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Family did not follow statutory remedies before suing bank

December 23, 2014
A federal court properly dismissed a family’s lawsuit against an Indiana bank and employee alleging they breached a fiduciary duty to a veteran in managing his benefits, the 7th Circuit Court of Appeals held Monday. The family is required to seek review of the fiduciary appointment as outlined under statute.

The family of William L. Evans Jr. sued Greenfield Banking Co. and employee Joana Springmier asserting breach of fiduciary duty and conversion by the bank. Evans’ daughter, Carolyn Stump, was originally appointed by the U.S. Department of Veterans Affairs as Evans’ federal fiduciary after it determined he was no longer competent to manage the nearly $4,000 a month he received in benefits. But the VA later terminated her appointment and appointed the bank, leading to this lawsuit in state court. When the VA intervened, the suit was moved to federal court, where Judge Tanya Walton Pratt dismissed it for lack of jurisdiction.

“In short, the allegations in this complaint are that the Bank breached its fiduciary duty to Evans in managing his benefits by complying with its obligations as a federal fiduciary with the VA. Decisions by the Secretary under 38 U.S.C. Section 502, including the appointment and supervision of fiduciaries, are matters ‘affect[ing]’ the provision of benefits,’” Judge Ann Claire Williams wrote in Dorothy J. Evans, et al. v. Greenfield Banking Co. and Joana Springmier, et al., 13-3054.

“As a result, they are subject to review only by the Board of Veterans’ Appeals and ultimately by the Veterans Court and Federal Circuit. The complaint acknowledges, and alleges as misconduct, that the Bank complied with its agreement with the VA and followed the Secretary’s directions. The way this complaint is pled demonstrates that the relief sought against the Bank impermissibly intrudes on the Secretary’s discretion under 38 U.S.C. Section 5502(a)(1) and 38 C.F.R. Section 13.55(a) to designate, supervise, and remove a federal fiduciary.”

Because the complaint is really a challenge to the fiduciary appointment and to veteran benefits distributions, the appeals court lacks jurisdiction over it, the 7th Circuit held.
 
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