Antal Post De Bekessy v. Floyd

• Decision Date: 13 July 2015
• Docket Number: No. 0257,0257
• Citation: Antal Post De Bekessy v. Floyd, No. 0257 (Md. App. Jul 13, 2015)
• Parties: ANTAL POST DE BEKESSY v. GEORGE R. FLOYD, ET AL.
• Court: Court of Special Appeals of Maryland

ANTAL POST DE BEKESSY v. GEORGE R. FLOYD, ET AL.

No. 0257

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2013

July 13, 2015

UNREPORTED

Zarnoch, Berger, Reed, JJ.

Opinion by Zarnoch, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority.Md. Rule 1-104.

This case comes to this Court following a complex and lengthy trial in the Circuit Court for Baltimore City involving an estate of substantial size.The complexity of this case stems from differing versions of key testamentary instruments that span many years, multiple countries and two languages.We hold that it was not error for the circuit court to reform a 2004 trust to reflect the intent of the settlor / decedent, Eleanor Close Barzin, to keep the trust's foreign assets separate from the U.S. assets and to account for required estate taxes.The court correctly held that the use by appellant, Antal de Bekessy, in a summary judgment motion of witness testimony relating to transactions with the decedent waived the protection of Maryland's Dead Man's Statute.Md. Code(1973, 2013 Repl. Vol.), Courts and Judicial Proceedings Article ("CJP"), § 9-116.Furthermore, appellees, George R. Floyd and Vivian G. Johnson, Co-Trustees of the Eleanor Close Barzin Trust ("the Trustees") sufficiently demonstrated that de Bekessy had been unjustly enriched by a $10.3 million IRS tax refund.Accordingly, we affirm the judgment and rulings of the circuit court.

FACTS AND LEGAL PROCEEDINGS

In his opinion, Circuit Judge W. Michel Pierson provided this account of the facts:

Eleanor Close Barzin was the daughter of Marjorie MerriweatherPost.She was born on December 3, 1909.She moved to Europe in 1925 and lived outside the United States for most of the remainder of her life.She owned substantial assets in the United States, and real and personal property in France and Switzerland.Prior to 2002, she owned real property in Texas; after its disposition, her U.S. assets consisted of securities maintained in an investment account, located at Crestar Bank during part of the period covered by the evidence, and later at Brown Advisory Services.She owned a residence in Paris (53 Rue Monceau), another in France (Vaux Sur Seine), and one in Fribourg, Switzerland.In addition to the assets owned by her, Mrs. Barzin was the life beneficiary of a substantial trust established by hermother (held at Manufacturers of Hanover and later at Chase Manhattan Bank), of which Mr. de Bekessy was the beneficiary after her death.

Mrs. Barzin's cousin was David P. Close, an attorney who handled her estate planning and managed her assets in the United States.Between 1992 and Mrs. Barzin's death, there were a number of testamentary instruments prepared by Mr. Close.Close enlisted Michael Curtin, another attorney, to help him in drafting instruments.He also sought assistance and advice from several other attorneys, including Henri Gendre, Frank Reiche and Michel Degroux.

David Close died on July 4, 2004.On July 26, 2004, Mrs. Barzin executed a revocable trust instrument and pour over will based on drafts that Close had sent to her before his death.¹She named as trusteesVivien Johnson, Mr. Close's long time secretary, and George Floyd, an employee of Brown Advisory Services.The will named David Close, Michael Curtin and Vivien Johnson as co-personal representatives.The assets in the investment account became the corpus of the trust.

Mrs. Barzin also left a will executed in Switzerland before Henri Gendre, a Swiss notaire, on November 20, 2001; a codicil executed before Bernard Molliere, a French notaire, on January 11, 2005; and a second codicil executed on January 25, 2005, all of which were in French.

This litigation began in 2006 when de Bekessy, Barzin's sole child, sued Floyd and Johnson, the Trustees of the July 26, 2004inter vivos trust governing the United States assets.Laeititia Vere, Barzin's granddaughter, along with twenty-nine other individuals and charitable organizations were joined as defendants because they were named beneficiaries of the trust.De Bekessy sought to force the Trustees to pay all of the taxes assessed against the estate, including the taxes due on the property located in France and Switzerland.The Trustees counterclaimed, seeking reformation of the trust.They sought to have changed the language that pertained to the payment of taxes, because as written, the tax provision of the trust would cause it to be "entirely consumed by taxes."

After numerous amendments to the pleadings, a bench trial was held in April, 2011 in the circuit court before Judge Pierson and resulted in a 147-page opinion.The parties asked the circuit court to decide four issues:

1.Is the trust required to make payment of succession taxes levied by foreign governments?This rests on a determination of whether the trust should be reformed.

2.Was Mr. de Bekessy unjustly enriched by the payment of the $10,38[8],013.00 estate tax refund, and is he liable for restitution to the trust?

3.Are the Trustees liable for receiving excessive compensation?

4.Has Mr. de Bekessy violated the in terrorem clause contained in the trust?²

A key focus of the litigation was the contested tax provision in the July 26, 2004 Trust (Article Fourth).In relevant part it provided that:

Payment of Death Taxes and Satisfaction of Cash Needs: As soon as practicable following the death of the Settlor, the Trustees shall pay all estate, inheritances, transfer, succession, legacy, and other death taxes or duties, including any interest or penalties thereon, payable by reason of the death of the Settlor under any laws of the United States or any state (including the District of Columbia) or any foreign country, whether with respect to property passing under this Agreement, or under the Settlor's Will, or otherwise. . . .

The Trustees relied on the testimony of Curtin to explain that the inclusion of this provision as worded was a mistake, while de Bekessy contended that it was clear from the face of the document that Barzin intended the trust to be used to pay all of the taxes due on her estate.

Extensive evidence was presented by both sides to prove Barzin's intent regarding the payment of taxes.The circuit court reviewed correspondence between Barzin and herattorneys and heard testimony regarding the process used to create the July 26, 2004 trust and pour-over will.Wills created in the United States in 1992 and 1994 were compared to a 2001 Swiss will and its 2005 codicils to establish Barzin's intent.A question arose over the translation of a particular phrase in the Swiss will.The parties asked the court to determine Barzin's intent with respect to the Swiss will and to take judicial notice of the translation of "ma succession" to mean either "my estate" or "my heirs."³Each side presented evidence to show a different interpretation of the phrase "ma succession."The circuit court relied on the testimony of Gendre and the Trustees' expert, Leigh Basha, to conclude that even though the phrase translated to "my estate," a French estate is of a different nature than a United States estate.

The Trustees also sought to have de Bekessy return a refund received from the IRS in the amount of $10,388,013.00 for overpayment of estate tax.De Bekessy claimed that the Trustees presented no evidence that he had received this money or that he was not entitled to receive the money.In the alternative, he claimed the Trustees failed to show why they were entitled to make a claim for the refund.The Trustees asserted that thispayment constituted unjust enrichment because the tax refund should have benefitted the trust, not de Bekessy directly.

The circuit court reserved its rulings on evidentiary issues, particularly on the hearsay objections and the relevance of certain testimony presented.These decisions were included in the written opinion issued on February 28, 2013.In analyzing the Dead Man's Statute argument presented by de Bekessy, the circuit court concluded that the rule should be applied as a procedural mechanism and not a substantive rule.The circuit court found that the Dead Man's Statute did not bar admission of the testimony of Christine Pont, personal secretary and a potential trust beneficiary, because de Bekessy had waived its protections by using Pont's deposition testimony for the purposes of summary judgment.

The circuit court reviewed the extensive amount of evidence provided by both sides to conclude:

Count I of Mr. de Bekessy's Second Amended Complaint asks the court to declare that the trustees are obligated to pay French taxes.This claim is pretermitted by the court's determination that the provisions of the trust should be reformed.Under those circumstances, this count should be dismissed.Normally, it is inappropriate to dismiss a claim for a declaratory judgment without issuing a declaration.However, a declaration based on the terms of the trust as written would be meaningless, since the trust has been reformed. . . .

Count I of the Trustees' First Amended Counterclaim and Count I of the Trustees' Second Amended Crossclaim seek judicial instruction and direction concerning their duty to pay taxes, and their actions if the trust assets are insufficient.To the extent that this claim depends on the construction of the trust as written, it is, like Count I of the Second Amended Complaint, mooted by the court's decision that the trust should be reformed.There is no other evidence before the court that suggests a need for such a determination.Therefore, Count I will be dismissed. . . .

Count II of the Trustees' First Amended Counterclaim seeks restitution from Mr. de Bekessy for the tax refund payment from the IRS.In light of the court's determination of this claim, judgment for$10,38[8],013.00 will be entered in favor of the trustees

...