STEINHOF v. Murphy

• Decision Date: 19 April 2010
• Docket Number: No. 2008-136-Appeal.,2008-136-Appeal.
• Citation: 991 A.2d 1028
• Parties: David L. STEINHOF et al. v. Michelle J. MURPHY et al.
• Court: Rhode Island Supreme Court

991 A.2d 1028

David L. STEINHOF et al. v. Michelle J. MURPHY et al.

No. 2008-136-Appeal.

Supreme Court of Rhode Island.

April 19, 2010.

COPYRIGHT MATERIAL OMITTED

John M. Verdecchia, Esq., Providence, Raymond C. Holland, Esq., for Plaintiffs.

Jeremiah C. Lynch, III, Esq., Middletown, for Defendants.

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

OPINION

Chief Justice SUTTELL, for the Court.

The plaintiffs, David L. Steinhof, Michael E. Steinhof, Gregory E. Steinhof, Edward J. Steinhof, and Jody Louise Fedele (collectively the Steinhofs), and the defendants,¹ Elizabeth Ferland, Charles Ferland, and Oscar M. Ferland (collectively the Ferlands), as heirs at law of Laura V. Ferland, cross-appeal from the Superior Court's summary judgment (1) dividing the corpus of the trust established by Robert Steinhof (Robert)² into two equal shares: one for Alice Bouchard (Alice) and one for the Steinhofs, as heirs to Edward J. Steinhof (Edward), and (2) directing that a proportional share of federal and state estate taxes be paid out of the trust. For the reasons stated in this opinion, we affirm in part and vacate in part the summary judgment of the Superior Court.

I Facts and Procedural History

Robert was predeceased by his wife, Avis Steinhof, and the couple had no children. Robert had four sisters, Eugenia Stoutnar, Josephine Steinhof, Laura, and Alice, and one brother, Edward.

This dispute arises, in part, from a will (the 1994 will) and a trust (the trust) that Robert executed and established on December 28, 1994. At the time the trust and the 1994 will were executed, Edward and Alice were Robert's only living siblings. On February 10, 1999, Robert executed the "First Amendment of the Robert Steinhof Declaration of Trust" (the 1999 amendment). The 1999 amendment reaffirmed most of the terms of the trust, but named Alice and her daughter Michelle Murphy (Michelle) as successor trustees. Robert executed a second will on November 5, 2003 (the 2003 will), which expressly revoked and annulled "all other and former wills" he had made.

The trust provided in relevant part:

"ARTICLE VII

"FINAL DISTRIBUTION

"* * * the entire Trust estate upon my death if my wife does not survive me, shall be held in Trust and administered as follows:

"Section A. Generation-Skipping Trusts.

"(1) Establishment. The portion, or portions, if any, of the Trust Estate to which generation-skipping tax exemption was or is allocated by virtue of my death, or the death of my spouse, shall be divided to provide (a) one equal share for Settlor's brother, Edward J. Steinhof, and Settlor's sister, Alice Bouchard, each to be held as a separate trust for their benefit under subsection (2) of this Section A, ARTICLE VII, and (b) one equal share for the issue, collectively, of Settlor's then deceased brother or sister, also to be administered as a separate trust for the benefit of those issue pursuant to subsection (2) of Section A, ARTICLE VII. In the event Settlor's brother or Settlor's sister shall predecease Settlor with no surviving issue, such deceased brother's or sister's share shall be distributed equally amongst the then remaining shares established hereunder.

"* * *

"Section B. Family Trusts.

"(1) Establishment. The rest, residue, and remainder of the Trust Estate shall be divided to provide (a) one equal share for Settlor's brother and Settlor's sister, each to be held as a separate trust for Settlor's brother's and Settlor's sister's benefit under subsection (2) of this Section B of this ARTICLE VII, and (b) one equal share for the then living issue, collectively, of each then deceased brother or sister of Settlor, to be administered for the benefit of those issue pursuant to subsection (2) of Section B of this ARTICLE VII.

"(2) Administration.

"(a) Income. Until the time for termination and liquidation of a separate trust, as prescribed below in subsection (3) of this Section B, ARTICLE VII, Trustee shall distribute only so much of the income of each separate trust, as in its sole discretion is necessary, for the proper health, education, maintenance, and support of Settlor's brother or Settlor's sister or, unless otherwise appointed by Settlor's brother or Settlor's sister pursuant to subsection (4) of this Section B, ARTICLE VII, per stirpes to the issue of that deceased brother or sister of Settlor.

"(b) Principal. Until the time for termination and liquidation of a separate trust, as prescribed below in subsection (3) of this Section B, ARTICLE VII, Trustee shall distribute only so much of the principal from a separate trust, as in its sole discretion is necessary, for the proper health, education, maintenance, and support of Settlor's brother or Settlor's sister or, unless otherwise appointed by Settlor's brother or Settlor's sister pursuant to subsection (4) of this Section B, ARTICLE VII, for the proper health, education, maintenance, and support of the issue of Settlor's brother or Settlor's sister."

On August 27, 2004, Robert passed away, and Alice was his only surviving sibling. Alice subsequently passed away on March 31, 2005, thereby leaving her daughter, Michelle, as trustee of the trust and executrix of Robert's estate. Michelle was also the sole beneficiary under her mother's last will and testament. Laura was survived by three children, Elizabeth Ferland, Charles Ferland, and Oscar Ferland. Robert's other two sisters, Eugenia Stoutnar and Josephine Steinhof, died without issue.

On September 18, 2006, the Steinhofs filed an action seeking a declaration, under the Uniform Declaratory Judgments Act, G.L. 1956 § 9-30-1, that they be awarded a one-half share of the trust assets and that Michelle, as executrix of Robert's estate, be ordered to reimburse the trust for the estate taxes that were charged against it. The Ferlands answered on October 30, 2006. On November 2, 2006, Michelle answered and counterclaimed seeking a declaration that she, the Steinhofs, and the Ferlands each be awarded a one-third share of the trust assets, and an order that a proportional share of estate taxes be paid out of the trust. Thereafter, Michelle and the Ferlands filed motions for summary judgment under Rule 56 of the Superior Court Rules of Civil Procedure. The Steinhofs subsequently filed an objection and a cross-motion for summary judgment.

The motion justice issued a written decision on July 27, 2007, granting plaintiffs' motion for summary judgment in part and denying it in part, and granting defendants' motion for summary judgment in part and denying it in part. With respect to the division of the trust corpus, the motion justice granted plaintiffs' motion for summary judgment in part, dividing the trust into two equal shares, one share for the benefit of Alice Bouchard and one share for the Steinhofs. With respect to the apportionment of estate taxes, the motion justice granted summary judgment for defendants, declaring that a proportional share of federal and state estate taxes would be paid out of the trust. Summary judgment was entered on August 29, 2007. Thereafter, the Ferlands and the Steinhofs cross-appealed.

II Standard of Review

In reviewing the Superior Court's judgment on the parties' cross-motions for summary judgment, "we examine the matter de novo and apply the same standards as those used by the trial court." Delta Airlines, Inc. v. Neary, 785 A.2d 1123, 1126 (R.I.2001). "The hearing justice may grant the motion for summary judgment only if * * * he or she determines that `no issues of material fact appear and the moving party is entitled to judgment as a matter of law * * *.'" Estate of Giuliano v. Giuliano, 949 A.2d 386, 391 (R.I.2008) (quoting Steinberg v. State, 427 A.2d 338, 340 (R.I.1981)). Moreover, "in ruling on a motion for summary judgment, the motion justice must look for factual issues, not determine them." Steinberg, 427 A.2d at 340.

III Discussion

A Division of Trust Assets

The Ferlands contend that the motion justice should have granted summary judgment in their favor, rather than for the Steinhofs, because the trust should be construed to divide the trust corpus into three equal shares: one for Alice, one for Edward's heirs, and one for Laura's heirs. More specifically, the Ferlands assert that Article VII, Section B of the trust is unambiguous on its face, and thus it was improper for the motion justice to look to other provisions of the trust to ascertain Robert's intent. The Ferlands also assert that the motion justice incorrectly relied on the absence of any specific reference to Laura in the trust. Such reliance was improper, according to the Ferlands, because the provisions that specifically name Edward and Alice refer to a power of appointment and an interest for Robert's living siblings, neither of which could have applied to Laura, who was deceased at the time the trust was drafted.

Michelle and the Steinhofs counter that the motion justice did not err in granting summary judgment for the Steinhofs because construction of the trust requires its division into two equal shares: one for Alice and one for Edward's heirs. Specifically, the Steinhofs argue that the trust and the 1999 amendment clearly reflect Robert's intention for the trust to benefit only Edward, Alice, and their issue. To support their position, the Steinhofs note that every reference in Article VII is to Robert's brother or sister in the singular, that the trust as a whole never refers to his brothers or sisters in the plural, and that the trust does not refer to any of Robert's siblings by name other than Edward and Alice.

This Court's "primary objective when construing language in a will or trust is to ascertain and effectuate the intent of the testator or settlor as long as that intent is not contrary to law." Fleet National Bank v. Hunt, 944 A.2d 846, 851 (R.I.2008) (quoting In re DiBiasio, 705 A.2d 972, 973 (R.I.1998)). To ascertain the settlor's intent, donative language should be interpreted...