Posts Categorized: Litigation Update

T&E Litigation Update – The FPE Foundation v. Solomon; Berkowitz v. Berkowitz

Author:
Mark E. Swirbalus, Esq., Goulston & Storrs, P.C.

While the Red Sox were marching toward victory, the following decisions were reported enforcing an arbitration clause in a trust and addressing statute of frauds and statute of limitations questions in a case involving alleged breaches of an oral trust.

The FPE Foundation v. Solomon

In The FPE Foundation v. Solomon, Civil Action No. 12-11342-GAO, 2013 U.S. Dist. LEXIS 134120 (D. Mass. Sept. 19, 2013), the charitable remainder beneficiary of a QTIP trust brought suit against the trustees and the estate planning attorney for alleged mismanagement of the trust, asserting tort and contract claims in the U.S. District Court.  The Court dismissed the claims and compelled arbitration of the dispute pursuant to the arbitration clause in the trust instrument.  In doing so, the Court assumed the enforceability of the clause and focused its discussion on whether the defendants had waived their right of enforcement.

Berkowitz v. Berkowitz

In Berkowitz v. Berkowitz, Civil Action No. 11-10483-DJC, 2013 U.S. Dist. LEXIS 134791 (D. Mass. Sept. 20, 2013), Samuel Berkowitz sued his daughter Bonnie Berkowitz for breach of fiduciary duty, claiming that she was holding certain real property and securities for his benefit pursuant to an oral trust, and that she repudiated the oral trust in 2008.  Bonnie moved for summary judgment, arguing in part that Samuel’s claim is barred by the statute of frauds and the statute of limitations.  Her motion was denied.

The U.S District Court acknowledged that the statute of frauds applies to contracts for the conveyance of land, and that no trust concerning land, except a trust that may arise or result by implication of law, shall be created or declared unless by a written instrument.  The Court held, however, that one such trust that arises by implication of law (and thus does not require a written instrument) is a resulting trust, and that a genuine issue of fact exists as to whether a resulting trust was created when Samuel transferred the real property to Bonnie.

Similarly, the statute of frauds does not apply to the securities that were allegedly held pursuant to the oral trust, because it was not a contract to make or revoke a will or codicil.  Even if the oral trust were made in contemplation of Samuel’s death, and thus arguably fell within the statute of frauds, the statute of frauds would not apply to a constructive trust, and Samuel brought forth sufficient evidence to raise a genuine issue of fact as to the existence of a constructive trust.

Finally, the Court held that Samuel’s claim was not barred as a matter of law by the statute of limitations.  A claim for breach of fiduciary duty does not accrue until the trustee repudiates the trust and the beneficiary has actual knowledge of the repudiation.  Here, although there is evidence that Samuel knew he had been “swindled” as early as 2002, there was no evidence that Bonnie specifically repudiated the trust until 2008, when Samuel requested an accounting.  For the same reason the Court rejected Bonnie’s argument under the doctrine of laches.

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

Waxman v. Waxman

By: Melissa E. Sydney, Esq. of Burns & Levinson LLP

In Waxman v. Waxman, 84 Mass.App.Ct. 314 (September 30, 2013), the Court affirmed two decisions of the Superior Court and addressed the distribution of assets upon the death of a party to a divorce proceeding during the pendency of the proceeding. The Court affirmed the summary judgment ruling with respect to the assets that the decedent held with his estranged wife as tenants by the entirety and as joint tenants, ruling that such assets passed to her by common law right of survivorship upon the decedent’s death, because there was no agreement between the parties overriding this right.

The Court also affirmed the summary judgment ruling regarding the decedent’s IRA, ruling that the decedent did not violate the automatic restraining order under Supplemental Probate Court Rule 411 as a matter of law when the decedent changed the beneficiary designation on his IRA three days prior to the filing of the complaint of divorce and before the automatic restraining order took effect. The record indicates that the decedent’s wife failed to raise at trial the issue of fact regarding the decedent’s state of mind when he changed the beneficiary designation on his IRA (i.e. whether the decedent intended to evade the automatic restraining order by changing the beneficiary designation shortly in advance of filing for divorce), so this issue was not preserved for appeal.

T&E Litigation Update – Estate of Elizabeth B. Lacey; Surabian v. Billings; Stevens v. Stevens

Author: Mark E. Swirbalus, Esq., Goulston & Storrs, P.C.

In three recent decisions, the Appeals Court affirmed a judgment on undue influence grounds in a “classic will contest” with some procedural twists, addressed statute of limitations questions, and restored a beneficiary’s interest in a realty trust.

Estate of Elizabeth B. Lacey

In Estate of Elizabeth B. Lacey, Case No. 12-P-357, 2013 Mass. App. Unpub. LEXIS 865 (August 29, 2013) (Rule 1:28), the Appeals Court affirmed the judgment in what it described as a “classic will contest.” The beneficiaries of a prior will successfully contested a subsequent will – under which the contestants would receive nothing – as the product of undue influence. The facts are not remarkable, but three aspects of the decision are noteworthy.

First, the proponent of the subsequent will argued on appeal that the trial judge improperly adopted verbatim many of the findings of fact proposed by the contestants. The Court rejected this argument, explaining that although the practice of adopting a party’s proposed findings of fact verbatim has been criticized, it is not fatal if the adopted findings are supported by the evidence. Here, the trial judge did not adopt all of the contestants’ proposed findings (83 out of 225 proposed findings), and provided her own conclusions of law and reasoning, which served as the judge’s “badge of personal analysis.”

Second, in noting that the judgment was not clearly erroneous, the Court pointed to the proponent’s broader scheme of misappropriating the decedent’s assets, including his endorsing and cashing her pensions checks, forging her name on checks after her death, and invoking the privilege against self-incrimination when asked about these checks. “That choice permitted the judge to draw any reasonable adverse inferences in this civil litigation.”

Third, the Court rejected as “meritless” the proponent’s argument that he was deprived of due process by the two-year delay between the trial and the judge’s decision. The proponent had not indicated how he was prejudiced by this delay. Because he possessed no lawful interest in the estate, “he therefore suffered no deprivation of any kind, let alone a deprivation of a due process interest.”

Surabian v. Billings

In Surabian v. Billings, Case No. 12-P-1287, 2013 Mass. App. Unpub. LEXIS 870 (August 29, 2013) (Rule 1:28), the Appeals Court reversed the allowance of a motion to dismiss the plaintiff’s claim against the defendants for conversion on statute of limitations grounds. The complaint was filed three years and forty days after the plaintiff’s daughter’s death, who apparently – the facts recited in the decision are sparse – was in possession of the plaintiff’s property at her death.

The Court explained that a three-year limitations period applies to the conversion claim against the defendants in their individual capacities, that the claim would have accrued when the defendants refused the plaintiff’s demand for the property, and that the plaintiff had pled sufficient facts, which are assumed to be true on a motion to dismiss, that the claim did not accrue – i.e., that the defendants did not refuse to return the property – until the date the complaint was actually filed. At the very least, “nothing in the complaint asserts with sufficient clarity that any cause of action for conversion had accrued on the date of the daughter’s death.”

The Court affirmed the trial judge’s dismissal of the plaintiff’s claim for conversion against one of the defendants in her capacity as administrator of the daughter’s estate because the claim was not brought within the applicable one-year limitations period. The Court also seemed to suggest, however, that the claim against the administrator was not yet ripe because the administrator had not listed the property as part of the daughter’s estate in the voluntary administration statement, and that, if this property were later claimed to be part of the estate, then the statute of limitations would be no bar and the plaintiff could amend his complaint on remand or assert a new action against the administrator.

Stevens v. Stevens

In Stevens v. Stevens, Case No. 12-P-773, 2013 Mass. App. Unpub. LEXIS 883 (September 3, 2013) (Rule 1:28), the Appeals Court affirmed a judgment for the plaintiff Christopher against his brother David and mother Esther on Christopher’s claim for wrongful deprivation of his share of a family trust, awarding him damages in the amount of $918,546. Esther established the trust in July 1983 to hold certain property in Marshfield, naming herself as trustee and executing a schedule of beneficiaries giving Christopher and David equal interests of 50% each. The terms of the trust prohibited any change in the beneficial interests without Christopher’s and David’s authorization.

In 1984, David asked Esther to change the beneficial interests such that he would be given a 51% interest and Christopher a 49% interest. Esther rejected this change, crossing out the percentages proposed on the new schedule and writing 50% next each son’s name. Esther then signed this schedule as trustee as of July 10, 1983, the date when she established the trust. Some years later, however, Esther conveyed the Marshfield property to herself and David as tenants in common, without informing Christopher, and when Christopher eventually learned of this conveyance, he was assured by Esther and David that they would make things “right.” They subsequently acted on this promise by making equal distributions to Christopher, but when the property was later sold to a third party, Esther and David denied that Christopher held any interest.

After a lengthy bench trial, the judge found that the schedule Esther signed as of July 10, 1983 (where she crossed out David’s proposed change in percentage interests and wrote 50% next to each son’s name) was controlling, even though no original schedule could be found. In affirming the judgment, the Appeals Court upheld the trial judge’s validation of this document as a copy of the controlling schedule and rejection of another document showing Esther and David as the sole beneficiaries. The Appeals Court also rejected Esther and David’s argument that Christopher’s claims were barred by the statute of limitations, because Christopher’s promissory estoppel claim was brought within six years of Esther and David’s promise to honor and restore Christopher’s 50% interest in the trust, and Christopher had reasonably relied on this promise, which Esther and David actually fulfilled for some time before finally reneging.

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

T&E Litigation Update – Nichols v. Pritzker; Kramer v. Chafets

Author: Mark E. Swirbalus, Esq., Goulston & Storrs, P.C.

The month of August began with two noteworthy decisions from the courts:

Nichols v. Pritzker

In Nichols v. Pritzker, Case No. 12-P-1328, 2013 Mass. App. Unpub. LEXIS 828 (August 8, 2013) (Rule 1:28), the Appeals Court affirmed a Superior Court judgment in favor of the plaintiff, who claimed she had an agreement with the decedent and his wife under which, upon their deaths, they were to give “everything” to the plaintiff.  The defendant appealed, arguing that the agreement is barred by the Statute of Wills and the Statute of Frauds.  The Appeals Court disagreed.  “Neither the Statute of Wills, G.L. c. 191, § 1, nor the Statute of Frauds, G.L. c. 259, § 5A, were implicated by the agreement between the plaintiff and [the decedent] and his wife.  The plaintiff argued she had an oral contract with [the decedent] and his wife prior to their deaths that governed disposition of their shared property after their deaths, and that agreement does not implicate the Statute of Wills . . .  The Statute of Frauds is similarly inapplicable, as the agreement in question was not a will, but a promise to give the plaintiff all of [the decedent’s] and his wife’s property after their deaths.”  The Court upheld the jury’s award of more than $1.5 million in damages to the plaintiff for the breach of the promise, but did not give any further explanation on the inapplicability of the Statute of Wills or the Statute of Frauds.

Kramer v. Chafets

In Kramer v. Chafets, Civil Action No. 2013-876-A (August 2, 2013), the Middlesex Superior Court (Wilkins, J.) denied a motion to dismiss an undue influence claim, and in doing so addressed the level of specificity needed for allegations of undue influence.  The Court explained that “not much authority exists” on this question, and adopted a “practical approach” to the particularity requirement of Rule 9(b) applicable to claims of fraud, mutual mistake and undue influence, explaining that the complaint does not have to detail every fact upon which an undue influence claim rests.  Here, the complaint contained factual allegations going to the elements of undue influence, and nothing more was required at the pleading stage.  “By its nature, undue influence exercised over one party by another generally occurs out of sight and hearing of the disadvantaged third party.  To require greater specificity would set up an insuperable barrier to prosecution of undue influence claims.  In the circumstances, the complaint contains sufficient particularity as to time, manner and perpetrator to allow the defendant to defend himself.”

 

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

T&E Litigation Update – Matter of the Estate of Sharis; Alford v. Thibault

Author: 

Two recent decisions by the Appeals Court are especially worth noting this week: 

Matter of the Estate of Sharis 

In Matter of the Estate of Sharis, Case No. 12-P-693, 2013 Mass. App. LEXIS 113 (June 28, 2013), the Appeals Court affirmed the disallowance of a will on grounds of lack of testamentary capacity and undue influence.  The burden of proof had been shifted to the decedent’s fiduciary (one of her grandchildren) who benefitted under the will, and the Court held that he had failed to meet this burden.  In doing so, the Court rejected the fiduciary’s argument that the decedent had the advice of independent legal counsel, which would have been a fact militating against undue influence as a matter of law.  The Court explained that “[o]ne of the functions of independent counsel is to provide documentation that the making and execution of a will is voluntary and knowing, thus lending transparency and credibility to the bequest.”  Here, this function was not served.  The decedent never met the attorney and spoke with him only twice by phone, briefly.  Moreover, the attorney’s associate who actually drafted the will never spoke with the decedent, instead communicating by e-mail with the fiduciary, and neither the attorney nor the associate reviewed the terms of the will with the decedent, leaving that task to the fiduciary. 

Alford v. Thibault 

In Alford v. Thibault, Case No. 12-P-1184, 2013 Mass. App. LEXIS 110 (June 27, 2013), the Appeals Court addressed the question of whether a life tenant with a power of sale owes a fiduciary duty to his co-remainderman with respect to the sale.  The defendant was the life tenant of a condominium, and the will pursuant to which he was given the life tenancy provided that he had the power to sell the condo in his absolute discretion, for such price and upon such terms as he deems advisable.  The plaintiff co-remainderman claimed that the defendant had breached his fiduciary duty by selling the condo for less than full value.  The trial court rejected this claim after trial, observing that there is no case law in Massachusetts holding that a life tenant, even one with a power of sale, owes a fiduciary duty to remaindermen.  The Appeal Court affirmed, concluding that the defendant was required merely to comply with the terms of the will and act in good faith.  Though the trial court had found that the sale price of the condo, which was $70,000 below fair market value, “certainly raises an eyebrow,” the sale price alone was not sufficient to demonstrate bad faith because the defendant was under significant pressure to sell.  That this pressure resulted from the defendant’s allowing the condo to fall into disrepair and failing to pay real estate taxes and other costs, causing the condo to be subject to a tax taking, seemed not to matter.    

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

 

T&E Litigation Update – Adler v. Adler; Ramsten v. Alfieri

Author: 

The past month has been relatively quiet for reported decisions in this area in Massachusetts, but two decisions by the Appeals Court are worth noting: 

Adler v. Adler 

In Adler v. Adler, Case No. 10-P-1760, 2013 Mass. App. Unpub. LEXIS 639 (June 7, 2013), a decision issued pursuant to Rule 1:28, the Appeals Court affirmed the invalidation of a will, a restated trust, and related conveyances of real property on grounds of lack of capacity and undue influence.  The facts of the case are interesting, but the decision is most noteworthy for its thorough discussion of the state of the law involved in will and trust contests.  Specifically, the Court discussed (1) testamentary capacity versus capacity to contract, (2) the presumption of capacity and the shifting burden of proof, (3) the elements of undue influence, (4) the shifting of the burden of proof to a benefitting fiduciary on an undue influence claim, and (5) the standard of review for a will contest versus an equity action.  The remedy affirmed by the Court is also noteworthy, in that a prior will was allowed as a matter of equity rather than on an adjudicated petition for its probate.  The Court held that this prior will had been admitted into evidence during the trial, reflected the decedent’s true “untainted” wishes,  and that the defendant effectively waived his right to contest it.
Ramsten v. Alfieri 

In Ramsten v. Alfieri, 83 Mass. App. Ct. 1132 (May 17, 2013), another decision issued pursuant to Rule 1:28, the Appeals Court reversed an order that enjoined an executor from improving and subdividing certain real property held in the estate.  There was a disagreement about how to maximize the value of the property.  The executor believed that he could maximize the value by creating additional buildable lots and marketing them as independent parcels.  The plaintiffs, who were some (but not all) of the beneficiaries, disagreed.  The probate court granted the plaintiffs’ motion for preliminary injunction against the executor.  In reversing the issuance of the injunction, the Appeals Court explained as follows:  “[The executor’s] subdivision plan does not appear to be unreasonable, and we conclude that by allowing the plaintiffs’ application for a preliminary injunction, the judge substituted her judgment for that of the executor.  Indeed, the judge did not find that the plan constituted a fraudulent, arbitrary, or capricious use of [the executor’s] discretionary power as executor.  That there may have been an easier course of action in dealing with the lots is beside the point.”  The Court also noted that the plaintiffs have no entitlement to the property itself – their interest as beneficiaries is in the effective and profitable administration of the estate.  If the executor’s plan decreases the value of the estate, then they could have an action against him in the final accounting of the estate. 

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

T&E Litigation Update – Ajemian v. Yahoo!, Inc.

Author: 

Ajemian v. Yahoo!, Inc.
Last week, the Appeals Court issued a much-anticipated decision in Ajemian v. Yahoo!, Inc., No. 12-P-178 (May 7, 2013), which concerns the question of whether the decedent’s e-mails in his Yahoo! account are property of his estate. 

Without ruling on this question, the Probate Court had dismissed the administrators’ complaint, holding that their suit to gain access to the e-mails must be brought in California pursuant to the forum selection clause in the Terms of Service and Privacy Policy (“TOS”) for the Yahoo! account.  The Probate Court had also held that res judicata barred the administrators’ suit in Massachusetts, where they had already obtained an unopposed order against Yahoo! permitting them to obtain the headers to the e-mails, but not the contents of the e-mails themselves.  

The Appeals Court reversed and remanded, holding that res judicata did not bar the present suit in Massachusetts, and that neither the forum selection clause nor the one-year limitations period stated in the TOS barred the present suit in Massachusetts.   The Appeals Court explained that the TOS, which was in the form of a  “browsewrap” agreement (where terms and conditions are posted as a hyperlink on the website), had not been reasonably communicated to the decedent or accepted by him.  The Appeals Court also explained that it would be unreasonable to enforce the TOS against the administrators, who were not parties to the agreement, and that Massachusetts is the proper jurisdiction to hear the dispute because the decedent was domiciled in Massachusetts and the administrators are residents of Massachusetts. 

The Appeals Court declined to address the question of whether the decedent’s e-mails in his Yahoo! account are property of his estate, and thus whether the administrators can access those e-mails.  “In these circumstances, the question is best addressed on remand after full briefing and such further proceedings as the probate judge deems appropriate.”  So, for the answer to this question, it would seem that we must stay tuned. 

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

T&E Litigation Update – Yeomans v. Stackpole; Asfawossen v. Stahlin

Author: 

Yeomans v. Stackpole 

In Yeomans v. Stackpole, Docket No. MICV2011-01702-F, 2013 Mass. LEXIS 237 (April 13, 2013), the Middlesex Superior Court addressed the question of whether a law firm could be held vicariously liable for legal malpractice based on the alleged breach of fiduciary duty of one of its lawyers as a trustee.Attorney John Roche served as a trustee of a trust since 1999. In 2001, Attorney Roche joined a law firm (“TG&P”) as a “contract partner.” Under the terms of his contract, Attorney Roche was entitled to keep the trustee fees he earned on trusts that pre-dated his association with TG&P. After Attorney Roche died in 2007, a successor trustee was appointed, and he and a beneficiary then brought suit against Attorney Roche’s estate, TG&P and another law firm with which he had been associated for his allegedly imprudent management of the trust.

The claim against TG&P was that it should be held vicariously liable for Attorney Roche’s alleged negligence. The plaintiffs based this claim on their argument that the beneficiaries had an attorney-client relationship with Attorney Roche. TG&P moved for summary judgment, arguing in part that the firm cannot be held vicariously liable because a viable claim for legal malpractice against Attorney Roche as a partner in the firm does not exist.

The Court granted TG&P’s motion. The Court explained that for a viable legal malpractice claim to exist, there must be an attorney-client relationship, either express or implied, between one of the plaintiffs and Attorney Roche, and that this relationship must exist in the context of his allegedly improper investment and disbursement decisions. The Court held that there was no evidence of such a relationship. All of the interactions with Attorney Roche were as a trustee, not as an attorney. There were no bills for “legal” services, and there was no correspondence on TG&P letterhead that purported to show Attorney Roche giving “legal” advice.

The Court also noted that the trust was not a client of TG&P and that Attorney Roche did not bill for his trustee fees on TG&P letterhead. The only connections between Attorney Roche and TG&P were letters relating to trust management on TG&P letterhead and a meeting at TG&P between Attorney Roche and the beneficiaries. As the Court found, these connections were simply not enough to create an attorney-client relationship between TG&P and the trust.

“Ultimately, there is no record evidence that the law firm . . . had an attorney-client relationship with either plaintiff. Because no attorney-client relationship existed . . . , no duty ran between the law firm and the plaintiffs. Without a duty, the plaintiffs’ legal malpractice claim against [TG&P] must be dismissed.”

Asfawossen v. Stahlin 


In a separate decision pursuant to Rule 1:28 that warrants only passing mention, Asfawossen v. Stahlin, Case No. 12-P-645, 2013 Mass. App. Unpub. LEXIS 464 (April 23, 2013), the Appeals Court held that a party cannot collaterally attack a Probate Court judgment by suing the Probate Court judge in Superior Court. Needless to say, even if the Probate Court judge were not judicially immune from such a suit, the Superior Court lacks subject matter jurisdiction to hear this kind of pseudo-appeal from a Probate Court judgment. Let the world take notice.
 

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

T&E Litigation Update – Guardianship of Kenneth E. Simon

Author: 

After more than a month with no summary-worthy decisions reported in this area (in your author’s opinion), the Appeals Court has issued two Rule 1:28 decisions in the same case. 

In Guardianship of Kenneth E. Simon, Sr. No. 1, Case No. 12-P-630, 2013 Mass. App. Unpub. LEXIS 400 (April 8, 2013), the Appeals Court affirmed a decision by the single justice denying the guardian’s motion for an enlargement of time to file a notice of appeal from a Probate Court decree. In that decree, the Probate Court ordered the guardian to pay legal fees and costs to the ward’s children. 

The guardian argued that (1) the clerk of the Probate Court never provided him with notice that his motion under Rule 63 had been denied, (2) he did not check the docket until after the usual appeal period had already expired, and (3) there was good cause to allow his late filing because there was a meritorious basis for appeal. The Appeals Court disagreed, explaining that an attorney’s oversight or lack of notice of entry of a judgment – the guardian is an attorney – is neither excusable neglect nor good cause to extend the time for filing a notice of appeal. The Court further explained that an attorney cannot simply rely on a clerk’s duty to send notice of orders, because the attorney has an obligation to check docket entries periodically. “The petitioner [guardian] has not shown good cause for failing to check the docket entries . . . Nor does the suggestion of a clerk’s error, without more, create ‘unique and extraordinary’ circumstances.” 

Moreover, the Court held that the denial of the guardian’s motion under Rule 63 did not toll the time for filing a notice of appeal in any event. Rather, the denial of the guardian’s motion for a new trial under Rule 59 is what triggered the running of the appeal period, and the guardian did not dispute having received notice of that denial. 

In addition to affirming the decree ordering the guardian to pay legal fees and costs to the ward’s children, the Court also ordered the guardian to pay their legal fees and costs on appeal pursuant to G.L. c. 215, § 45. 

On the same day, but in a separate decision, Guardianship of Kenneth E. Simon, Sr. No. 2, Case No. 12-P-1510, 2013 Mass. App. Unpub. LEXIS 404 (April 8, 2013), the Appeals Court affirmed a judgment of the Probate Court with respect to the guardian’s first and final account. The issue in dispute was the nearly $330,000 in fees and costs that the guardian and his attorney were ordered to return to the ward’s estate. The Probate Court found that “during the eighty-three days of guardianship prior to the ward’s death, the guardian and his attorney acted in concert, and in their own interest rather than that of the ward, to generate outrageous, excessive, and improper guardian’s and attorney’s fees.” 

The Appeals Court held there was no merit to the attorney’s argument that, because he was not a named party to the proceedings, the Probate Court lacked authority and subject matter jurisdiction to enter a disgorgement order against him. The Appeals Court reasoned that the reasonableness of the attorney’s fees and costs had been identified in the pretrial order, and that “it was well within the judge’s broad equitable discretion to order the guardian and his attorney, who acted in concert, to return fees taken that were in excess of those to which they were lawfully entitled.” Their acting in concert “rendered them both fiduciaries who could be required to return to the estate the monies beyond which they were lawfully entitled.” 

The Appeals Court rejected the attorney’s argument that he had not been given proper notice and an opportunity to be heard on the question of disgorgement. “The attorney examined the witnesses, reviewed the exhibits, and argued extensively at trial. . . [T]he attorney was well aware that what was at stake during the trial was the reasonableness of the fees charged during the guardianship, as to which the attorney had already received payment (and had assured himself by constantly replenishing his retainer). At no point in the proceedings did the attorney request to testify or present his other evidence as to the reasonableness or necessity of the fees charged or the propriety of an order of disgorgement.” 

The Appeals Court also rejected the attorney’s argument that the Probate Court committed error in denying a motion to strike the testimony of the opposing side’s expert witness, who was permitted to testify regarding his survey of attorney rates within Barnstable County. The Appeals Court described this kind of survey as a “historically accepted method of determining local rates.” Moreover, both the expert and the Probate Court had properly relied on the lode-star method of calculating a reasonable fee by multiplying hours reasonably incurred by a reasonable hourly rate. The Appeals Court did not address the attorney’s related argument that the expert’s testimony stifled competition in violation of the interstate commerce clause, other than to find that this argument was waived because it had not been raised below. 

Finally, the Court rejected the attorney’s arguments that the judge should have recused himself based on an alleged ex parte communication (bar counsel spoke with the judge’s case manager by telephone to request a copy of the trial transcript) and the judge’s alleged bias, and that the Probate Court improperly denied the attorney’s motion for a new trial pursuant to Rule 63. “Rule 63 does not entitle litigants to a new trial, and the judge did not err in so ruling.” 

The Boston Bar Association Trusts & Estates Section Blog provides information as a service to its users and BBA members. Neither the Trusts & Estates Section nor the Boston Bar Association are a law firm and do not represent clients in any way. Although the information on this site is about legal issues and informational services it is not legal advice. Use of this blog does not in any way create a lawyer-client relationship. If you need a lawyer, the Boston Bar Association Lawyer Referral Service can refer you to a qualified attorney. http://www.bostonbarlawyer.org/ or call 617-742-0625.

T&E Litigation Update – Fortier v. Sullivan; Pierce v. Spalding; Nystedt v. Nigro; Liporto v. Liporto; Staten v. O’Neill; Masciari v. Fenichel; Kraft Power Corporation v. Merrill; Estate of Steven Gavin v. Tewksbury State Hospital; Fowler v. Kulhowvick; Fiumara v. Fiumara

Author:

Mark E. Swirbalus, Esq., Goulston & Storrs, P.C.

The T&E Litigation Update is a recurring column summarizing recent trusts and estates case law. If you have question about this update or about T&E litigation generally, please feel free to e-mail the author by clicking on his name above.

 

Fortier v. Sullivan
In Fortier v. Sullivan, Case No. 12-P-231, 2012 Mass. App. Unpub. LEXIS 1258 (Dec. 11, 2012), a decision issued pursuant to Rule 1:28, a beneficiary of a will sued the testator’s estate planning attorney for professional negligence and breach of contract. The Superior Court dismissed the claims. The Appeals Court affirmed the dismissal of the professional negligence claim, holding that no duty of care runs from a testator’s attorney to the testator’s intended beneficiary. The Appeals Court reversed the dismissal of the breach of contract claim, however, holding that it is not barred by the Statute of Frauds, despite the lack of a written contract between the attorney and the testator. The Court highlighted the attorney’s admission that plaintiff was the intended beneficiary of the services that the attorney contracted to provide to the testator.

 

Pierce v. Spalding


In Pierce v. Spalding, Case No. 11-P-1373, 2012 Mass. App. Unpub. LEXIS 1200 (Nov. 26, 2012), another decision issued pursuant to Rule 1:28, the Appeals Court affirmed the Probate Court’s denial of legal fees and costs in the underlying trust dispute pursuant to G.L. c. 215, § 45. In affirming the denial of fees, the Court quoted the SJC’s decision in Matter of Estate of King, reiterating that “[a] Probate Court judge has broad discretion to award fees and costs under G. L. c. 215, § 45, and such a decision is ‘presumed to be right and ordinarily ought not to be disturbed.’”

Nystedt v. Nigro
In Nystedt v. Nigro, Case No. 12-1245, 2012 U.S. App. LEXIS 23947 (1stCir. Nov. 20, 2012), the First Circuit affirmed the dismissal of claims against a Probate Court-appointed special discovery master in a will contest. The plaintiff prevailed in the will contest, but, because of the litigation’s expense, the value of the estate had been greatly diminished and he was “left holding a nearly empty bag.” The plaintiff’s response was to sue a “phalanx of will-contest participants,” including the special discovery master, who was alleged to have been delinquent in his duties, causing the estate assets to plummet. The claims against the special discovery master were dismissed under the doctrine of quasi-judicial immunity, which provides absolute immunity to those who perform tasks that are inextricably intertwined with the judicial function
Liporto v. Liporto


In Liporto v. Liporto, Case No. 12 MISC 462221, 2012 Mass. LCR LEXIS 118 (Nov. 13, 2012), the Land Court heard a dispute between four brothers, who are the four trustees and beneficiaries of a trust established by their father, regarding whether the trust is to terminate by its terms. The plaintiff brothers argued in a motion for summary judgment that, pursuant to the plain language of the trust, its assets “shall be distributed outright equally to the Grantor’s children” following the Grantor’s death, provided that he is predeceased by the parties’ mother. The defendant brothers argued in a cross-motion for summary judgment that although both parents are deceased, the date of outright distribution is not specified in the trust (there is no“definitive end date”) and thus the trust should continue to provide income to the four brothers during their lifetimes. The Court held for the plaintiff brothers, finding that nothing in the trust provides for its continuation during the brothers’ lifetimes and ordering the distribution of the trust’s real property to them as tenants in common. Based on this order, the Court stated that it could proceed to the second question presented in the case, i.e., the absolute right of the co-tenants to seek partition of the property. On this point, the Court noted the well-established principle, now inapplicable to this case in light of the ordered termination of the trust and distribution of the property to the brothers as co-tenants, that property owned by a trust is not subject to partition.

 

Staten v. O’Neill
InStaten v. O’Neill, Case No. 11-P-23, 2013 Mass. App. Unpub. LEXIS 3 (Jan. 3, 2013), a decision issued pursuant to Rule 1:28, the Appeals Court affirmed the dismissal of claims against a lawyer by his former clients, the successor trustees of a trust he had represented.

The defendant lawyer (“Attorney O’Neill”) drafted the trust and served as the trust’s lawyer until 2005. In 2006, a third party wished to pursue a case against the trustees, and Attorney O’Neill referred the third party to his own personal lawyer and allegedly spent four hours on the telephone with that lawyer as he drafted a complaint, which ultimately resulted in a judgment of approximately $300,000 against the trustees in their individual and fiduciary capacities.

The trustees sued Attorney O’Neill for negligence, fraud, breach of fiduciary duty and conflict of interest. The claims rested on the premise that Attorney O’Neill employed knowledge gained during his representation of the trustees and transmitted that knowledge to the lawyer to whom he referred the case against them, which contributed to the judgment against them. The Court affirmed the dismissal of the claims against Attorney O’Neill, which the Court characterized as speculative because they failed to show plausible causation of the eventual judgment by reason of the referral. Most significantly, the Court explained that “[t]he mere referral of a claim against the trustees by [Attorney O’Neill] to separate counsel would not by itself constitute a breach of fiduciary duty or a betrayal. Equally plausibly, the referral could represent compliance with a duty not to undertake a matter against a present or former client.” The Court also noted, however, that the course of maximum prudence would be for a lawyer to abstain completely from contact with a claim against a present or former client.

Masciari v. Fenichel


In Masciari v. Fenichel, Case No. 12-02757 (Middlesex Sup. Ct. Nov. 30, 2012), the Middlesex Superior Court denied a motion to dismiss a legal malpractice action against an attorney who drafted a will that was the subject of a will contest. The executor of the estate, which incurred a $44,000 payment to settle the will contest, claimed in a nutshell that the attorney had failed to take appropriate steps to ensure that the testator possessed testamentary capacity and was free from undue influence.

The Court explained that “[a]n attorney owes to a client, or a potential client, for whom the drafting of a will is contemplated, a duty to be reasonably alert to indications that the client is incompetent or is subject to undue influence and, where indicated, to make reasonable inquiry and a reasonable determination in that regard[,]” and that “[a]n attorney should not prepare or process the will unless the attorney reasonably believes the testator is competent and free from undue influence.” (Citation omitted.)

Although the Court also explained that an attorney’s duty of care to a testator does not extend to the testator’s heirs and beneficiaries, the Court nevertheless denied the attorney’s motion to dismiss because the claims against him were brought by the executor of the estate, rather than by an individual heir or beneficiary. “Massachusetts courts have allowed an administrator of an estate to file an action for legal malpractice against an attorney who had prepared the will of the deceased.” (Citation omitted.) The relief, however, must be limited to the damages sustained by the estate as a result of the attorney’s alleged malpractice.

 

Kraft Power Corporation v. Merrill and Estate of Steven Gavin v. Tewksbury State Hospital
In two recent decisions, the courts discussed the viability of certain claims against and on behalf of estates.

First, in Kraft Power Corporation v. Merrill, Case No. SJC-11063, 2013 Mass. LEXIS 8 (Jan. 14, 2013), the Supreme Judicial Court addressed whether an estate can be held liable for certain claims against the decedent as a principal of a corporation under the doctrine of corporate disregard, i.e., whether such claims against the decedent survive his death and can be asserted against his estate.

The doctrine of corporate disregard applies as a matter of equity, and the corporate veil can be pierced, in order to disregard a corporation’s existence and impose liability on individual principals for the purpose of defeating some fraud or wrong or remedying some injury.

The decedent was the sole shareholder and officer of Power Wiring. Kraft Power sold equipment to Power Wiring, for which Power Wiring did not pay. Kraft Power obtained a default judgment against Power Wiring for breach of contract in the approximate amount of $260,000, but Power Wiring had no assets to satisfy the judgment. Prior to entry of the default judgment, the decedent died, and Kraft Power subsequently brought claims against the decedent’s estate. Kraft Power alleged that the decedent was personally responsible for Power Wiring’s contractual obligations because he had abused the corporate form by causing Power Wiring, over which he exercised pervasive control, to become insolvent by transferring its assets to another company under his control, and that both companies were operated by the decedent as shams for his personal benefit. Kraft Power asserted claims against the decedent’s estate for breach of contract, fraudulent transfers in violation of the Uniform Fraudulent Transfer Act, G.L. c. 109A, violations of Section 11 of Chapter 93A, unjust enrichment and fraud.

The trial court dismissed the claims. The SJC reversed in large part and affirmed in small part.

The Court explained that claims which survive a defendant’s death pursuant to the survival statute, G.L. c. 228, § 1, include certain enumerated tort claims and common law claims, and that the common law claims that survive include claims based on contract.

With this explanation, the Court held that the breach of contract claim against the decedent’s estate survives, and similarly that the fraudulent transfer claim survives because it is premised on a contractual obligation owed by the decedent’s company. Therefore, neither of these claims should have been dismissed.

With respect to the Chapter 93A claim, which presented a question of first impression, the Court held that the claim itself survives because it is contract-based (some Chapter 93A claims can be tort-based, and some can be mixed in nature), and thus should not have been dismissed, but that the multiple damages available under Chapter 93A, which are intended to be punitive, do not survive. “Like punitive damages in tort actions, multiple damages under G.L. c. 93A can no longer achieve the goals of punishing a defendant or deterring him from future misconduct when the wrongdoer has died[.]”

The Court also reversed the dismissal of the unjust enrichment claim, which is based on the allegation against the executrix of the estate that she is holding assets that properly belong to Kraft Power, and so the doctrine of corporate disregard and the survival statute do not even apply.

The Court affirmed the dismissal of the fraud claim, however, which was based on the allegation that the decedent had fraudulently induced Kraft Power to enter into the contract. This claim was properly dismissed because a claim of fraudulent inducement does not survive under the survival statute or at common law.

Second, in Estate of Steven Gavin v. Tewksbury State Hospital, Case No. 12-P-62, 2013 Mass. App. LEXIS 6 (Jan. 18, 2013), the Appeals Court addressed the dismissal of a claim for wrongful death under the Massachusetts Tort Claim Act, G.L. c. 258, § 4, because the claim had not been presented or filed by the duly appointed executor or administrator of the decedent’s estate.

The decedent died on August 11, 2008, allegedly because of Tewksbury State Hospital’s negligence. The Massachusetts Tort Claim Act (the “Act”) provides that a claim against a governmental entity must be “presented” within two years. Although the executors named in the decedent’s will (his parents) sent a“presentment” letter to the Hospital and to the Attorney General within the two-year window, on July 21, 2010, they had not been appointed as executors at that time. Then, on March 24, 2011, after the six-month waiting period required under the Act had expired, the named executors filed the wrongful death action on behalf of the estate against the Hospital and the Commonwealth of Massachusetts. After being appointed as temporary executors, they then moved to amend the complaint.

The defendants moved to dismiss, arguing that the presentment and the suit were deficient in that they were brought by someone other than a duly appointed executor or administrator of the estate. The trial court granted the motion, and the Appeals Court affirmed. The Court held that because the “claimants” had not been duly appointed at the time of presentment, a condition precedent to suit under the Act was not met, and that their subsequent appointment did not cure this defect. The Court reasoned that the presentment requirement reflects a legislative choice to permit the public employer to investigate any claim in full and to negotiate, arbitrate, compromise or settle any such claim. Accordingly, the claimant must have the power to negotiate, arbitrate, compromise or settle the claim. Because they had not been duly appointed, the named executors (even in their later capacities as the appointed temporary executors) did not have this power.

Justice Agnes dissented, writing that the meaning the majority assigned to the term “claimant” is too technical and contrary to legislative intent.

 

Fowler v. Kulhowvick
In Fowler v. Kulhowvick, Case No. 12-P-277, 2013 Mass. App. Unpub. LEXIS 168 (Feb. 8, 2013), a decision issued pursuant to Rule 1:28, the Appeals Court affirmed the denial of a petition to vacate a decree allowing a will.

Fowler, an interested party, was not given notice of the petition to probate the will, and did not learn about it until after the will had already been allowed. He then filed a petition to vacate the allowance of the will and for leave to file objections. The probate court determined that notice to Fowler was defective and ordered a hearing on whether Fowler could substantiate his claims of lack of capacity and undue influence. In itself, defective service is not enough to vacate a decree allowing a will. “[A] probate judge has discretion to vacate a decree only after ascertaining whether the party seeking revocation can present ‘substantial and meritorious grounds’ against allowance of the will. Here, after finding that notice was defective, the probate judge ordered a hearing to evaluate whether Fowler had substantial and meritorious grounds against allowing the will. This was the proper procedure under our precedents.” (Internal citations omitted.)

After hearing, the probate court denied Fowler’s petition to vacate the allowance of the will, holding that he could not substantiate his claims of lack of capacity and undue influence. The Appeals Court affirmed because it found no error in the probate court’s ruling.

 

Fiumara v. Fiumara


In Fiumara v. Fiumara, Case No. 12-P-133, 2013 Mass. App. Unpub. LEXIS 130 (Feb. 4, 2013), another decision issued pursuant to Rule 1:28, the Appeals Court affirmed a superior court ruling that the trust at issue was a “sham” because the decedent never intended to relinquish control over the properties placed in the trust or to vest meaningful title in the trustee.

“In order for a trust to be valid in the Commonwealth, it must unequivocally show an intention that the legal estate be vested in one person to be held in some manner or for some purpose on behalf of another.” (Internal citation omitted.) Here, the Appeals Court held that the superior court properly relied on the decedent’s conduct after executing the trust in finding that he did not intend to part with control of the property or divest himself of ownership. The decision does not recite all of the evidence, but the Appeals Court noted that the decedent never informed the trustee of her responsibilities or of the identities of the beneficiaries, which was characterized as “robust” evidence that no valid trust was ever intended.

 

 

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