Ralph Sandor died on January 20, 2018, at the age of 107. The Court appointed an Administrator Pendente Lite of the decedent’s estate (the “Administrator”).
The Administrator filed an action seeking to set-aside gifts made by decedent’s grand-nephew, Anthony Russo, Jr. (“Russo”), by and through a power of attorney. The Administrator alleged that the transfers made by Russo to himself and others from decedent’s account at Wells Fargo Bank were improper. The Administrator sought to recover the sums transferred out of the decedent’s Wells Fargo accounts. The Administrator also asserted that Wells Fargo, the bank at which decedent maintained the majority of his assets, was liable for the improper transfers.
The bank filed a motion for summary judgment. In the motion, the Administrator asserted that Wells Fargo violated New Jersey’s Uniform Fiduciaries Law, N.J.S.A. § 3B:14-52, et seq. (the “UFL”). The Administrator also asserted that Wells Fargo acted negligently by failing to act in conformity with Wells Fargo’s internal policies to safeguard decedent’s accounts by investigating the transfers which were purportedly made pursuant to Russo’s POA.
In response to the motion, Wells Fargo contended that Russo’s POA provided that Russo was authorized to “take any action in regard to [decedent’s] personal financial affairs as [decedent’s] agent deem[ed] appropriate.” Wells Fargo contended that Russo’s POA expressly waived liability against any third persons acting in reliance on decedent’s agent’s instructions. Wells Fargo asserted that it does not dispute that any of the alleged transactions occurred, but maintained that the disputed transactions were initiated by an individual authorized to transact business with decedent’s accounts at Wells Fargo. Wells Fargo contended that Russo was authorized to transact business on decedent’s behalf pursuant to his POA. Decedent executed a form to change his brokerage account to a transfer-on-death account with Russo as the one hundred percent (100%) beneficiary. Further, Wells Fargo acknowledged that Wilson conferred with decedent’s attorney, Lawrence Joel, Esq. (“Mr. Joel”), of Joel and Joel, LLP, to ensure that such change was decedent’s intent, and Mr. Joel confirmed that it was decedent’s intent to do so and the brokerage account was subsequently changed to a transfer-on-death account. Further, decedent had a history of gift-giving and therefore the transfers to Estate beneficiaries would not have raised “red flags” to Wells Fargo.
The Court granted the bank’s motion for summary judgment. The Court ruled, first, that the Administrator’s claim for violation of the UFL had to be dismissed because the UFL does not create an affirmative cause of action against Wells Fargo. Rather, the UFL provides a defense when a bank is sued for failing to take notice of and action on a fiduciary’s obligation.
Second, the Court found that plaintiff’s negligence claim had to be dismissed because plaintiff could not prove that the bank violated any duty of care. The Court found that it is industry standard for firms to rely upon representations made by a POA agent and there is no duty to have continued dialogue with the client. As such, the Court found that the Administrator was unable to show the standard of care and that Wells Fargo breached same. The Court concluded that the UFL provided a bank with limited immunity against claims” … unless the bank acts in bad faith or had actual knowledge of a fiduciary breach. Thus, the Court held that the UFL immunized the bank from a negligence-type action premised on the common law duty to exercise due care.
The Court dismissed the Administrator’s claims against Wells Fargo Bank with prejudice.
The case, entitled Estate of Sandor v. Lugowe, No. BER-C-54-21, 2021 WL 3162993 (N.J. Super. Ch. Div., Bergen Cty. July 12, 2021), is annexed hereto –
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