Haffenreffer v. Haffenreffer
| Decision Date | 18 May 2010 |
| Docket Number | No. 2008-276-Appeal.,2008-276-Appeal. |
| Citation | 994 A.2d 1226 |
| Parties | David H. HAFFENREFFER, in his Capacity as Co-Executor of the Estate of Carolyn B. Haffenrefferv.Karl HAFFENREFFER, in his Capacity as Co-Executor of the Estate of Carolyn B. Haffenreffer et al. |
| Court | Rhode Island Supreme Court |
William R. Landry, Esq., Providence, RI, for Plaintiff.
R. Daniel Prentiss, Esq., for Defendant.
Present: GOLDBERG, FLAHERTY, and ROBINSON, JJ.
This case comes before us on the defendant's appeal from two grants of summary judgment entered in accordance with Rule 56 of the Superior Court Rules of Civil Procedure in favor of the plaintiff, David H. Haffenreffer. The defendant, Karl Haffenreffer, raises two principal issues on appeal. First, Karl 1 contends that the hearing justice in the Superior Court erred in ruling (a) that an offer document authored by the coexecutors administering the Estate of Carolyn B. Haffenreffer was clear and unambiguous and should be understood as David would have it and (b) that the offer document correspondingly precluded Karl from using a credit, against his anticipated share in Carolyn's overall estate, as a portion of the purchase price in acquiring three parcels of real estate from the estate. Secondly, Karl contends in the alternative that the hearing justice erred in failing to order a reformation of the offer document so as to comport with the actual preexisting intention of the coexecutors, at whose behest the offer document was drafted. For the reasons set forth below, we reverse and vacate the judgment of the Superior Court.
David and Karl are brothers. Their mother, Carolyn B. Haffenreffer, passed away on December 13, 2003. Carolyn's estate plan was reflected in a will executed in 1995. Having set forth a plan for the distribution of her probate estate, Carolyn's will then provided that the residue and remainder of her estate should be transferred, or should pour over, into a trust established in 1982 and subsequently amended some sixteen times, most recently in 1999 (the Trust Agreement or trust). Carolyn's will named David and Karl as coexecutors of her estate; it also provided that Attorney Noel M. Field, Jr. should serve as a coexecutor.2
Carolyn's probate estate consisted mainly of various parcels of real property and various items of personal property. Carolyn bequeathed all her tangible personal property in roughly equal shares to be divided amongst Karl, David, and David's wife. Carolyn directed that three parcels of real estate in Little Compton be devised to David. She also instructed the coexecutors to sell one parcel of real estate on Congdon Street in Providence.3
Additionally, Carolyn directed the coexecutors to sell several other parcels of real estate located in Little Compton; it is these parcels that lie at the core of the instant controversy. Section 10 of the will governed the preconditions for the sale of these parcels. Essentially, section 10 required that the coexecutors first offer to sell the parcels to a select group of family members for “the lowest price which the seller would be willing to accept for such parcel;” then, if any of the parcels remained unsold, the coexecutors were to offer them for sale to the public.
Carolyn's will provided that the residue and remainder of her estate should be transferred into her trust. Carolyn had established in 1982 a Trust Agreement with Fleet National Bank (now Bank of America) to serve as trustee.4 The Trust Agreement provided that, after accounting for taxes, debts, and expenses, Karl would receive one-third of the remainder of the estate and David would receive the balance.
In May of 2004, several months after Carolyn's death, Attorney Field (one of the coexecutors) created a spreadsheet to better explain what assets would ultimately constitute the Overall Estate 5 and would be distributed in accordance with the Trust Agreement. He opined that the value of the assets would amount to a total sum of $29,442,438.70. After deductions for estate taxes, specific gifts, and expenses, Attorney Field calculated that $11,847,788.13 would be available to Karl and David. Ultimately, Karl could expect to receive approximately $3.9 million and David could expect to receive approximately $7.9 million. This estimate was updated in May of 2005 so as to indicate that Karl could expect to receive approximately $4.1 million and that David could expect to receive approximately $8.3 million.
On March 2, 2005, the three coexecutors (Karl, David, and Attorney Field) caused to be created a document (Offer Document) that would be used to facilitate the sale of the six Little Compton parcels as directed by Carolyn's will; in that document, the coexecutors mutually agreed to sell the six parcels in four saleable units. The Offer Document permitted Karl, David, and David's three children to make offers to purchase the four units in accordance with section 10 of Carolyn's will. What ultimately lies at the heart of the instant dispute is the language in the so-called “credit provision” of the Offer Document which sets forth the terms of payment for the units. That provision reads as follows:
“Payment shall be made in the form of cash, certified check, bank check or wire transfer, with or without financing, excepting however, seller financing, in the full amount of the purchase price, subject to customary adjustments and prorations as of the date of transfer and subject to adjustment or credit for shares or amounts due to such offeree from the Estate of Carolyn B. Haffenreffer pursuant to the terms of the Will.”
The Offer Document required that any family member who wished to purchase a unit return his or her response by May 2, 2005.
On May 2, 2005, Karl submitted his response to the Offer Document-accepting the offer by indicating that he wished to purchase three specific units of the four that had been offered; those three units had been appraised as having a total value of $5,215,500. Karl indicated that he would pay most of the purchase price by using, in the form of a credit, the approximately $4.1 million that was due to him from Carolyn's Overall Estate to be distributed in accordance with the Trust Agreement.6
Almost a month later, on June 1, 2005, Attorney Field responded to Karl's acceptance of the coexecutors' offer to sell the parcels. Attorney Field did so in a memorandum to the coexecutors and their counsel; he asserted that the credit provision set forth in the Offer Document did not permit Karl to purchase the three units by using a credit reflective of the amount due to him from the Overall Estate. Attorney Field indicated that Karl would have to pay for the properties in the form of cash, certified check, bank check, or wire transfer.
Less than a week later, on June 7, 2005, Karl, through his attorney, responded to Attorney Field and David, demanding that the sale take place and asserting that he was entitled to use a credit reflective of the amount due to him from Carolyn's Overall Estate. It is undisputed that David and Attorney Field, in their capacities as coexecutors, ultimately refused to consummate the sale.
On May 6, 2005, David commenced the instant action in Newport County Superior Court by filing a verified complaint seeking (1) a declaratory judgment and (2) a temporary restraining order to prevent the sale of the properties. On June 22, 2006, David filed an amended verified complaint, again requesting declaratory relief pursuant to the Uniform Declaratory Judgments Act.7 In count 3 of his amended complaint, David sought a declaration that Karl had breached the contract to purchase the three units because he had failed to “close on the properties within the time set forth in the Will (as extended by agreement of the Co-Executors) [which] * * * negates the Estate's duty to sell him any of the subject parcels.”
Karl answered the amended complaint and also filed a counterclaim and cross-claim, asserting that it was David and Attorney Field who, when they refused to convey the three parcels to him, had breached the contract that had come into existence when he accepted the offer set forth in the Offer Document. Karl contended that, in drafting the Offer Document, the coexecutors had intended that the credit provision in the Offer Document would allow him to use his intended distribution from Carolyn's Overall Estate as a credit for a portion of the purchase price. The parties thereafter filed cross-motions for summary judgment.
On May 3, 2007, the parties appeared in Superior Court and participated in a hearing on their cross-motions for summary judgment. On July 27, 2007, the hearing justice issued a written decision and ruled that the credit provision clearly and unambiguously permitted Karl to use a credit from his anticipated share of Carolyn's probate estate only-and not from the Overall Estate. Notably, the hearing justice stated that she did not “resort to analysis of extrinsic evidence” in reaching her decision; after having made reference to the parole evidence rule, she expressed her view that such analysis would be “both unnecessary and impermissible.” She therefore granted summary judgment in favor of David with respect to count 3 of his amended verified complaint.
In the wake of the just-referenced ruling, Karl was granted leave to amend his counterclaim. He then added a count 3 to his original counterclaim. In count 3 of Karl's counterclaim, he sought reformation of the contract on the basis of mutual mistake; he again argued that the coexecutors had intended that, in purchasing such parcels as he might choose to purchase, he could use a credit from his expected share of the Overall Estate. David and Karl again filed cross-motions for summary judgment.
On May 23, 2008, the same hearing justice as had ruled on the earlier cross-motions addressed the most recent cross-motions for...
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