Lazarus v. Sherman

• Decision Date: 06 January 2011
• Docket Number: No. 2008-228-Appeal.,2008-228-Appeal.
• Parties: Leonard I. LAZARUS v. William H. SHERMAN et al.
• Court: Rhode Island Supreme Court

10 A.3d 456

Leonard I. LAZARUS

v.William H. SHERMAN et al.

No. 2008-228-Appeal.

Supreme Court of Rhode Island.

Jan. 6, 2011.

Jeffrey S. Michaelson, Esq., No. Kingstown, for Plaintiff.

Matthew F. Medeiros, Esq., Providence, for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice INDEGLIA, for the Court.

After nearly thirteen years of litigation, during which time this case was dismissed from the Superior Court for failure to prosecute and later reinstated, the parties came before the Supreme Court for oral argument on December 1, 2010. In this intrafamily dispute, the plaintiff, Leonard I. Lazarus, brought an action against the defendants, the Shermans, seeking the interpretation of two wills and a trust contained in them and a codicil to one of them. The trial justice found that the testators' intent could be determined from the four corners of the will, declined to turn to extrinsic evidence, and ruled in favor of the plaintiff.¹ He found that the codicil likewise was unambiguous and ruled in favor of the defendants.

On appeal, the defendants argue that the language of the trust provision is unambiguous but that it compels the opposite result from that which the trial justice reached. Alternatively, defendants argue that, even if the provision is ambiguous, the extrinsic evidence supports their interpretation. However, the extended and convoluted course that this case took to this Court engendered confusion among the parties and the trial justice about the questions before the trial court and its rulings. As a reflection of this uncertainty, defendants also argue in this appeal that the trial justice erred when he retracted, months later, a previous statement that he made in response to defendants' inquiry about the substance of a proposedfinal judgment. Consequently, they submit that the entered judgment was not final because the statement was a holding that was necessary to resolve the issues raised. After careful review of the record and consideration of the parties' arguments, we affirm the judgment of the Superior Court.

IFacts and Travel

The facts central to this case are undisputed. Frank Lazarus died in June 1994. His wife, Rose Lazarus, died slightly more than a year later, in August 1995. They were survived by their two children, plaintiff Leonard I. Lazarus (Leonard or plaintiff) and defendant Sandra H. Sherman (Sandra). William H. Sherman (William), also a defendant, is Sandra's husband. Sandra and William's sons, Gary L. Sherman (Gary) and Robert D. Sherman (Robert), are defendants as well.²

Frank and Rose both executed a last will and testament on March 30, 1994. The wills were mirror images of each other. However, on April 25, 1995, Rose amended her will with a duly executed codicil, which inserted language following the first paragraph of the Article Third of the will. This additional paragraph forgave "any loans" Rose made "to any child or grandchild." The plaintiff alleged, and defendants admitted, that on or about April 19 and May 30, 1995, Sandra borrowed a total of $150,000 from Rose.

Frank and Rose's estate plan included three trusts: the marital trust (Trust A), the family trust (Trust B), and the children's trust (Trust C). All three trusts were for the initial benefit of the surviving spouse. Upon the death of that spouse, all three trust estates were to be divided into equal shares in trust for the benefit of Leonard and Sandra and upon their deaths, the balances of the trust estates, "if any," were to be divided equally once more in trust for the benefit of Gary and Robert.³ The notable difference among the trusts was the right to withdraw principal: Trust A conferred the right to withdraw principal on the surviving spouse, Trust B conferred the right to withdraw principal on Leonard and Sandra, and Trust C conferred the right to withdraw principal on Gary and Robert.

Rose survived Frank and was the initial beneficiary of each trust. Therefore, as pertinent to this appeal, upon her death, subparagraphs (a) and (b) of Trust B directed the cotrustees to divide the balance of Trust B into equal, one-half amounts in trust for the benefit of Leonard and Sandra, respectively. The cotrustees of Trust B were to "pay to or apply the net income of each share held in trust hereunder to or for the benefit of the individual beneficiary or beneficiaries thereof, in convenient installments, but not less frequently thanquarter-annually." Significantly, the paragraph labeled as "(11)" of Trust B (paragraph 11) states that "Leonard I. Lazarus and Sandra H. Sherman shall have the right to withdraw and have paid over to them equally so much or all of the principal of [Trust B] as they at any time and from time to time direct in writing."

On March 28, 1997, Leonard filed a complaint in Superior Court alleging that "[u]nder date of September 19, 1996, [he] attempted to exercise his right of withdrawal of one-half the principal and accumulated income of Trust B pursuant to the power granted by the paragraph designated '11'." He requested a declaratory judgment as to "whether or not [he had] a unilateral power to withdraw one-half [of] the principal and accumulated income of Trust B under both Frank's and Rose's wills." In his answer, William, as cotrustee and defendant, "allege[d] that both Sandra and Leonard together have the right to request distributions from principal. This right to request distributions must be exercised by both Sandra and Leonard acting together in concert." The defendants asserted that Leonard's position was "contrary to the best interest of the beneficiaries of [Trust B] and to the express intent of [Frank and Rose]."

On April 15, 2004, the case was dismissed under G.L.1956 § 9-8-5 for lack of prosecution. On December 2, 2004, Leonard moved to vacate the order of dismissal or, alternatively, to reinstate the case. He said that the lack of prosecution was attributable, in part, to the pending legal malpractice action against the attorney who drafted Frank and Rose's wills, of which he was awaiting resolution before he continued to proceed with the instant case. After a hearing, plaintiff's motion to reinstate was granted on February 11, 2005. The parties were directed to conduct discovery and submit briefs.

This declaratory-judgment action finally came before a justice of the Superior Court on July 25, 2006. The trial justice reviewed the parties' written submissions, the attached exhibits, and the court file. First, the trial justice considered the meaning of the provision stating that "Leonard I. Lazarus and Sandra H. Sherman shall have the right to withdraw and have paid over to them equally so much or all of the principal of [Trust B] as they at any time and from time to time direct in writing." The trial justice stated his "oblig[ation] to effectuate the intents of the testator." He noted that the attorney who drafted the wills was deposed in this case, and "an inquiry into the perceptions of the drafter of the will" is permissible "if the will is so ambiguous that it cannot be construed otherwise." However, the trial justice did not consider the deposition testimony of the drafting attorney because he found that the will was not "so ambiguous." Rather, after examining the provision in question and "also considering the four corners of the will," the trial justice found that the provision was "very simple clear and direct" and, therefore, he could "determine what the testators had in mind" from the will alone.

The trial justice found that "it is clear that Leonard and Sandra have the prerogative under the will if they [choose] to exercise it, to get out their principal." Therefore, he concluded

"that the intent of the testator was not to have them make a joint request. It is clear that the monies assigned to Leonard, meaning half of the estate, in effect were to go to him. He could take it over time, get income payments or partial principal payments, or he could do what Paragraph 11 says, seek to get his entire half. He certainly can't invade any portion that is earmarked for Sandra, but it's clear he can get his money.

* * * Similarly, Sandra can get her money out if she wants or she can decline to exercise her prerogative and take only such portion of the principal she wants at any given time, leave the money * * * in the trust as she sees fit."

Next, the trial justice considered the meaning of the provision in the codicil to Rose's will that forgave loans that she made to her children and grandchildren. The trial justice found that "the codicil of Rose is absolutely clear; any loan made to a child or grandchild is forgiven." Therefore, he concluded that the codicil "extinguished" Sandra's obligation to repay the amount Rose loaned to her, and he stated that Rose "forgave the loan, and that's the end of it. The language could not be clearer."

An order reflecting the findings that the trial justice made at the hearing on July 25, 2006, was entered on August 17, 2006. The order declared that Leonard and Sandra both "[have] the legal right to cause a distribution of one half of the assets * * * of Trust B * * * without regard to whether the other makes a similar request, joins in such a request or otherwise." It also declared that the codicil to Rose's will "whereby she forgives loans * * * does not affect or alter the amount of any bequest made in the will." Finally, the order deferred consideration of the request for attorneys' fees, without prejudice, until raised by an appropriate motion.

The matter came before the trial justice again on October 19, 2006, to hear plaintiff's motion for attorneys' fees. After the issue of attorneys' fees was addressed, counsel for defendants informed the trial justice that he "hasn't indicated to counsel how you view the issue of whether the $75,000 payback that [Leonard] has to make by reason of the issue we won on, [and] how that gets factored into the judgment." ⁴ The trial justice suggested...