Symmons v. O'Keeffe

• Decision Date: 11 January 1995
• Citation: 644 N.E.2d 631,419 Mass. 288
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: P. Vanessa SYMMONS & another 1 v. William B. O'KEEFFE & others. 2

Page 631

644 N.E.2d 631

419 Mass. 288

P. Vanessa SYMMONS & another ¹ v. William B. O'KEEFFE & others. ²

Supreme Judicial Court of Massachusetts,

Norfolk.

Argued Sept. 13, 1994.

Decided Jan. 11, 1995.

Sydelle Pittas (Marc C. Laredo, with her), Boston, for plaintiffs.

Nonnie S. Burnes (Diane diIanni, with her), Boston, for William B. O'Keeffe.

Edward J. Duggan (Domenic P. Aiello, with him), Boston, for Roderick M. Connelly & others.

Before LIACOS, C.J., and WILKINS, ABRAMS, NOLAN and LYNCH, JJ.

ABRAMS, Justice.

The plaintiffs, P. Vanessa Symmons and Janet Symmons Hollyday, appeal from the entry of summary judgment in favor of the defendants, William B. O'Keeffe (O'Keeffe) and his partners at the law firm of Lyne, Woodworth & Evarts (LWE). The plaintiffs sought "injunctive and other appropriate relief in order to right the wrongs done to the family of the founder of Symmons Industries, Inc., by William B. O'Keeffe, Esq.," and LWE. The amended verified complaint claimed that "[a] trusted attorney, instead of transferring the stock owned by the founder of a multi-million-dollar, closely-held corporation outright to his three adult daughters as was the founder's intent, seized the opportunity to wrest control of the corporation from the founder and his daughters, and transfer it to himself."

Specifically, the plaintiffs allege that: (1) O'Keeffe should be removed as trustee of trusts established for their benefit, pursuant to G.L. c. 203, § 12 (1992 ed.), on the ground that he has failed to act in their best interests (count I); (2) O'Keeffe violated his fiduciary duties as trustee (count II); (3) O'Keeffe violated his fiduciary duties as majority shareholder of Symmons Industries (count III); (4) O'Keeffe wasted the corpus of trusts established for their benefit by diminishing the value of Symmons Industries stock held by the trusts (count IV); and (5) the defendant law firm partners were negligent in their legal representation of the plaintiffs' interests (counts V and VI). In a separate count, the plaintiffs requested equitable relief for the alleged wrongs (count VII). This count did not set forth a separate legal theory. Defendants O'Keeffe and LWE filed counterclaims for abuse of process. The judge allowed the defendants' motions for summary judgment on the plaintiffs' complaint and the plaintiffs' motion for summary judgment on O'Keeffe's abuse of process counterclaim. The partners of LWE thereafter dismissed their counterclaim for abuse of process. The plaintiffs appeal from the summary judgment entered for the defendants. The defendants seek sanctions because they claim the plaintiffs' appeal is frivolous. See G.L. c. 231 § 6F (1992 ed.); Mass.R.A.P. 25, as amended, 378 Mass. 925 (1979). We allowed LWE's application for direct appellate review. We affirm the judgment of the Superior Court. We deny the defendants' motions for double costs and reasonable attorney's fees.

1. The facts. The plaintiffs are two of the three daughters of Paul C. Symmons (Symmons). Symmons's third daughter, Paula O'Keeffe, married defendant William B. O'Keeffe, a partner at LWE, nearly thirty years ago.

In 1938, Symmons founded Symmons Industries, a plumbing manufacturing company, and created the Symmons Family Partnership, which holds title to the real estate on which Symmons Industries is located. Over the years, Symmons Industries became a very successful family business. At the time this litigation was commenced, Symmons Industries' board of directors consisted of O'Keeffe, Symmons, P. Vanessa Symmons, Janet Symmons Hollyday, Paula O'Keeffe, Albert G. Fehrm (president of Symmons Industries), and Kevin V. Symmons (Symmons's nephew and a vice president of Symmons Industries). Prior to April 7, 1989, Symmons owned approximately sixty percent of the outstanding shares of Symmons Industries common stock. His three daughters each owned nine percent of the shares.

Defendant O'Keeffe is the chief executive officer (CEO) and chairman of the board of Symmons Industries. In 1966, Symmons hired O'Keeffe to do some legal work for Symmons Industries. LWE then became legal counsel to Symmons Industries, handling most of its legal work. In 1970, O'Keeffe became clerk of Symmons Industries and in 1982 he was elected to its board of directors. In 1986 he became CEO and in 1987 he became chairman of the board.

Attorney Kingsbury Browne of the law firm of Hill & Barlow prepared an estate plan for Symmons in 1974 and revised it in 1978, 1981 and 1982. This plan, in all its revisions, included a trust into which shares of stock of Symmons Industries would be transferred for the benefit of Symmons's three daughters. O'Keeffe was one of the trustees of this trust from 1982 onward. The trust was to terminate five years after Symmons's death.

In 1985, Symmons had LWE revise his estate plan. LWE made changes required by tax law and removed Browne as trustee of the trust (leaving O'Keeffe and an accountant for Symmons Industries as the two cotrustees). The new plan extended the term of the trust from five to fifteen years. In 1988, Symmons again amended his estate plan, to make it conform to the subchapter S tax status Symmons Industries had elected. ³ O'Keeffe and the accountant remained the two trustees and the term of the trust remained fifteen years.

In 1989, Symmons contemplated marriage. His daughters became concerned about the potential impact of this marriage on their expected inheritances. O'Keeffe discussed these concerns with Symmons. At O'Keeffe's suggestion, Symmons decided to transfer his Symmons Industries stock into trusts for the benefit of his three daughters while he was alive. At a meeting at O'Keeffe's home during the afternoon of April 7, 1989, Symmons transferred his stock into three identical trusts for the benefit of his daughters. Symmons also set up an additional trust called the Symmons Family Trust. He transferred his thirty percent interest in the Symmons Family Partnership into this trust. The beneficiaries are Symmons's three daughters. Several lawyers from LWE were present at this meeting, as were the plaintiffs. The plaintiffs did not participate in the discussions. According to the evidence, Symmons was given a full explanation of the transactions by the LWE lawyers. Symmons was alert, asked questions and appeared knowledgeable about estate planning. As in the trust in his previous estate plan, O'Keeffe and the accountant were the trustees and the trusts were to continue for fifteen years after Symmons's death.

The trusts provide that if one trustee resigns, the other may serve alone, and that, if a further vacancy occurs, the beneficiaries may select successor trustees. Under the terms of the trusts, the trustees are required to distribute all net income to the beneficiaries. The amount of dividends paid to the trusts, and all other Symmons Industries shareholders, is determined by the company's board of directors.

In the fall of 1989, the plaintiffs objected that the stock had not been transferred to them as an outright gift and asked O'Keeffe to resign as trustee. O'Keeffe declined to do so. In October, 1991, a dispute arose as to how to pay taxes due on the 1989 gifts. That dispute led to this litigation. The accountant-trustee resigned and O'Keeffe became sole trustee.

From the creation of the trusts until the filing of this lawsuit, the plaintiffs consistently voted to elect O'Keeffe as a director of Symmons Industries. They have never challenged the composition of the board of directors or made nominations for substitute members. As directors, the plaintiffs voted for O'Keeffe as chairman of the board in 1990 and 1991.

2. Summary judgment. The plaintiffs claim that the motion judge erred in allowing the defendants' motions for summary judgment. Summary judgment is appropriate when "there is no genuine issue as to any material fact and [ ] the moving party is entitled to a judgment as a matter of law." Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). See, e.g., Theran v. Rokoff, 413 Mass. 590, 591, 602 N.E.2d 191 (1992); Massachusetts Bay Transp. Auth. v. Allianz Ins. Co., 413 Mass. 473, 476, 597 N.E.2d 439 (1992). "[The ]party moving for summary judgment in a case in which the opposing party will have the burden of proof at trial is entitled to summary judgment if he demonstrates ... that the party opposing the motion has no reasonable expectation of proving an essential element of that party's case." Wheatley v. American Tel. & Tel. Co., 418 Mass. 394, 397, 636 N.E.2d 265 (1994), quoting Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716, 575 N.E.2d 734 (1991). See Judson v. Essex Agric. & Technical Inst., 418 Mass. 159, 162, 635 N.E.2d 1172 (1994). The record, although voluminous, discloses no genuine issues of material fact. The judge correctly ordered that summary judgment be entered for the defendants.

A. Removal. The plaintiffs contend that there are genuine issues of material fact relevant to O'Keeffe's suitability to continue as trustee of the trusts and that there therefore was a triable issue of fact as to whether O'Keeffe should have been removed as trustee under G.L. c. 203, § 12. ⁴ We now address each of the grounds set forth by the plaintiffs as basis for O'Keeffe's removal.

I. Settlor's intent to create trusts. The plaintiffs first contend that Symmons had no intention of creating the trusts, but rather, was "tricked" into doing so by the defendants. The plaintiffs did not assert a claim of fraud, duress, undue influence or mistake, nor did they have standing to do so. Such a claim would be properly brought by Symmons, who was alive at the time this suit was commenced, or by his representative. See Robinson v. Gould, 11 Cush. 55, 57 (1853) (duress); Markell v. Sidney B. Pfeifer Found., Inc., 9 Mass.App.Ct. 412, 440-441, 402 N.E.2d 76 (1980) (mistake induced by fiduciary). The plaintiffs did not seek reformation or rescission of the trusts. ⁵ Instead, they argue...