Behrmann v. Baker CA2/6

Filed 7/3/13 Behrmann v. Baker CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

JOHN R. BEHRMANN et al., 2d Civil No. B241830 (Super. Ct. No. 1341686) Plaintiffs and Appellants, (Santa Barbara County)

v.

JOEL R. BAKER et al.,

Defendants and Respondents.

Plaintiffs John and Nancy Behrmann (the Behrmanns) sued Joel Baker and his related companies (collectively Baker) for damages allegedly caused by a life insurance-based investment tool Baker invented and by breach of the fiduciary duty Baker allegedly owed them. After the Behrmanns rested their case at trial, the trial court granted a nonsuit. Because the nonsuit was properly granted, we affirm. FACTS AND PROCEDURAL HISTORY A. Facts Because we are reviewing the trial court's grant of a nonsuit, we construe the evidence presented at trial in the light most favorable to the Behrmanns, and resolve all presumptions, inferences and doubts in their favor.

(Castaneda v. Olsher (2007) 41 Cal.4th 1205, 1214-1215; Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291 (Nally).) In the mid-1990s, Baker created a proprietary investment "tool" he called the "Financial Independence Plan" (FIP). Under the FIP, an investor would buy a variable life insurance policy and place title to the policy in an irrevocable life insurance trust. The policy would be a "split dollar policy." Ten percent of the policy's premiums would be paid directly by the investor; the remaining 90 percent would be paid by a private charity the investor created and funded specifically for that purpose. The policy's death benefit was also split, with the charity and the investor's designated beneficiaries receiving a share upon the investor's death. Baker's plan advised investors up front that the Internal Revenue Service (IRS) might, at some point, disallow split dollar policies. Baker's plan also suggested that Hartford Life provide the life insurance policy; that the investor's private charity be housed at the National Heritage Foundation (NHF); and that attorney Michael Goldstein (Goldstein) be hired to draft the required legal documents. The Behrmanns met with their insurance agent around this time. The agent had heard Baker discussing the FIP at a conference, and brought in a second agent more familiar with the FIP to help him advise the Behrmanns. The Behrmanns met only with the insurance agents; they never met Baker, and only spoke with him over the phone once years later. Baker provided the agents information about the FIP, and answered the agents' questions. After conducting "due diligence" on the FIP with their personal attorney, the Behrmanns decided to use the FIP notwithstanding the possibility that split dollar policies might be disallowed. The Behrmanns then took out three insurance policies with Hartford Life (one for themselves and one for each of their two adult children); created the Highbourne Foundation as a private charity housed at NHF; and retained Goldstein to create the necessary legal documents. As the FIP promised, the Behrmanns avoided capital gains taxes, and were able to declare as charitable deductions the hundreds of thousands of dollars in stock they donated to