Ann Marie Castle et al. v. Donald Dimugno (2013)

MEMORANDUM OF DECISION

FACTS AND PROCEDURE:

The defendant, Donald Dimugno, is the son of Mary Dimugno who established the Mary Dimugno Revocable Trust (MD Trust) and Donald Dimugno (hereinafter also “Donald”), acted as trustee of this Trust as of October 18, 1995 forward.   He was de facto trustee even though he may not have had a formal appointment as such.   In all particulars he acted as Trustee for the Trust.   Mary Dimugno, who technically remained trustee, testified in this case and is 100 years old.   Subsequent to Donald Dimugno acting as trustee, he was later appointed formally as trustee as a successor to Mary Dimugno by his own appointment dated July 20, 2011, plaintiff's exhibit 8, and claimed falsely in paragraph 3 that Mary Dimugno “has become incapable of acting as trustee of the Trust.”   This is contrary to several witnesses who believed that she understood the duties of a trustee and had the wherewithall to act as same.   Paragraph 3 was clearly an effort by Donald to make himself a trustee.   He was later removed as trustee and his niece, Ann Marie Castle, was appointed as trustee of the Trust in 2011, prior to which Donald Dimugno was charged with maintaining the assets of the Trust, de facto, if not formally until July 20, 2011.   When he finally filed with the probate court accountings on or about June 14, 2012, after repeated requests to do so, see exhibits 9 through 12, he listed himself as trustee, and the accountings were for January 1, 2006 to December 31, 2009.   Donald Dimugno clearly believed he was trustee from 1995 forward until he was removed and acted as a trustee even though he may not have technically or formally been named as such until 2011.   The defendant has cited in his original brief that:  “The Court cannot decide this case on a basis which was neither pleaded nor litigated.  Oxford House at Yale v. Gilligan, 125 Conn.App. 464, 10 A.3d 52 (2010).”

However, the issue of who was trustee and who had the power of attorney and the other issues, facts and findings in this case were in fact litigated over eight days.   Moreover, the Court should note that there was no request to revise the complaint, no motion to strike, summary judgment or any other motions directed to the complaint.”

Between 1995 and 2011, Donald maintained the power of attorney for his mother, Mary Dimugno (hereinafter also called “Mary”).   He had a durable, limited power of attorney, plaintiff's Exhibit 6, commencing October 18, 1995, and a durable, unlimited power of attorney, plaintiff's Exhibit 7, executed on February 9, 2009.   In short, he was clearly acting as trustee from 1995 until 2011, and he was formally appointed as power of attorney and served as such from October 18, 1995 until 2011 (see Exhibits 6 and 7).   At the same time that Mary's trust was created on October 18, 1995, a revocable trust was established for her husband, Anthony Dimugno (hereinafter also called “Anthony”).   When Anthony died, Donald took over as trustee of the Anthony Dimugno Trust.

While Donald was acting as trustee, he did not account to any of the beneficiaries of the Trust, including his mother, and the heirs of the Trust, namely, the grandchildren of Anthony and Mary. Moreover, according to Mary's testimony, which the Court believes and which was not refuted by Donald, she and Donald had a joint bank account which was to be used only to pay her bills and not his.   She was to give gifts from that account and he was not.   She also denied that Donald had painted or repaired her house.

Donald was removed from the Mary Dimugno revocable trust on July 20, 2011, the same day he appointed himself as successor trustee, and the plaintiff, Ann Marie Castle, was appointed as the successor trustee to Donald.   She learned upon taking over the Trust that over the course of the time that Donald was trustee and had a power of attorney he had breached his fiduciary duties.   He is alleged to have commingled the assets of the Mary Dimugno Trust (hereinafter the “MD Trust”), with his own assets, that he used the Trust assets for his personal expenses and gain, he hid the assets of the Trust and he improperly managed the Trust assets that were in his possession.   In Count One of the complaint, the plaintiff has claimed that Donald breached his fiduciary duty as trustee and as power of attorney and has caused assets that were rightfully belonging to the MD Trust to be taken, removed, commingled and converted to his own use.   The plaintiff claims damages for the Trust as a result of Donald's alleged breach of fiduciary duty.

Count Two of the complaint alleges that Donald violated CGS Sec. 52–564 which is the Civil Theft Statute by converting the Trust assets to his own benefit and in Count Three the plaintiff alleges that the defendant, Donald, committed fraud upon Mary and the beneficiaries of the Trust by concealing from them and from his mother, Mary, that he was taking assets that belonged to her or the Trust.   Various special defenses were filed by Donald, and the Court allowed the filing of an amended answer and special defenses near the end of the trial.   The first special defense is that Donald was operating under either a limited and/or a durable power of attorney dated, respectively, October 18, 1995 and February 9, 2009.   The second special defense is that Donald was not intellectually competent of acting as a fiduciary in this matter.   The third special defense is violations of the Statutes of Limitations.

Trial was held before this Court for eight days with a host of witnesses and exhibits from April 23, 2013 to May 9, 2013, inclusive;  some transcripts were ordered and produced and briefs have been filed.

STANDARD OF REVIEW:

“The plaintiffs in a civil case and defendants in their Special Defenses, sustain their burden of proof as to any essential element in their cause of action if the evidence, considered fairly and impartially, induces in the mind of the trier, a reasonable belief that it is more probable than otherwise that the facts involved in that element are true.”  Busker v. United Illuminating Co., 156 Conn. 456, 458 (1968).   This is also known as proof by a preponderance of the evidence.

In addition, this Court evaluates the credibility of the witnesses based upon their appearance and demeanor on the witness stand, the consistency or inconsistency of their testimony, their memory or lack thereof of certain events, whether they were candid and forthright or evasive and incomplete, their manner in responding to questions and their interest or lack of interest in the case as well as the exhibits in the case.

Also, the Court evaluates general credibility on the basis of other testimony in the case, as well as documents in evidence as to their consistency or inconsistency with other evidence.

The burden is on the plaintiffs to prove their allegations by a preponderance of evidence.   The burden is on the defendants to prove their Special Defenses by a preponderance of the evidence.

ISSUES AND FINDINGS:

1. Credibility:  Several witnesses testified in this case, and the Court makes the following findings as to their credibility:

1.  The first witness was James Davis IV, a financial advisor and investment manager for Capital Planning Consultants.   Starting in 1995 one of his clients was the Mary Dimugno Irrevocable Trust at which time Mary was the Trustee.   He (Davis) did investments through Charles Schwab.   He also opened an account for the Anthony Dimugno Trust.   He seemed to be somewhat confused but honest although he was primarily worried about his own potential personal liability stemming from the transactions in which he was involved regarding the MD Trust.   He was somewhat naive because he believed that Mary was still the trustee from 1995 through 2010, but, nevertheless, he met with Donald more than he did with Mary. He did testify that there was no evidence of incapacity on the part of Donald and that he, Davis, “didn't have to explain to Donald anymore than anyone else;  Donald wasn't confused and was capable of making decisions, he was fully competent and understood the choices.”

2. Ann Marie Castle.   The Court found her to be honest and forthright in her answers and was very specific in describing what she did not know as well as what she did know.   She was a very credible witness.

3. Attorney Paul Czepiga.   The Court found him to be lacking in credibility.   He showed a lack of attention to detail as to certain documents, and he indicated that he relied totally on Donald's representations as trustee even though Mary had not formally appointed him as far as Attorney Czepiga knew.   He was honest, but the way he conducted his representation of Mary and Donald seemed less than capable.   What was especially troubling, although this cannot be directed to Attorney Paul Czepiga, but can be directed to his partner, Attorney Daly;  that when Ann Marie and her cousin, concerned about the way Donald was handling the Trust and not getting sufficient response to their questions of Donald, went for advice to Attorney Daly, Attorney Daly did not at the time reveal that his office, with Attorney Czepiga, represented Donald, which would appear to be a conflict of interest.

4. Attorney George B. Bickford.   The Court found him to be knowledgeable, honest and very credible in both his background and his testimony.   He was a very credible witness.

5. Dr. Karen Goldfinger, Ph.D., was not an impressive witness.   Her main contribution was that she had initiated an adult intelligence test to Donald.   Her evaluation based on a clinical test done by others found an IQ of Donald to be between 70 & 79, which she stated was below average.1  However, the methods of testing and her testimony were at the very least, questionable.   Other than that, her testimony wasn't that valuable because she stated that she could not make a determination as to whether Donald could function as a fiduciary.   She admitted that she did not take a listing of what medication Donald was using or even whether he had taken his medication the day she interviewed him.   She admitted that she didn't ask him about the probate situation, his job description, whether he had graduated from high school and knew nothing of his educational background.   She did admit that an article by Donald (plaintiff's Exhibit 1) which had been published was very well written and articulate.   She could not testify, she indicated, as to his capability to perform under a power of attorney or as a trustee.   She was not a credible witness.

6. Dr. Harry Morgan, a psychiatrist specializing in geriatrics, was a credible witness and because of his background and professional ability he impressed the Court as a better witness as to the capabilities of both Mary and Donald.   He was a credible witness.

7. Attorney George Bickford;  his testimony was interrupted but he appeared to this Court to be an excellent witness, knowledgeable, very competent and totally honest.2

8. Mary Dimugno.   She was very honest and understood the questions posed to her.   She was a credible witness.

9. Sharlene Karanian, a certified public accountant;  she was honest in her testimony, but the accountings she performed were based upon checks that were furnished to her by Donald.   Although honest and candid, she did not add much important information in her testimony.

10. Katherine Dimugno;  she was married to Donald from 1979 to 2005.   As a witness she was very nervous, she was clearly biased towards Donald and was trying to portray him as someone who could not keep business records or checkbooks and that he had a limited ability;  although she now knew that he was taking money from the Trust estate for his own personal use, her testimony was basically worthless.

11. William Driscoll.   He seemed honest and credible although he also seemed to favor Donald.   His only contribution to the case was his testimony that Mary said to William's mother, in regard to William's dental bill, why don't you help William like I'm helping Donald with his dental bill.   However, that is all he knew and although this Court does not have any reason to discredit him, he could not testify as to how much, if any, Mary was helping Donald with his dental bill.

12. Kathleen Donnelly.   She is a cousin of Ann Marie and the daughter of Dorothy Dimugno Lee. She is a CPA. The Court found her to be honest and credible.

13. Donald Dimugno.   The Court has no opinion as to his credibility as a witness.   Although he was present during the entire trial, he chose not to testify.   Therefore, the only way to determine credibility of Donald is based upon the findings of fact in this case, that he hid the assets, commingled them with his assets, used them for his own use, etc., of the Trust and he improperly managed the Trust assets that were in his possession.   The plaintiff has claimed that Donald breached his fiduciary duty as trustee and as power of attorney and has caused assets that were rightfully belonging to the MID Trust to be taken, removed, commingled and converted to his own use.   The plaintiff claims damages for the Trust as a result of Donald's alleged breach of fiduciary duty.

2. Is Donald Dimugno liable on the First Count of Breach of Fiduciary Duty?

The short answer is yes.

There was a relationship between Mary and Donald, mother and son, and he was the acting trustee and had a power of attorney to act on her behalf;  the relationship was characterized by a unique degree of trust and confidence.   Mary trusted her son Donald to handle her financial affairs;  Donald had superior knowledge, skill, and expertise, as to the trust and the powers of attorney because he was representing Mary in dealing with the trust and was representing her under the powers of attorney so he had superior knowledge and skill to the extent that he knew more about the trust and knew more about her assets because he was handling them.   The same is true of his expertise because he was involved in representing her.   He was under a duty to represent her interest and his breach of that duty caused harm to Mary Dimugno as will be outlined further.

3. Is Donald Dimugno liable on Count Two, civil theft?

The short answer is yes.

Civil theft has been defined as Larceny under the criminal statute of CGS Sec. 53a–119, which states, in pertinent part:  “A person who commits larceny, when with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner.”

The actions of the defendant, Donald Dimugno, taking money out of the trust of Mary Dimugno and using it for himself amounts to larceny as described above, which amounts to civil theft.³

4. Is the defendant liable under Count Three for fraud?

The short answer is yes.

Theft certainly is a basis for a conclusion of fraud.   Donald made false representations as to what was happening with the trust money and the assets of Mary by telling her, in effect, that everything was fine and he was discharging his duties properly as acting trustee and under powers of attorney.   He obviously deceived her, and contrary to her wishes, he stole her money and assets.   Accordingly, that everything was fine and that he was acting properly was untrue and Donald knew it was untrue;  the statements of deception were made to induce Mary to rely upon them and were made to induce Ann Marie Castle and Kathleen Donnelly to rely on his allegations that everything was fine with the trust and under the powers of attorney and they should not become involved.   Finally, these deceptive acts and false statements on which the above three individuals relied, were to their injury.

SPECIAL DEFENSES:

The defendant has filed three special defenses, the last one with the permission of this Court toward the end of the trial.

1. The first special defense is rejected.   It claims that the defendant operated under either a Limited Power of Attorney dated October 18, 1995 and/or Durable Power of Attorney dated February 9, 2009.   Even if that is true, it does not permit the defendant from taking the actions/inactions he took under the powers of attorney.   As stated above, he had no right to divert Mary Dimugno's assets to his own use, fail to make the proper accountings and conduct himself as he did in procedures and actions that were inimical to Mary Dimugno's interest.

2. The second special defense claims that Donald Dimugno was not intellectually competent in acting as a fiduciary in this matter.   First, for the reasons stated above, he was competent to act as a fiduciary.   There was ample evidence from Mr. Davis, from Doctor Morgan and Attorney Bickford that he, Donald, fully understood the actions he was taking.   His IQ was not so low that it made him unable to competently act as a fiduciary.

3. The third special defense is a claim of violation of the Statutes of Limitations.   However, there was ample evidence from Ann Marie Castle and Kathleen Donnelly, her cousin, who this Court believes to be credible witnesses that they tried to find out information about the way in which Donald was conducting the Trust, and he often rebuffed them.   He made every effort to conceal the conditions of the Trust from them and deliberately hid the facts of his improper actions from them all in an effort to prevent them from learning that as beneficiaries they had a case against him.

CGS Sec. 52–5 95 reads as follows:  “Fraudulent Concealment of Cause of Action.”  “If any person, liable to action by another, fraudulently conceals from him the existence of the cause of such action, such cause of action shall be deemed to accrue against such person so liable therefor at the time when the person entitled to sue thereon first discovers its existence.”

This means that because of the concealment by Donald, the Statutes of Limitations were tolled until July 20, 2011 when Ann Marie Castle became trustee and first learned of the actions/inactions and wrongful conduct of Donald which gave rise to the present lawsuit.   The Statute of Limitations, therefore, began to run on July 20, 2011, suit was brought April 25, 2012, in less than one year, and, therefore, the Statutes of Limitations have not been violated.

DAMAGES:

1.  Donald was representing Mary in dealings with James Davis IV, the financial consultant of Capital Planning Consultants (CPC) as the financial advisor to the trust and to make recommendations as to Mary's stock holdings.   Mr. Davis testified, and the Court believes him, that between 1996 and 2005 Donald Dimugno took from the Trust's Schwab account $124,555, which went into the bank account of Donald at Webster Bank. Donald never accounted for that money to the extent of providing bank statements or bank records, and as Attorney George Bickford testified, the plaintiff's expert witness whom the Court believes, the burden was on Donald Dimugno to account for that $124,555.   See testimony of George Bickford.

2. The Court has reviewed the exhibits in this case and finds them filled with instances where money, based on Donald's own accountings to the probate court in 2012, went to him.   See Schedule A. Schedule A shows that he not only commingled Mary's funds with his own, but that he took money for his own use without authority to do so and the money he took improperly totals $156,440.63.4

This, plus $124,568 he took from Mary's account with Schwab totals $281,008.63.

CONCLUSION:

Accordingly, on Count One, breach of fiduciary duty, the Court finds the defendant liable by clear and convincing evidence in the amount of $281,008.63.

The Court further finds that the defendant is liable for civil theft in the initial amount of $281,008.63, and under the statute the Court has the discretion to triple that amount.   Therefore, the defendant is liable under this count in the amount of $843,025.89.

The Court finds the defendant liable under the Third Count for fraud and assesses damages at $281,008.63.

Accordingly judgment is entered on the first count for $281,008.63, on the second count for $843,025.89 and on the third count for $281,008.63.

Judgment against the defendant is so ordered.

Rittenband, J.T.R.

Note:  The Court would like to commend both counsel for doing an excellent job representing their clients.   The Court is fully aware of the difficulties in this case, particularly those facing Attorney Sweeney.   It was a complex case, and both attorneys acquitted themselves very well.   Attorney Brignole waived his reply brief and Attorney Sweeney has filed his.

Note:  The plaintiff, if she seeks an award of attorneys fees should file an affidavit regarding same and schedule a hearing for argument and evidence regarding attorneys fees.

SCHEDULE A

The Court has reviewed the exhibits to determine what damages should be assessed against the defendant and looked to the accountings filed by Donald Dimugno with the probate court both as trustee and as power of attorney.   In reviewing the following, it should be remembered that Mary Dimugno in her testimony, which the Court believes, said that her son, Donald, never did any repairs or maintenance to her house;  she further stated that he was never authorized to give gifts to himself.   It also should be noted that where it says “cash to Mary and Donald” the Court has charged Donald with one-half of the amount listed.   These are full exhibits and are documents signed and filed by the defendant, Donald Dimugno.

A. The following amounts were spent for Donald as trustee of the Mary Dimugno Irrevocable Trust:

Exhibit 9 gift to Donald 1,000.00

Dental bill for Donald 15,000.00

Exhibit 10 Labor by Donald 10,203.00

Christmas Gift 700.00

Exhibit 11 Donald's bills 6,916.46

Labor by Donald 1,225.00

Cash to Mary and Donald 3,175.00 (1/2)

Exhibit 12 Christmas gift 1,000.00

Labor 2,120.00

Donald's bills 4,770.36

Cash to Mary and Donald 2,435.00 (1/2)

Exhibit 13 Cash to Donald 11,000.00

Cash to Mary and Donald 2,375.00 (1/2)

Donald's bills 5,637.39

Exhibit 14 Cash to Mary and Donald 1,300.00 (1/2)

Chippendale House owned by Donald 1,010.33

Cash to Donald 2,400.00

Donald for snow removal 2,000.00

Donald's bills 8,571.64

TOTAL:  71,841.18

B. As Power of Attorney:

Exhibit 15 Cash to Mary and Donald 2,625.00 (1/2)

Christmas gift to Donald 1,000.00

Massiro Landscaping for

Donald's house 2,803.70

Donald's dental work 15,000.00

The Court is well aware that he charged money for his dental bill as trustee for the same amount but does not know whether the total was $30,000 or it's a duplicate;  but in any case, he took that money out.

Exhibit 16 Christmas gift 700.00

Massiro Landscaping for Donald's house 67.10

Cash to Mary and Donald 2,225.00(1/2)

Labor on house 10,453.00

Exhibit 17 Cash to Mary and Donald 3,175.00 (1/2)

Labor 450.00

Donald's bills 6,916.46

Exhibit 18 Cash to Mary and Donald 2,435.00 (1/2)

Christmas gift 1,000.00

Labor 2,000.00

Labor 120.00

Donald's bills 5,160.96

Exhibit 19 Cash to Donald 11,000.00

Cash to Mary and Donald 2,375.00 (1/2)

Labor 1,250.00

Donald's bills 5,636.89

Exhibit 20 Cash to Mary and Donald 700.00(1/2)

Cash to Donald 2,400.00

Donald for snow removal 1,000.00

Donald's bills 2,857.40

Anthony's Trust 1,249.00

TOTAL 84,599.45

Grand total from trust and as power of attorney 156,440.63

FOOTNOTES

FN1. In the state Supreme Court case of State v. Sharon Patterson, 18868, June 18, 2013, 2013 WE 2631718 (Conn.), the Court found “the defendant possesses an IQ of 61.   This score places her within the bottom one-half of one percent of the population.   Due to this cognitive disability, the defendant did not know that withholding liquids could cause the victim to die.   The defendant did, however, generally understand that depriving someone of fluids can cause dehydration ․” (Emphasis added.)   The defendant was convicted of criminally negligent homicide, two counts of risk of injury to a child and two counts of cruelty to persons.   The Court held that a not guilty verdict on a charge for First Degree Manslaughter ․ did not necessarily preclude conviction on a charge for criminally negligent homicide.   Her diminished mental capacity did not preclude conviction for cruelty to persons arising out of defendant's act of depriving child victims of liquids, resulting in child's death from dehydration ․ defendant intentionally withheld liquids from victim.”.  FN1. In the state Supreme Court case of State v. Sharon Patterson, 18868, June 18, 2013, 2013 WE 2631718 (Conn.), the Court found “the defendant possesses an IQ of 61.   This score places her within the bottom one-half of one percent of the population.   Due to this cognitive disability, the defendant did not know that withholding liquids could cause the victim to die.   The defendant did, however, generally understand that depriving someone of fluids can cause dehydration ․” (Emphasis added.)   The defendant was convicted of criminally negligent homicide, two counts of risk of injury to a child and two counts of cruelty to persons.   The Court held that a not guilty verdict on a charge for First Degree Manslaughter ․ did not necessarily preclude conviction on a charge for criminally negligent homicide.   Her diminished mental capacity did not preclude conviction for cruelty to persons arising out of defendant's act of depriving child victims of liquids, resulting in child's death from dehydration ․ defendant intentionally withheld liquids from victim.”

FN2. Mr. Bickford testified on May 1, 2013, page 64, that Donald had a responsibility to account for the money and that if the money went to him then he has to show that it went to his mother or was converted for some other purpose.   If in fact he cannot show what he did with the funds, the presumption is that it was converted in a civil conversion, which, in effect, is a theft..  FN2. Mr. Bickford testified on May 1, 2013, page 64, that Donald had a responsibility to account for the money and that if the money went to him then he has to show that it went to his mother or was converted for some other purpose.   If in fact he cannot show what he did with the funds, the presumption is that it was converted in a civil conversion, which, in effect, is a theft.

FN3. In the case of Stuart v. Stuart, 297 Conn. 26 (2010), the Connecticut Supreme Court held that the standard of proof for a claim for treble damages under the Civil Theft Statute is by a preponderance of the evidence.   That has certainly been met in this case..  FN3. In the case of Stuart v. Stuart, 297 Conn. 26 (2010), the Connecticut Supreme Court held that the standard of proof for a claim for treble damages under the Civil Theft Statute is by a preponderance of the evidence.   That has certainly been met in this case.

FN4. His own accountings contributed to his liability in this case..  FN4. His own accountings contributed to his liability in this case.

Rittenband, Richard M., J.T.R.