Shelton v. Tamposi

• Decision Date: 11 January 2013
• Docket Number: No. 2010–634.,2010–634.
• Citation: 62 A.3d 741,164 N.H. 490
• Parties: Julie SHELTON and another v. Samuel A. TAMPOSI, Jr. and another.
• Court: New Hampshire Supreme Court

164 N.H. 490

62 A.3d 741

Julie SHELTON and another

v.Samuel A. TAMPOSI, Jr. and another.

No. 2010–634.

Supreme Court of New Hampshire.

Argued: July 13, 2012.

Opinion Issued: Jan. 11, 2013.

Choate, Hall & Stewart LLP, of Boston, Massachusetts (Robert S. Frank, Jr. and Robert M. Buchanan, Jr. on the brief, and Mr. Frank orally), for petitioner Julie Shelton.

Robert A. Stein, of Concord, on the brief, Ransmeier & Spellman, P.C., of Concord (Frank E. Kenison on the brief and orally), McDermott Will and Emery LLP, of Boston, Massachusetts (Michael Kendall on the brief and orally), and Barradale, O'Connell, Newkirk & Dwyer, of Bedford (Pamela J. Newkirk on the brief), for the respondents.

PER CURIAM.

Petitioner Julie Shelton, trustee of the Elizabeth M. Tamposi Trusts (the EMT trusts), appeals a lengthy and detailed order of the Hillsborough County Probate Court (Cassavechia, J.) that dismissed the complaint filed by: (1) Shelton, in her capacity as trustee of the EMT Trusts; and (2) Elizabeth M. Tamposi. Shelton argues that the trial court erred in: (1) construing the governing trust instrument; (2) ruling that, by filing the complaint, Elizabeth Tamposi violated the in terrorem clause; (3) ordering Shelton to pay the attorneys' fees "of both the Respondents and the voluntary Intervenors"; and (4) removing Shelton from her position as trustee. We affirm in part and remand.

The following facts are found in the trial court's order or are supported by the record before us. Samuel Tamposi, Sr. (Sam, Sr.) had six children: Samuel, Jr. (Sam, Jr.), Michael, Elizabeth (Betty), Nicholas (Nick), Celina (Sally) and Stephen (Steve).¹ In 1992, Sam, Sr. established the Samuel A. Tamposi, Sr. 1992 Trust, which was designed to benefit him during his lifetime and, after his death, his six children and their issue. It was amended four times by Sam, Sr. prior to his death. In its final form, it specified that after his death, the trust corpus was to be divided into twelve separate trusts for each of his children and their issue (sibling trusts); six trusts contained assets exempt from the federal generation skipping transfer tax and six contained non-exempt assets. It also provided that Sam, Jr. and Steve would serve as investment directors of the twelve trusts and that a trustee would also be appointed. The trial court found that the third amendment to the trust "confer[red] certain fiduciary responsibilities on the investment directors that are more commonly vested in a trustee."

Sam, Sr. also subsequently established the Samuel A. Tamposi Sr. 1994 Irrevocable Trust; he named David Tulley as his successor trustee for this trust. The 1992 and 1994 trusts were eventually consolidated pursuant to a settlement agreement of the parties; we refer to them collectively for purposes of our analysis as the SAT Sr. Trust.

Sam, Sr. died in 1995. At the time of his death, in accordance with the provisions of the amended 1992 trust, Sam, Jr. and Steve became the investment directors of the twelve sibling subtrusts. Gerald Prunier succeeded the original trustee, David Tulley. In 2000, Sam, Jr. and Steve, as investment directors, and Prunier filed a petition for declaratory judgment in which they sought a ruling that the trustee was required to act in accordance with the written directions of the investment directors, and that, in doing so, the trustee would incur no liability. The petition "alleged that Betty and Nick had expressed interest in a possible ‘buy-out’ or separation of their beneficial interests in the trust property."

Later that year, Nick and Betty and their children filed their own petition for declaratory judgment, seeking a ruling that they could participate in the action initiated by Sam, Jr. and Steve without triggering the in terrorem clause contained in the 1992 trust. The probate court ruled that as long as they did not attempt to challenge the validity of the trust or authenticity of documents, but sought only to uphold fiduciary standards under the trust and New Hampshire law, the in terrorem clause would not be triggered. Both petitions were dismissed by agreement in November 2000.

The trial court also found that in September 2001, Betty and Nick filed suit against "Sam, Jr. and Steve, individually and as investment directors; Gerald Prunier, individually and as trustee; and David Tulley, individually and as trustee for the Samuel A. Tamposi, Sr. 1994 Irrevocable Trust; this time for breach of fiduciary duties." Betty and Nick took a voluntary non-suit approximately two months later.

Between 2001 and 2006, disagreements between Betty and Nick and their siblings continued. Following mediation, a settlement agreement was reached which provided that: (1) the SAT Sr. 1994 Trust for the benefit of each child would be merged into his or her respective non-exempt sibling sub-trust; (2) Nick and Betty could appoint his or her own trustee; and (3) Sam, Jr. and Steve would resign as investment directors over all but ten assets in Betty's and Nick's subtrusts pending their liquidation. Changes made to the SAT Sr. Trust as a result of the settlement agreement were approved by the court on February 22, 2007. Betty appointed Shelton as her trustee in August 2007.

The case giving rise to this appeal began in October 2007, when Shelton and Betty filed a pleading entitled "Complaint" against Sam, Jr. and Steve, "Individually and as Investment Directors of Elizabeth M. Tamposi GST Trust and the Elizabeth M. Tamposi Trust both created under the Samuel A. Tamposi, Sr. 1992 Trust and the Elizabeth M. Tamposi Trust created under Samuel A. Tamposi, Sr. 1994 Irrevocable Trust, and as Directors of the Tamposi Companies." They filed an amended complaint in March 2009.² In their amended complaint, Shelton and Betty requested that the trial court: (1) order the "decoupling" of the EMT Trust assets from the other subtrusts created by the 1992 Trust Instrument and from the control of the respondents; (2) order the removal of Sam, Jr. and Steve as investment directors of the EMT Trusts and as directors of "the Tamposi Companies"; (3) surcharge the respondents "for all losses to the EMT Trusts and the Gifted Assets caused by Respondents' breaches of their fiduciary duties to Petitioners"; and (4) award them "their attorneys' fees and costs in this action, and any other costs caused by the actions of Respondents." They also sought "a declaration that it is the role of Petitioner Trustee Julie Shelton to determine what amounts need to be made available to the EMT Trusts so that the Trustee can fulfill her fiduciary obligations to make the appropriate distributions to the beneficiaries of the EMT Trusts to provide for their education and maintenance in health and reasonable comfort and it is the role of the Respondents Investment Directors Samuel A. Tamposi, Jr. and Stephen A. Tamposi to manage the assets of the EMT Trusts so that the needs are met." The trial court summarized this as a request for a ruling that Shelton as trustee had "sole responsibility and authority to determine appropriate distributions from the EMT Trusts; and that the investment directors' responsibility is to provide funds when and in the amount requested by the trustee."

In January 2008, counsel for trustee Prunier filed an appearance. In August 2008, the trial court granted without objection the motion to join filed by Michael Tamposi and Celina Tamposi Griffin. The trial court found that at the time this litigation began, the SAT Sr. Trust was comprised of the original trust instrument, the first, third and fourth amendments executed by Sam, Sr., certain provisions of the 2006 settlement agreement, and a 2007 court order.

After a trial of more than five weeks, the probate court dismissed the petitioners' complaint and amended complaint, and granted several motions filed by the respondents. The court also found that the in terrorem clause of the trust had been violated and, accordingly, Betty "forfeited her right, title and interest in the trust." In its order, the trial court indicated that it intended to award attorneys' fees and costs to the respondents and intervenors following receipt of further filings. Both Shelton and Betty filed appeals with this court. We subsequently granted with prejudice Betty's motion to withdraw her appeal.

We note that the trial court has not yet determined the amount of fees and costs to be awarded to the respondents and the intervenors. Accordingly, this appeal would appear to be interlocutory. See Van Der Stok v. Van Voorhees, 151 N.H. 679, 681, 866 A.2d 972 (2005). To the extent that it may have been interlocutory when we accepted the appeal, we waive the requirements of Supreme Court Rule 8, see Sup.Ct. R. 1, and now consider the appeal on its merits.

Shelton first argues that the trial court erred in construing the governing trust instrument. As she concedes, when we construe a trust instrument, "the intention of a settlor is paramount, and we determine that intent, whenever possible, from the express terms of the trust itself." Appeal of Lowy, 156 N.H. 57, 61, 931 A.2d 552 (2007). The rules of construction that apply to the interpretation of and disposition of property by will also apply as appropriate to the interpretation of the terms of a trust and the disposition of trust property. RSA 564–B:1–112 (2007) (amended 2011); see RSA 564–B:11–1104 (a)(1) (Uniform Trust Code applies to all trusts created before, on, or after its effective date). We reject any construction of trust language that would defeat the clear and expressed intention of the settlor.

Lowy, 156 N.H. at 61, 931 A.2d 552. The settlor's intent is a question of fact to be determined by competent evidence and not by rules of law. King v. Onthank, 152 N.H. 16, 18, 871 A.2d 14 (2005).

Although Shelton concedes that the trust instrument contemplates an equal initial distribution of assets to the individual trusts, she argues that it "does not empower the Investment Directors to make...