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Gray v. Gray

United States District Court, D. New Hampshire

January 15, 2019

Evan W. Gray
v.
Chester L. Gray, III

          Adam M. Hamel, Esq. Ralph F. Holmes, Esq. Roy S. McCandless, Esq. Neil B. Nicholson, Esq. Andrea Jo Schweitzer, Esq.

          ORDER

          JOSEPH A. DICLERICO, JR. UNITED STATES DISTRICT JUDGE

         Evan Gray (“Evan”) brought suit against Chester L. Gray, III (“Skip”), as executor of the estate of Chester L. Gray, Jr., as sole trustee of a trust (the “CLG Trust”) created by Chester, and as co-trustee of a trust (the “BJG Trust”) created Barbara Gray.[1] Evan alleges that Chester, prior to his death, breached his fiduciary duties while he was trustee of the BJG Trust. Evan also alleges that Skip has breached his fiduciary duties as trustee of the CLG Trust.

         Skip filed a third-party complaint against the co-trustees of the BJG Trust, who are himself, Scott Gray (a third brother), and Evan, seeking indemnification for any liability, attorneys' fees, and costs arising from Evan's suit. Skip also seeks a declaratory judgment to enforce certain terms of the BJG Trust. Evan then filed an amended complaint. In his Amended Answer to the Amended Complaint and his Answer to the Third-Party Complaint, Skip alleges a counterclaim and a crossclaim, each with three parts, against Evan, seeking indemnification.

         Evan moves to strike and dismiss Skip's Third-Party Complaint and moves to dismiss Skip's counterclaim and crossclaim. Skip objects.

         Background

         This suit involves three brothers, Skip, Scott, and Evan Gray. In 1996, the brothers' parents, Barbara and Chester Gray, created, respectively, the “BJG Trust” and the “CLG Trust.” In 2011, they restated the terms of their respective trusts by executing the trust documents at issue.

         Barbara and Chester Gray served as the initial co-trustees of both the CLG Trust and the BJG Trust, which were revocable until their respective settlor's death. The CLG Trust includes among its assets valuable real estate located in Grafton and Springfield, New Hampshire.

         1. The Trust Terms

         It is the general purpose of the CLG Trust to maintain and hold the Grafton and Springfield real estate for Barbara and Chester Gray's descendants “as long as is reasonably and prudently possible.” Doc. 15-1 at 5. To that end, the CLG Trust provides for the creation of a “Maintenance Fund” consisting of the real estate and $820, 000, adjusted for inflation, after Chester's death.[2] After all the provisions of the CLG Trust have been satisfied, the remainder of the CLG Trust's assets are to be distributed equally among Skip, Scott, and Evan.

         The BJG Trust has no expressly stated purpose other than to provide for the disposition of Barbara Gray's assets after her death. In addition, Article 2.4.A of the BJG Trust provides the following:

If at the time of the death of my husband and myself, the amount of liquid assets held in the continuing trust for real estate located in Grafton and Springfield, New Hampshire as set forth in my husband's trust is less than [$820, 000 plus calculated inflation], I direct that my trustee distribute from my trust an amount of property that will increase the sums held in said continuing trust of my husband's to [$820, 000 plus calculated inflation].

Doc. 15-2 at 5. The BJG Trust documents require that the remaining trust property be distributed equally among Skip, Scott, and Evan. In short, the BJG Trust must make up any deficit in the CLG Trust's Maintenance Fund that exists “at the time of the death of”[3] Chester and Barbara, and then distribute the remaining money or assets equally among Skip, Scott, and Evan.

         Both trusts contained various contingencies for succession of trustees depending on the order in which Barbara and Chester died and whether any of their children predeceased them. As it happened, Barbara Gray died in 2013. Upon his wife's death, Chester Gray became sole trustee of both trusts. Although the BJG Trust became irrevocable, Chester retained a lifetime interest in it.

         Specifically, as to the BJG Trust, Chester was permitted to receive any income from the trust paid “in convenient installments.” Doc. 15-2 at 4. He was also permitted to receive “from the principal of the trust from time to time such amounts as are in [the] trustee's discretion necessary for his support and maintenance in his accustomed manner of living and for his health care, ” after taking into account any other “resources available to him, ” including the income from the trust. Id. The “power to use principal for [Chester's] benefit shall not be exercised without the consent of an independent trustee or one of [Barbara's] children.” Id.

         Chester remained as trustee of both the BJG Trust and CLG Trust until his death in 2017. Upon their father's death, Skip, Scott, and Evan became co-trustees of the BJG Trust; Skip became sole trustee of the CLG Trust, which became irrevocable upon the death of Chester. Skip was ...


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