Bennett v. Gentile

• Docket Number: 25
• Decision Date: 12 August 2024
• Citation: Bennett v. Gentile, 487 Md. 604, 321 A.3d 34 (Md. 2024)
• Parties: Madelyn BENNETT, Individually and as Successor Trustee of the Pauline A. Bennett Revocable Living Trust v. Thomas A. GENTILE
• Court: Maryland Court of Appeals

321 A.3d 34

487 Md. 604

Madelyn BENNETT, Individually and as Successor Trustee of the Pauline A. Bennett Revocable Living Trust

v.Thomas A. GENTILE

No. 25, Sept. Term, 2023

Supreme Court of Maryland.

August 12, 2024

Circuit Court for Montgomery County, Case No.: 481150V, Rachel A. McGuckian, Judge.

Argued by Richard E. Schimel(Law Offices of Richard E. Schimel, LLC, Bethesda, MD), on brief, for Appellant.

Argued by Brett A. Buckwaiter(Craig D. Roswell of Niles, Barton & Wilmer, LLP, Baltimore, MD), on brief, for Appellee.

Argued before: Fader, C.J., Watts, ^*Hotten, Booth, Biran, Gould, Eaves, JJ.

Gould, J.

In this legal malpractice case by the beneficiary of an inter vivos trust against the drafting attorney, we are mainly asked to abandon or relax the rule—known as the "strict privity rule"—under which "a third party not in privity with an attorney has no cause of action against the attorney for negligence in the absence of fraud or collusion."Noble v. Bruce,349 Md. 730, 738, 709 A.2d 1264(1998).Alternatively, the beneficiary asks us to hold that she can proceed against the attorney on a third-party beneficiary theory.As explained below, we hold that the strict privity rule under Noble is still good law and that, on the undisputed facts, the beneficiary does not have a claim against the attorney as a third-party beneficiary.

I

A

[1] A trust is "a fiduciary relationship with respect to property, subjecting the person by whom the title is held to equitable duties to deal with the property for the benefit of another person[.]"Klein v. Bryer,227 Md. 473, 477, 177 A.2d 412(1962).A trust is created by a "settlor": The person who contributes property to the trust. d. ode nn., st. & rusts ("ET")§ 14.5-103(w)(1)(1974, 2022 Repl.Vol.); estatement ( hird) of rusts § 3(" estatement")(Am. L. Inst. 2003, June 2024 Update).The trust property is held by the "trustee" for the benefit of one or more "beneficiaries." estatement § 3.

[2–4] A trust may be created for any legal purpose.Klein,227 Md. at 476, 177 A.2d 412.A settlor, trustee, and beneficiary are all required for the creation of a trust.Waesche v. Rizzuto,224 Md. 573, 583, 168 A.2d 871(1961).The settlor may create a trust either by will or, as here, inter vivos. estatement § 3.Either way, the trust may be created through a "[t]rust instrument," which is defined as "an instrument executed by the settlor that contains the terms of the trust, including amendments to the trust."ET§ 14.5-103(bb).The phrase "terms of the trust""means the manifestation of the intent of the settlor regarding the provisions of a trust as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding."ET§ 14.5-103(aa).The terms of the trust can also, if the settlor so chooses, reserve the right to amend the terms or revoke the trust altogether.SeeVito v. Grueff,453 Md. 88, 93-94, 160 A.3d 592(2017); my orris ess et al., ogert’s he aw of rusts and rustees § 1(2023).

B

In 2015, Madelyn Bennett’s¹mother, Pauline Bennett, age 91, retained RespondentThomas Gentile, Esquire, to prepare her estate planning documents.Mr. Gentile prepared a trust instrument memorializing the terms of the Pauline A. Bennett Revocable Living Trust ("Trust"), which Pauline executed on October 30, 2015("2015 Instrument").Pauline wore three hats under the 2015 Instrument: "Settlor,""Trustee," and "Beneficiary."The 2015 Instrument was broken down into nine sections, each with one or more subsections.

In subsection 1.02, Pauline stated that her intention as Settlor was "to transfer certain real and [personal property] into this trust" and that "[t]he Trustee hereby agree[s] to hold any such property, IN TRUST, on the terms set forth in this instrument."That subsection also specifically identified two properties to be transferred: 11605 Fillmore Drive in Silver Spring ("Fillmore") and 4715 Wissahican Avenue in Rockville ("Wissahican").On the same day she signed the 2015 Instrument, Pauline also signed deeds to transfer Fillmore and Wissahican to herself, as Trustee under the Trust.Both deeds were duly recorded.This dispute concerns the disposition of Wissahican upon Pauline’s death.

Subsection 2.01 of the 2015 Instrument stated that until her death, Pauline as Settlor "shall utilize" the Trust’s property as Trustee for her benefit, with just one exception: Wissahican could be used solely for the benefit of Pauline’s daughter, Audrey Bennett-Eney.

Subsection 3.01 directed the disposition of the Trust’s assets upon Pauline’s death with this introductory clause: "Upon the death of Settlor, the Successor Trustee shall distribute the real property in the trust, and any personal property, and any property and funds later added to the trust corpus, as follows[.]"The subsections that followed instructed the Trustee to distribute: (a) Wissahican and its contents to Audrey; (b) Fillmore to Pauline’s son, Matthew Bennett, and to Madelyn; (c) Fillmore’s contents "equitably" to Audrey, Madelyn, and Matthew; and (d)"any other funds and property of the trust" in equal shares to Audrey, Madelyn, and Matthew.

In subsection 7.01 of the 2015 Instrument, Pauline appointed herself to serve as the "Initial Trustee" and Madelyn to serve as "Successor Trustee" upon Pauline’s "death or disability."

C

Pauline executed a new trust instrument in May 2017 called the "Revised Pauline A. Bennett Revocable Living Trust"("2017 Instrument"), also prepared by Mr. Gentile.This instrument contained the same nine sections and their subsections as its predecessor.Many of these provisions were untouched, including the provisions regarding Wissahican.

But the 2017 Instrument also made some significant changes.Subsection 1.02 was changed to acknowledge that Pauline had transferred the property as contemplated in the prior version, and it retained the provision stating that she"agree[s] to hold any such property, IN TRUST, on the terms set forth in this instrument."Also, by that time, Matthew had died, so the provisions addressing Fillmore and its contents were modified to replace Matthew with Pauline’s grandson, Jonathan.Audrey was added as a Successor Trustee to serve jointly with Madelyn.

D

In 2019, while temporarily living in a nursing facility, Pauline learned that Au- drey had withdrawn money from Pauline’s bank accounts, used Pauline’s credit cards without authorization, and mismanaged Pauline’s money.In November 2019, Pauline expressed these concerns and others to Mr. Gentile, including her fear that she lacked sufficient funds to pay for home nursing care.She told Mr. Gentile that she needed to sell Wissahican to pay for that care.Recall that under subsection 2.01, as Trustee, Pauline was required to "utilize" Wissahican "for the benefit" of Audrey, so an amendment to the 2017 Instrument would be required to use that property for her benefit, that is, to sell Wissahican and use the proceeds for her own needs.Pauline asked Mr. Gentile to adjust her estate planning documents accordingly and told Mr. Gentile "don’t put anything about [Wissahican] going to Audrey."

Mr. Gentile prepared a new trust instrument called the "Amended Revised Pauline A. Bennett Revocable Living Trust," which Pauline signed on November 20, 2019("2019 Instrument").This version contained the same nine sections as the two previous ones, again with most of the provisions unchanged.Subsection 2.01 was amended by removing the clause that required Pauline to use Wissahican for Audrey’s benefit.

In addition, subsection 3.01 was changed substantially.The provision in subsection 3.01 calling for Audrey to receive Wissahican upon Pauline’s death was removed.The subsections disposing of Fillmore and "any other funds and property of the trust not listed above" were changed to remove Audrey and Jonathan as beneficiaries, leaving Madelyn as the sole beneficiary under those clauses.And, under subsection 7.01, Audrey was removed as a Successor Trustee, leaving Madelyn as the sole Successor Trustee.

E

Pauline died on December 31, 2019, and Madelyn became the Successor Trustee of the Trust.A dispute arose between Madelyn and Audrey over the ownership of Wissahican.Audrey believed she was entitled to Wissahican due to a deed, signed by Pauline in November 2019, that would have transferred Wissahican to Audrey.After Pauline executed the deed, and due to her concerns about Audrey’s conduct, Pauline instructed Mr. Gentile not to deliver it to Audrey, and the deed was never delivered or recorded.In January 2020, Audrey’s counsel asked Mr. Gentile to record the deed or deliver it to Audrey, but Mr. Gentile refused.

Madelyn, as Trustee, filed a four-count complaint in the Circuit Court for Montgomery County on April 3, 2020.Count One was a claim to quiet the title to Wissahican.Count Two, captioned "Waste," sought damages from Audrey for allegedly neglecting Wissahican, and allowing it to fall into disrepair to the point that it became rat-infested.Count Three, captioned, "Wrongful Taking," sought damages because of Audrey’s alleged taking of Pauline’s personal property while Pauline was confined to a nursing home, and Count Four, captioned "Detinue in the Alternative," sought the return of the personal property as an alternative remedy to damages.

Over the ensuing 26 months, many pleadings were filed.In June 2020, before her quiet title action had been resolved, Madelyn, as Trustee, contracted to sell Wissahican to third-party buyers.The contract purchasers and Mr. Gentile were made parties in one or more pleadings.²

The details of each count in each pleading are not necessary to frame the issues before us.We can group the relevant claims into two categories: (1) claims that turned on whether Wissahican belonged to Madelyn or Audrey upon Pauline’s death; and (2) if Wissahican was determined to belong to Audrey, claims that turned on whether Mr. Gentile was liable to...