Opinion
No. CV 10 6016333S
May 16, 2011
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#101, 105)
FACTS
On November 15, 2010, the plaintiffs, David Price and Timothy Price, filed this action against the defendants, Charles Randall Price (Randall), in his individual capacity and in his capacity as the trustee of the Elaine S. Price Irrevocable Trust (trust), and John Hancock Life Insurance Co. (John Hancock). In their three-count complaint, the plaintiffs allege the following relevant facts. The plaintiffs are the only children of Elaine S. Price, who died on September 5, 2009, at her home in Connecticut. The plaintiffs allege that "upon information and belief," Randall intentionally caused her death. John Hancock issued a life insurance policy on the decedent's life that was effective at the time of her death. The plaintiffs allege that the beneficiary of that policy is the trust; Randall is the sole trustee of the trust; and Randall, David and Timothy are the only beneficiaries of the trust.
The plaintiffs further allege that, pursuant to the terms of the trust, if Randall had predeceased the decedent, the John Hancock policy proceeds would have become assets of the trust and would have been divided into two equal shares, with each share to be held in a separate trust with David as the sole beneficiary of one separate trust and Timothy as the sole beneficiary of the other separate trust. Also, pursuant to the trust provisions, half of the assets of each separate trust were to be distributed immediately to its beneficiary, and the remainder of the assets of each separate trust was to be distributed to its beneficiary when Timothy reached the age of thirty-five. Timothy attained the age of thirty-five on September 28, 2010. "Upon information and belief," Randall has not created the separate trusts.
The basis of the plaintiffs' complaint is that, pursuant to General Statutes § 45a-447(c)(1), the insurance proceeds are payable as if Randall had predeceased the decedent, and the plaintiffs have a right to the proceeds because Randall intentionally caused the decedent's death. In count one, the plaintiffs request a declaratory judgment that: (1) the John Hancock policy proceeds are payable as though Randall had predeceased the decedent; (2) Randall is not entitled to any of the proceeds; and (3) the entirety of the proceeds are to be paid directly to the plaintiffs, individually and in equal shares. In their second count, the plaintiffs claim that, pursuant to General Statutes § 52-484, all parties should be required to interplead concerning their claims to the proceeds of the John Hancock policy. In their third count, the plaintiffs claim that Randall, in his capacity as trustee, breached his fiduciary duties by failing to create the separate trusts, distribute one-half of the insurance proceeds to each separate trust, distribute one-half of the assets of each separate trust to David and Timothy, reasonably invest the assets remaining in each separate trust for the time prior to Timothy attaining the age of thirty-five, and distribute the remainder of the separate trusts to David and Timothy when Timothy reached age thirty-five.
General Statutes § 45a-447(c)(1) provides: "A named beneficiary of a life insurance policy or annuity who intentionally causes the death of the person upon whose life the policy is issued or the annuitant, is not entitled to any benefit under the policy or annuity, and the policy or annuity becomes payable as though such beneficiary had predeceased the decedent."
General Statutes § 52-484 provides: "Whenever any person has, or is alleged to have, any money or other property in his possession which is claimed by two or more persons, either he, or any of the persons claiming the same, may bring a complaint in equity, in the nature of a bill of interpleader, to any court which by law has equitable jurisdiction of the parties and amount in controversy, making all persons parties who claim to be entitled to or interested in such money or other property. Such court shall hear and determine all questions which may arise in the case, may tax costs at its discretion and, under the rules applicable to an action of interpleader, may allow to one or more of the parties a reasonable sum or sums for counsel fees and disbursements, payable out of such fund or property; but no such allowance shall be made unless it has been claimed by the party in his complaint or answer."
Randall, in his individual capacity and as the trustee, filed a motion to dismiss the complaint and a supporting memorandum of law on December 23, 2010. John Hancock filed its motion to dismiss, in which it adopts Randall's arguments, on January 6, 2011. The plaintiffs filed a memorandum in opposition to the motion to dismiss on January 25, 2011.
The motion to dismiss claims that count one and count two are barred by lack of subject matter jurisdiction because the plaintiffs lack standing; that count three is barred by lack of subject matter jurisdiction because the claim is not yet ripe; that the estate or the trust, or both, must be named in this suit; and that defendant is not prevented by statute from collecting funds as trustee.
DISCUSSION
I. COUNT ONE AND COUNT TWO: STANDING
The defendants argue that count one and count two must be dismissed because neither plaintiff is a beneficiary under the John Hancock policy or a representative of the decedent's estate. Specifically, they argue that the trust is the beneficiary of the policy, the trust did not intentionally cause the death of the decedent, and the residual beneficiary of the trust is the decedent's estate, not the plaintiffs. The defendants contend that because the plaintiffs have not filed their claims on behalf of the estate, they have no standing. They claim that the general rule is that only the fiduciary may sue on behalf of an estate, and the two exceptions to that general rule do not apply in this case.
The defendants allege that Paul M. Sterczala has been appointed the administrator of the decedent's estate.
The plaintiffs counter that they are not seeking distribution of the insurance policy proceeds on behalf of the decedent's estate. They claim that, because of Randall's alleged wrongdoing, the proceeds must be distributed in accordance with the terms of the policy and trust as if Randall had predeceased the decedent.
"The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss. Practice Book § 10-31(a)." (Internal quotation marks omitted.) Wilcox v. Webster, 294 Conn. 206, 213, 982 A.2d 1053 (2009).
"It is a basic principle of our law . . . that the plaintiffs must have standing in order for a court to have jurisdiction to render a declaratory judgment . . . A party pursuing declaratory relief must . . . demonstrate, as in ordinary actions, a `justiciable right' in the controversy sought to be resolved, that is, contract, property or personal rights . . . as such will be affected by the [court's] decision . . . When standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue and not whether the controversy is otherwise justiciable, or whether, on the merits, the plaintiff has a legally protected interest that the defendant's action has invaded." (Citations omitted; internal quotation marks omitted.) Steeneck v. University of Bridgeport, 235 Conn. 572, 578-79, 668 A.2d 688 (1995).
"The law governing descent and distribution emanates from the legislature and is purely statutory . . . The legislature has, by statute, carved out exceptions to the statutes governing descent and distribution to deprive an ostensibly rightful heir, falling within the ambit of those exceptions, of an otherwise lawful inheritance." (Internal quotation marks omitted.) Sandford v. Metcalfe, 110 Conn.App. 162, 168, 954 A.2d 188, cert. denied, 289 Conn. 931, 958 A.2d 160 (2008). General Statutes § 45a-447(c)(1) provides: "A named beneficiary of a life insurance policy or annuity who intentionally causes the death of the person upon whose life the policy is issued or the annuitant, is not entitled to any benefit under the policy or annuity, and the policy or annuity becomes payable as though such beneficiary had predeceased the decedent."
The defendants base their argument that the plaintiffs lack standing because they are not representatives of the estate on the insurance policy's provision that the contingent beneficiary was to be the decedent's estate. The policy was, however, assigned to the trust. The original beneficiary designation was revoked, and the beneficiary of the policy is the trust. The plaintiffs are contingent beneficiaries of the trust, and they are, therefore, "proper [parties] to request an adjudication of the issue"; Steeneck v. University of Bridgeport, supra, 235 Conn. 579; of the proper distribution of the insurance proceeds. Additionally, the plaintiffs are the decedent's children and her heirs or next of kin, or both. The plaintiffs have standing.
Consideration of the insurance policy reveals that, at the inception of the policy, Randall was the sole beneficiary and policy owner, and no contingent beneficiary was named. The policy authorizes the policy owner to change the owner and beneficiary and to assign the policy. In May 2005, the decedent signed a document purporting to be a "gift assignment and beneficiary designation," assigning ownership and the right to the policy proceeds to the trust and Randall, as trustee, who also signed the document. See exhibit A, exhibit B and tab one of the defendants' memorandum in support of the motion to dismiss.
As for the defendants' argument that the trust did not intentionally cause the decedent's death, the court will not ignore the reality that, while the trust may be the owner of legal title to the insurance policy proceeds, Randall is the primary beneficiary of the trust. The plaintiffs have alleged that Randall intentionally caused the decedent's death, and pursuant to § 45a-447(c)(2)(C), "the Superior Court may determine by the common law, including equity, whether the named beneficiary is entitled to any benefit under the policy or annuity."
Section 45a-447(c)(2)(C) provides: "In the absence of such a conviction or determination, the Superior Court may determine by the common law, including equity, whether the named beneficiary is entitled to any benefit under the policy or annuity."
Additionally, the plaintiffs contend that the defendants are judicially or collaterally estopped, or both, from contesting the plaintiffs' standing because, an earlier proceeding regarding this matter, the defendants argued to the court that the plaintiffs' claims under § 45a-447 might be brought in Superior Court through an action for declaratory judgment or interpleader, and the court relied on and agreed with those arguments.
Price v. Transamerica Life Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 09 5033535 (July 29, 2010, Peck, J.), appeal filed August 16, 2010, case No. 32591.
"The common-law doctrine of collateral estoppel, or issue preclusion, embodies a judicial policy in favor of judicial economy, the stability of former judgments and finality . . . Collateral estoppel . . . prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties [or those in privity with them] upon a different claim . . . For an issue to be subject to collateral estoppel, it must have been fully and fairly litigated in the first action. It also must have been actually decided and the decision must have been necessary to the judgment." (Internal quotation marks omitted.) Sikorsky Aircraft Corp. w Commissioner of Revenue Services, 297 Conn. 540, 544-45, 1 A.3d 1033 (2010).
In the previous action, Price v. Transamerica Life Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 09 5033535 (July 29, 2010, Peck, J.) [ 50 Conn. L. Rptr. 446], the issue decided was whether the plaintiffs had standing to bring a private cause of action under § 45a-447(c). Thus, the issues of whether the plaintiffs have standing to bring an action for declaratory judgment or interpleader may not have been fully litigated. However, it is not necessary to decide, because judicial estoppel applies.
"[J]udicial estoppel prevents a party in a legal proceeding from taking a position contrary to a position the party has taken in an earlier proceeding. [J]udicial estoppel serves interests different from those served by equitable estoppel, which is designed to ensure fairness in the relationship between parties . . . The courts invoke judicial estoppel as a means to preserve the sanctity of the oath or to protect judicial integrity by avoiding the risk of inconsistent results in two proceedings . . . Typically, judicial estoppel will apply if: 1) a party's later position is clearly inconsistent with its earlier position; 2) the party's former position has been adopted in some way by the court in the earlier proceeding; and 3) the party asserting the two positions would derive an unfair advantage against the party seeking estoppel . . . We further limit judicial estoppel to situations where the risk of inconsistent results with its impact on judicial integrity is certain." (Citations omitted; internal quotation marks omitted.) Association Resources, Inc. v. Wall, 298 Conn. 145, 169-70, 2 A.3d 873 (2010).
In the prior decision, in which the plaintiffs were the same, Randall and John Hancock were defendants, and Transamerica Life Ins. Co. was also a defendant, the court stated that it "agrees" with the defendants' position that the plaintiffs had the potential remedy to "bring a declaratory action in the Superior Court, which has jurisdiction pursuant to General Statutes § 52-29 to `declare rights and other legal relations on requests for such a declaration.'" Price v. Transamerica Life Ins. Co., supra, Superior Court, Docket No. CV 09 5033535. The court also stated: "courts have decided questions arising from § 45a-447(c)(1) by way of interpleader actions."
General Statutes § 52-29 provides, in pertinent part: "(a) The Superior Court in any action or proceeding may declare rights and other legal relations on request for such a declaration, whether or not further relief is or could be claimed. The declaration shall have the force of a final judgment."
All of the elements necessary for judicial estoppel, as set out in Association Resources, Inc. v. Wall, supra, 298 Conn. 169-70, are met: (1) the defendants' argument that the plaintiffs lack standing is clearly inconsistent with their earlier position that a declaratory judgment or interpleader action is an alternate remedy available to the plaintiffs; (2) the court manifested its adoption of this argument by stating "The court agrees"; and (3) it will give Randall an unfair advantage and harm our judicial integrity if the plaintiffs are forced to abandon this lawsuit, after this court has already determined that declaratory judgment or interpleader actions are appropriate in these circumstances. Thus, the plaintiffs have standing to bring this action for declaratory judgment and interpleader, the defendants are judicially estopped from contesting the plaintiffs' standing, and the motion to dismiss count one and count two is hereby denied.
II COUNT THREE IS NOT BARRED BY LACK OF SUBJECT MATTER JURISDICTION BECAUSE THE CLAIM IS RIPE
The defendants argue that count three, breach of fiduciary duty, is not ripe because count three concerns Randall's alleged failure, as trustee, to take certain actions with respect to the insurance policy proceeds, the trust is not yet funded, and the insurance proceeds have not been paid to the trust because the plaintiffs' filing of legal actions has "blocked" payment. They also contend that there is no current conflict of interest due to Randall's status as a beneficiary of the trust because, pursuant to the terms of the trust, a second trustee must be appointed to determine whether distributions to Randall are appropriate.
The plaintiffs respond that count three is ripe for adjudication because Randall, as trustee, has not consented to payment of the insurance proceeds to the separate trusts; and the plaintiffs have already suffered the loss of the income that the funds would have earned if they had been promptly paid in accordance with the trust provisions.
"[R]ipeness is a sine qua non of justiciability . . . An issue regarding justiciability . . . must be resolved as a threshold matter because it implicates [the] court's subject matter jurisdiction . . . If it becomes apparent to the court that such jurisdiction is lacking, the [cause] must be dismissed." (Internal quotation marks omitted.) Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 812, 967 A.2d 1 (2009). A trial court properly grants a motion to dismiss if it determines that the cause of action is "unripe for adjudication." Bloom v. Miklovich, 111 Conn.App. 323, 336, 958 A.2d 1283 (2008).
A trustee has a duty "to secure possession of all the assets of the trust estate." McClure v. Middletown Trust Co., 95 Conn. 148, 153, 110 A. 838 (1920).
In the present case, the plaintiffs have alleged that Randall intentionally caused the death of the decedent, and the trust should, pursuant to § 45a-447(c)(1), be administered as if Randall had predeceased the decedent. The plaintiffs have also alleged that Randall, in his capacity as trustee, has not created the separate trusts, as is required by the terms of the trust, or consented to payment of the insurance proceeds to the separate trusts. Viewing the allegations and evidence in the light most favorable to the plaintiffs, the claim of breach of fiduciary duty is ripe, and the motion to dismiss count three is denied.
III THE ESTATE AND THE TRUST MUST BE NAMED IN THE SUIT
"The purpose of a declaratory judgment action, as authorized by General Statutes § 52-29 and Practice Book § 17-55, is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties . . . Section 52-29(a) permits the Superior Court to declare rights and other legal relations. Similarly, Practice Book § 17-55(1) authorizes a court to render a declaratory judgment if a plaintiff has a legal interest by reason of danger of loss or of uncertainty as to his rights or other jural relations . . . The provision [of Practice Book § [17-55]] that there must be an issue in dispute or an uncertainty of legal relations which requires settlement between the parties means no more than that there must appear a sufficient practical need for the determination of the matter." (Citations omitted; internal quotation marks omitted.) Bombero v. Planning Zoning Commission, 40 Conn.App. 75, 78-79, 669 A.2d 598 (1996).
General Statutes § 52-29 provides, in pertinent part: "(a) The Superior Court in any action or proceeding may declare rights and other legal relations on request for such a declaration, whether or not further relief is or could be claimed. The declaration shall have the force of a final judgment."
Practice Book § 17-55 provides: "A declaratory judgment action may be maintained if all of the following conditions have been met: (1) The party seeking the declaratory judgment has an interest, legal or equitable, by reason of danger of loss or of uncertainty as to the party's rights or other jural relations; (2) There is an actual bona fide and substantial question or issue in dispute or substantial uncertainty of legal relations which requires settlement between the parties; and (3) In the event that there is another form of proceeding that can provide the party seeking the declaratory judgment immediate redress, the court is of the opinion that such party should be allowed to proceed with the claim for declaratory judgment despite the existence of such alternate procedure."
"At common law, a claimant could not initiate an interpleader; Connecticut law provides a statutory innovation . . . [General Statutes] § 52-484, which enables a claimant to be a proper plaintiff to an interpleader action." (Citation omitted.) Triangulum Associates v. Harrison Conference Center of Heritage Village, Inc., Superior Court, judicial district of Waterbury, Docket No. 099881 (July 15, 1991, Langenbach, J.) ( 4 Conn. L. Rptr. 305, 306). Section 52-484 provides: "Whenever any person has, or is alleged to have, any money or other property in his possession which is claimed by two or more persons, either he, or any of the persons claiming the same, may bring a complaint in equity, in the nature of a bill of interpleader, to any court which by law has equitable jurisdiction of the parties and amount in controversy, making all persons parties who claim to be entitled to or interested in such money or other property. Such court shall hear and determine all questions which may arise in the case, may tax costs at its discretion and, under the rules applicable to an action of interpleader, may allow to one or more of the parties a reasonable sum or sums for counsel fees and disbursements, payable out of such fund or property; but no such allowance shall be made unless it has been claimed by the party in his complaint or answer."
In the present case, there "is a substantial question in dispute or a substantial uncertainty of legal relations between the parties"; see Bombero v. Planning and Zoning Commission of Town of Trumbull, supra, 40 Conn.App. 75, 78; because the proper disposition of the insurance proceeds has yet to be determined. The plaintiffs claim rights to the proceeds through the trust, and Randall claims that the residual beneficiary of the proceeds is the estate. Accordingly, the court finds the trust and the estate must be named as additional parties to this suit.
IV WHETHER THE DEFENDANT IS PREVENTED BY STATUTE FROM RECEIVING FUNDS AS TRUSTEE WILL BE DETERMINED IN THE PRESENT ACTION
The defendants argue that the trust is not yet funded and if the insurance proceeds are later paid to the trust, the trust provisions require a co-trustee to be appointed, and that the co-trustee will make all decisions regarding distributions to Randall. The defendants contend that Randal does not, therefore, have a conflict of interest that prevents him from serving as trustee.
The plaintiffs counter that the terms of the trust provide that any co-trustee can be appointed by Randall, he could appoint someone who has already agreed to distribute funds to him, and, therefore, a conflict of interest would arise upon Randall's attempting to appoint a co-trustee.
The record contains a copy of the trust and an affidavit stating that it is a true and accurate copy. Consideration of article eight of the trust provisions reveals that, while Randall would not be allowed to make distributions to himself as a beneficiary, he could appoint a co-trustee with that power. If Randall appoints a co-trustee, that co-trustee will owe a fiduciary duty to all of the beneficiaries, and will be prevented by that duty from distributing the trust assets improperly. "A trustee's duty is to protect the interests of the beneficiaries of the trust by guarding the trust res." New Haven Savings Bank v. LaPlace, 66 Conn.App. 1, 9, 783 A.2d 1174, cert. denied, 258 Conn. 942, 786 A.2d 426 (2001). Randall's qualifications and ability to serve as trustee will be determined by the present declaratory judgment action.
Exhibit A to tab seven of the defendants' memorandum in support of the motion to dismiss.
Tab seven of the defendants' memorandum in support of the motion to dismiss is an affidavit of William J. Britt, who was the estate planning attorney for Randall and the decedent.
CONCLUSION
The motion to dismiss count one and count two is denied because the plaintiffs have standing; the motion to dismiss count three is denied because the claim is ripe; the estate and the trust must be named in this suit, and whether the defendant is prevented by statute from receiving funds as trustee will be determined by this action for declaratory judgment.