Levy v. Hofer: Release and Limitations Defenses Fail in Fiduciary Duty Case

Sheldon Levy and Lana Friedman were the children of J. Leonard Levy and Myra Levy. Leonard and Myra created multiple family trusts, including trusts for Sheldon and Lana and several trusts established by Myra for her own benefit during her lifetime. Myra’s trusts expressly reserved her right to amend or revoke the trust agreements in whole or in part.

In April 2004, Myra amended two of her trusts. The amendments removed Sheldon and Lana as co-trustees and added the Rose Community Foundation as a beneficiary. Sheldon and Lana were informed of these changes during a meeting held in May 2004. After that meeting, Sheldon and Lana later stated that they met with Myra and believed she intended to reinstate the original family estate plan.

According to Sheldon and Lana, Myra communicated with her Arizona attorney about restoring the original estate plan, under which trust assets would pass to Sheldon, Lana, and their children. They later asserted that Preston Hofer was aware of those instructions and aware of Myra’s stated intent to restore the prior estate plan.

Events Following the Trust Amendments

Sheldon and Lana alleged that Myra’s Arizona attorney did not reinstate the original estate plan and instead referred Myra for a mental health evaluation. A mental health professional later determined that Myra was a vulnerable adult. Sheldon and Lana asserted that Preston Hofer learned of that determination and also knew that the original estate plan had not been restored.

Sheldon and Lana alleged that Preston Hofer did not disclose this information to them. They further asserted that Preston Hofer was aware of additional estate planning changes Myra made in October 2004. Those later changes directed that the vast majority of Myra’s trust assets be distributed to charitable organizations, with specific bequests of one million dollars each to Sheldon and Lana.

Myra died in June 2009. Her will directed most of her estate to pass through a revocable trust administered by Northern Trust, with distributions to Sheldon, Lana, and several charitable beneficiaries, including the Rose Community Foundation. Sheldon and Lana later contested the will. That contest was resolved through a settlement agreement and mutual release executed in September 2011.

Claims Based on Fiduciary Duties

After the will contest settled, Sheldon and Lana filed a separate action against Preston Hofer. They alleged that Preston Hofer owed fiduciary duties arising from confidential relationships connected to his roles as co-trustee, accountant, and advisor. Sheldon and Lana alleged that those duties required disclosure of material information concerning Myra’s estate planning decisions, her vulnerable adult determination, and communications with Myra’s attorney.

The claims asserted that Preston Hofer failed to disclose information that could have affected Sheldon and Lana’s ability to protect their interests under the family estate plan. Sheldon and Lana also alleged that confidential information they shared with Preston Hofer was improperly disclosed to Myra’s attorney.

Motion for Summary Judgment

Preston Hofer moved for summary judgment on several grounds. He asserted that the claims were barred by the statute of limitations, that the settlement agreement from the will contest released the claims, and that the alleged duties did not exist or were more limited than Sheldon and Lana described. He also asserted that the claims failed for lack of causation and that a certificate of review was required.

The court reviewed the summary judgment record under Colorado law, viewing the evidence in the light most favorable to Sheldon and Lana and resolving factual disputes against the moving party.

Statute of Limitations and Release Issues

The court examined when Sheldon and Lana knew or should have known the facts giving rise to their claims. Sheldon and Lana submitted affidavits stating that they did not learn certain key facts, including the vulnerable adult determination and the failure to restore the estate plan, until after Myra’s death and the later production of documents. The court concluded that disputed issues of fact existed regarding accrual of the claims.

The court also reviewed the settlement agreement from the will contest. The agreement released claims between Sheldon and Lana, Northern Trust, and the Rose Community Foundation. The court determined that the agreement did not, as a matter of law, release claims against Preston Hofer, who was not a party to that probate litigation.

Fiduciary Duties, Causation, and Certificate of Review

The court addressed whether fiduciary duties could arise from confidential relationships extending beyond formal trustee roles. Sheldon and Lana submitted evidence describing long-standing relationships of trust involving estate planning, family finances, and personal matters. The court concluded that the scope and existence of any fiduciary duties presented factual issues not suitable for resolution on summary judgment.

The court also determined that causation issues remained for trial. Sheldon and Lana asserted that disclosure of information could have allowed them to take steps to protect their interests, including seeking a conservatorship or persuading Myra to modify her estate plan.

Finally, the court concluded that a certificate of review was not required because the claims were not based on professional negligence involving accounting services.

The Court’s Ruling

The court denied the motion for summary judgment in its entirety. The court determined that disputed issues of material fact required the claims to proceed.

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