Salce v. Cardello

348 Conn. 90

301 A.3d 1031

John SALCE v. Joan CARDELLO

SC 20701

Supreme Court of Connecticut.

Argued April 26, 2023

Officially Released September 26, 2023

Kenneth A. Votre, for the appellant (plaintiff).

William N. Wright, with whom was Michael P. Kaelin, for the appellee (defendant).

Robinson, C. J., and McDonald, D'Auria, Ecker and Alexander, Js.

Opinion

ROBINSON, C. J.

In this certified appeal, we consider the extent to which in terrorem, or no-contest, clauses in will and trust documents are enforceable against a beneficiary who has challenged certain aspects of the performance of a fiduciary, namely, the executor of the will or the trustee of the trust. The plaintiff, John Salce, appeals, upon our grant of his petition for certification, ¹ from the judgment of the Appellate Court, which affirmed the trial court's judgment for the defendant, Joan Cardello, dismissing his probate appeal. See Salce v. Cardello , 210 Conn. App. 66, 68, 82, 269 A.3d 889 (2022). On appeal, the plaintiff principally contends that the Appellate Court incorrectly concluded that enforcement of the in terrorem clauses in the decedent's will and trust agreement against the defendant would violate public policy when she challenged the executor's refusal (1) to remove her personal bank account from the estate's Connecticut estate and gift tax return, and (2) to deduct the outstanding mortgages from the value of the estate on the return. Consistent with this court's venerable decisions in South Norwalk Trust Co. v. St. John , 92 Conn. 168, 101 A. 961 (1917), and Griffin v. Sturges , 131 Conn. 471, 40 A.2d 758 (1944), because the defendant's actions were based in good faith, we conclude that enforcement of the in terrorem clauses in the present case would violate the public policy embodied by our statutes requiring probate courts to supervise fiduciaries. Accordingly, we affirm the judgment of the Appellate Court.

The opinion of the Appellate Court aptly sets forth the relevant facts, as found by the trial court, and procedural history. "The plaintiff and the defendant are the son and daughter, respectively, of Mae Salce (Mae). Mae was the settlor of the Amended and Restated Mae Salce Revocable Trust Agreement (trust or trust agreement), which was established on June 29, 2005, and amended on April 3, 2008. The principal asset of the trust was Mae's interest in a piece of real property known as 113 Buffalo Bay in Madison (Buffalo Bay). The trust agreement provided that the defendant would serve as the trustee for the trust until Mae died, at which time Attorney Jay L. Goldstein would become the trustee. Pursuant to the terms of the trust agreement, on December 22, 2005, the defendant, acting as trustee of the trust, transferred a one-half interest in Buffalo Bay to herself. The trust agreement further provided that the defendant would receive the other one-half interest in Buffalo Bay at the time of Mae's death. On the same day that Mae amended the trust, she also executed her last will and testament. Consistent with the terms of the trust agreement, article third of the will provides that all of Mae's interest in Buffalo Bay was bequeathed to the defendant. It further provides that, if the defendant predeceased Mae, Mae's Interest in Buffalo Bay would be devised to ‘[the defendant's] issue, per stirpes or if there shall be no such issue to [the plaintiff] if [the plaintiff] shall survive me, [or] if [the plaintiff] shall not survive me to [the plaintiff's] issue, per stirpes.’ In article fourth of her will, Mae forgave the plaintiff's obligation to pay any outstanding amounts due to her pursuant to a December 22, 2001 promissory note in the principal amount of $700,000. ² In article seventh of her will, Mae designated the defendant as the executor of her estate.

"Both the trust agreement and the will contain an in terrorem clause providing that, if a beneficiary takes certain actions, he or she forfeits his or her rights as a beneficiary under the instruments. The in terrorem clause in the trust agreement provides in relevant part: ‘If [a] beneficiary under this [t]rust [a]greement ... directly or indirectly ... (iv) objects in any manner to any action taken or proposed to be taken in good faith by any [t]rustee ... [and/or] (vii) files any creditor's claim against [the] [t]rustee (without regard to its validity) ... then that person's right as a beneficiary of this [t]rust [a]greement and to take any interest given to him or her by terms of this [t]rust [a]greement ... shall be determined as it would have been determined if the person and the person's descendants had predeceased [the] [s]ettlor without surviving issue....’ The in terrorem clause in the will likewise provides in relevant part: ‘If [a] beneficiary hereunder ... directly or indirectly ... (iv) objects in any manner to any action taken or proposed to be taken in good faith by any [e]xecutor or trustee ... [and/or] (vii) files any creditor's claim against my [e]xecutor (without regard to its validity) or trustee ... then that person's right as a beneficiary of this [w]ill and any [c]odicil thereto or trust ... shall be determined as it would have been determined if the person and the person's descendants had predeceased me without surviving issue....’

"Mae died on April 12, 2012. Thereafter ... Goldstein became the trustee of the trust pursuant to the terms of the trust, as well as the executor of Mae's estate, after the defendant declined to serve as the executor. While administering the estate ... Goldstein sent letters to the beneficiaries, including the defendant, which detailed their required contributions for the payment of certain taxes and fees incurred by the estate. The beneficiaries were also permitted to inspect the Form CT-706/709 Connecticut Estate and Gift Tax Return (CT-706) that ... Goldstein had filed on behalf of the estate. When the defendant reviewed the CT-706, she noticed that a Citizens Bank account that belonged solely to her mistakenly had been listed as an asset of the estate. The defendant's attorney, Alphonse Ippolito, also reviewed the CT-706. In doing so, he realized that ... Goldstein also had inflated the value of the estate and increased the beneficiaries’ tax burdens by failing to deduct two outstanding loans that were secured by mortgages on Buffalo Bay. ³ ...

"Ippolito raised these apparent errors with ... Goldstein, who then asked the defendant to ‘produce evidence verifying that the income received pursuant to the mortgages was expended in connection with the administration of the trust.’ The defendant did so, but ... Goldstein still refused to amend the CT-706 either to remove the Citizens Bank account or to deduct the outstanding mortgages.... Goldstein did, however, indicate to ... Ippolito that he would amend the return if instructed to do so by the Probate Court. The defendant, on July 30, 2014, filed a request with the Probate Court for a hearing on these issues but later withdrew the request for unknown reasons.

"Thereafter, the plaintiff filed a complaint in the Probate Court [for the district of Branford-North Branford], alleging that the defendant's filing of her request for a hearing, and the issues raised therein, violated the in terrorem clauses in both the will and the trust agreement. Specifically, the plaintiff argued that the defendant had violated the in terrorem clauses by (1) filing a creditor's claim against the estate, and (2) challenging ... Goldstein's refusal to amend the CT-706. Enforcement of the in terrorem clauses as requested by the plaintiff would cause Mae's [bequest] of her one-half interest in Buffalo Bay to the defendant to be nullified and, pursuant to the terms of her [trust], result in that interest being bequeathed to the plaintiff. The plaintiff, on December 17, 2015, also instituted a lawsuit in Superior Court seeking to invalidate ... Goldstein's December, 2012 transfer by quitclaim deed of the estate's interest in Buffalo Bay to the defendant pursuant to the will and trust. In response to the plaintiff's complaint in the Probate Court, the defendant claimed that the plaintiff had violated the in terrorem clauses by delaying the administration of the estate and by instituting the Superior Court action seeking to invalidate the transfer of the estate's remaining interest in Buffalo Bay to the defendant.

"Following a hearing, the Probate Court concluded that neither the plaintiff nor the defendant had violated the in terrorem clauses. Furthermore, the Probate Court concluded that ... Goldstein had erred in including the Citizens Bank account in the estate's assets and ordered that it be removed from the accounting." (Footnotes in original.) Salce v. Cardello , supra, 210 Conn. App. at 68–71, 269 A.3d 889.

"The plaintiff appealed from the Probate Court's refusal to enforce the in terrorem clauses against the defendant to the Superior Court, pursuant to General Statutes § 45a-186 (b). The defendant then filed a counterclaim in that appeal, alleging that the plaintiff had violated the in terrorem clauses by instituting the December 17, 2015 action to invalidate ... Goldstein's transfer of the estate's interest in Buffalo Bay to the defendant pursuant to the will and the trust.

"The [trial court] held a five day trial de novo on the plaintiff's appeal and the defendant's counterclaim. Thereafter, the court issued a memorandum of decision, in which it concluded that neither party had violated the in terrorem clauses. With regard to the defendant, specifically, the court concluded that she had not violated the clauses because she (1) never filed a creditor's claim against the estate, and (2) acted in good faith, upon probable cause, and with reasonable justification when challenging ... Goldstein's actions in administering the estate and the trust, thus excusing any violations of the in terrorem clauses." (Footnotes omitted.) Id., at 72, 269 A.3d 889. Accordingly, the trial court...