By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Probate Estate Litigation Attorney

In Part 1 and Part 2 of this series I introduced you to a probate case that included a claim of Undue Influence. Two sisters made changes to their mother’s accounts making them joint accounts just prior to her death. In this final part I will be discussing the outcome.

In this case, there was no contractual relationship between plaintiff and the defendants who managed her mother’s investment accounts. Defendants had no written or oral agreements with plaintiff, a non-customer. Indeed, there was no proof in the record that they even knew her identity before her death.

Plaintiffs could produce no federal or state statute, regulation, or law that imposes a duty owed to a non-customer in the circumstances of this case. Nor did the plaintiff point to any published industry standard or expert support for such an obligation.

Instead, plaintiff exclusively relied on Morgan Stanley’s own internal procedures, which might not have been strictly followed here when the decedent’s accounts were converted to joint accounts. However, such a departure from a company’s internal guidelines is immaterial if there is no contractual or “special” relationship established that could support a legal duty to a non-customer and a cause of action for negligence or breach.

An interesting discussion during oral argument, the bank’s counsel acknowledge that a special duty to a non-customer may arise in some circumstances where, for example, the firm removes a named beneficiary from an account. But in this case, there was never such a named beneficiary. She had no legal relationship with the firm, nor any reasonable basis to enforce duties it may have owed to her mother as the sole account-holder until her sister was added.

In the absence of a statutory or regulatory mandate, the court declined to alter the course of established precedent by recognizing a novel duty in this case. Such a duty arguably might impose undue burdens on financial institutions, and invite meddlesome interference with the relationships between investors and those who manage their accounts.

The Appellate court further agreed with the trial court that, even if a duty were recognized here, and a breach of it were established at trial, plaintiff could not prove proximate causation for her losses. If, in fact, plaintiff’s mother was indeed the subject of her sister’s undue influence, presumably the account changes would have been made anyway at her behest. Plaintiff’s appropriate remedy was estate litigation against the siblings, through which she has already derived a substantial recovery in settlement.

To discuss your NJ Estate Probate Litigation matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.