Engaged? Thinking about a prenuptial agreement? You probably shouldn’t rely too heavily on your future father-in-law’s legal advice. Consider a recent Appeals Court case.
According to court documents, William Connell became the beneficiary of two well-funded trusts when his affluent father died in 2001.
Both trusts named Richard Morrissey—a topnotch estate planning attorney—as trustee. Morrissey and Connell’s father were close friends and the father personally chose Morrissey to oversee the cash-laden trusts.
In 2006 Connell became engaged to Morrissey’s daughter, Pamela.
Connell wanted to protect the two trusts that his father left for him. So he and his lawyer met with Morrissey to discuss a prenuptial agreement that would address his concerns.
At that meeting Morrissey allegedly told Connell that “he had nothing to worry about, [and] that a prenuptial agreement was unnecessary.” Connell’s pleadings also allege that Morrissey claimed to have “sufficient knowledge of both Pamela’s and Connell’s finances to weigh in on the need for a prenuptial agreement.” (See pages 3-4 of the slip opinion attached below.)
Ultimately no prenuptial agreement was signed.
After 13 years of marriage, Connell filed for divorce. Can you guess what happened next? According to the Appeals Court,
One of Pamela’s first actions was to file a document request seeking production of all documents relating to the Connell family trusts, of which Connell is a beneficiary. In August 2020, Pamela also sought to add the trustees of the 1989 trust, including her father, as parties to the divorce action, and sought an order directing the trustees to make distributions from the 1989 trust for her benefit.
Connell claims that defending the trusts in family court has “substantially” increased his litigation costs. Consequently, he filed suit against Morrissey in superior court for alleged breach of fiduciary duty, fraud, and gross negligence.
A superior court judge dismissed the complaint citing the three-year statute of limitations for such claims. According to the judge,
Because all of Connell’s claims arise out of Morrissey’s alleged advice against a prenuptial agreement, and the harm from that advice was known at the point Connell entered marriage without a prenuptial agreement [in 2006], Connell’s claims for fiduciary breach, negligence, and fraud are time-barred.
Connell appealed, arguing that the three-year statute of limitations did not begin to run until the trusts were targeted in the divorce proceedings.
The Appeals Court agreed with Connell and vacated the dismissal.
The issued, according to the justices,
is whether Connell’s breach of fiduciary duty, fraud, and gross negligence claims, and his request for declaratory relief, accrued at the time of his marriage in 2006, as Morrissey contends, or, as Connell argues, when Pamela sought to access information about his trusts in 2020.
The applicable case law states that
The critical moment for accrual purposes is not when the plaintiff gains knowledge of any wrongdoing by the fiduciary but, rather, [when] the plaintiff gains knowledge of the particular harm forming the basis for his or her claim. (Citations and quotations omitted.)
Applying that law to the alleged facts at hand
Connell…did not learn of the harm flowing from Morrissey’s wrongdoing until his divorce proceedings began…[W]hen Pamela sought to add the trustees of the Connell family trusts as parties to the divorce action and Morrissey resigned as a trustee, Connell (1) knew unequivocally that his trust assets were being targeted “aggressively” in the divorce proceedings and that, absent a prenuptial agreement, the Connell family trusts and his premarital assets could be at risk;9 and (2) began incurring significant attorney’s fees to defend his trust and premarital assets that, until that time, he had thought were safe. Connell’s actual knowledge of the harm forming the basis of his claims then triggered the running of the limitations period.
Though Connell won this appellate battle, he has not yet won the war. And the penultimate footnote by the justices cannot be overlooked:
We are not blind to the improbability of Connell’s prevailing on his claims where he had independent counsel and Morrissey was representing the interests of his daughter and own family in his discussions with Connell’s counsel. Nor have we overlooked the fact that this lawsuit is being used to gain tactical advantage in the Connecticut divorce case. Nonetheless, untimeliness is not among the complaint’s flaws.
The full text of the slip opinion is attached.