Ciampa v. Bank of Am.

88 Mass.App.Ct. 28

35 N.E.3d 765

Jamie CIAMPA, individually and as administratrix¹

v.BANK OF AMERICA² & another.³

No. 14–P–1179.

Appeals Court of Massachusetts, Essex.

Argued June 3, 2015.

Decided Aug. 13, 2015.

W. Matthew Iler, Jr., for the plaintiff.

Robert A. Delle, Westborough, for J. Edward Cotgageorge.

Present: MEADE, HANLON, & BLAKE, JJ.

Opinion

MEADE, J.

This case requires us to review the propriety of the allocation of a sixty-six percent share of an individual retirement account (IRA) of the decedent, Priscilla Cotgageorge (Priscilla). Following her death, that share was to be paid to a named contingent beneficiary whose identity cannot be ascertained. Both Priscilla's daughter, the plaintiff Jamie Ciampa (Jamie), and her stepson, the defendant J. Edward Cotgageorge (Edward), claim to

be that contingent beneficiary and, consequently, to be entitled to that share. After a trial, a judge of the Probate and Family Court awarded the sixty-six percent share, as well as the other thirty-four percent share, to Edward. Jamie appeals, and we vacate the decree.

1. Background. We summarize the facts found by the judge, supplementing with uncontroverted evidence in the record. Yankee Microwave, Inc. v. Petricca Communications Sys., Inc., 53 Mass.App.Ct. 497, 499, 760 N.E.2d 739 (2002). Priscilla died intestate in 2007; her husband, James Cotgageorge (James), had predeceased her. Priscilla and James had two children during their marriage: a daughter, Jamie, who enjoyed a close relationship with Priscilla, and a son, Michael.⁴ Edward was Priscilla's stepson, and except for a few short visits and a summer spent living with her and James in Marblehead, Edward lived across the country and was generally uninvolved in the family affairs.

At the time of her death, Priscilla owned an IRA held by the defendant Bank of America, doing business as Merrill Lynch Wealth Management (Merrill).⁵ Priscilla opened the account in November, 1997, by signing an IRA agreement form and funding the account. The parties stipulated that while Priscilla had signed the form, the handwriting on the rest of the form was not hers. The form named her husband, James, as the sole primary beneficiary,⁶ and named two people as contingent beneficiaries: “James Cotgageorge, Jr.” was to receive a sixty-six percent share, and “J. Edward Cotyup” was to receive the other thirty-four percent share. Each was identified as Priscilla's “son,” but no Social Security number or date of birth was entered for either of them. In addition, Priscilla's Social Security number was incorrectly recorded on the form. The parties stipulated that “J. Edward Cotyup” was a reference to Edward. No person with the name “James Cotgageorge, Jr.” exists in either Priscilla's or James's families.

In October, 2009, two years after Priscilla's death, Merrill notified Edward that he was entitled to both shares of the IRA and that it intended to pay him the full account balance.⁷ Jamie, as administratrix of Priscilla's estate, then sought to prevent Merrill

from distributing the sixty-six percent share to Edward, claiming in a letter that she believed that share “must be made payable to the estate of [Priscilla].” In December, Merrill agreed to refrain from distributing the IRA pending the filing of a complaint for instructions and a subsequent court order. Merrill took no position on the question of who was entitled to the share, stating only that it would pay it to whomever the court determined was the proper beneficiary. Subsequently, on May 5, 2010, Jamie filed a complaint for instructions in the Probate and Family Court. While Jamie initially asked for a declaratory judgment that Merrill pay the share into Priscilla's estate, she subsequently abandoned that strategy, intervened in her individual capacity, and sought payment of the share directly to herself instead of to her mother's estate.

The parties agreed that Edward was entitled to the thirty-four percent share; however, Jamie and Edward each testified at trial to his or her belief that he or she was the person incorrectly recorded as “James, Jr.” Following trial, the judge found that Jamie had not proved that the IRA agreement form did not reflect Priscilla's intent. The judge found “no evidence to prove that the beneficiaries on the form were not as [Priscilla] intended or that [Priscilla] intended to distribute any of the IRA to [Jamie].” She concluded that Priscilla—a legal secretary and the wife of a local attorney—knew how to designate or change beneficiaries to her IRA, and would have done so if that had been her intent. The judge ordered payment of the contested sixty-six percent share to Edward.

2. Discussion. The judge held that Jamie failed to establish that a mistake was made in the formation of the IRA. We review the propriety of that decision. More specifically, we must determine whether the IRA agreement form contains a mistake due to a scrivener's error and, if it does, whether we can reform the IRA agreement form to conform to Priscilla's intent. In so doing, we review the judge's factual findings for clear error, giving deference to her assessment of witness credibility. We will, however, review her conclusions of law de novo. See, e.g., Martin v. Simmons Properties, LLC, 467 Mass. 1, 8, 2 N.E.3d 885 (2014).

Our resolution of this case turns on an application of trust law.⁸

See 26 U.S.C. § 408 (2012) (defining an IRA as “a trust created or organized in the United States for the exclusive benefit of an individual or [her] beneficiaries”).⁹ See Restatement (Third) of Trusts § 25 comment c(3) (2001). “In order for a trust to be valid in the Commonwealth, it must unequivocally show an intention that the legal estate be vested in one person to be held in some manner or for some purpose on behalf of another.” Ventura v. Ventura, 407 Mass. 724, 726, 555 N.E.2d 872 (1990) (citation omitted). A drafting error may be grounds to reform the trust instrument “once the existence of a mistake is established by full, clear, and decisive proof.” Bellemare v. Clermont, 69 Mass.App.Ct. 566, 572, 870 N.E.2d 624 (2007) (citation omitted). “Included in the category of unilateral mistakes for which relief may be obtained is a settlor's acceptance of a trust instrument which, because of the mistake or inadvertence of the scrivener, fails to embody the settlor's intentions.” Berman v. Sandler, 379 Mass. 506, 510, 399 N.E.2d 17 (1980). Finally “[t]he interpretation of a written trust is a matter of law to be resolved by the court. A trust should be construed to give effect to the intention of the settlor as ascertained from the language of the whole instrument considered in the light of the attendant circumstances. We are in as good a position as the [trial] judge to do this.” Redstone v. O'Connor, 70 Mass.App.Ct. 493, 499, 874 N.E.2d 1118 (2007) (citations omitted).

Here, the parties agree that the thirty-four percent share belongs to Edward. The sole issue is to whom Priscilla (or the scrivener) intended to refer by naming “James, Jr.,” a person who does not exist, as a contingent beneficiary.

a. Scrivener's error. Jamie claims that the misnomer of “James, Jr.” constitutes a scrivener's error on the IRA agreement form. We agree. The judge found that “James, Jr.” does not exist in the Cotgageorge family.¹⁰ Designating a person who does not exist as the intended beneficiary of a trust is, without more, “clear and decisive proof of mistake due to scrivener's error.” Pond v. Pond, 424 Mass. 894, 898, 678 N.E.2d 1321 (1997). Despite this, the judge nevertheless concluded that “[Priscilla] signed the form and sent funds to open the account making her intentions clear ” (emphasis supplied).

The judge's findings of fact do not support this conclusion. The mere fact that Priscilla opened and funded an IRA does not mean that her intended beneficiaries were correctly recorded on the form, particularly where it was uncontroverted that the form had been filled out by a third party, not Priscilla.¹¹ The misnomer is therefore attributable to the “mistake or inadvertence of the scrivener, [which] fails to embody the settlor's intentions.” Berman v. Sandler, 379 Mass. at 510, 399 N.E.2d 17. The judge erred in concluding otherwise.

b. Reformation. Having proven a scrivener's error, Jamie next seeks the reformation of the IRA agreement form to reflect her asserted right to the sixty-six percent share, while Edward defends the judge's decree awarding the entire account to him. The Supreme Judicial Court has “allowed the reformation of an ambiguous trust instrument based on extrinsic evidence of the settlor's intent and provisions in the instrument that showed that the [scrivener] who drafted it failed to carry out the settlor's intent.” Putnam v. Putnam, 425 Mass. 770, 772, 682 N.E.2d 1351 (1997). As discussed above, Jamie proved that the scrivener failed to name the sixty-six percent beneficiary in accordance with Priscilla's intent. Jamie goes further, however, and claims that “James, Jr.” is an obvious reference to her. We disagree.

Jamie's claim that she is “James, Jr.” is primarily based on the similarity of her first name to James, and her explanation of the word “son” and “Junior.”¹² She also points to the close familial relationship she enjoyed with her mother, as well as the fact that her late father had distributed sixty-six percent of his estate to her and thirty-four percent to Edward—the same proportion she now suggests Priscilla intended for her IRA. The judge, however, rejected this explanation as merely “possible [but] not plausible,” noting “it is not probable that [Priscilla] would misspell her daughter's name, call her daughter ‘Jr.’ ” and list her daughter as

her son.” When we compare Jamie's offer to other cases, the party seeking reformation in those cases presented much more. See, e.g., DiCarlo v. Mazzarella, 430 Mass. 248, 250, 717 N.E.2d 257 (1999) (trust language indicated settlor's intent to qualify for marital deduction); ...