Opinion
No. CV 03-0825102
November 15, 2004
MEMORANDUM OF DECISION
This is an action in two counts brought by the plaintiffs, Joseph Ramondetta II and John Ramondetta against the defendant, Salvatore Amenta who in turn responds with a counterclaim. Count one of the complaint sounds in breach of fiduciary duty. The CUTPA claim has been withdrawn. Count three claims breach of the duty of good faith and fair dealing. Defendant's counterclaim sounds in unjust enrichment.
The facts are as follows. Six friends entered into a trust agreement with the corpus of the trust, property in Wethersfield, Connecticut.
The original trust agreement indicates that Salvatore Amenta, Jack Cannarella, Sebastian Ramondetta, Nicholas Cecere, Joseph Ramondetta and Sarino Garafolo, by way of an agreement entitled Trust Agreement dated May 4, 1971, agreed to contribute funds for the purpose of purchasing property known as 132 Silas Deane Highway, Wethersfield, Connecticut. Each contributed $25,000 to the Trust Fund.
Pursuant to this Trust Agreement, Salvatore Amenta was identified as the trustee. There is no provision in the agreement for trustee fees. Amenta managed the trust's asset, a 16,000 sq. ft. commercial building, for nearly twenty years without compensation. Amenta agreed with the trust's original settlors that he would be compensated for his work as trustee when the trust asset was sold because there was no income for much of its life. The beneficiaries of the trust, including Amenta, often had to add money to the general partnership through which the trust acted in order to meet ongoing expenses such as mortgage and taxes.
Plaintiffs were beneficiaries for the last six years of the trust's existence.
Plaintiffs also contest Amenta's payment of accounting fees to Amenta's son, Robert, an accountant, for his sixteen years of work as bookkeeper and accountant for the trust. As trustee Amenta is obligated to maintain the accounts of the trust and is permitted to hire professionals to accomplish that task. Plaintiffs were aware that Robert Amenta was doing all of the accounting for the trust, having met with him on numerous occasions and instructing their own accountants to meet with Robert to review the trust's books. Plaintiffs did not object to Robert Amenta acting as accountant to the trust or complained about the quality of his work.
Amenta presented uncontradicted evidence that he worked 420.5 hours over twenty years on trust business. He seeks $10,000. This comes to $23.00 an hour or $500.00 a year. A trustee is entitled to a reasonable fee absent an express provision in the Trust Agreement to the contrary. See Bissell v. Butterworth, 97 Conn. 322 (1935). There is no provision in the Trust Agreement stating that Amenta was not going to be paid. Amenta had an express agreement with the original settlors of the trust that he would be paid. In 1980 Amenta received a check for $4,000, countersigned by one of the trust's original settlors, Jack Cannarella, for Amenta's work as a trustee since 1971. Amenta received a $4,000 payment, countersigned by Jack Cannarella for Amenta's work as trustee since 1980. There was a reconfirmation of Amenta to be paid during a 1992 meeting of the trust's beneficiaries when the Trust Agreement was amended. Relying on his original agreement and its 1992 reconfirmation, Amenta continued to work as trustee from 1983 until the trust was settled in December 2002.
The original settlors of the trust were close personal friends that did business on an informal basis. Ongoing expenses like mortgage payments and payment of taxes were frequently made after an in person or telephone request. That Amenta did not present a bill for services until the trust was settled is of no moment. For a number of years there was no income to the trust because the trust buildings were unoccupied. There was no money in the trust from which Amenta could be paid. The same situation affected the trust's lawyers, Sabatini and Associates, who were also not paid for years worth of work until the buildings were sold. Amenta's uncontradicted testimony was that because of the cash shortage, he and the original settlors of the trust agreed he would be paid when the trust building was sold and money became available. Union New Haven Trust Co. v. Osterweis, 9 Conn.Sup. 11 (1940) (generally trust fees taken out of the corpus should not be paid until the trust terminates).
Plaintiffs knew Amenta had his own business to run and took time away from that business to attend to the affairs of the trust. In determining what constitutes reasonable compensation, the court may consider nine factors: (1) the size of the estate; (2) the responsibilities involved; (3) the character of the work required; (4) special problems and difficulties; (5) results achieved; (6) knowledge, skill and judgment required of and used by the fiduciary; (7) manner and promptitude; (8) time and service required; (9) and other circumstances which may appear relevant and material to determination. Hayward v. Plant, 98 Conn. 374 (1923).
The trust estate consisted of two commercial buildings with about 16,000 sq. ft. of available space. Amenta had first to supervise refitting the buildings to get their first tenant, the Connecticut Lotto, into the building. Amenta subsequently leased the building to an environmental consulting firm, TRC, and a contractor supply company. In the 1990s the Hartford area's economy slowed nevertheless he pursued opportunities to rent the property on an ad hoc basis.
When the property was vacant, Amenta continually searched for both potential tenants and buyers. He was responsible for fixing and dealing with the problems arising in an older building, i.e. roof repairs, furnace repair, boarding of broken windows, and ground maintenance. He had to deal with the health department over recurring litter problems.
Amenta was responsible for depositing payments from the trust members, overseeing the trust's accounts, paying the trust bills when they came due, and making sure the trust had enough money to do so.
The trust agreement expressly requires that Amenta provide annual accountings of the assets. Robert Amenta, Amenta's son, graduated from Bryant College with a degree in accounting. He worked for Arthur Anderson from 1986 until 1989. Since then he has acted as both bookkeeper and accountant for his family's business, Modern Tires.
Robert Amenta acted as the trust's accountant for sixteen years. In that capacity he kept all the trust's books and accounts and each year prepared both the state and federal tax returns for the trust's partnership. The plaintiffs were aware that Robert Amenta was the trust's accountant. Plaintiffs had their accountants meet with Robert Amenta on more than one occasion to review the plaintiffs' contributions to the trust for tax purposes. Plaintiffs never objected to Robert Amenta acting as accountant to the trust or complained about the quality of his work.
Plaintiffs contend that Robert Amenta should not be paid for the work on their behalf. This contention is based on the claim that Amenta did not tell the plaintiffs Robert Amenta would be paid for his work. Amenta during the 1992 meeting of the trust beneficiaries told them that Robert Amenta would be paid.
As of June 30, 1998, the property had been conveyed out of the trust and into a general partnership. On January 5, 2001, the property was sold to a third party. At that time various parties' bills were paid including bills from attorneys, environmental companies, real estate agents and other professionals. At the time of the closing the plaintiffs contend that Amenta did not inform them that either he or his son were due any funds. The plaintiffs contend at no time during the period from July 1998 through November 2002, did he inform the plaintiffs that he was going to be charging trustee fees. Nor did he send a billing statement or writing. This, however was against almost thirty years of informality in the manner in which the trust responsibilities were handled, that is with a handshake, or verbally. One can assume, since the last time fees were discussed was 1992, that the plaintiffs, who had title transferred to them in 1998, were informed by the original transferors' relatives regarding the fees that attached to their share.
The initial investment by the six original settlors was $25,000 a piece or a total of $150,000. The property sold in 2002 for a gross of $709,000. The plaintiffs own 50% of the property and the defendant Amenta owns 50%. Even the plaintiffs acknowledged the value received for the property was very good.
This court finds that based on the authorities cited which hold that the trust does not have to have language that a fee is to be paid to the trustee; and that a fee of $4,000 was paid on two separate occasions. Looking at the activities the trustee engaged in during the thirty years that the property was in the trust and the last three years when the property was conveyed out of the trust and into a general partnership, the court finds the requested $10,000 a modest amount, well earned by the trustee Amenta.
As for the work done by the Ramondettas to clean up the contamination on the property, the property would not have sold but for the clean up. The Ramondettas were 50% owners. The buyer was paying almost four times what the property was originally purchased for. Over the years the settlors made contributions toward the upkeep of the property. The Ramondettas' father and uncle contributed a total of $131,844.95. Amenta contributed $121,369.54 in addition to his work as trustee.
As for the accounting work done by Robert Amenta over a period of sixteen years, there is no question that Amenta as trustee could hire him to prepare the necessary reports and tax returns. The case cited herein so hold.
On June 30, 1998, the property, i.e. the corpus of the trust, was quitclaimed to Allied Investors II, a Connecticut general partnership and subsequently sold on March 14, 2000. Though the plaintiffs suggest in their brief that there may be statute of limitations problems as to the trustee and accountant fees, no mention is made in the complaint that this is being asserted. It stands as a bear statement in the brief with no statutory citation and no case authority so holding under the facts of this case.
There is also a statement in the plaintiffs' brief that the trust does not continue once the corpus, in this case the property, leaves the trust. A trust does not automatically terminate for lack of a corpus. See Scott on Trust, (4th ed.) § 74. A fiduciary duty does not cease merely because he no longer holds any property.
The plaintiffs have not briefed the count alleging breach of the duty of good faith and fair dealing. However, this court will deal with it. "Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose." (Citation omitted; internal quotation marks omitted.) Habetz v. Condon, 224 Conn. 231, 237 (1992). There is nothing in the actions, conduct and representations of the trustee, Amenta, which rises to the standard enunciated in Habetz for a finding of bad faith and unfair dealing.
Judgment may enter for the defendant, Salvatore Amenta as to counts one and three. Count two has been withdrawn.
As for the defendant's counterclaim, based on the facts found by this court, judgment may enter in the amount of $20,000 for the counterclaim plaintiff, Salvatore Amenta.
Hennessey, J.