Bulgari v. Bulgari

Background

Ilaria Bulgari sued Veronica Bulgari for breach of fiduciary duty and negligence. Ilaria brought the claims against Veronica only in her capacity as trustee of two trusts established by their father, Nicola Bulgari, for their mother, Anna Bulgari. Veronica moved for summary judgment, which asks a court to rule without a trial when no genuine dispute of important facts requires a jury’s decision.

A magistrate judge recommended granting Veronica’s motion in part and denying it in part. Both parties objected. Judge Schofield reviewed the objections and adopted the recommendation except for the portion concerning Veronica’s possible role in their father’s decisions to stop payments to Ilaria and revoke the Filicaia Trust.

Rulings on the fiduciary-duty claim

The court denied summary judgment on Ilaria’s claim that Veronica breached her duty of loyalty by influencing Nicola Bulgari’s decisions to stop payments to Ilaria or revoke the Filicaia Trust. The court found factual disputes about Veronica’s role in those decisions and whether her conduct was sufficiently connected to her administration of the family trusts. Communications about a draft letter, financial pressure, and the timing of the trust revocation and stopped payments could allow a reasonable jury to find that Veronica sought to obstruct Ilaria’s efforts to obtain trust information or pressure her to accept less favorable trust terms.

The court granted summary judgment to Veronica on the “missing assets” portion of the fiduciary-duty claim. The court found that the evidence did not allow a reasonable jury to conclude that Veronica accepted the trustee role before 2015. It also found that Ilaria waived an argument that Veronica had a duty, after becoming co-trustee in 2015, to investigate money allegedly missing before her trusteeship because that argument was raised only in a footnote.

The court granted summary judgment to Veronica on the portion of the fiduciary-duty claim concerning her investigation of irregularities in Morgan Stanley account statements. The court concluded that no reasonable jury could find that Veronica failed to act with reasonable diligence after Ilaria raised the issues in November 2021. Veronica requested supporting materials, responded after receiving them, and instructed Morgan Stanley and her attorneys to address the discrepancies. Ilaria’s separate argument that Veronica should have investigated before being alerted to the irregularities was not preserved.

The court denied summary judgment on the portion of the fiduciary-duty claim alleging that Veronica failed to provide requested trust records promptly. The court found a factual dispute about whether, and to what extent, expenses incurred to obtain the records before possible litigation could be recoverable as damages.

The court also denied summary judgment on the portion alleging that Veronica delayed distributions of trust assets. Ilaria presented evidence that the trust’s value declined between the second and third distributions and that the decline reduced the amount she received. The court stated that the damages question is generally the difference between what Ilaria received because of the delayed distribution and the greater amount she would have received from a timely distribution, rather than a calculation based on how she might have invested the funds.

The court’s conclusion also states that summary judgment was granted to Veronica on Ilaria’s claims concerning maintaining records and failing to record a change in ownership of the cottage with the county clerk.

Negligence claim

The court granted summary judgment to Veronica on Ilaria’s negligence claim. It held that the claim duplicated the fiduciary-duty claim and that Ilaria had not identified an independent duty of care. Ilaria’s argument that Veronica voluntarily assumed a duty of reasonable care before becoming co-trustee was both inadequately preserved and unsupported on the merits.

Disposition

Judge Schofield adopted the magistrate judge’s recommendation except as stated in the opinion. Veronica’s motion for summary judgment was GRANTED in part and DENIED in part. The fiduciary-duty issues concerning possible influence over Nicola Bulgari’s decisions, trust-information requests, delayed distributions, and related damages remain for further proceedings; the specified other fiduciary-duty portions and the negligence claim were resolved in Veronica’s favor.