BETTY ARMBRECHT v. DACIANO STONE (2023)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

This case involves a dispute over funds held in a trust intended to care for a daughter who was born with Down Syndrome. Sadly, the dispute between the parties resulted in most of the corpus of the trust being spent on attorney's fees rather than on the intended beneficiary. Defendant Edward Stone, as trustee of the O'Connell Family Irrevocable Trust (trust), appeals the decisions of a Probate and Family Court judge (motion judge) denying his motion to stay the judgment and his motion for permission to pay counsel fees from the remainder of the trust assets and a judgment finding him “guilty” of civil contempt. There is no appeal of the judgment, which ordered the remaining trust funds transferred out of the trust forthwith and thereafter terminated the trust. Plaintiff Betty Armbrecht requests that defendant Edward Stone be ordered to pay her appellate legal fees. We affirm the decisions of the motion judge and decline to award legal fees.

Background. The trust was created in 2004 by Vincent and Diocleciana O'Connell to financially support their adult child, Melanie O'Connell, who suffers from Down Syndrome and requires a full-time caretaker as she lacks the capacity for independent living. The trust also provided that after Melanie's lifetime needs had been provided for, any remaining assets were to go to Diocleciana's four brothers: Decio, Edward, Orlando, and Daciano Stone. From the trust's inception until his death in 2014, Daciano served as the sole trustee of the trust.⁴

In 2013, Daciano planned to distribute $480,000 from the trust, which at the time totaled approximately $680,000, to himself and his three brothers. At the time, Vincent and Diocleciana had passed, but Melanie was still alive and in need of significant care. Despite attorneys advising him that the planned distribution was impermissible under the clear terms of the trust, Daciano was insistent that the money be distributed prior to Melanie's death.⁵ To facilitate this distribution, Daciano had $480,000 wired out of the trust's investment bank account into a checking account in the names of Vincent and Betty Armbrecht (Betty). Betty is Daciano's daughter and Melanie's caretaker since 2009.

To prevent the distribution, Betty, who was living with Melanie in Texas at the time, wired the $480,000 out of this checking account into a Texas trust bank account for “The Melanie O'Connell Supplemental Care Trust,” a Texas trust she created for Melanie (Texas trust). Betty ensured that the Texas trust reflected most of the provisions of the former trust, including that the Stone brothers would still inherit any remaining funds after Melanie's death. The transfer of the funds by Betty caused significant turmoil in the family. When Betty refused to return the funds, Daciano filed an action in Superior Court for conversion. Betty in turn filed an equity action in the Probate and Family Court claiming a breach of fiduciary duty, and claims for constructive trust, reformation of trust, termination of trust, and declaratory judgment.

The Superior Court conversion case was stayed while the Probate and Family Court addressed the equity claims. After a six-day trial in the Probate and Family Court, the trial judge made extensive written findings of facts and conclusions of law. The judge found that Daciano breached his fiduciary duties in attempting to transfer the funds from the trust prior to Melanie's death. However, the judge declined to find Daciano breached his fiduciary duty by filing the Superior Court action for conversion. As the trial judge appropriately noted “both parties had clearly acted improperly.” Despite her requested relief,⁶ the judge declined to order Betty's requests for relief because he resolved the issues in a different manner. The trial judge noted:

“Furthermore, the Court declines to award the other relief sought by Betty such as her request to be appointed as successor trustee of the O'Connell Trust ․ as the trust shall forthwith terminate according to the terms of the accompanying judgment. The Court also declines to require the defendants, Edward and the Estate of Daciano Stone, to repay the trust for attorney's fees and costs which they incurred in defending this action and in initiating the conversion action in the Superior Court after Betty transferred the trust funds to a newly established trust account in Texas.”

The trial judge found that Betty had not established a constructive trust but ordered that the funds from the O'Connell Trust “be decanted and poured into the Texas supplemental care trust, and thereafter, the O'Connell Trust, which will no longer contain any assets, should be terminated. ․ Therefore, in accordance with the provisions of the accompanying judgment, all remaining funds held by the O'Connell Trust shall be transferred to the Melanie O'Connell Supplemental Care Trust forthwith.”⁷ Edward, the current trustee, was not found to have breached any fiduciary duties but was ordered to transfer the remaining trust funds to the Texas trust forthwith and thereafter terminate the trust.

The plaintiff filed a motion for additional findings of fact and to amend the judgment to prohibit Edward from paying any remaining legal fees out of the remaining trust funds. At the hearing, from the bench, the trial judge directed Edward to transfer the remaining assets to the Texas Trust. The judge unequivocally told the parties that his earlier decision was clear and that, once he endorsed the order, the trust ended. He explained to Edward's counsel, “And the money, your client, Mr. Stone, whoever was the trustee, has no further ability to handle any of those funds. That money goes right over to the Texas trust. I don't think I could be any clearer.” Later in the hearing, in response to Edward's counsel's again asking him for clarification as to payment for costs incurred in the litigation, the judge underscored his intention, stating: “[M]y order is my order. You're not paying yourself any more fees out of that money, so.” Counsel once more asked the court to reconsider and be allowed to pay reasonable fees out of the remainder of the trust funds. The judge ended the hearing by stating, “Well, I'm going to tell you that that's not what my decision was. So the trust ended. He has no more power. The money goes to Texas. So that's that on that.”

Despite the order, the defendant still did not transfer the monies to the Texas trust. Instead, about one month after this exchange and five months after entry of the judgment, Edward filed a motion to stay the judgment pending a ruling on his recently filed motion for permission to pay counsel fees from trust assets. Betty responded with a complaint for contempt based on Edward's failure to transfer the funds. A second judge of the Probate and Family Court (motion judge) denied the defendant's motions without an evidentiary hearing. And, after a hearing, the motion judge found the defendant guilty of civil contempt for failing to transfer the funds and terminate the trust; he ordered the transfer of funds within fourteen days.

1. Denial of the defendant's motions. On appeal, the defendant did not challenge the underlying judgment but rather claims that the motion judge abused his discretion by denying his motions to stay the judgment and to pay attorney's fees from the remainder of the trust funds.

It is well settled that the judge has wide discretion in determining an award of attorney's fees including consideration of whether the trustee was at fault. See Latucca v. Robsham, 442 Mass. 205, 210 (2004). “An important factor in assessing the reasonableness of fees awarded in probate cases is the size of the estate” (citation omitted). Brady v. Citizens Union Sav. Bank, 88 Mass. App. 416, 419 (2015). In order to prevent the funds from being used or a “great part absorbed by counsel fees,” attorney's fees “are to be awarded on 'strictly conservative principles'” (citations omitted). Id. The trial judge is in the best position to make this assessment.

Here, the defendant's counsel did not timely file a motion for relief from judgment and for attorney's fees. A motion to amend or alter the judgment must be filed no later than ten days after the entry of judgment. See Mass. R. Civ. P. 59 (c), 365 Mass. 827 (1974). Here, the judgment issued on May 28, 2020; the motion to pay attorney's fees was filed on October 13, 2020, and the motion to stay the judgment was filed on December 14, 2020.

Moreover, in his request for findings and rulings in the Probate and Family Court, the defendant did not seek an award of attorney's fees to be paid by the trust. This failure is particularly notable where “[w]hat constitutes a reasonable fee is a 'question of fact for the judge.'” Matter of the Trusts Under the Will of Crabtree, 449 Mass. 128, 142 (2007), quoting McMahon v. Krapf, 323 Mass. 118, 123 (1948).

The motion to stay was not timely and therefore was properly denied. As to the motion to pay attorney's fees from the trust, under the particular circumstances presented here, we conclude that the motion judge did not abuse his discretion in denying the motion. “[A] judge's discretionary decision constitutes an abuse of discretion where we conclude the judge made 'a clear error of judgment in weighing' the factors relevant to the decision such that the decision falls outside the range of reasonable alternatives” (internal citation omitted). Franzosa v. Franzosa, 98 Mass. App. Ct. 179, 182 n.5 (2020), quoting L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014).

2. Complaint for civil contempt. Edward also argues that the motion judge abused his discretion by finding him guilty of civil contempt for failing to transfer all funds from the trust to the Texas Trust. “We review the judge's ultimate finding of contempt for abuse of discretion, ․ [the] underlying conclusions of law de novo and [the] underlying findings of fact for clear error.” Commercial Wharf E. Condominium Ass'n v. Boston Boat Basin, LLC, 93 Mass. App. Ct. 523, 532 (2018).

A defendant can be found guilty of civil contempt if there is “clear and convincing evidence of disobedience of a clear and unequivocal command.” In re Birchall, 454 Mass. 837, 853 (2009). The judgment, which required the transfer of funds to the Texas trust, was clear and unequivocal, and we are not persuaded by Edward's arguments that the order was unclear because it did not mention payment of attorney's fees. Edward's disobedience of that order is also undoubted. Accordingly, the motion judge did not abuse his discretion by finding Edward guilty of civil contempt.

Conclusion. We affirm the orders denying the motions to stay the judgment and to pay attorney's fees from trust assets, and the judgment of contempt. We decline to award appellate attorney's fees.

So ordered.

FOOTNOTES

4.   We refer to the O'Connells and the Stones by their first names to avoid confusion.

5.   Daciano had no expertise in medical training or Down Syndrome and did not consult any medical expert before deciding that Melanie would not live much longer and would therefore not need much more financial support. At oral argument, counsel confirmed that Melanie is still alive.

6.   Betty requested that she be appointed trustee of the O'Connell Trust, provided with a detailed accounting of the funds, that Edward personally reimburse the trust for funds withdrawn to pay attorney's fees and costs, and that both Edward and Daciano's estates forfeit their interests in the trust and repay the trust for attorney's fees that they had paid with trust funds.

7.   Finally, the trial judge found that the attempt by Daciano to amend the trust was invalid and improper.