Tamposi v. Denby

136 F.Supp.3d 77

Elizabeth M. Tamposi, Plaintiff,

v.Stephanie Denby, Esq.; Burke Warren Mackay & Serritella, P.C.; Michael Weisman, Esq.; Rebecca McIntyre, Esq..; Weisman & McIntyre, P.C.; Julie Shelton, Esq., individually and in her capacities as Trustee of the Elizabeth M. Tamposi GST Exempt Trust and the Elizabeth M. Tamposi Trust, both created under the Samuel A. Tamposi, Sr. 1992 Trust, and in her capacity as Trustee of the Elizabeth A. Tamposi Trust, created under the Samuel A. Tamposi, Sr. 1994 Irrevocable Trust; Butler, Rubin, Saltarelli & Boyd, LLP; and Baker & Daniels, LLP, Defendants.

Civil Action No. 10-12283-FDS

United States District Court, D. Massachusetts.

Signed September 30, 2015

Charles P. Kazarian, Christopher S. Malloy, Law Office of Charles P. Kazarian, Boston, MA, for Plaintiff.

David A. Axelrod, Robert A. Cohen, David A. Axelrod & Associates P.C., Chicago, IL, Susan E. Cohen, George A. Berman, Sarah-Elizabeth Cloutier, Timothy M. Pomarole, Peabody & Arnold LLP, Bruce E. Falby, DLA Piper LLP, Camille F. Sarrouf, Sarrouf Law, LLP, Joan A. Lukey, Michael R. Dube, Robert M. Buchanan, Jr., Robert S. Frank, Jr., Choate, Hall & Stewart LLP, Matthew L. McGinnis, Ropes & Gray LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT ON CROSS-CLAIMS

SAYLOR, District Judge

This is a claim for legal malpractice arising out of prior litigation in New Hampshire concerning the administration of family trusts. Plaintiff Elizabeth M. Tamposi brought claims in this Court against various attorneys and law firms that had represented her interests in the prior litigation, alleging legal malpractice, breach of fiduciary duty, and unjust enrichment. Three defendants—Butler, Rubin, Saltarelli & Boyd, LLP; Faegre Baker Daniels LLP (successor in interest to Baker & Daniels, LLP); and Julie Shelton (together, the "Shelton Parties")—filed counterclaims against Tamposi. All eight defendants filed cross-claims against multiple other defendants.

On December 23, 2014, the parties filed a joint stipulation dismissing all claims by and against Tamposi and the majority of the cross-claims. The only claims remaining in the case are the cross-claims for legal malpractice filed by the Shelton Parties against all other defendants.

Four motions for summary judgment have been filed as to those cross-claims—one by Michael Weisman, Rebecca McIntyre, and Weisman & McIntyre, P.C. (together, the "W&M Parties"); one by McIntyre alone; one by Burke, Warren, MacKay, & Serritella, P.C., and Stephanie Denby (the "Denby Parties") as to the cross-claims of only Butler Rubin and Baker Daniels; and one by the Denby Parties as to the cross-claims of all of the Shelton Parties.

For the reasons set forth below, the motion of the Denby Parties for summary judgment as to the cross-claims of Butler Rubin and Baker Daniels will be granted, and all other motions will be denied.

I. Background

The following facts are undisputed unless otherwise noted.

A. The Samuel A. Tamposi, Sr. Trusts

Samuel A. Tamposi, Sr. was a prominent and successful real estate developer in New Hampshire. (W&M SMF ¶ 3). In 1992, as part of his estate plan, he established the Samuel A. Tamposi, Sr. 1992 Trust (the "1992 Trust") and named himself as beneficiary during his life and his six children as beneficiaries after his death. (Id. ). See Shelton v. Tamposi , 164 N.H. 490, 493, 62 A.3d 741, 744 (2013). He amended the trust four times prior to his death. Id. ; (Dkt. No. 209, Ex. 6, at 31-45). In its final form, the trust provided that upon Samuel's death, the trust corpus was to be divided into twelve separate sub-trusts—six containing assets exempt from the federal generation-skipping transfer tax and six containing non-exempt assets. Shelton , 164 N.H. at 493, 62 A.3d at 744. As provided by the 1992 Trust, the twelve sub-trusts would be divided equally among Samuel's six children, with each of the six being named as the primary beneficiary of one "GST exempt" trust and one "non-exempt" trust. (Denby SMF ¶ 3); Shelton , 164 N.H. at 493, 62 A.3d at 744.¹

Article TENTH of the 1992 Trust provided that each of the twelve sub-trusts would constitute a separate and distinct trust, but that each could be combined with the other trusts in a common fund for the convenience of administration. (Id. ). In that way, legal title to the trust property would be held in the name of the larger Samuel A. Tamposi, Sr. Trusts, while equitable title would rest with the twelve individual trusts. (Id. ).

Article TENTH-B of the 1992 Trust, as amended, specified that two of Samuel's sons—Samuel Tamposi, Jr. ("Sam") and Stephen Tamposi ("Steve")—were to serve as "investment directors" for the entire trust property and for the twelve individual trusts. (Id. ¶ 4; Resp. to Denby SMF ¶ 4). The enumerated responsibilities and powers of the investment directors included, but were not limited to, "the management, control, handling, financing, refinancing and structuring of any and all real estate interests and other operating entities from time to time included in the trust property" and the "full power and authority to direct the retention or sale of all other assets from time to time included in the trust property and to direct the purchase of property with any principal cash included in the trust property." (1992 Trust Art. TENTH-B(d) and (e)).

The 1992 Trust contained an in terrorem clause that provided, in relevant part:

If any person shall at any time commence or join in the prosecution of any proceedings in any court or tribunal ... to have ... this trust ... set aside or declared invalid or to contest any part or all of the provisions included in ... this trust ... or to cause or to induce any other person to do so, then and in that event such person shall thereupon forfeit any and all right, title and interest in or to any portion of this trust, and this trust shall be distributed in the same manner as would have occurred had such person died prior to the date of execution of this trust.

(1992 Trust Art. FOURTEENTH).

Upon his death, Samuel's estate and trust property consisted of "various tenancies, business entities, limited partnerships, [and] corporations and numerous parcels of real estate in New Hampshire and Florida," and was valued at approximately $20.5 million. Order at 6, Shelton v. Tamposi , No. 316-2007-EQ-2109 (N.H. Probate Ct. Aug. 18, 2010).

B. The Elizabeth M. Tamposi Trusts

Elizabeth ("Betty") M. Tamposi, the original plaintiff in this action, is one of Samuel's children. When Samuel died on May 25, 1995, Betty became the beneficiary of two of the twelve individual trusts that were sub-divided out of the 1992 Trust. (Denby SMF ¶ 1). Those two trusts, known as the Elizabeth M. Tamposi Trusts ("EMT Trusts"), also named Betty's children (the "Goodlander Children") as beneficiaries. (Id. ).

In addition to her interests in the EMT Trusts, Betty also acquired minority interests in many Tamposi holdings in which the EMT Trusts owned no interest (the "Gifted Assets"). (Denby SMF ¶ 7; Steve Dep. at 16-17). Those included ownership interests in business entities known as Ballinger Properties LLC and Citrus Hills Holdings LLC. (Steve Dep. at 16-17).

C. Trust-Related Conflict Prior to 2007

After Samuel died in 1995 and Sam and Steve took over as investment directors, the Tamposi family experienced significant discord concerning the proper relationship between the investment directors and the trustee. (Denby SMF ¶ 13). In the summer of 1995, Steve and Betty discussed the possibility of a buyout of Betty's interest in the Trusts for approximately $500,000. (Id. ¶ 14). According to Steve, they discussed that possibility again some time in 1997, 1998, or 1999. (Steve Dep. at 88-89).

On January 26, 2000, Sam and Steve, together with trustee Gerald R. Prunier, filed an action in the Hillsborough County (N.H.) Probate Court seeking a declaratory judgment as to the division of fiduciary responsibilities between the investment directors and the trustee of the 1992 Trust. (Dkt. No. 182, Ex. 4). The petition alleged that Betty and her brother Nicholas Tamposi ("Nick") had expressed an interest in a separation or buyout of their beneficial interests in the trust property. (Id. ).

On March 17, 2000, Betty and Nick filed an action for declaratory judgment against Sam and Steve. (Denby SMF ¶ 19; Dkt. No. 182, Ex. 17). Among other things, the action sought a declaratory judgment as to whether the in terrorem clause in the 1992 Trust would trigger a forfeiture if Betty and Nick responded to the declaratory-judgment action filed by Sam, Steve, and Prunier. (Denby SMF ¶ 19; Dkt. No. 182, Ex. 17).

On October 2, 2000, New Hampshire Probate Court Judge Raymond A. Cloutier ruled that Betty and Nick would not violate the in terrorem clause by seeking to uphold fiduciary standards under the trust and New Hampshire law, as long as they did "not challenge or attempt to challenge the validity of the trust or the authenticity of the [trust] documents or signatures." (Denby SMF ¶ 20; Dkt. No. 182, Ex. 19).

In September 2001, Betty filed another action against Sam, Steve, trustee Prunier, and trustee David Tully alleging breach of fiduciary duties. (Denby SMF ¶ 21; Dkt. No. 182, Ex. 20). Among other things, the 2001 lawsuit sought removal of Sam and Steve as investment directors and Prunier as trustee of the 1992 Trust "and the individual trusts established thereunder." (Denby SMF ¶ 21; Dkt. No. 182, Ex. 20, at 49). The complaint alleged that Prunier, Sam, and Steve had been using the in terrorem clause to "stifle dissent." (Denby SMF ¶ 21).

In late 2001, Betty and Nick withdrew their complaint for breach of fiduciary duty in order to engage in settlement discussions. (Denby SMF ¶ 22). Genus Resources, LLC was hired to mediate the dispute. (Id. ). On May 2, 2002, Genus put out an Assessment Report that stated in part:

Betty wants essentially four things: [1] access on a regular basis to cash generated by her interests in

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