Opinion
C.A. PM-2017-4755
01-30-2018
BANK OF AMERICA, N.A., in its capacity as Co-Trustee of the Michael Pierce Metcalf 1950 Trust f/b/o Hannah Metcalf Childs, Petitioner, v. RENEE A.R. EVANGELISTA, in her capacity as Co-Trustee of the Michael Pierce Metcalf 1950 Trust f/b/o Hannah Metcalf Childs, CHARLES E. CLAPP, III, in his capacity as Co-Trustee of the Michael Pierce Metcalf 1950 Trust f/b/o Hannah Metcalf Childs, HANNAH METCALF CHILDS, JAMES M. CHILDS, JR., GEORGE M. CHILDS, and THAYER CHILDS, Respondents.
For Plaintiff: Paul M. Sanford, Esq. Benjamin C. Caldwell, Esq. For Defendant: Kyle Zambarano, Esq. David T. Riedel, Esq. Stacey P. Nakasian, Esq.
Providence County Superior Court
For Plaintiff: Paul M. Sanford, Esq. Benjamin C. Caldwell, Esq.
For Defendant: Kyle Zambarano, Esq. David T. Riedel, Esq. Stacey P. Nakasian, Esq.
DECISION
SILVERSTEIN, J.
Before the Court for decision is a petition for instructions by Bank of America, N.A. (herein Bank of America or Petitioner) in its capacity as co-trustee of the Michael Pierce Metcalf 1950 Trust f/b/o Hannah Metcalf Childs (Hannah 1950 Trust). Petitioner seeks instructions regarding whether it should honor or dishonor an instrument of removal as trustee issued by its two co-trustees, Renee A.R. Evangelista (Evangelista) and Charles E. Clapp, III (Clapp) (collectively referred to herein as Co-Trustees or Respondents) to Bank of America. Jurisdiction is pursuant to G.L. 1956 § 8-2-13.
Throughout its Decision, the Court will refer to several trust instruments and individuals using their first names. In doing so, the Court seeks to improve clarity and intends no disrespect.
I Facts and Travel
In December of 1950, George Pierce Metcalf (the Settlor) executed a deed of trust for the benefit of his son, Michael Pierce Metcalf, and others, specifically referred to as the Michael Pierce Metcalf 1950 Trust (Michael 1950 Trust). Rhode Island Hospital Trust Company (RIHT), a corporate predecessor to Bank of America, served as one of the original trustees in the Michael 1950 Trust. The Michael 1950 Trust further contemplated the possibility of RIHT merging with another entity and directed the successor entity-here, Bank of America-to continue as a co-trustee.
In 2013, the then three co-trustees petitioned for approval to divide and modify the Michael 1950 Trust. This petition sought to divide the Michael 1950 Trust into three equal shares for the benefit of Michael's three children-Hannah, Lucy, and Jesse. The petition was granted by this Court, and the Michael 1950 Trust was divided into three separate trusts-including the Hannah 1950 Trust at issue here-containing terms and conditions essentially identical to the Michael 1950 Trust.
Shortly following the division of the Michael 1950 Trust, Evangelista-at the request of Hannah Metcalf Childs (Hannah)-and Clapp-by recommendation of Evangelista-were appointed as co-trustees, succeeding Charlotte S. Metcalf and Joseph E. Fellows, respectively. On May 5, 2017, Evangelista sent electronic correspondence to Bank of America informing it of Hannah's desire to remove Bank of America as co-trustee of the Hannah 1950 Trust. No complaints or misconduct was reported to Bank of America precipitating its removal. On or about September 15, 2017, Bank of America received an Instrument of Removal of Trustee, dated September 14, 2017, purporting to remove Bank of America as a co-trustee of the Hannah 1950 Trust. The Instrument of Removal of Trustee was signed by the remaining Co-Trustees, Evangelista and Clapp. In addition to the Instrument of Removal of Trustee, Bank of America also received seven assents to removal of a co-trustee, representing a majority of the Settlor's issue of full age and then living.
Bank of America initially filed its petition for instructions on October 5, 2017 and amended its petition on October 13, 2017. Soon thereafter, Respondents filed their answer to Bank of America's petition. Bank of America subsequently filed a motion for instructions, accompanied by a memorandum and a statement of undisputed facts. Respondents submitted their response and accompanying memorandum, to which Bank of America filed a reply memorandum.
II Analysis
The "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." Lazarus v. Sherman, 10 A.3d 456, 462 (R.I. 2011) (quoting Steinhof v. Murphy, 991 A.2d 1028, 1033 (R.I. 2010)) (internal quotation marks omitted). In interpreting a trust instrument, the Court first examines the "trust's 'plain language.'" Id. (quoting Fleet Nat'l Bank v. Hunt, 944 A.2d 846, 851 (R.I. 2008)); see also Prince v. Roberts, 436 A.2d 1078, 1081 (R.I. 1981) ("When construing the trust instrument words should be given their primary, ordinary, and common meaning unless it plainly appeared that they were used in some other sense."). The Court's examination, however, should be "with reference to the whole trust." Steinhof, 991 A.2d at 1033.
Article 9 of the Hannah 1950 Trust reads as follows:
It should be noted that the prior Order issued by this Court on August 30, 2013 dividing the Michael 1950 Trust into three separate trusts directed "each Separate Trust to contain terms and conditions essentially identical to those of Michael's [1950 Trust.]" See Order, M.P. No. 2013-3793 (Aug. 30, 2013) (Procaccini, J.). Per that Order, Article 9 contained within the Hannah 1950 Trust remains identical to Article 9 of the Michael 1950 Trust.
"Any Trustee may be removed at any time by the other two (2) Trustees then acting hereunder by an instrument in writing signed and acknowledged by them, assented to in writing by a majority of the issue of the Settlor of full age and legal capacity then living, such removal to be effective forthwith, provided, however, that no Trustee may be so removed unless there be three (3) Trustees hereunder immediately prior to such removal and unless there be one or more issue of the Settlor of full age and legal capacity living at the time of such removal."
For ease of reference, the Court will refer to this excerpt of the Hannah 1950 Trust as "the removal provision."
Petitioner here asserts that the language contained within the removal provision does not permit no-fault removal. Specifically, Bank of America argues that the phrase "at any time" contained within the removal provision does not provide for removal "without cause, " "for any reason, " or in the Co-Trustees' "uncontrolled discretion."
Petitioner cites to a decision of this Court, finding that Rhode Island law views the removal of a trustee as an "extreme remedy" requiring "'a showing that the trustee has failed to perform his duties through more than mere negligence.'" Buchanan v. Bank of America, N.A., Nos. PC 10-3087, PC 10-3088, PC 10-3089, PC 10-3090, PC 10-3091, PC 10-3092, PC 10-3093, PC 10-3094, PC 10-3095, 2011 WL 3705352, at *5 (R.I. Super. Aug. 17, 2011) (quoting Cuzzone v. Plourde, No. 03-0524, 2005 WL 2716749, at *2-3 (R.I. Super. Oct. 17, 2005)). Further, Petitioner contends that the omission of the phrases "without cause, " "for any reason, " and "uncontrolled discretion" in the removal provision was likely intentional because those phrases are found elsewhere in the trust instrument regarding the trustees' ability to make payments from the income or principal. Petitioner also maintains that a plain reading of the phrase "at any time" does not permit removal without cause and that allowing removal without cause may lead to an absurd result inconsistent with the Settlor's intent. Finally, Petitioner asserts that its removal is arbitrary and, therefore, void.
Specifically, the quotation, in context, reads: "Accordingly, this Court remains steadfast in its belief that the removal of a trustee by a court is an extreme remedy which should be exercised 'sparingly and only upon a showing that the trustee has failed to perform his duties through more than mere negligence.'" Buchanan, 2011 WL 3705352, at *5 (quoting Cuzzone, 2005 WL 2716749, at *2-3) (emphasis added).
Conversely, Respondents argue that Petitioner's focus on the omission of specific phrases ignores that the Settlor, through the removal provision, imposed a series of requirements for removal of a trustee. Respondents further contend that the Co-Trustees should not be subject to the judicial standard for the removal of a trustee in the face of the special provision in Article 9 of the Hannah 1950 Trust detailed above. Additionally, Respondents assert that the trustees' ability to distribute income and principal in their "uncontrolled discretion" and "for any reason" does not impact the removal provision, nor would the removal of Bank of America lead to an absurd result.
A Removal Without Cause
At issue before the Court is whether the Co-Trustees-with the assent of the adult issue-ought to be permitted to remove Bank of America from its position as the third trustee without showing cause. This Court has previously contemplated the circumstances required before the court may take action to remove a trustee. See, e.g., Buchanan, 2011 WL 3705352; Cuzzone, 2005 WL 2716749. The question of whether a trust instrument may grant trustees the ability to remove a co-trustee without cause, however, is a novel issue before this Court.
Petitioner cites to several decisions from a variety of jurisdictions to support its position that without additional language specifically permitting the removal of a trustee for any reason, the removal provision contained within the Hannah 1950 Trust does not grant the absolute power to remove a trustee by the Co-Trustees. Petitioner cites to a number of cases-Matter of GAC Corp., 50 B.R. 332, 339 (Bankr. S.D. Fla. 1985); In re New York County Supreme Court, 2006 NYLJ LEXIS 899, *3 (Sup. Ct. New York County 2006); Democratic Cent. Comm. of D.C. v. Washington Metro. Area Transit Comm'n, 41 F.3d 757, 759 (D.C. Cir. 1994); In Matter of Heizer Corp., CIV. A. No. 7949, 1988 WL 58272 (Del. Ch. 1988); and Ellis v. Broder, 11 Misc.3d 534, 536 (Sup. Ct. New York County 2006)-which refer to language permitting removal of a trustee "at any time" coupled with language specifying "with or without cause, " "for cause, " or "for any reason whatsoever." Petitioner further relies on Goddard v. Bank of America, N.A., Nos. 09-6232, 09-6233, 09-6234, 09-6235, 09-6236, 09-6237, 2010 WL 710110 (R.I. Super. Feb. 24, 2010), a decision of this Court in which the petitioner sought to add language allowing the removal of a trustee for any reason. In Goddard, petitioners sought to modify the trust at issue to include, inter alia, provisions "establish[ing] an investment committee to make final decisions[]" and "allow[ing] the committee to remove a trustee for any reason." Id. at *1. The court there, however, did not focus on the proposed removal provisions, but rather on whether or not the collective nine proposed modifications affected a material purpose of the trust. Id. at *2-4.
Conversely, Respondents cite to Mucci v. Stobbs, wherein the Illinois Appellate Court found a beneficiary possessed the authority to remove a trustee with written notice pursuant to a provision in the trust. See 666 N.E.2d 50, 56 (Ill.App.Ct. 1996) ("The trust is clear; the only requirement for [the beneficiary] to remove the trustee is to give the trustee written notice."). Respondents additionally cite to Procaccianti v. Baginski, No. PB 2013-3440, 2016 WL 1745898 (R.I. Super. Apr. 25, 2016), wherein this Court refused to impose requirements on the removal of a member of a limited liability company. The Procaccianti decision, in part, focused on language contained within the LLC's operating agreement-permitting the removal of any member of the LLC by unanimous decision of the other members-to determine whether or not the expulsion of a member of the LLC was proper. Id. at *3. The Court found "[b]ased upon its interpretation of the relevant provisions of the Operating Agreement . . . it was the intent of the parties to allow for expulsion of a member to occur upon the unanimous decision of the other members" and, therefore, a valid expulsion. Id.
Petitioner is correct in stating that the Mucci court further found that "[t]he trial court was additionally within its discretion in removing [the trustee], based upon his breach of fiduciary duty[.]" Mucci, 666 N.E.2d at 56. This finding, however, was detailed following the court's decision that the trust permitted the beneficiary to remove the trustee by written instrument and, perhaps more noteworthy, the trial court "did not specify that particular ground for [the trustee's] removal." Id.
The removal provision here provides that "[a]ny Trustee may be removed at any time by the other two [] Trustees[.]" Moreover, the removal provision imposes a series of requirements that must be met prior to the removal of a trustee. Specifically, the trust provides that (1) two trustees must agree to remove the third trustee; (2) that agreement must be memorialized by a written instrument; and (3) a majority of the Settlor's issue must also provide written assent to the removal. The removal provision also provides that no trustee may be removed unless there are (1) three trustees immediately prior to removal and (2) there exists at least one or more living issue of the Settlor of full age and legal capacity. A reading of the plain language of the removal provision, therefore, imposes restrictions on the process regarding the removal of a trustee. The trust does not, however, set forth a requirement of cause or fault on the part of a trustee before removal may be effectuated. Accordingly, by the plain language of the removal provision contained within the trust, the Co-Trustees possess the authority-by agreement, through written instrument, and with the assent of a majority of issue-to remove Bank of America as trustee.
This conclusion does not change when the removal provision is examined "with reference to the whole trust." Steinhof, 991 A.2d at 1033. Petitioner points out that-throughout the entirety of the trust instrument-the phrases "uncontrolled discretion" and "for any reason" appear four times throughout the Hannah 1950 Trust. The inclusion of these phrases in the context of payment of net income or the principal of the trust and the omission of these phrases in the removal provision do not necessarily lead to the conclusion that the Settlor intended to impose a "for cause" requirement. Rather, it is evident through the language of the removal provision that the Settlor intended to provide a set of criteria by which the Co-Trustees and issue must abide by before removing a trustee. The Settlor clearly possessed the ability to include a "for cause" requirement in addition to the criteria set forth in the removal provision if he so desired. The trust instrument clearly states that RIHT's position as trustee will be assumed by any successor bank, trust company, or corporation in the event of a sale, merger, or name change. Here, Bank of America has assumed RIHT's role as trustee. There is no language, however, in the trust protecting RIHT from removal as a trustee. Reading the trust instrument as a whole, this Court finds it is clear that the Settlor intended to install RIHT as an original trustee and ensure that a subsequent entity following a merger or sale would continue in this role. Nonetheless, the trust instrument contains no indication that the Settlor intended to prohibit his issue from ever attempting to remove or replace RIHT, or a successor entity, as trustee. Noting our Supreme Court's prior refusal to rewrite or read nonexistent terms into contracts, here too the Court declines to rewrite the trust instrument to include either phrase in the removal provision of the Hannah 1950 Trust. See Takian v. Rafaelian, 53 A.3d 964, 979 (R.I. 2012) (quoting Papudesu v. Med. Malpractice Joint Underwriting Ass'n of R.I., 18 A.3d 495, 499 (R.I. 2011)) ("This Court always refuses 'to read nonexistent terms or limitations into a contract.'"); see also Pearson v. Pearson, 11 A.3d 103, 109 (R.I. 2011) (Court declined to read nonexistent terms and limitations into a settlement agreement).
Petitioner further refers to Michael's Testamentary Trust (n/k/a "Hannah's Trust Under Will")-another trust instrument executed on December 27, 1950-for additional evidence that the Settlor intentionally omitted the phrases "uncontrolled discretion" and "for any reason" from the removal provision. The Court notes, however, that "when that intent can be determined from within the four corners of the [trust], resort to extrinsic evidence is unnecessary and improper[.]" Lazarus, 10 A.3d at 462 (quoting Hayden v. Hayden, 925 A.2d 947, 951 (R.I. 2007)) (internal quotation marks omitted). Here, the plain language contained within the removal provision is not ambiguous; thus, resorting to evidence outside of the four corners of the trust is not necessary or proper. See Steinhof, 991 A.2d at 1033-34.
B Absurd Result
Petitioner asserts that permitting the Co-Trustees to remove it without cause would ultimately lead to an absurd result and ultimately frustrate the Settlor's intent. Petitioner contends that if a no-fault removal is permitted, a number of potentially detrimental occurrences may come to pass. For example, Petitioner postulates that if no-fault removal of a trustee is allowed, then the three trustees will ignore their fiduciary responsibilities and bend to the will of the trust beneficiary or that a trustee, if granted power of attorney by another trustee, may decide to remove one or both of the other trustees. Conversely, Respondents argue that there is no evidence that any of these situations will occur and that the only way they might transpire is if the trustees abandoned their fiduciary responsibilities.
The Court interprets the plain language of the trust giving words "primary, ordinary, and common meaning unless it plainly appeared that they were used in some other sense." Prince, 436 A.2d at 1081. Here, there is no indication that the words used by the Settlor in the removal provision were intended to be used in a different manner than that in which they were used. While the Petitioner argues that permitting a no-fault removal would serve to frustrate the Settlor's intent as written, by injecting language imposing further requirements-in addition to the requirements already set forth in the removal provision-it is just as possible that the Court would misconstrue the intent of the Settlor. See Lazarus, 10 A.3d at 462. Accordingly, as stated above, the Court refuses to deviate from the plain and unambiguous language contained within the Hannah 1950 Trust and insert a for-cause removal requirement when no such requirement is contemplated by the trust instrument.
III Conclusion
For the above reasons, the Court finds that the Respondents may remove Bank of America, N.A. as a Trustee of the Hannah 1950 Trust pursuant to the plain language of the trust instrument. Prevailing counsel shall present an appropriate order consistent herewith which shall be settled after due notice to counsel of record.