FMR Corp. n/k/a FMR LLC, et al. v. Howard n/k/a Hart

FMR Corp. n/k/a FMR LLC, Fidelity Management Trust Company, and Fidelity Brokerage Services LLC (collectively, "Fidelity") appealed a circuit court order denying their motion asking the court to compel Elizabeth Howard n/k/a Elizabeth Hart ("Hart") to arbitrate Fidelity's dispute with her regarding her responsibility to indemnify Fidelity for losses it might suffer if Hart's stepchildren prevailed on claims they asserted against Fidelity that were the subject of a separate pending arbitration proceeding. In 2006, Hart's husband, Frederick Howard, opened an individual retirement account with Fidelity ("the Fidelity IRA"), funding it with money previously been held in a retirement account administered by Howard's former employer. Although Howard had previously designated his three children from a prior marriage as beneficiaries of the employer's retirement account, he did not designate any beneficiary for the Fidelity IRA at the time it was opened or at anytime thereafter. Howard died in 2011. His will left all his personal property to the children, explaining that Hart "has a sizeable separate estate of her own." However, because Howard never designated a beneficiary for the Fidelity IRA, Fidelity distributed the money held in that account to Hart in accordance with the terms of the Fidelity IRA, which provided that any assets in the account would become the property of a surviving spouse when the account holder died if no beneficiary had been named. The Howard children unsuccessfully challenged that distribution in Probate Court. Then the Howard children sued Fidelity and Hart, asserting claims of undue influence, fraud, and conversion against Hart and a claim of negligence against Fidelity, contending their father was incompetent at the time the Fidelity IRA was opened and that Hart was the impetus behind the opening of the Fidelity IRA, Fidelity was negligent for failing to implement adequate procedures governing its online-account-opening process that would prevent either fraudulent activity or invalid actions by incompetent individuals. Fidelity moved the Circuit Court to compel arbitration, noting in its motion that Howard, Hart, and the Howard children had all executed documents related to accounts with Fidelity that contained arbitration provisions. The Supreme Court reversed, finding that the circuit court denied Fidelity's motion notwithstanding the submission of competent evidence establishing Fidelity had a right to arbitrate these claims. View "FMR Corp. n/k/a FMR LLC, et al. v. Howard n/k/a Hart" on Justia Law