213 A.3d 417 (R.I. 2019), 2017-149-Appeal, Branson v. Louttit

Docket Nº:2017-149-Appeal, 2017-150-Appeal
Citation:213 A.3d 417
Opinion Judge:Flaherty, Justice
Party Name:Wenda BRANSON v. Marion P. LOUTTIT, individually and in her capacities as Trustee of the Augusta P. Hathaway Living Trust and Custodian for Jonathan H. Louttit, II and Caroline Hathaway Louttit, minor children.
Attorney:Joseph F. Hook, Esq., for Plaintiff. David E. Maglio, Esq., for Defendant.
Judge Panel:Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
Case Date:June 28, 2019
Court:Supreme Court of Rhode Island

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213 A.3d 417 (R.I. 2019)

Wenda BRANSON

v.

Marion P. LOUTTIT, individually and in her capacities as Trustee of the Augusta P. Hathaway Living Trust and Custodian for Jonathan H. Louttit, II and Caroline Hathaway Louttit, minor children.

Nos. 2017-149-Appeal, 2017-150-Appeal

Supreme Court of Rhode Island

June 28, 2019

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Providence County Superior Court (PC 09-5006), Associate Justice Luis M. Matos

Joseph F. Hook, Esq., for Plaintiff.

David E. Maglio, Esq., for Defendant.

Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

OPINION

Flaherty, Justice

This protracted squabble among siblings reaches us after a decade of litigation. At issue are amendments to an inter vivos trust and gifts of interest in a family limited partnership that was established by Augusta Hathaway during the 1990s in an effort to limit the tax liability to her estate. A trial was held in December 2014, after which a jury found that Ms. Hathaway lacked the testamentary capacity to amend her trust and that the defendant, Marion Louttit, Ms. Hathaway’s youngest daughter, had unduly influenced Ms. Hathaway, thereby causing Ms. Hathaway to execute the challenged amendments and gifts.1 The jury also found that Marion Louttit had breached her fiduciary duty as trustee of the inter vivos trust. Following the jury’s verdict, Louttit renewed her motion for judgment as a matter of law and moved for a new trial. After duly considering those motions, the trial justice denied Louttit’s motion for new trial and judgment as a matter of law on the claims of testamentary capacity and undue influence. However, the trial justice granted both motions as to the fiduciary duty verdict because, according to the trial justice, the plaintiff, Wenda Branson— Ms. Hathaway’s middle daughter— had failed to prove damages. An order entered on February 4, 2016, to that effect, which also denied the plaintiff’s motion for attorneys’ fees. Judgment entered that same day, and the parties cross-appealed.2 After carefully reviewing the parties’ arguments and thoroughly examining the evidence presented at trial, we affirm the judgment of the Superior Court in all respects, and we vacate the grant of a new trial as to the plaintiff’s breach of fiduciary duty claim.

I

Facts and Travel

The essential facts of this case are not in dispute. Augusta Hathaway lived in her home in Barrington for nearly fifty years. She married twice, and had three daughters: Joan Prout-Oscarsson, Wenda Branson, and Marion Louttit. In 1992, following the death of her second husband, Ms. Hathaway created the Augusta P. Hathaway Living Trust Agreement to distribute her assets upon her death. In addition, the trust contained language that required the trustee to apply "so much of the net income and principal of the Trust Estate, even to the extent of exhausting principal, as the Settlor may at any time or times direct in writing or as the Trustee may deem advisable for the Settlor’s support,

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maintenance, health, education, or welfare."

In 1997, the trust was amended to include an equalization clause, which provided that: "[T]he Trustee shall take into consideration that it is the Settlor’s desire and intention that all of the Settlor’s children share equally in her estate. To that end, in distributing the Trust Estate, per stirpes, to the Settlor’s issue, the Trustee shall consider all gifts and loans made by the Settlor to her children or other issue during her lifetime. Gifts and loans made to each child and his or her issue shall be added together to arrive at a total family share for each child. To the extent that the total family shares for each child are unequal, the Trustee shall first allocate to each child and to the issue of a deceased child the amount or amounts necessary which, when added to the total family share for each child will equalize the total amounts given to each child’s family during the Settlor’s lifetime."

Around the same time, Ms. Hathaway also established the A. P. Hathaway Family Limited Partnership, to which she deeded her Barrington home. The partners to the limited partnership were Ms. Hathaway, who retained the general interest, and limited partners Louttit, who also retained an interest for the benefit of her two children, and Branson, who also retained an interest for the benefit of Kristal Osborn, who was then a minor child.3 Over the next several years, Ms. Hathaway gifted additional interests in the limited partnership to her children and grandchildren. The last unchallenged gifting document, executed in 1999, indicates that Hathaway retained 44.1 percent, Louttit owned a combined 31.06 percent for herself and her children, and Branson owned a combined 24.84 percent for herself and Kristal Osborn.

The record reveals that, in the fall of 2000, Louttit and her mother discussed Louttit’s wish to move into the Barrington home with her husband, Jonathan, and their family as soon as some planned construction at the home could be completed.4 However, Louttit and Jonathan had difficulty securing a loan to pay for the construction because the ownership of Ms. Hathaway’s home was divided among the other members of the limited partnership.

In October 2000, Louttit and Jonathan met with Ms. Hathaway’s attorney, Andrew Davis, for the purpose of effecting changes to Ms. Hathaway’s estate plan. Mr. Davis’s legal bills for the date in question indicate that the purpose of the meeting was to conduct a "review of partnership documents and prepare [a] new gifting letter."

Facing the trials and increasing infirmities of age, Ms. Hathaway moved into an assisted living facility in November 2000. Sadly, just a few weeks later, she attempted suicide and was admitted to Butler Hospital for care. When asked why she had tried to take her own life, she responded, "to relieve my family of the burden of taking care of me" and that "[t]his is the easiest way to give my house to them." Ms. Hathaway was discharged from inpatient care on December 1, 2000. In a discharge

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report, her treating physician diagnosed Ms. Hathaway as having bipolar disorder, type II depressed, and "Alzheimer’s dementia, mild." Her physician reported that Ms. Hathaway "requires a higher level of care secondary to obvious cognitive deficits" and that "[s]he demonstrates impairments in the areas of safety, medication management, and money management." Importantly, the physician at Butler Hospital also reported that "[s]he demonstrates significant difficulty in determining negative consequences of her actions and poor coping skills as well" and that "she had difficulty weighing the risks, benefits, and alternatives to suicide for handing her property over to her family."

It is also noteworthy that, in the months following her discharge from Butler Hospital, Ms. Hathaway made several changes to her estate plan, all of which were geared toward shifting the major portion of her estate to the Louttit family and away from Branson and Osborn. Ms. Hathaway signed two documents (the partnership gifts) transferring her remaining interest in the limited partnership, including the general partnership share, to Louttit and her family. She also made several amendments to her trust. The first, signed on December 19, 2000, appointed Louttit as trustee. Another amendment, signed on February 28, 2001, made Branson and Osborn’s beneficiary interest in the trust conditional on the transfer of their interest in the limited partnership to Louttit. The relevant language of that amendment provided: "Notwithstanding anything herein to the contrary, it is the Settlor’s specific intent that all of the interests in THE AUGUSTA P. HATHAWAY FAMILY LIMITED PARTNERSHIP be owned by MARION P. LOUTTIT and her family, in spite of the fact that such ownership might result in an ultimate unequal distribution of the Settlor’s estate. To that end, the Settlor hereby provides that any and all benefits or trust distributions provided for WENDA P. BRANSON and/or KRISTAL A. FAHEY pursuant to this trust are contingent upon the said WENDA P. BRANSON and KRISTAL A. FAHEY transferring, without consideration, all of their respective interests in THE AUGUSTA P. HATHAWAY FAMILY LIMITED PARTNERSHIP to MARION P. LOUTTIT or if she is not then living, to her living issue per stirpes . Said transfer to be accomplished within ninety (90) days of the Settlor’s death, provided however, that MARION P. LOUTTIT may, at her sole discretion elect to purchase within said ninety (90) day period said interests in THE AUGUSTA P. HATHAWAY FAMILY LIMITED PARTNERSHIP from WENDA P. BRANSON and KRISTAL A. FAHEY at such price and upon such terms and conditions as MARION P. LOUTTIT shall deem appropriate."

Around the time of those amendments, Jonathan sent a letter to Branson, in which he asked that she and Osborn surrender their shares in the limited partnership. In that correspondence, Jonathan represented that making the transfers would have the result of "saving the estate almost $200,000 in estimated estate taxes." He clarified, however, that "it is still your mother’s intention that you, Marion and Joan will eventually share equally in her estate at the time of her death. That will include the value of the house." Jonathan later testified at trial that, in fact, there would not have been any savings in estate taxes because the house already had been conveyed to the limited partnership in 1997. In any event, Branson and Osborn did not comply with Jonathan’s request and did not surrender their shares in the limited partnership.

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Soon after she received the letter from...

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