Filippi v. Filippi

• Decision Date: 18 February 2003
• Docket Number: No. 2001-130-A. and 2001-169-A.,2001-130-A. and 2001-169-A.
• Citation: 818 A.2d 608
• Parties: Peter Filippi et al. v. Marion Filippi et al. v. Peter Filippi et al. v. Citizens Trust Company, in its capacity as Corporate Trustee of the Paul A. Filippi Trust Agreement.
• Court: Rhode Island Supreme Court

818 A.2d 608

Peter Filippi et al. v. Marion Filippi et al. v. Peter Filippi et al. v. Citizens Trust Company, in its capacity as Corporate Trustee of the Paul A. Filippi Trust Agreement.

No. 2001-130-A. and 2001-169-A.

Supreme Court of Rhode Island.

February 18, 2003.

Present WILLIAMS, C.J., LEDERBERG, FLANDERS, GOLDBERG, JJ. and WEISBERGER, C.J. (Ret.)

Richard W. MacAdams, Providence/Kris Macaruso Marotti, Thomas a. Tarro, III, Warwick/Denean M. Russo, Providence, for Plaintiff.

Lori Caron Silveira, John A. McFadyen, III/Howard E. Walker, Providence, for Defendant.

OPINION

WILLIAMS, Chief Justice.

This family feud involves the sad but all too familiar story of a family united solely by its eldest member during his life and then fiercely divided after his death.¹ The plaintiffs, Peter Filippi (Peter), Carolyn Filippi Cholewinski (Carolyn) and Paula Consagra (Paula) (collectively referred to as plaintiffs), are decedent Paul Filippi's (Paul or decedent) three adult children from his first marriage. The defendants are Marion Filippi (Marion), who is Paul's widow, and Citizens Trust Company (Citizens), the institutional trustee of Paul's trust. The plaintiffs appeal the trial justice's grant of Marion's motion for a new trial on damages conditioned upon plaintiffs' rejection of a remittitur. They also appeal the judgment that entered in favor of Citizens on the undue influence claim. That judgment entered after the trial justice decided to invoke his right to rule on undue influence in equity and deem the jury verdict on that issue purely advisory. Marion cross-appeals the trial justice's denial of her motions for judgment as a matter of law and the conditional grant of a new trial.

This complex appeal combines two separate actions consolidated before trial and consolidated again on appeal. The first action was for breach of contract against Paul and involved plaintiffs against Marion, as executrix of Paul's estate. The second case named Citizens as defendant in an undue influence action with respect to Paul's 1992 trust amendment. For the sake of clarity, we will address the issues of each individual case seriatim but we begin with a recitation of all the relevant facts.

I Facts and Travel

Paul was a businessman and restaurateur. The plaintiffs were born to Paul and his first wife, Elizabeth Filippi: Peter in 1938, Carolyn in 1941 and Paula in 1946. Paul and Elizabeth divorced in 1968.

In 1973, Paul, then fifty-nine years old, married Marion, who then was twenty-four years old. Paul and Marion had three children. Marion gave birth to the couple's first child, Paul, Jr., in 1975. Steven was born in 1979 and Blake arrived one year later.

This controversy centers around Ballards Inn and Restaurant (Ballards), a family business and famous Block Island eatery that Paul acquired during his marriage to Elizabeth. Shoreham, Inc. (Shoreham), a corporation in which Paul held all the shares, owned all of Ballards's physical assets. Ballards opened each season from around Memorial Day to Labor Day. Most, if not all, of the Filippis worked in the restaurant at some point.

Of the three plaintiffs, Paula participated the most in the business. In fact, she worked there every season from age eleven until 1968, when she married Lou Consagra (Lou) and the couple moved out of state. In 1974, Paula returned to Rhode Island and worked a few weekends at Ballards, once filling in as manager. After the weekend she worked as manager, Paula testified that her father said, "I want you to come back and run Ballard's for me * * * and if you do this for me, Ballard's will be yours and you will take care of the family." She initially turned him down, but in the summer of 1976, after his repeated requests, she returned to help her father run Ballards.

Paul fell ill with cancer in 1977 and again in 1979. During his battles with cancer, Carolyn, a registered nurse, assisted in his care and treatment. His serious illness most likely caused him to contemplate his mortality and how he was going to care for his family after he died.² Consequently, at the end of 1979, Paul executed a will and living trust dividing his estate into six equal shares to be held in a marital trust for Marion and family trusts for each of the then existing five children. He amended the trust in 1980 to provide for his newest child, Blake. This was the first of fifteen documents relating to his estate that Paul executed over the last twelve years of his life.

On January 5, 1981, Paul executed a new will and trust providing that each plaintiff was to receive a specific gift of $25,000. Paul divided the remainder of the estate into five parts, granting 25 percent to Marion, 9 percent to Peter for life and 22 percent for the benefit of each of Paul's three youngest children. The trust also granted control of Ballards to an institutional trustee. Later that year, Paul amended the trust to name Peter, Paul and Marion as executors and trustees.

In February 1982, once again Paul revised the trust. He divided the estate into sevenths: three sevenths for Marion, one seventh for Paul's three youngest children, two sevenths for Paula and one seventh for Carolyn and Peter.

The next year, Paul executed a new will that attempted to devise to each plaintiff cottages (Bosworth cottages) that he and Marion owned. He also left money to Marion and certain real property held in trust for her. He then created a marital trust with the residue passing to his three youngest children. Furthermore, he expressly acknowledged plaintiffs' omission from the will but indicated that he believed he adequately provided for them in life. Paula was reappointed co-trustee of the marital and family trusts.

In 1984, Peter, Carolyn and her husband, Clides Brizio (Brizio), formed a limited partnership called Block Island Associates (Associates) to buy and develop a seventeen-acre piece of property known as Ocean View upon which the Ballards property partially encroached. Associates purchased the land for $850,000 with Brizio putting up $200,000, Carolyn providing $40,000 and Peter adding $10,000 of the initial payment and closing costs. Shortly thereafter, the partners of Associates asked Paula to join the partnership in return for her knowledge and expertise. She agreed.

The plaintiffs said that Associates received an offer to purchase Ocean View for $1.85 million in 1985. Thereafter, Paul and plaintiffs discussed the fate of Ocean View. The plaintiffs assert that Paul orally agreed to the following:

(1) Associates would convey Ocean View to Block Island Realty (Realty), Paul's real estate corporation;

(2) Paul would pay the outstanding $600,000 mortgage on the property;

(3) Brizio would recover his investment in Associates;

(4) Paul would keep the portion of the land that Ballards encroached upon;

(5) Plaintiffs would reimburse Paul for the expenses associated with the sale or development; and

(6) Paul and plaintiffs would evenly divide the net proceeds between the four of them.

However, the only evidence of any transaction involving Ocean View is a purchase and sale agreement between Associates and Realty and the resulting deed, indicating that Realty is the sole owner of Ocean View. Neither document referenced the alleged oral agreement between Paul and plaintiffs.

Unfortunately, in June 1986, a fire destroyed Ballards. Paul, Marion, plaintiffs and other family members met to discuss what they should do because the restaurant was underinsured. They decided to sell Ocean View and another property that Paul owned with his brother to rebuild Ballards.

In September 1986, Paul sold two small parcels of Ocean View: one for $250,000, paid in full, and the other for $175,000: $50,000 paid in cash and a $125,000 promissory note. The final and largest piece of Ocean View sold in December 1986 for $3.4 million to developers Ephron Catlin (Catlin) and Kenneth Stoll (Stoll). Catlin and Stoll paid $100,000 cash and signed a promissory note for $3.3 million. Following the sale, Paul liquidated Realty and became the holder of the notes.

At the beginning of 1987, Paul revoked his 1983 will and executed a new will leaving his entire estate, including the Shoreham stock, to Marion, except for the proceeds from the sale of Ocean View. He left the Ocean View sale proceeds to his children in equal sixths. In March 1987, when Paul informed plaintiffs of the change, they agreed to decrease their one-fourth share to one-sixth so that Paul could provide for his three youngest children as well.

In need of cash to rebuild Ballards, Paul agreed to subordinate his priority position on the Ocean View mortgage so that Catlin and Stoll could sell the property to a third party. In return, he received a portion of the mortgage in cash along with other payoffs and an easement on the property on which Ballards encroaches.

Upon learning of the subordination, Carolyn expressed to Paul her concerns that the second mortgage would not be honored. She testified that he promised that he would assume the risk of not collecting on the loan and personally guaranteed that she would receive interest on her one-sixth share. Paula asked Paul to memorialize the one-sixth interest in the Ocean View proceeds in writing. He agreed and his attorney drafted the agreement in June. The agreement characterized the one-sixth share in the net proceeds as a gift.

That same month, Peter demanded his one-sixth interest up front, which Paul's accountant, Ronald Nani (Nani) calculated as $260,706. However, Peter accepted a check for $200,000 as partial payment.

Ballards reopened in June but not without fireworks. Paula and Marion had a falling out in July resulting in Paula's departure from Block Island.³ According to Paula, Marion insisted that she not return or else Marion would take the couple's three young boys to Italy for the summers. By the close of the turbulent season, Stoll had not paid the outstanding amount on the...