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Gray v. Gray

United States District Court, D. New Hampshire

December 9, 2019

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

          ORDER

          JOSEPH A. DICLERICO, JR. UNITED STATES DISTRICT JUDGE

         As discussed in the court's prior orders, this case involves disputes among Chester and Barbara Gray's three children, Skip, Scott, and Evan Gray.[1] Evan brought suit against Skip as executor of the CLG Estate, as sole trustee of the CLG Trust, and as co-trustee of the BJG Trust. In his Amended Complaint, Evan alleges that Chester, prior to his death, breached his fiduciary duties while he was trustee of the BJG Trust (Counts 1 and 2). Evan brings Counts 1 and 2 in his capacity as a trustee of the BJG Trust and in his individual capacity. Evan sues Skip in Skip's capacity as executor of the CLG Estate.[2]

         Skip filed counterclaims, [3] the “CLG Estate Counterclaims, ” which were brought in his capacities as executor of the CLG Estate and trustee of the CLG Trust. Doc. 36. The CLG Estate Counterclaims are for indemnification (Count I) and for a declaratory judgment regarding the BJG Trust's “pour over” provision, Article 2.4.A (Count II).

         Skip moves for summary judgment in his favor on Counts 1 and 2 of Evan's Amended Complaint to the extent Evan brought Counts 1 and 2 in his individual capacity. Additionally, Skip moves for summary judgment in his favor as to Count II of the CLG Estate Counterclaims, arguing that he is entitled to relief on the merits of that claim and that Evan cannot prevail on his affirmative defense of equitable estoppel, which he pled as the Fifth Defense to Count II.

         Evan opposes partial summary judgment. Scott, who in his capacity as a co-trustee of the BJG Trust is a counterclaim defendant as to the CLG Estate Counterclaims, did not file an opposition to Skip's motion for summary judgment.[4]

         Standard of Review

         Summary judgment is appropriate when the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Faiella v. Fed. Nat'l Mortg. Assoc., 928 F.3d 141, 145 (1st Cir. 2019). “A genuine issue of material fact only exists if a reasonable factfinder . . . could resolve the dispute in that party's favor.” Town of Westport v. Monsanto Co., 877 F.3d 58, 64-65 (1st Cir. 2017) (internal quotation marks and citation omitted).

         Background

         A. BJG Trust & CLG Trust

         In 1996, Chester and Barbara Gray each created a trust. Doc. 65-4 (creating the 1996 CLG Trust); Doc. 65-4 (creating the 1996 BJG Trust). The two trusts reserved the right of the grantors (Chester and Barbara) to revoke or modify the trusts. Doc. 65-5 at 22; Doc. 65-4 at 22.

         Between 2010 and 2011, Attorney Nicholas Harvey served as Chester's and Barbara's estate planning counsel. Chester, who was a retired lawyer, paid particular attention to the details of the estate plans. Ultimately, Attorney Harvey prepared two trust documents, which Barbara and Chester executed in 2011: the “First Amendment and Complete Restatement of the Chester L. Gray, Jr. Trust of 1996” and the “First Amendment and Complete Restatement of the Barbara J. Gray Trust of 1996, ” which have been referred to throughout this litigation as the CLG Trust and the BJG Trust, respectively.

         Barbara and Chester served as the initial co-trustees of both the CLG Trust and the BJG Trust, which were revocable until their respective settlor's death, at which point they became irrevocable under their provisions. Among the assets included in the CLG Trust is real estate located in Grafton and Springfield, New Hampshire.

         The CLG Trust exists, in part, to hold and maintain the Grafton and Springfield real estate for Barbara and Chester's descendants “for as long as is reasonably and prudently possible.” Doc. 62-3 at 4. To that end, the CLG Trust provides that, after Chester's death, the real estate will be held in a Continuing Trust, which shall exist until certain conditions outlined in Article 2.2.A(2)-(4) of the CLG Trust are met.

         In addition, after Chester's death, the CLG Trust provides for the creation of a “maintenance fund” for the real estate, which is to be funded with assets valued at $820, 000 adjusted for inflation. After all of the CLG Trust provisions have been satisfied, the remainder of the CLG Trust's assets are to be distributed equally among Barbara and Chester's three sons, Skip, Scott, and Evan.

         The BJG Trust provides for the management of Barbara's assets before and after her death. Barbara died on April 9, 2013. Following Barbara's death, Chester became sole trustee of both trusts. Chester remained as trustee of both the BJG Trust and the CLG Trust until his death on April 26, 2017.

         The BJG Trust includes provisions that became effective after the death of both Barbara and Chester. One of the principal provisions of the BJG Trust is Article 2.4.A which provides:

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 adjusted for inflation], [5] 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 adjusted for inflation].

Doc. 62-4 at 4. The “remainder of the trust property” is to be distributed equally among Skip, Scott, and Evan. Id.

         After Chester's death, Skip, Scott, and Evan became co-trustees of the BJG Trust, and Skip became sole trustee of the CLG Trust. Skip petitioned the probate division of the New Hampshire Circuit Court to open a probate administration and appoint him to administer the CLG Estate. The New Hampshire court granted Skip's petition for estate administration and appointed him Executor on June 14, 2017.

         B. Pre-Litigation Correspondence

         Skip originally retained Attorney Catherine Richmond of Stebbins Bradley, PA, to represent him as fiduciary of the CLG Trust and CLG Estate, before retaining current counsel Attorney Ralph Holmes. After Chester's death in late April 2017, Skip's counsel engaged in correspondence with Evan which continued throughout 2017 and 2018 and culminated in this litigation begun by Evan.

         On December 12, 2017, Evan sent to Skip, by registered mail, a letter entitled “Notice of Claims and Demand for Payment.” Doc. 62-8 at 1. In the letter, Evan listed Skip twice, once as executor of the CLG Estate and once as trustee of the CLG Trust. In the letter, Evan explained his claims:

PLEASE TAKE NOTICE, pursuant to New Hampshire RSA Section 556:2, that Evan W. Gray, as Trustee of the Barbara J. Gray Trust of 1996, asserts the following claim(s) against Chester L. Gray, III, Executor of the Estate of Chester L. Gray, Jr., and Chester L. Gray III, Trustee of the Chester L. Gray, Jr., Trust of 1996:
Claim(s) for breaches of fiduciary duties by decedent Chester L. Gray, Jr., as former sole trustee of the Barbara J. Gray Trust of 1996 from April 9, 2014, through April 26, 2017 (the “Period”), by: (i) managing the investments of the Trust for his sole benefit as income beneficiary of the Trust during the Period, to the detriment of the Trust and the remainder beneficiaries of the Trust, including without limitation by concentrating the investments of the trust solely in municipal bonds and utility stocks bearing high levels of current income but little or no capital growth, such that the capital value of the Trust was $100, 000 (One Hundred Thousand Dollars) less at the end of the Period than at the beginning of the Period, whereas the Standard & Poor 500 equity index increased 50% during the Period; (ii) distributing capital of the Trust to himself in violation of Paragraphs 2.3.A. (2) and (4) of the Trust instrument; and (iii) using capital removed improperly from the Trust to purchase real property in the center of the town of Grafton, New Hampshire, and donating such real property to the town of Grafton, New Hampshire, for the decedent's own charitable benefit, to the detriment of the Trust and the remainder beneficiaries of the Trust.
PLEASE TAKE FURTHER NOTICE, pursuant to New Hampshire RSA Section 556:2, that based on the foregoing breaches, Evan W. Gray, as Trustee of the Barbara J. Gray Trust of 1996, DEMANDS that the Estate of Chester L. Gray, Jr., and the Chester L. Gray, Jr., Trust of 1996 pay to the Barbara J. Trust of 1996 damages in an amount to be ...

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