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NEWSLETTERS & ALERTS
JPMorgan Escapes $8 Billion Verdict Over a Breach of Fiduciary Obligations
[Photo: Golf Legend Arnold Palmer with his golf club collection / Golfdigest.com]
by Howard Haykin
Earlier this month, JPMorgan Chase was ordered by a Texas probate judge to pay $7.1 million to the widow of a deceased American Airlines executive. Eleven months earlier, a Dallas jury had awarded the widow and her family an $8 billion verdict against the bank for mismanaging the family estate.
The judgment was computed, as follows: (i) $781K in actual damages; (ii) >$5Mn in lawyers’ fees; (iii) almost $1Mn in exemplary damages; and, (iv) >$255K in prejudgment interest on the actual damages.
$8 BILLION JUDGMENT FOR THE ESTATE OF MAX HOPPER, ET AL. Max Hopper, who pioneered a reservation system for American Airlines, died in 2010 with assets of more than $19 million, but without a will and testament. JPMorgan was hired as an administrator to divvy up the assets among family members – Hopper’s wife, Jo, and his two step children. Yet, according to family lawyers, JPMorgan botched its fiduciary responsibilities.
“Instead of independently and impartially collecting and dividing the estate’s assets, the bank took years to release basic interests in art, home furnishings, jewelry, and notably, Mr. Hopper’s collection of 6,700 golf putters and 900 bottles of wine. Some of the interests in the assets were not released for more than five years.”
“The bank's incompetence caused more than just unacceptably long timelines; bank representatives failed to meet financial deadlines for the assets under their control. In at least one instance, stock options were allowed to expire. In others, Mrs. Hopper's wishes to sell certain stock were ignored. The resulting losses, the jury found, resulted in actual damages and mental anguish suffered by Mrs. Hopper. With respect to Mr. Hopper's adult children, the jury found that they lost potential inheritance in excess of $3 million when the Bank chose to pay its lawyers' legal fees out of the estate account to defend claims against the Bank for violating its fiduciary duty.”
The 6 jurors agreed with the Hoppers’ lawyers, finding that the bank committed fraud, breached its fiduciary duty and broker a fee agreement. And so, on top of the less than $5 million in actual damages and over $3 million in legal fees, the jurors awarded $8 billion in punitive charges against the bank - $2 billion each to widow Jo Hopper, the Hopper Estate, and each step child. [zerohedge.com] A 26-year-old insurance agent who served on the jury said the $8 billion verdict was meant to “send a message” to the bank “to prevent this from happening again.”
POSTSCRIPT. In April 2018, JPMorgan reached a confidential settlement with the step children of Max Hopper The children had sought about $74 million after conceding that the $6 billion in punitive damaged awarded to them and their father’s estate wasn’t legally defensible under rulings by the Texas and U.S. courts. Jo Hopper, who claimed $14.4 million in damages, agreed to receive $7.1 million.