loss, and of explanations for the payments the Bank as trustee had accepted. See, e.g, id.

¶31, 37, 45. The SAC alleges that in furtherance of its venture with Chubb and fully aware

that the Plaintiff was suing Chubb, the Bank refused to make disclosure of its dealings with

Chubb and at the same time refused to distribute to the Plaintiff several hundred thousand

dollars of trust assets unless she released the Bank and its “affiliates.” Id. ¶61-63; Exh F at

BA 23-25.

Despite this the plethora of allegations of insurance business activities and

indisputably unfair settlement practices, the Bank asks the Court to just take its word that it

was not engaged in the business of insurance and hence to dismiss the claim under the

second prong of c. 93A §(9)(1) and c. 176D. According to the Bank, Plaintiff’s

“conclusory allegations” of the Bank’s engagement in “insurance business” activities are

“entirely unsupported.” Memorandum of Law in Support of Defendant Bank of America

N.A.’s Motion to Dismiss (“Mem.”) at 9.

These allegations are not conclusory. The Bank has the temerity to seek a dismissal

for lack of detailed allegations concerning the Bank’s business dealings with Chubb when

it has refused to produce discovery about the operation of its master insurance program

with Chubb in part on the basis such information is the Bank’s proprietary business

information. Exh. G.

The Bank’s motion also fails to address the SAC’s allegations that the Bank had

contractually undertaken risks constituting insurance. Considering the face of the master

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 4 of 21

5

policy, the Bank’s sworn testimony and Probate Court admissions, there are trial worthy

issues whether as permitted by federal law this national bank acted as an insurer.

BACKGROUND.2

I. The Trust, The Bank and The Property.

On September 21, 1983, “as part of a property management program,” the

Plaintiff’s father created the Bruno V. D’Agostino Trust (the “Trust”) pursuant to a written

trust agreement with STATE STREET BANK AND TRUST COMPANY. SAC ¶8; Exh.

A. The Trust indenture specifies that only a “national bank or trust company” having

“corporate or administrative assets of $500,000,000.00 or more” can qualify to serve as a

successor trustee. SAC ¶8; Exh. A at 23. In July 2007, the Bank’s parent company Bank of

America Corporation, acquired State Street’s successor “for $3.3 billion in cash.” Exh. B at

23.

The Bank sells its services to the public as a professional trustee and at all relevant

times has acted as trustee administering over 5,000 trusts. SAC ¶21. Under the brand name

"U.S. Trust, Bank of America Private Wealth Management” the Bank “provides

comprehensive wealth management solutions to wealthy and ultra-wealthy clients with

investable assets of more than $3 million.” Exh. B at 1, 23, 24, 46. The Bank touts that it is

2 Without converting the Bank’s motion into one for summary judgment, in deciding this motion the Court may look beyond the four corners of the SAC and also take “into account facts set out in … documents the authenticity of which are not disputed by the parties[,] … official public records[,]… documents central to Plaintiff[’s] claim[,] … or documents sufficiently referred to in the complaint.” Watterson v. Page, 987 F.2d 1, 3 (1st Cir.1993); Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1st Cir.1998) (When “a complaint's factual allegations are expressly linked to—and admittedly dependent upon—a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6).”). The court may also consider “matters susceptible to judicial notice,” Jorge v. Rumsfeld, 404 F.3d 556, 559 (1st Cir.2005), including “documents submitted [that] are part of the public record ... without converting the motion to dismiss into a motion for summary judgment.” Santiago v. Bloise, 741 F.Supp .2d 357, 361 (D.Mass.2010). See Gargano v. Liberty Int’l Underwriters, Inc., 572 F. 3d 45, 51 n.1 (1st Cir. 2009)(pleadings in related state court action); McGrath and Co. LLC v. PCM Consulting Inc., 2012 WL 503629, *9 n.2 (D. Mass. 2012) (Casper, J.) (website pages attached to complaint). See Affidavit of Richard A. Goren, 6-24-13 and Exhs. A-K. (“Exh.”).

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 5 of 21

6

“one of the largest financial services companies managing private wealth in the U.S.;” in

2008 this “business unit” generated gross and net revenues of $2.65 billion and $460

million. Id.

The Trust at issue in this case contained substantial liquid assets and real estate,

including a three-family dwelling located at 72-74 Lexington Avenue, Cambridge MA (the

“Property”). SAC ¶¶9, 12; Exh. F at BA 80-179. The beneficiary of the Trust has at all

times been the Plaintiff Miia C. D’Agostino, daughter of Bruno V. D’Agostino.3 SAC ¶9.

During his lifetime Bruno D’Agostino, a noted architect, substantially remodeled the

Property, which was featured at least twice in Better Homes and Gardens. Id. ¶12. The

Property included many unusual architectural details, including floor to ceiling

fenestration, large decorative windows and skylights, ship lapped wood walls and ceiling,

roof and beam design elements, track and recessed lighting, quarry tile and hard wood

floors, designer kitchens, five full bathrooms, fireplaces on four floors, a patio, and several

decks. Id. The Property also included a greenhouse with plumbing and power, a two-story,

two-car garage, elaborate gardens with rare, valuable and unusual plantings, and privacy

fencing. Id. Its contents included an extensive collection of fine art and antiques. Id. ¶16.

Prior to a devastating fire on December 9, 2008, the Plaintiff lived and conducted business

activities at the Property, using some 7100 square feet of space. Id. ¶¶14, 15. In addition,

under the Bank’s management, two rental units located at the Property produced some

$55,000 in annual net income to the Trust. Id. ¶14.

II. The Bank’s Concealed Relationship With Chubb.

3 The Trust terminated in 2009 when the Plaintiff attained age 31, and ownership of all trust assets devolved equitably to her. SAC ¶¶9,10.

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 6 of 21

7

Prior to August 1, 2008, the Bank and Chubb entered into an undisclosed

agreement pursuant to which Chubb would insure under a $10 million blanket commercial

policy each of the over 5,000 properties, including the Trust’s Property, that the Bank held

as Trustee in the operation of its wealth management business. SAC ¶¶19,20,23,24. On

August 1, 2008, Chubb issued Master Policy number 3580-08-18 STL, with a limit of

$10,000,000 (the “Master Policy”), Exh. C, naming the Bank’s parent, Bank of America

Corporation, as insured. Id. ¶24. With respect to the Trust’s Property, in the event of a fire

loss, the Trust was insured under the Master Policy for up to $10 Million for: (i) the full,

current code compliant replacement cost of the three family house; (ii) the replacement

cost of all personal property of the Trust and the Plaintiff; (iii) the Trust’s loss of rents;

and, (iv) the Plaintiff’s additional living expenses, including those incurred to continue her

business activities. Id. The Property was also insured up to $250,000 for: (i) the full

replacement cost of outdoor trees, shrubs and plants; (ii) the full replacement cost of

Plaintiff’s valuable papers, records, photographic negatives, transparencies, electronic

media and images; (iii) the fair market value of Plaintiff’s fine arts; and, (iv) the full

replacement cost of Plaintiff’s electronic data processing equipment. Id. There was also

coverage of up to $50,000 for recreation of Plaintiff’s records. Id.

The Bank caused its agent Chas. L. Crane Agency Co. (“Crane”) to issue to each

trust a certificate of insurance with far lesser limits. Id. ¶20; Exh E. According to the

Bank, its agent “determined the amount of premium …[which] was paid directly to Crane

from the Trust.” Id.

The certificate of insurance issued to the Trust (the “Certificate”) stated only two

coverages, and both were inadequate in amount. The figure used on the Certificate for the

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 7 of 21

8

replacement cost coverage for the house was $883,188. Exh. H. The Bank provided this

figure to Crane as representing the cost to replace and update the Cambridge multifamily

residential house to currently applicable building and zoning codes during the twelve

month period commencing August 1, 2008. SAC ¶¶12-18, 24, 25; Exh. I at 92:1-7. The

Bank claims that the $883,188 figure was based upon an appraisal of the Property;

however, the Bank has no record of how it arrived at this value. SAC ¶25; Exh. I at 62:9-

17. The Bank now admits the Certificate’s replacement cost for the house was

underestimated.4 SAC ¶25; Exh. I at 78:2-11, 88:5-24.

Crane set the replacement cost of the contents of the house arbitrarily at 70% of the

undervalued replacement cost for the structure, that is, at $618,232, and this coverage was

also listed on the Certificate. SAC ¶¶25, 26; Exhs. H. The Bank stood mute even though it

was aware or had reason to know of Plaintiff’s valuable art works and her business and

artistic activities at the Property. SAC ¶15,16,27,29. Indeed, the Bank never inventoried

the fine art, trees, plants, shrubs, or other items at the Property. Id. ¶¶26, 27. The

Certificate lists no coverage for loss of rent; personal records; fine arts; trees, plants and

shrubs; electronic data processing equipment; business expenses; and papers, records,

photographic negatives and electronic media and images. Id. ¶28. At no time did the Bank

disclose that these coverages would be available under the Master Policy in the event of a

casualty. Id. ¶32. Further, at no time did the Bank raise any questions as to the adequacy or

correctness of the coverage recited in the Certificate. Id. ¶28; Exh. I at 54:5-21.

III. The Fire and The Insurance Claim.

4 As of August 2008, the city of Cambridge assessed the fair cash value of the house, excluding the land, at $1,033,000. SAC ¶25. Chubb itself initially determined the replacement cost value of the house to be no less than $1,411,611.70 and has made payment in this amount to the Plaintiff. The $1,411,611.70 estimate omits a number of material features of the Property. SAC ¶¶53,54,69. Plaintiff subsequently obtained a preliminary estimate to replace the house that was about a half million dollars higher than this figure. Id.

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 8 of 21

9

The Property sustained substantial damage as a result of a fire on December 9,

2008, rendering it uninhabitable by the Plaintiff and by the tenants in the two rental units

leased and managed by the Bank. SAC ¶29.

When the Plaintiff requested a copy of the policy, the Bank delivered to her the

Certificate and knowingly and intentionally misrepresented to her that coverage under the

Master Policy was limited to the two replacement values stated on the Certificate. SAC

¶¶30,45. When Chubb wrongfully refused to indemnify Ms. D’Agostino for numerous

costs, which but for the fire she would not have incurred, to continue her several

businesses and to maintain her normal pre-fire standard of living, the Bank stood mute.

SAC ¶¶37-43. When the Plaintiff reminded the Bank of the extensive fine arts in the house,

the Bank falsely misrepresented to her that there was no coverage and never submitted a

claim for any fine art loss. SAC ¶46. Further, even though it had a detailed listing of the

outdoor plants, trees and shrubs, the Bank did not disclose to the Plaintiff the $250,000

coverage under the Master Policy and failed to submit a claim for the replacement cost of

the plants, trees and shrubs. SAC ¶47.

Despite the Bank’s representation that coverage was limited to the two amounts on

the Certificate, Chubb made payments for certain additional loss payable categories under

the Master Policy coverage, including loss of rents and living and business expenses. Id.

¶¶30,37. Contradicting what it admittedly told the Plaintiff, the Bank now concedes that

the “‘limits’ on the Certificate of Insurance …[are] not determinative of the ultimate award

for a loss or losses sustained under the [Master P]olicy.” Exh. E.

IV. The Bank’s Symbiotic Relationship With Chubb.

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 9 of 21

10

The Bank engaged in no meaningful oversight of its contract with Chubb. At all

times, the Bank accepted whatever Chubb determined to be the applicable coverage and

amounts to be paid under the Policy. SAC ¶¶34,35,39-43,48-55. The Bank never made an

independent assessment and determination of the coverage available to the Trust. Id. ¶34.

In fact, the Bank never once disagreed with, or even questioned, Chubb as to the amount

of coverage available or the actual amount to be paid on Plaintiff’s claims. Id. The Bank

never consulted with legal counsel as to any question of Policy interpretation, nor did it

hire any experts in connection with the Trust’s claim. Id.

In fact, the Bank took steps to conceal crucial information from Ms. D’Agostino,

acting at all times in the best interests of the party bearing the insurance risks. As noted

above, when Plaintiff requested the policy, the Bank provided the Certificate. When the

Plaintiff eventually requested the Master Policy, the Bank refused to do so without the

consent of Chubb, again leaving Plaintiff to think that coverage was limited to the amounts

in the Certificate. SAC ¶¶31,44.

In April 2009, Chubb proposed $1,411,611.70 as the code compliant replacement

cost indemnity obligation for the house under the Policy based on a report from one of its

regular consultants, Brown & Dupont. Id.¶49. The Bank made no objection to this number,

despite its awareness of the report’s numerous omissions and methodological

shortcomings, and the Bank accepted this amount from Chubb in August 2009 in a

purported settlement of this aspect of the claim. Id. ¶51,55; Exh. I at 88:5-24,91:15-

24,92:1-7,94:15-21.

Even as the Plaintiff sought to terminate the Trust in fall 2009, the Bank demanded

that she quickly settle the Chubb claim, even though the Bank knew that Plaintiff had been

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 10 of 21

11

provided neither a copy of the Master Policy nor a copy of the Brown & Dupont report. Id.

¶61. The Bank also demanded a release and indemnification for itself and its “affiliates”

from Plaintiff. Id.; Exh. F at BA 24. In fact, in the fall of 2009, the Bank refused to

distribute to Ms. D’Agostino over $300,000 unless she settled with Chubb and provided a

release and indemnification. SAC ¶61.

In December 2010 and again on February 16, 2011, the Bank did not object to

Chubb’s contention that the time for presenting claims under the policy had expired, even

though that assertion was frontally inconsistent with the Master Policy. Id. ¶65,68. In

October 2011, the Bank made a “final agreement” with Chubb this time asserting Actual

Cash Value as to the amount of indemnity to which the Trust was entitled for the loss of

the house. SAC ¶¶81; Exh. F at BA 200.

Because of the Bank’s actions, the Plaintiff has been forced to institute litigation

without support of her fiduciary the Bank to seek appropriate recovery for the December 9,

2008 fire losses.

ARGUMENT.

I. Motion to Dismiss Standards.

A complaint need only “give the defendant fair notice of what the . . . claim is and

the grounds upon which it rests” and allege “a plausible entitlement to relief.” Decotiis v.

Whittemore, 635 F.3d 22, 29 (1st Cir. 2011) (quoting Bell Atl. Corp . v. Twombly, 550 U.S.

544, 555, 559 (2007)). “The Court accepts non-conclusory factual allegations in the

complaint as true, … and “draw[s] all reasonable inferences in favor of the Plaintiff[ ].”

Sumner v. Mortg. E. R. S., Inc., 2012 WL 3059429 *1 (D. Mass. 2012) (Casper, J.)5.

5 See also Anderson News, LLC v. American Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012), cert. denied, 133 S. Ct. 846 (2013) (a district court should not choose between two plausible inferences that may be drawn

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 11 of 21

12

II. The Second Amended Complaint should not be dismissed because it alleges that the Bank breached its fiduciary duties.

The Bank does not even argue that the Plaintiff’s claim for breach of fiduciary duty

should be dismissed. Plaintiff’s claim under G.L. c. 93A expressly rests on a claim that the

Bank breached its fiduciary duty to her. SAC ¶92 (“The Bank’s actions constitute a breach

of fiduciary duty owed to the Plaintiff.”).6 Voluminous, specific factual allegations support

this claim.

Under Massachusetts law, to succeed on a breach of fiduciary duty claim, the

Plaintiff must show (1) that the Bank owed her a fiduciary duty, (2) that the Bank breached

its duty, and (3) that the breach of duty caused damages. Hanover Ins. Co. v. Sutton, 46

Mass. App. Ct. 153, 164 (1999). It is beyond dispute that the Bank as trustee owed

fiduciary duties to the Trust and the Plaintiff as its beneficiary. Ventura v. Ventura, 407

Mass. 724, 728 (1990).

Further, the SAC sufficiently alleges multiple breaches of duty. First, the Bank

caused a Certificate of Insurance to be issued that did not adequately protect the Trust

Property. SAC ¶ 28. Second, the Bank represented to the Plaintiff that insurance coverage

was limited to the amounts on the Certificate, without disclosing material terms of the

Master Policy. See, e.g., id. ¶30. Third, the Bank accepted without question the

representations of Chubb concerning amounts of coverage available and the amounts of

indemnity obligations incurred. Id. ¶¶34-35. Fourth, the Bank sought release and

from factual allegations, dismissing a complaint "merely because [it] finds a different version more plausible.") 6 This statement is more than sufficient to allege a breach of fiduciary duty claim. The liberal pleading requirements require only a “short and plain” statement of the Plaintiff’s claim, sufficient to put the defendant on notice of the subject of the lawsuit; no “technical forms of pleadings” are required. Fed. R. Civ. P. 8(a),(e). There is no requirement to specify any particular cause of action in order to survive a motion to dismiss. See Skinner v. Switzer, 131 S. Ct. 1289, 1296 (2011) (“a complaint need not pin Plaintiff’s claim for relief to a precise legal theory …[nor set forth] an exposition of his legal argument”).

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 12 of 21

13

indemnification from the Plaintiff, and even withheld funds to pressure Plaintiff into doing

so, at a time when it knew the insurance claim was very much unresolved. Id. ¶61. Finally,

the Bank accepted Chubb’s erroneous representations about the deadline for presenting

claims. Id. ¶65,68.

Plaintiff also alleges that these actions by the Bank caused her harm, as she has

been forced to institute the present lawsuit to receive adequate compensation from Chubb

for the casualty losses to the Property. The Bank failed to represent the interests of the

Trust and its beneficiary in dealing with Chubb and improperly left the Plaintiff to her own

devices when she should have been able to rely on the Bank’s protection in filing her

insurance claims.

III. The Bank faces liability under Chapter 93A because the unfair and deceptive acts committed by the Bank were done in the conduct of one or more activities constituting trade or commerce under the statute.

To show a violation of G.L. c. 93A, § 9, the Plaintiff must prove that: (1) she has

suffered an injury having a causal connection to some act or practice of the defendant; (2)

the act or practice was done in the conduct of “any trade or commerce”; (3) the act or

practice is “unfair or deceptive”; and (4) at least 30 days before filing suit the Plaintiff sent

the defendant a written demand for relief, identifying herself and reasonably describing the

unfair or deceptive act or practice and the injury suffered. See, e.g., Hershenow v. Enter.

Rent-A-Car Co. of Bos., 445 Mass. 790, 797 (2006). The Bank argues that its actions as

trustee were not done in trade or commerce.

A party is engaging in “trade or commerce” if it acts in business context. Peabody

N.E., Inc. v. Town of Peabody, 426 Mass. 436, 439 (1998). Trade or commerce includes

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 13 of 21

14

“the sale, rent, lease or distribution of any services and any property.” c. 93A §1(b).

Applying the business context test requires the court to consider

the nature of the transaction, the character of the parties involved, and the activities engaged in by the parties.... Other relevant factors are whether similar transactions have been undertaken in the past, whether the transaction is motivated by business or personal reasons ... and whether the participant played an active part in the transaction.

Linkage Corp. v. Trustees of Boston University, 425 Mass. at 24 (a charitable corporation

acting in a business context subject to liability). The statute is not intended to reach an

isolated, private non-commercial transaction. Begelfer v. Najarian, 381 Mass. 177, 191

(1980) (defendant-pharmacists who lent money to real estate developers and had no role in

arranging an illegal, usurious loan or the underlying real estate transaction were not liable

under 93A). The motivations of the alleged wrongdoer for the questioned conduct must be

in a business context. Begelfer, 381 Mass. at 191; see Klairmont v. Gainsboro Restaurant,

Inc., 465 Mass. 165, 176 (2013)(trial court could infer that profit motive led restaurant and

bar to knowingly fail to seek building permits or comply with building code, leaving

defendant liable under 93A to patron who fell down stairs).

The SAC alleges that the Bank was engaged in three separate business activities

each of which constitutes “trade or commerce” and each of which has the requisite “causal

connection” with injury to the Plaintiff.

The first is the Bank’s wealth management and professional trustee business. The

SAC makes numerous specific allegations of unfair actions by the Bank in the course of its

administration of the Trust. Specifically, the SAC alleges that the Bank subordinated its

fiduciary duty to the Plaintiff in furtherance of the interests of the Bank and/or of the Bank

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 14 of 21

15

and Chubb in the operation of this master insurance program venture, thereby causing

injury to the Trust and to the Plaintiff. See, e.g., SAC ¶¶ 25-28.

The Bank’s motion counters that its actions as a trustee did not occur in trade or

commerce and arose from a wholly private arrangement with the Plaintiff. The Bank’s

motion incorrectly focuses on the nominal status of the Bank as trustee and erroneously

asserts that a trustee’s actions are always private and never occur in trade or commerce.

In language the Bank fails to present to this Court, the Massachusetts Appeals

Court has declared that a party that “sold . . . trustee services in the marketplace to

consumers . . . should [not] be treated any differently from similarly situated business

professionals who are subject to the reach of G.L. c. 93A §9.”7 Quinton v. Gavin, 64 Mass.

App. Ct. 792, 799 (2005) (citing cases applying c.93A liability to attorneys, medical care

providers, and stock brokers). Beyond scrutinizing how the fiduciary relationship

originated, the First Circuit has examined the actions of fiduciaries and recognized that

sales to the public, even in a fiduciary context, are a quintessentially commercial

transaction. States Res. Corp. v. The Architectural Team, 433 F.3d 73, 84 (1st Cir. 2005)

(citing Szalla v. Locke, 421 Mass. 488 (1995)). In State Res. Corp., the court recognized

that the parties had “a fiduciary relationship,” but concluded that the defendant’s “handling

of [a] foreclosure auction [of the real property at issue in the case] was not an intra-

enterprise transaction but the management of the sale of a property through public

7 In light of this clear language, it is incorrect to argue, as the Bank does, that the decision in Quinton is “narrow” and applies only where the trust form is a “sham . . . designed to bilk unwitting consumers.” Mem. at 7. There is no language in the Quinton opinion which suggests that this level of malfeasance is required to subject a trustee to liability under M.G.L. c. 93A; instead, the court applied c.93A to a trustee whose relationship with the beneficiaries could not “properly be characterized as private.” Quinton, 64 Mass. App. Ct. at 798.

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 15 of 21

16

auction.” Id.; Cf. Grand Pacific Fin. Corp. v. Brauer, 57 Mass. App. Ct. 407, 417 (2003)

(93A applicable to creditor’s claim against debtor’s escrow agent).

Similarly, the Bank here acted in a commercial context with respect to the Plaintiff

and Property. The Bank is a professional trustee. SAC ¶21. It markets its services to the

public and derives substantial profit from these activities. Exh. B at 1. It was hired to

manage the Property on behalf of the Plaintiff. SAC ¶8; Exh. A. The Bank acts as trustee

for over 5,000 real properties in similar situations. SAC ¶23. Indeed, even the Bank’s

administrative actions as trustee occurred in the commercial context for the benefit of the

Plaintiff. The Bank rented two units at the Property, marketing the units to the public and

netting over $55,000 per year in income to the Trust. SAC ¶14,17. Finally, and most

importantly, the Bank procured a master insurance program for itself, the Property and for

5,000 additional properties, entering into commerce with Chubb to arrange an insurance

contract providing coverage. SAC ¶19.

The Bank relies on two cases—Lattuca v. Robsham, 442 Mass. 205 (2003) and

Steele v. Kelley 46 Mass. App. Ct. 712 (1999)—for the proposition that its conduct as

trustee should be immune from liability under c.93A. This is not a correct reading of these

cases. The cases are merely examples of the general rule that c. 93A liability does not lie

between parties to a joint venture. In Lattuca, the parties were personal friends as well as

business associates, and they jointly participated in the development of a residential

subdivision. 442 Mass. at 206-07. Similarly, the parties in Steele v. Kelley were friends

who entered into a trust involving a parcel of commercial real estate in Boston. 46 Mass.

App. Ct. at 713. The property was used for a restaurant that employed relatives of some of

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 16 of 21

17

the parties. Id. at 718. And, the alleged wrongdoing did not “involve the requisite

commercial marketplace transactions.” Id. at 726.8

In contrast, in the present case—as in Quinton—“neither the settlors nor the

beneficiaries of the trusts managed by [the defendant trustee] were involved in a common

business endeavor with him.” 64 Mass. App. Ct. at 798. The “trust” relationship in this

case is a business arrangement for the professional fiduciary management of the Trust’s

several million dollars of property. The Bank’s participation in the commercial

marketplace for fiduciary management brings its conduct well within the ambit of c. 93A.

Second the Bank’s actions and activities pursuant to its business venture with

Chubb under the circumstances of this case constitutes trade or commerce under the first

prong of G.L. c. 93A, § 9(1). By way of example, while Chubb contracted to indemnify

the Bank, both qua bank and in its fiduciary capacity, as well as the Plaintiff for their

respective, separate insurable interests for up to $10 Million, the Bank sold to the

D’Agostino Trust an insurance certificate with significantly lower limits.9

Third, the Bank’s collaborations with Chubb constitute engagement in the business

of insurance and hence subject the Bank to liability under the second prong of G.L. c. 93A,

§ 9(1). See Section IV, infra.

IV. Plaintiff’s claim against the Bank under chapter 176D should survive because of the Bank’s cozy and largely undisclosed relationship with Chubb.

The Bank and Chubb worked hand in glove on this matter, from arranging the

insurance coverage in the first place, through collaboratively determining the appropriate

8 The intra-venture wrongdoing in Steele was essentially a case of a controlling partner/shareholder who looted the venture to the detriment of his co-owners. 9 Put another way, these quintessential commercial activities of the Bank qua bank were unfair and deceptive because they constituted an intentional interference, achieved by improper means or with an improper motive, with Plaintiff’s trust contract. Cf. King v. Driscoll, 418 Mass. 576 (1994).

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 17 of 21

18

amounts to be paid by the party having an affirmative settlement obligation in satisfaction

of the claims, to pressuring the Plaintiff to participate in a settlement. Consequently, the

SAC sufficiently alleges that Bank should be regarded as an agent or partner of Chubb

“engaged in the business of insurance” under G.L. c. 176D § 1(a), and the Plaintiff’s

claims under 93A through this statute should not be dismissed. Morrison v. Toys “‘R’”

Us, Inc., 441 Mass. 451, 455-56 (2004).10

The business of insurance involves “profit driven business decisions about

premiums, commissions, marketing, reserves and settlement policies and practices.”

Poznik v. Mass. Med. Prof'l Ins. Ass'n, 417 Mass. 48, 51(1994). The allegations that the

Bank is “engaged in the business of insurance,” SAC ¶116, are not mere formulaic

recitations unsupported by fact, see Twombley, 550 U.S. at 555. At least three sets of

allegations support the Bank’s engagement in the business of insurance.

First, the SAC alleges that the Bank qua Bank was party to an agreement,

supported by consideration, in which it promised to pay money or its equivalent, or to do

an act valuable to the D’Agostino Trust and its beneficiary upon the destruction, loss or

injury of something in which the D’Agostino Trust and its beneficiary has an interest. See

G. L. c. 175 §§2 (definition of an insurance contract), 174F “Business Transacted with

Broker-Controlled Insurer Act”, 174G (definition of captive insurer); 15 U.S.C. §6712

(empowering national banks to offer and sell insurance products subject however to

regulation by each state in which the insurance is sold). See Exh. A, Art. Two (Trustees 10 Liability for unfair claims settlement practices in violation of c. 176D § 3(9) may be imposed through c. 93A §§ 2 and 9. Wheatley v. Mass. Insurers’ Insolvency Fund, 465 Mass. 297 (2013). Section 3(9) encompasses many of the actions that the Bank is alleged to have taken, including without limitation: misrepresenting the pertinent facts or insurance policy provisions related to the coverages at issue, §3(9)(a); failing to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear, §3(9)(f); compelling insureds to institute litigation to recover amounts due under an insurance policy, §3(9)(g), and failing to settle claims promptly, where liability has become reasonably clear, §3(9)(m).

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 18 of 21

19

obligated to “collect all sums payable” under insurance policies). Moreover, the Bank is

itself an insurer through affiliated lines of business. Exh. B, at 1, 36-37. See also, e.g., SAC

¶¶18,19,20 (Bank provides coverage); 25-28,30 (Bank decides about premiums and

amounts of coverage); and 32-34,36,39 (Bank fails to settle the claim when liability was

reasonably clear).

From what the Bank contends is the operative insurance policy, the Certificate and

the Bank’s testimony, it is more than plausible that the Bank has contracted as an insurer.

According to the Bank, it does not know whether it bears any risk if Chubb pays more than

the $883,188 Certificate value for the replacement cost of the house. Exh. I at 70:24,71:1-

5,75:12-21,77:11-5. By way of just one example, a preliminary estimate sets the cost at

just under $2 million.

Under the master policy, Chubb agreed to indemnify the Bank up to $1 million plus

defense costs for errors or omissions and/or negligence in securing and administering

insurance for each trust owning property covered by the master policy. The Master Policy

produced by the Bank has no schedule of Covered Trust Properties and there is no stated

consideration, i.e., there is no premium to be paid to Chubb for the risk during the twelve

month specified period of coverage; but the Master Policy recites a quarterly reporting

period possibly suggesting rolling coverages and risk assessments.11 The SAC plausibly

alleges the Bank to be acting as an insurer subject to regulation under Massachusetts law.

Second, the collaborative venture of the Bank and Chubb constitutes the business

of insurance. See Miller v. Risk Mgt. Foundation of Harvard Med. Insts., Inc., 36 Mass.

App. Ct. 411 (1994). Together with Chubb, the Bank “sought ‘to control or minimize the

11 While Chubb has produced the same documents, Chubb has refused to identify the documents it contends comprise the operative policy at issue despite repeated demands.

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 19 of 21

20

ultimate exposure of … [Chubb] and thus of the …[the venture].’” Lemos v. Electrolux

North America, Inc., 78 Mass. App. Ct. 376, 382 (2010) quoting Miller, 36 Mass. App. Ct.

at 416. The venture issued documents, i.e., over 5,000 certificates of insurance “that have

all the indicia of insurance policies.” Lemos, 78 Mass. App. Ct. at 381-82. The venturers

collaborated to control settlements. Among other things, each failed to disclose and falsely

misrepresented applicable coverages under the Master Policy. Further, they made an

agreement to limit the indemnity for the house to actual cash value while the master policy

provides—as the Bank now concedes—code compliant replacement cost coverage. See,

e.g., SAC ¶¶19, 20 (master policy); 30-33 (misrepresentations of amount of coverage and

failure to provide policy without Chubb’s consent); 34-35 (failure of Bank to contest any

position or determination taken by Chubb).

These allegations create at minimum a plausible claim that the Bank was not

independent of Chubb but was in fact an agent, partner, or co-venturer. The Plaintiff

should not be denied discovery on the relationship between Chubb and the Bank.

CONCLUSION.

Defendant Bank of America N.A.’s Motion to Dismiss should be DENIED.

MIIA C. D’AGOSTINO June 24, 2013 By her attorney,

/s/ Richard A. Goren Richard A. Goren BBO #203700 Law Office of Richard Goren 101 Federal Street Suite 1900 Boston, Massachusetts 02110 617-261-8585 rgoren@richardgorenlaw.com

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 20 of 21

21

CERTIFICATE OF SERVICE

I hereby certify that this document filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of Electronic Filing (NCF), and that paper copies will be sent to those non-registered participants (if any) on June 24, 2013. /s/ Richard A. Goren

Case 1:12-cv-11628-DJC Document 66 Filed 06/24/13 Page 21 of 21