April 2, 2009

Birts v. The Estate Plan: $10 Million Punitive Damages Award Entered on Default of Living Trust Seller

A Texas law journal (The Southeast Texas Record) reported yesterday that a federal judge in Arkansas has entered a $16 million default judgment—including $10 million in punitive damages—against The Estate Plan, a company that sells living trusts. The plaintiffs brought a class action alleging that The Estate Plan was exploiting senior citizens and offering unsound financial and legal advice in a manner giving rise to claims of fraud, unauthorized practice of law, negligence, breach of fiduciary duty, and conspiracy. The March 16 default judgment in Birts, et al v. The Estate Plan (case 4:08-cv-04047-HFB) also reportedly requires the defendant to correct misrepresentations in the materials that it provides to consumers and to engage in a public information campaign.

Public outrage over financial shenanigans like this will likely result in a continuing stream of big-ticket punitive damages awards.