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Merrill Says Lawsuit Over Dead Client’s Assets Should Go into Arbitration

By Miriam Rozen March 23, 2021

Merrill Lynch has asked a California state court to toss a plaintiff’s punitive damage claims against the wirehouse and compel her to instead arbitrate remaining negligence claims in her pending lawsuit.

The lawsuit, filed by Jami Handelman Katz in November 2020, alleges that in 2010 — prior to the full retirement in 2019 of financial advisor Toby Cooper from Merrill — Cooper errantly deterred his client, Joan Lickerman, from signing a transfer on death form.

The lawsuit describes Katz as a close friend of Lickerman, who died in 2018, and the “intended beneficiary” of Lickerman’s Merrill cash management account. The lawsuit relies on Cooper’s affidavit to corroborate some of her professional negligence allegations.

In a motion to dismiss the punitive damage claims filed on March 4, Merrill’s lawyers argue that Katz isn’t entitled to punitive claims because she “fails to allege any conduct” by the wirehouse that is “fraudulent, oppressive or malicious.” Katz also “never alleges” that the wirehouse “made an intentional misrepresentation, concealed a material fact, or took action intending to cause injury,” according to the motion.

In a separate motion to compel arbitration also filed on March 4, Merrill’s lawyers claim that Katz “is bound to arbitrate this dispute by the Cash Management Account Agreement and Client Relationship Agreement signed by” Lickerman.

But Katz is not bound by Lickerman’s arbitration agreement, according to her lawyer, Donald Putterman, a partner in Putterman Yu in San Francisco.

“The arbitration clause of that agreement has no application here,” Putterman says. He also pushes back against Merrill’s motion to dismiss his client’s claim for punitive damages, stating Merrill’s arguments have “no merit.”

According to Merrill’s motion to compel arbitration, Katz’s claims also raise the prospect that she could recover damages twice from two separate lawsuits about the same assets in the same brokerage-custodied account.

Katz already used the retired FA’s same affidavit to support claims in a previous lawsuit, Merrill’s lawyers write. That prior lawsuit pitted Katz against Lickerman’s two designated beneficiaries. Katz settled in mid-2020 with the designated beneficiaries, netting $350,000 as a result of the agreement, according to the motion.

At the time of Lickerman’s death, that account was valued at roughly $830,000, according to Katz’s lawsuit and Merrill’s motion to compel arbitration.

Katz attached in her lawsuit an affidavit that Cooper signed in 2019, corroborating some of the allegations. Specifically, in 2010, Cooper advised Lickerman that while she could “technically” use a TOD form to designate Katz as the account’s beneficiary, such a designation was “usually for married persons,” according to both the lawsuit and his affidavit. But the Merrill TOD form for the cash management account allowed for single or married persons to use it effectively, her lawsuit alleges.

Had Lickerman disregarded Cooper’s advice and used the TOD form, Katz would have received the cash management account’s assets after Lickerman died, her lawsuit alleges.

A Merrill spokesperson declined to comment on the pending litigation.

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Tags:  Regulatory/legal issues , Estate planning , Merrill Lynch

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