Opinion
14-P-164
10-05-2015
MARY-ELLEN KENNEDY v. KIERAN B. MEAGHER & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Background. Katherine E. Bond (Katherine) owned two homes, one in Massachusetts and one in Maine. After she began a romance with Edward A. Bond, Sr. (Bond Sr.), the two built a house together in Folly Point, Gloucester (Folly Point house); per documents creating the Fifty-Six Arnold Trust (Folly Point trust), drafted in 1975 by Robert J. Owens, and executed by Katherine and Bond Sr. in 1976, each owned a fifty percent interest in the Folly Point trust, which owned the Folly Point house. Owens was the trustee of the Folly Point trust. Katherine sold her Massachusetts and Maine homes to help finance the purchase of the Folly Point property, and moved into the house with Bond Sr. in 1976. Katherine and Bond Sr. married in 1977, but not before executing a prenuptial agreement restating each's fifty percent beneficial interest in the Folly Point trust and survivorship interest.
In 1974, Bond Sr. had established a revocable trust (Bond trust), with himself as the lifetime beneficiary of its income with the remainder to his son, Edward A. Bond, Jr. (Bond Jr.), at his death. Owens was also the trustee of the Bond trust. In 1980, three significant events occurred. First, Bond Sr., Katherine, and Bond Jr. executed a new schedule of beneficiaries for the Folly Point trust, in which the old fifty-fifty split between Katherine and Bond Sr. was changed to an arrangement in which Bond Sr. held a fifty-five percent interest and Bond, Jr. held a forty-five percent interest and the remainder interest; Katherine was no longer a beneficiary of the Folly Point trust. Next, Bond Sr. and Katherine terminated their prenuptial agreement, which had identical language to the prior schedule of beneficiaries of the Folly Point trust (i.e., that Katherine was a fifty percent beneficial owner of the Folly Point trust); by doing so, they eliminated inconsistency between the documents. Finally, they amended the schedule of beneficiaries of the Bond trust, which now named Katherine as a lifetime beneficiary of the Bond trust upon Bond Sr.'s death (the remainder, after her death, still went to Bond Jr.). To summarize, in 1980 Katherine's financial situation changed significantly: she no longer had a beneficial interest in the Folly Point trust, which contained a valuable real estate property, but she did have an interest in the Bond trust that, if not revoked, would provide her steady income should Bond Sr. predecease her.
In 1991, Bond Sr. directed Owens to resign as trustee of the Bond trust, and eventually, in 1992, Owens did so, with Kieran B. Meagher replacing him as trustee. Bond Sr. and Katherine remained married, living together in the Folly Point house until Bond Sr. died in 2002. The Folly Point house appreciated in value considerably, with a valuation at Bond Sr.'s death of $6,250,000. The Bond trust was never revoked, and after Bond Sr.'s death, until her own in 2013, Katherine received about $300,000 annually as income payments from it.
In 1979, Meagher, an attorney, joined the law firm of Robert J. Owens Associates, P.C., which eventually became known as City, Hayes & Dissette. Owens left the firm in 1991.
After being told she had no legal right to the Folly Point house, Katherine filed a complaint in 2003 challenging the 1980 change in the schedule of beneficiaries of the Folly Point trust, asserting that the transfer (whereby her interest in the Folly Point trust was extinguished) was void due to lack of consideration. Katherine claimed ownership of the Folly Point house as a result, and also brought several claims for breach of fiduciary duty. Some of the defendants prevailed on summary judgment, while others won at trial, resulting in judgment being entered for the defendants on all counts except one (count III). The judgment also disposed of the counterclaim of Meagher and Bond Jr., as trustees of the Folly Point trust, by denying their request for compensation from Katherine for her use and occupancy of the Folly Point house after Bond Sr.'s death in March, 2002. Katherine appeals from the judgment, as do Meagher and Bond Jr. For the reasons stated below, we affirm.
Katherine was awarded damages on count III: for forging Katherine's signature on a Federal tax return form, Meagher was found liable for $10 in his capacity as executor of Bond Sr.'s estate.
Discussion. Katherine takes issue with certain evidentiary rulings, summary judgment decisions, jury instructions, and the jury's (asserted) disregard of the given instructions.
The first evidentiary issue raised on appeal was the admission of Owens's handwritten notes. As Katherine's case against Owens was supported by (although it did not exclusively consist of) oral testimony, such notes are admissible under G. L. c. 233, § 66.
The rest of Katherine's objections are intertwined. Katherine's sundry causes of action against the defendants shared a common theory of damages: Katherine was harmed only to the extent that what she received (lifetime entitlement to income from the Bond trust) was less than what she allegedly lost due to the defendants' malfeasance (fifty percent beneficial interest in Folly Point trust). At trial, the defendants argued that Katherine ended up receiving valuable tax-free income for many years (which would continue until her death); Katherine countered that she received nothing, because Bond Sr. could have revoked the Bond trust at any time, per its terms. Via a special verdict form, the jury found that although Bond Sr. owed her a fiduciary duty, and breached that fiduciary duty, Katherine suffered no harm from the change in estate plans. This finding is fatal to her claims of error with respect to her claims relating to summary judgment against the defendants, and to her objection to the precise wording of the jury instruction defining the scope of Meagher's fiduciary duty. Cf., e.g., Billings v. GTFM, LLC, 449 Mass. 281, 288 (2007) ("Accordingly, as the burden of proving damages was on Billings, he could recover nothing on this claim even if there had in fact been a breach of duty"). The harm she claimed against each of the other defendants was the same as the harm claimed against Bond Sr., and if she was not harmed by Bond Sr. she was not harmed by the others.
Her argument that the jury did not follow the judge's instructions is without merit.
The only argument that Katherine raises with respect to that critical finding is on an evidentiary point. She asserts that the admission of evidence showing the amounts she received from the Bond trust was prejudicial error. She admits that consideration she received at the time of her agreeing to the change in beneficiaries of the Folly Point trust would be relevant and admissible, but argues that evidence of distributions two decades after she agreed to the change is not probative toward whether at the time of the transaction she received consideration. There was conflicting expert testimony at trial about whether Katherine's interest in the Bond trust -- the one she received a few months after she signed the new schedule of beneficiaries for the Folly Point trust, and that the defendants argued was intended to compensate her for the loss of her beneficial interest in the Folly Point house -- was legally cognizable, and the judge was within her discretion to submit the issue to the jury, along with the evidence of what Katherine in fact received upon Bond Sr.'s death. Consequently, we conclude there is no merit to any of Katherine's claims.
Defendants Meagher and Bond Jr., trustees of the Folly Point trust, are cross appellants with respect to their counterclaim against Katherine for compensation for the fair market rental value of the Folly Point house from Bond Sr.'s death on March 15, 2002, until she vacated the house, or alternatively, reimbursement for various expenses paid by them after Bond Sr.'s death (e.g., mortgage payments). On appeal, they argue that the judge erred in rejecting their theory that upon Bond Sr.'s death, Katherine became a tenant at sufferance, and in failing to award any damages. We are, however, unpersuaded by their argument. She was not a tenant of any kind during Bond Sr.'s life, and Meagher and Bond Jr. have not met their burden of demonstrating that she became a tenant at sufferance upon his death.
The defendants' request for appellate fees and costs is denied.
Judgment affirmed.
By the Court (Berry, Vuono & Rubin, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: October 5, 2015.