David Tikiob v. Sue Tikiob-Carlson ( 2021 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
DAVID TIKIOB, )
)
Petitioner, )
) C.A. No. 2020-0027-PWG
v. )
)
SUE TIKIOB-CARLSON, )
RICHARD DOWNER TIKIOB, SR., and )
RICHARD DOWNER TIKIOB, JR., )
)
Respondents. )
MASTER’S REPORT
Date Submitted: August 6, 2021
Draft Report: September 10, 2021
Final Report: September 22, 2021
Adam C. Gerber, Esquire, BENTON LYNN LAW, P.A., Dover, Delaware,
attorney for Petitioner
David J. Ferry, Jr., Esquire and Brian J. Ferry, Esquire, FERRY & JOSEPH. P.A.,
Wilmington, Delaware, attorneys for Respondent, Sue Tikiob-Carlson
Stephen A. Spence, Esquire, BAIRD MANDALAS BROCKSTEDT, LLC, Lewes,
Delaware, attorney for Respondent, Richard Downer Tikiob, Sr.
Richard Downer Tikiob, Jr., 41 Maryland Avenue, Rehoboth Beach, Delaware
19971, Pro Se
GRIFFIN, Master
Pending before me is a motion for summary judgment on a petition brought
by a son claiming his sister violated her duties as their father’s agent under a durable
power of attorney and seeking an accounting of her transactions while acting as agent
and her revocation as agent, among other relief. I previously denied the sister’s
motion to dismiss and ordered the sister join another sibling and their father to the
action.1 On that motion to dismiss, I found that the son sought relief that is generally
allowable under the Durable Personal Power of Attorney Act (“DPPAA”).2 Now
that the factual record is more developed, I find that there is not specific evidence to
show the sister breached a duty under the DPPAA and recommend the Court grant
the motion for summary judgment. This is a final report.3
I. FACTUAL BACKGROUND
Richard D. Tikiob, Sr. (“Richard Sr.”) has three living children – Respondents
Sue Tikiob-Carlson (“Sue”), his daughter, and Richard D. Tikiob Jr. (“Richard Jr.”),
his son, and a second son, Petitioner David Tikiob (“David”).4 Richard Sr. has
dementia and is not currently able to properly manage and care for his property.5
1
Docket Item (“D.I.”) 17.
2
Id., at 7-10.
3
This report makes the same substantive findings and recommendations as my September
10, 2021 draft report, to which no exceptions were filed.
4
D.I. 22, ¶ 8. I use first names only in pursuit of clarity and intend no disrespect or
familiarity.
5
D.I. 42, Ex. H [hereinafter “Sue Dep. Tr.”] 9:1-9; D.I. 22, ¶15; D.I. 28, ¶ 15; D.I. 29, ¶
15; D.I. 37, ¶ 15. David testified that he discussed financial matters with Richard Sr., when
1
Prior to October of 2019, he lived in his long-time home at 1010 Scarborough
Avenue, Rehoboth Beach Delaware, and was assisted by home health caretakers.6
Richard Sr. currently resides in an assisted living and memory care facility,
Brandywine Living at Seaside Pointe (“Brandywine facility”), in Rehoboth Beach,
Delaware.7
On July 25, 2013, Richard Sr. executed a durable power of attorney (the
“POA”) appointing Sue as his agent.8 Prior to this, Richard Sr. had executed a
personal power of attorney that appointed his other daughter Leslie Ballinger as
agent.9 Richard Sr. executed, on May 27, 2011, a Health Care Power of Attorney in
favor of his now-deceased wife, Ann Draper Tikiob, with Leslie Ballinger and Sue
as successor agents.10 David is not named as agent under any of these documents
and has not been named by Richard Sr. in any fiduciary capacity.11 In this action,
David has not disputed the validity of the POA.12
he was “still with it . . . four or five years ago.” D.I. 42, Ex. J [hereinafter “David Dep.
Tr.”] 35:22-36:3.
6
Sue Dep. Tr. 11:16-23; D.I. 22, ¶ 15.
7
D.I. 22, at ¶ 4; Sue Dep. Tr. 9:10-15.
8
D.I. 22, Ex. A. Richard Jr. was appointed as first alternate agent. Id.
9
See Sue Dep. Tr. 13:6-18. Leslie Ballinger is now deceased. See Sue Dep. Tr. 15:21;
David Dep. Tr. 14:12-14.
10
D.I. 42, Ex. G. Ann Tikiob died on October 20, 2012. Sue Dep. Tr. 39:24-40:2.
11
See D.I. 22, Ex. A; D.I. 44, Ex. G; David Dep. Tr. 66:13-18.
12
David Dep. Tr. 66:8-12.
2
The POA grants Sue, as agent, broad authority “to transact all [Richard Sr.’s]
business and manage all [his] property, affairs, and interests as fully and completely
as [he himself] might do if personally present and to do any and all acts and things
which [Sue] shall deem useful, necessary, or proper …”13 Specifically, the POA
authorizes Sue to buy and sell real and personal property on behalf of Richard Sr.,14
to make gifts not in excess of $13,000 annually to family and friends,15 to transfer
any property into his revocable trust, or create a trust for his benefit,16 and to employ
others such as accountants and attorneys to assist in managing Richard Sr.’s affairs.17
Sue began managing Richard Sr.’s financial matters in 2014 by paying some
bills and writing checks.18 In 2015, Sue took over the management of Richard Sr.’s
real estate properties, which are primarily seasonal vacation rentals.19 Sue currently
resides in California but lived in New York at the time this action was filed.20 When
she lived in New York, she would travel to Rehoboth Beach to see Richard Sr. 12 to
13
D.I. 22, Ex. A, ¶ 34.
14
Id., ¶¶ 5, 14.
15
Id., ¶ 27.
16
Id., ¶¶ 29, 30.
17
Id., ¶ 20.
18
Sue Dep. Tr. 14:15-20.
19
Id., 17:20-23.
20
Id., 5:15-17; 7:10-16.
3
20 times per year, at least once per month.21 Due to her move and the COVID-19
pandemic, Sue has travelled to Rehoboth less frequently, but she generally speaks
with Richard Sr.’s caregivers over FaceTime, and can have face-to-face time with
him, around once a week.22
When Sue began managing Richard Sr.’s real estate, he owned nine properties
in the Rehoboth Beach area, including his home and vacation rental properties.23
She has since sold two of the properties, which were both vacant lots.24 Richard Jr.
is a real estate agent, assists Sue in the management of the vacation rental properties,
and performs routine maintenance and repair tasks for the properties.25 In addition
to receiving reduced rent on an apartment owned by Richard Sr., Richard Jr. is paid
by Sue for various expenses related to those tasks.26
After Richard Sr. relocated to the Brandywine facility, Sue and others
discarded accumulated “junk,” and relocated valuables in Richard Sr.’s home.27 Sue
has also, in her management of Richard Sr.’s financial affairs, utilized and
21
Id., 7:24-8:6.
22
Id., 8:14-9:3.
23
Id., 18:6-12; 20:15-18; 60:17-21.
24
Id., 18:19-21.
25
Id.,19:18-19; 30:20-22.
26
Id., 29:24-31:13; D.I. 52, Ex A, ¶ 9.
27
Valuables were either placed into storage or into certain locations in the home. Sue Dep.
Tr., 20:24-21:8; 57:18-58:10.
4
restructured various assets owned by Richard Sr. to fund his medical care and other
expenses.28
II. PROCEDURAL BACKGROUND
On January 14, 2020, David filed the Petition to Strike the POA under 12 Del.
C. §49A-116 of the DPPAA, claiming that Sue engaged in self-dealing and acted in
bad faith by squandering Richard Sr.’s monies on gifts to family and friends and
mismanaging Richard Sr.’s properties.29 He seeks to compel Sue to account for
transactions undertaken since she became Richard Sr.’s agent, and to refrain from
“exercising authority for the purpose of maintaining her own inheritance.”30 He also
asks the Court to terminate Sue’s power of attorney and establish a new power of
attorney for Richard Sr.31
Sue filed a motion to dismiss, which I denied on July 17, 2020, and I ordered
the joinder of Richard Sr. and Richard Jr. to this action as necessary interested
parties.32 David filed his amended petition (“Amended Petition”) on October 23,
28
See D.I 52, Ex. A, ¶ 3; Sue Dep. Tr. 25:10-22.
29
D.I. 1., ¶ 17; D.I. 22, ¶ 17.
30
Id., at 5.
31
Id.
32
D.I. 17.
5
2020.33 Sue filed her Answer on February 1, 2021.34 Richard Jr. filed his Answer
on February 1, 2021, and Richard Sr. filed his Answer on April 14, 2021. 35
Sue filed this Motion for Summary Judgment (“Motion”) on June 11, 2021,
requesting dismissal of the Amended Petition because she claims there is no
evidence she breached her duties as an agent under the DPPAA and she provided
legal and financial documents to David.36 David filed his response in opposition on
July 12, 2021, arguing that evidence suggests Sue breached her fiduciary duties.37
Sue’s August 6, 2021 reply brief reiterates her argument that the evidence does not
show she breached a fiduciary duty.38
III. STANDARD OF REVIEW
Under Court of Chancery Rule 56, the Court grants a motion for summary
judgment when “the moving party demonstrates the absence of issues of material
fact and that it is entitled to a judgment as a matter of law.”39 The moving party
bears the burden of demonstrating that no material issues of fact are in dispute and
33
D.I. 22.
34
D.I. 29.
35
D.I. 28: D.I. 37.
36
D.I. 42.
37
D.I. 44.
38
D.I. 52.
39
Wagamon v. Dolan, 2012 WL 1388847, at *2 (Del. Ch. Apr. 20, 2012); see also
Cincinnati Bell Cellular Sys. Co. v. Ameritech Mobile Phone Serv. of Cincinnati, Inc., 1996
WL 506906, at *2 (Del. Ch. Sept. 3, 1996), aff’d 692 A.2d 411 (Del. 1997) (TABLE).
6
that it is entitled to judgment as a matter of law.40 Evidence must be viewed “in the
light most favorable to the non-moving party.”41 “[O]nce the moving party has
satisfied its initial burden of demonstrating the absence of a material factual dispute,
the burden shifts to the nonmovant to present some specific, admissible evidence
that there is a genuine issue of fact for a trial.” 42 “To withstand a motion for
summary judgment, the non-moving party must demonstrate, based upon submitted
evidence, ‘a triable issue of material fact.’”43 Mere allegations or denials in a
pleading, unless backed up by specific facts contained in admissible evidence, are
insufficient to show that there is a genuine issue for trial.44
40
Wagamon, 2012 WL 1388847, at *2; Ludeen v. Pricewaterhousecoopers, LLC, 2006
WL 2559855, at *5 (Del. Super. Aug. 31, 2006).
41
Williams v. Geier, 671 A.2d 1368, 1388-89 (Del. 1996) (citing Merrill v. Crothall-
American, Inc., 606 A.2d 96, 99 (Del. 1992).
42
In re Transkaryotic Therapies, Inc., 954 A.2d 346, 356 (Del. Ch. 2008) (internal
quotation marks and citations omitted); see also Ct. Ch. R. 56(e); In re John Q. Hammons
Hotels Inc. S’holder Litig., 2009 WL 3165613, at *9 (Del. Ch. Oct. 2, 2009) (“[S]ummary
judgment is appropriate where [the non-moving] party fails to make a sufficient showing
on any essential element of its case.”).
43
Frank v. Elgamal, 2014 WL 957550, at *17 (Del. Ch. Mar. 10, 2014) (quoting In re
Gaylord Container Corp. S’holders Litig., 753 A.2d 462, 473 (Del. Ch. 2000)); see also
Deloitte LLP v. Flanagan, 2009 WL 5200657, at *3 (Del. Ch. Dec. 29, 2009) (“It is not
enough that the nonmoving party put forward a mere scintilla of evidence; there must be
enough evidence that a rational finder of fact could find some material fact that would favor
the nonmoving party in a determinative way, drawing all inferences in favor of the
nonmoving party.”).
44
See, e.g., Feinberg v. Makhson, 407 A.2d 201, 203 (Del. 1979) (“It is settled law in
Delaware that where a moving party’s affidavits in support of a Rule 56 motion negate the
opposing party’s pleadings, the opposing party must submit countervailing evidence or
affidavits or judgment may be granted.”); Wagamon, 2012 WL 1388847, at *2; Geier v.
7
IV. ANALYSIS
David claims that Sue breached her fiduciary duties under the POA and
engaged in self-dealing, and requests that the Court impose various remedies under
the DPPAA.45 Viewing the evidence in the light most favorable to David, I consider
whether Sue has shown there are no material factual disputes and that she is entitled
to judgment as a matter of law. If Sue meets her burden, then David must
demonstrate, based upon submitted evidence, that there is a triable issue of material
fact. In other words, David must show evidence of acts by Sue as agent for Richard
Sr. that constitute a breach under the DPPAA, not just conclusory allegations.
Under the DPPAA, certain persons, including the child of a principal, are
authorized to petition the Court of Chancery to impose specified types of relief,
including compelling an agent to provide an accounting, modifying, suspending or
revoking an agent’s powers, or determining an agent’s liability for violating her
duties under 12 Del. C. §49A-114.46 While the DPPAA does not explicitly state
what entitles the petitioner to relief under Section 49A-116, I interpret this statute as
Meade, 2004 WL 243033, at *8 (Del. Ch. Jan. 30, 2004); Wells Fargo Bank, N.A. v.
Williford, 2011 WL 5822630, at *2 (Del. Super. Nov. 17, 2011).
45
See D.I. 1; D.I. 22; D.I. 17, at 7-8 (“The relief sought by David, even if stated in an
‘inartful manner,’ is generally allowable under 12 Del. C. § 49A-116.”).
46
12 Del. C. §§49A-116(a), (b). The DPPAA further provides that nothing in Section 49A-
116 “shall preclude or diminish the Court’s authority . . . to order other judicial relief, in
order to grant appropriate relief upon review of a personal power of attorney or an agent’s
conduct with respect to a personal power of attorney.” 12 Del. C. §49A-116(d).
8
providing remedies should the petitioner prove a breach of a fiduciary duty specified
under the DPPAA.47 It is well settled under Delaware law that “[t]o establish
liability for the breach of a fiduciary duty, a plaintiff must demonstrate that the
defendant owed her a fiduciary duty and that the defendant breached it.”48 As agent
under a durable personal power of attorney, Sue owed the duties enumerated in
Section 49A-114.49 Those duties include, among others: (1) the duty to act “in
accordance with the principal’s reasonable expectations” and “in the principal’s best
interest;”50 (2) the duty to act “in good faith,”51 defined as “honesty in fact;”52 (3) to
act “only within the scope of authority granted in the personal power of attorney;”53
47
See Parkhurst v. Nalley, C.A. No. 11930-VCZ (Del. Ch. Sept. 13, 2017) (Glasscock,
V.C.) (Transcript Ruling at 45:23-24) (“That is something to which this statute is silent.
And I think, to fill that void, I look at the common law.”) (interpreting 12 Del. C. §49-
116(c)).
48
See Est. of Eller v. Barton, 31 A.3d 895, 897 (Del. 2011) (applying fiduciary duties in
the context of a real estate agent).
49
12 Del. C. §49A-114.
50
12 Del. C. §49A-114(a)(1).
51
12 Del. C. §49A-114(a)(2).
52
12 Del. C. §49A-102(5).
53
12 Del. C. §49A-114(a)(3).
9
(4) to act loyally;54 (5) to not create conflicts of interest;55 (6) to act “with the care,
competence, and diligence ordinarily exercised by agents in similar
circumstances;”56 and (7) to keep records “of all receipts, disbursements, and
transactions made on behalf of the principal.”57
In the Motion, Sue contends that there is no factual support for David’s
allegations that Sue breached her fiduciary duty under the DPPAA or to support the
termination of the POA, and she has provided all necessary legal and financial
documents to David. She claims no further accounting is necessary and she is
entitled to judgment as a matter of law.58 In response, David identifies evidence that
he asserts shows Sue’s breach and argues that this evidence is sufficient to show that
a further accounting is necessary to uncover mismanagement or other improper
54
12 Del. C. §49A-114(b)(1). This duty of loyalty is qualified by the DPPAA, which
provides that “[a]n agent that acts with care, competence, and diligence for the best interest
of the principal is not liable solely because the agent also benefits from the act or has an
individual or conflicting interest in relation to the property or affairs of the principal.” 12
Del. C. §49A-114(d). While the concept of fiduciary relationships requires the fiduciary
“to pursue solely the interests of the beneficiary,” e.g. Crosse v. BCBSD, Inc., 836 A.2d
492, 495 (Del. 2003), the DPPAA and the Uniform Power of Attorney Act of 2006, upon
which the DPPAA is based, explicitly modifies this fiduciary duty to require only that the
agent act in the “best interest of the principal.” Unif. Personal Power of Atty. Act §116,
cmt. (2006). Under this statute, “loyalty to the principal can be compatible with an
incidental benefit to the agent.” Id.
55
12 Del. C. §49A-114(b)(2).
56
12 Del. C. §49A-114(b)(3).
57
12 Del. C. §49A-114(b)(4).
58
D.I. 42.
10
conduct.59 I analyze each transaction identified by David as a breach of fiduciary
duties by Sue in turn.
A. Sue’s Alleged Failure to Disclose Records from County Bank
David contends that Sue engaged in a pattern of withholding various records
related to Richard Sr.’s accounts in County Bank from him.60 He points to Sue’s
failure to turn over certain bank statements before the discovery deadline in this
matter.61 Sue does not dispute this but asserts that any delay was caused by the bank
and that she provided the documents to David as soon as they were made available.62
Since there is no factual dispute on this issue, I turn to whether this failure to
disclose by the discovery deadline shows, as David argues, “a pattern of what can
only be considered a breach of fiduciary duty.”63 I conclude, as a matter of law, that
it does not. Under the DPPAA, an agent has a duty to disclose receipts,
disbursements and transactions conducted on behalf of the principal if requested to
do so by the principal, a fiduciary of the principal, or a court order.64 David does
59
D.I. 44.
60
Id., at 3-4.
61
Id., at 4.
62
D.I. 52, at 6-7; Id., Ex. A., ¶ 2.
63
D.I. 44, at 4. This argument seems more directed toward a discovery violation that could
have been addressed through a motion to compel, if needed, than toward a breach of
fiduciary duty.
64
12 Del. C. §49A-114(g).
11
not fall within the list of persons who may request an accounting from Sue under the
DPPAA.65 Nothing in the POA instructs Sue to make an accounting to her siblings,66
and there was no court order requiring that Sue make such an accounting at the time
these records were disclosed. Accordingly, Sue did not owe David a duty to disclose
these records under the DPPAA, so there is no evidence of a genuine issue for trial
related to Sue’s failure to disclose records.67
Further, Sue, as agent, owed the duty to act “with the care, competence, and
diligence ordinarily exercised by agents in similar circumstances”68 and to keep
records “of all receipts, disbursements, and transactions made on behalf of the
principal.”69 David does not argue that Sue has acted without care in keeping and
maintaining records or that she has not kept records, but merely asserts that Sue has
65
Id.
66
See D.I. 22, Ex. A.
67
Sue has produced over 2,200 pages of records through discovery to David and two
depositions have been taken, among other discovery. See, e.g., D.I. 42, at 9, n.1; D.I. 42,
Exs. H, J; D.I. 36, D.I. 32. Assuming, arguendo, that Sue has breached a duty she owes
under the DPPAA and an accounting may be a possible remedy, David has not identified
documents or transactions that Sue has not now produced to him through discovery. He
merely points to certain events and argues that they “beg[] the question of what additional
information [Sue] may be withholding.” D.I. 44, at 10. Sue responds that she “has provided
David with every relevant document in her possession.” D.I. 42, at 9, n. 1. There is no
evidence that any duty to disclose records under the DPPAA has not been met through
discovery.
68
12 Del. C. §49A-114(b)(3).
69
12 Del. C. §49A-114(b)(4).
12
not disclosed all of the records.70 The undisputed evidence shows that Sue has kept
and maintained records of Richard Sr.’s affairs. Since there is no evidence that Sue
breached her duty with respect to keeping and maintaining financial records, David
has failed to meet his burden and Sue is entitled to judgment on this issue.
B. Transfers from County Bank to Accounts in Sue’s Name
David next points to two transfers from County Bank to accounts in Sue’s
name as evidence of her breach of fiduciary duties.71 On December 3, 2018, a
transfer of $65,000 was made from Richard Sr.’s account at County Bank to an
account in Sue’s name.72 On November 19, 2019, there was a transfer of $49,000
from Richard Sr.’s County Bank account to the same account in Sue’s name.73 David
argues that these transfers show that Sue “has repeatedly used [Richard Sr.’s] funds
as her own.”74 Sue responds, in a sworn affidavit, that these transfers were to a
property renovation account and “used for maintenance and renovations of [Richard
Sr.’s] multiple rental properties,” and that “[a]ll of the funds in this account were
expended for the benefit of [Richard Sr.] and his rental properties.”75
70
See D.I. 44, at 8-10.
71
Id., at 4-5.
72
D.I. 44, Ex. F.
73
Id.
74
D.I. 44, at 4.
75
D.I. 52, Ex. A, ¶ 6; see also D.I. 52, at 9-10; D.I. 52, Ex. A, ¶ 7.
13
Accepting, for purposes of the Motion, David’s factual assertions as true,
these transfers do not show a breach of fiduciary duty. As agent, Sue owed Richard
Sr. the duty to act loyally and to refrain from creating conflicts of interest.76 David
asks me to infer that the transfers to accounts in Sue’s name are, by their very nature,
improper transactions that resulted in Sue’s personal benefit. I do not find that is a
reasonable inference to draw.77 David offers no evidence that Sue spent these
monies in a wrongful way that did not benefit Richard Sr. Therefore, a claim for a
fiduciary duty breach under the DPPAA cannot be sustained on these facts.
C. Transfers to the “Antiks” Account
David next points to a number of transfers to an account that the parties
identify as the “Antiks” account, named in reference to a business that their mother
used to operate.78 David identifies transfers totaling $55,000 to this account and
argues that Sue breached her fiduciary duties by not disclosing the purpose of that
account.79 Sue responds that these transfers were necessary to pay Richard Sr.’s
76
12 Del. C. §49A-114(b)(1), (b)(2).
77
I consider that Sue has made significant expenditures for Richard Sr.’s benefit while
acting as his agent. Both his home healthcare (incurred before he relocated to the
Brandywine facility) and the Brandywine facility cost in excess of $10,000 per month. See
Sue Dep. Tr. 11:24-12:13. Sue marshalled Richard Sr.’s assets and disposed of properties
to make those payments and keep up with expenses. See D.I. 52, Ex. A, ¶ 3; Sue Dep. Tr.
25:10-22.
78
D.I. 44, at 5.
79
Id.
14
healthcare expenses and other necessary expenses of her parents.80 First, since Sue
owed no duty under the POA to disclose receipts, disbursements, or transactions to
David, the failure to disclose “what that account is for”81 is not evidence of a breach
of fiduciary duty in this matter. Next, I consider that Sue is required to “[a]ct with
the care, competence, and diligence ordinarily exercised by agents in similar
circumstances”82 and to “[k]eep a record of all receipts, disbursements, and
transactions made on behalf of the principal.”83 Based upon the record before me, I
find no evidence that Sue has breached either of those duties related to the “Antiks”
account. David has not produced evidence that indicates Sue maintained these bank
accounts without care, competence, or diligence. Indeed, Sue’s voluminous
discovery production, including the detail provided on the memo lines of the checks,
demonstrates that Sue kept fairly meticulous records.84 Based upon the specific,
admissible evidence before me concerning those transactions, I find there is no
material factual dispute concerning the “Antiks” account.
D. Payment of Sue’s Legal Fees
80
D.I. 52, at 7-8; D.I. 52, Ex. A, ¶ 3. Sue specifically points to the memo lines of the check
images that indicate what the funds were spent on, such as “Caregiving,” or Richard Sr.’s
caregiving expenses, or “Mom’s headstone.” D.I. 52, at 7-8.
81
D.I. 44, at 5.
82
12 Del. C. §49A-114(b)(3).
83
12 Del. C. §49A-114(b)(4).
84
See D.I. 44, Exs. J, K, L, M.
15
David next contends that legal fees Sue has paid from Richard Sr.’s funds are
evidence of a breach of fiduciary duty.85 He argues that, since Richard Sr. was not
joined as a party in this matter until October of 2020, Sue breached a fiduciary duty
by using Richard Sr.’s funds to pay for counsel in this matter.86 Sue contends that
she was permitted to expend funds out of the principal’s assets to defend a legal
action involving the principal.87
“An agent is entitled to reimbursement of expenses reasonably incurred on
behalf of the principal.”88 In Estate of Dean,89 then-Master LeGrow held that
attorneys’ fees incurred by an agent under a personal power of attorney in the
defense of a breach of fiduciary duty action were expenses “reasonably incurred on
the behalf of the principal,” subject to disgorgement should the court find the agent
breached their fiduciary duties.90 It appears the attorneys’ fees at issue here were
incurred by Sue to defend the POA in the course of her duties as agent acting on
Richard Sr.’s behalf.91 The POA authorizes Sue to employ attorneys and pay them
85
D.I. 44, at 5-6.
86
Id.
87
D.I. 52, at 11.
88
12 Del. C. §49A-112(a).
89
2014 WL 3221222 (Del. Ch. June 30, 2014).
90
Id., at *9-10.
91
Sue states, in a sworn affidavit, that the legal expenses paid to Ferry Joseph, P.A. were
paid “to represent me in my capacity as trustee and . . . as agent under [the POA].” D.I. 52,
Ex. A, ¶ 8.
16
“such salaries, wages or other remuneration as my Agent deems proper.”92 Thus,
since I find Sue is entitled to judgment as a matter of law in this litigation (so
disgorgement is not proper), Sue’s payment of her attorneys’ fees related to this
litigation from Richard Sr.’s funds does not represent a fiduciary breach.93
E. Payments to Focus Dynamics
David next contends that payments totaling $17,437.00 over seven years to
Focus Dynamics, LLC (“Focus Dynamics”), a consulting firm owned by Sue and
her husband, is evidence of a breach of fiduciary duty.94 Sue responds by sworn
affidavit that she employed Focus Dynamics as agent to provide bookkeeping and
accounting services on behalf of Richard Sr., at his request, and paid fees to Focus
Dynamics ranging “from $25.00 per hour to $40.00 per hour.”95
Sue was permitted under the POA to employ accountants, clerks and others in
furtherance of the agency and for Richard Sr.’s benefit.96 Accordingly, Sue was
within her authority as agent to employ Focus Dynamics for bookkeeping and
92
D.I. 22, Ex. A, ¶ 20.
93
The fact that Richard Sr. is represented by separate counsel in this litigation does not
preclude the payment of Sue’s attorneys’ fees from Richard Sr.’s funds if her attorneys’
fees were incurred on behalf of Richard Sr. and his POA.
94
See D.I. 44, at 6; Id., Ex. K.
95
D.I. 52, Ex. A, ¶ 10.
96
D.I. 22, Ex. A, ¶ 20.
17
accounting services. The inquiry next turns to whether Sue breached a fiduciary
duty by engaging in these transactions.
As agent, Sue owed Richard Sr. a duty to act loyally97 and to endeavor not to
create conflicts of interests.98 However, “[a]n agent that acts with care, competence,
and diligence for the best interest of the principal is not liable solely because the
agent also benefits from the act or has an individual or conflicting interest in relation
to the property or affairs of the principal.”99 Here, Focus Dynamics, a company
which Sue co-owns, received a benefit when it was employed to perform work on
Richard Sr.’s behalf. However, even though Sue benefitted as a result of her actions
as Richard Sr.’s agent, she will not be liable under the DPPAA if she acted with care,
competence, and diligence in Richard Sr.’s best interest.100 My calculations, based
upon the evidence before me, show that Focus Dynamics was paid approximately
$16,960.55 from Richard Sr.’s funds between January of 2014 and February of
2021.101 Sue states that the hourly rate charged by Focus Dynamics for services
provided ranged between $25.00 and $40.00, which is reasonable, given the types
97
12 Del. C. §49A-114(b)(1).
98
12 Del. C. §49A-114(b)(2).
99
12 Del. C. §49A-114(d).
100
Id.
101
D.I. 44, Exs. J, K.
18
of services provided.102 David asserts no impropriety about the services provided,
or the rates charged, related to this employment, other than the self-dealing nature
of it because of Sue’s ownership interest in Focus Dynamics. Given these
circumstances, and the absence of any evidence that Sue acted without care,
competence and diligence for Richard Sr.’s best interest in employing Focus
Dynamics, I find there is no specific evidence that shows a breach of fiduciary duty
on these facts.
F. Payments to Richard Jr. for Maintenance of Real Property
David next alleges that Sue’s payment of $34,888.00 to Richard Jr. from
Richard Sr.’s funds, while Sue was acting as agent, constitutes a breach of fiduciary
duty.103 The evidence shows Sue reimbursed Richard Jr. for various expenses that
Richard Jr. incurred in the maintenance and renovation of rental properties owned
by Richard Sr.104 Sue stated, in her sworn affidavit, that “[s]ome of the payments
[to Richard Jr.] were for reasonable compensation for his services and some of the
102
See D.I. 52, Ex. A, ¶ 10.
103
D.I. 44, at 6, 9.
104
See Sue Dep. Tr., 30:17-31:2; D.I. 52, Ex. A, ¶ 9. The record shows payments of
approximately $34,531.22 to Richard Jr. from Richard Sr.’s funds between January of 2015
and August of 2020. D.I. 49, Exs. K, L, M. There are notations on the checks to Richard
Jr. such as “maintenance,” “bathroom fixtures,” “renovations,” and indications as to which
properties the payments are for. Id. In her affidavit, Sue states that Richard Jr. had access
to a bank account that was used for maintenance and renovations of Richard Sr.’s rental
properties, and that all funds from that account “were expended for the benefit of [Richard
Sr.] and his rental properties.” D.I. 52, Ex. A, ¶ 6.
19
expenses were for supplies for the renovations and improvements to the rental
properties. All of these expenses were for the benefit of my father.”105 David asserts
that the amount paid to Richard Jr. “is an exorbitant sum for such services and well
above the market rate.”106
Sue, as agent under Richard Sr.’s Power of Attorney, had the duty to “[a]ct in
accordance with the principal’s reasonable expectations to the extent actually known
by the agent and, otherwise, in the principal’s best interest,”107 and to “[a]ct with the
care, competence, and diligence ordinarily exercised by agents in similar
circumstances.”108 David’s unsworn allegation is not supported by the record, since
there is no evidence that the payments to Richard Jr. were not reasonable, based upon
the services provided, or as reimbursement for supplies or other services obtained
by Richard Jr.109 The undisputed evidence at summary judgment shows that Sue
used Richard Jr. to help maintain and operate rental properties owned by Richard Sr.
and that she paid Richard Jr. for expenses related to that work. The evidence does
105
D.I. 52, Ex. A, ¶ 9.
106
D.I. 44 at 6.
107
12 Del. C. §49A-114(a)(1).
108
12 Del. C. §49A-114(b)(3).
109
See generally In re Transkaryotic Therapies, Inc., 954 A.2d 346, 370 (Del. Ch. 2008)
(“Instead of pointing to specific facts supportive of their claim, plaintiffs only offer
unsupported allegations and inferences. That is insufficient to defeat summary judgment.”)
(internal quotation marks and citations omitted); Thomas v. Hobbs, 2005 WL 1653974(Del. Super. Apr. 27, 2005) (“[A]n unsworn statement is not sufficient to create a dispute
of fact to avoid summary judgment.”).
20
not provide factual support for David’s claim that Sue breached her fiduciary duty
by making these payments to Richard Jr.
G. Removal of Items from Richard Sr.’s Home
David alleges Sue’s removal of items from Richard Sr.’s home is evidence of
her breach of fiduciary duties.110 Although Sue does not specifically address this
point,111 the evidence shows that, after Richard Sr. was moved into the Brandywine
facility, Sue and others removed valuables from Richard Sr.’s house for safekeeping
and discarded what Sue considered as “junk.”112 Sue has not yet made an inventory
of Richard, Sr.’s possessions.113
Sue, as Richard Sr.’s agent under the DPPAA, has the duty to “[a]ct in
accordance with the principal’s reasonable expectations to the extent actually known
by the agent and, otherwise, in the principal’s best interest,”114 and to “[a]ct with the
care, competence, and diligence ordinarily exercised by agents in similar
circumstances.”115 The POA authorizes Sue to “buy, sell, exchange, … or by any
other means whatsoever, to acquire or dispose of tangible or intangible personal
110
D.I. 44 at 6.
111
D.I. 52.
112
Sue Dep. Tr. 20:21-21:8; 57:18-58:10.
113
Id., at 58:11-14.
114
12 Del. C. §49A-114(a)(1).
115
12 Del. C. §49A-114(b)(3).
21
property.”116 Under the POA, Sue is entitled to dispose of Richard Sr.’s property.
For a breach to occur, she must be shown as failing to act in Richard Sr.’s best
interest or to act with the care, competence, and diligence exercised by agents in
similar circumstances.117 Indeed, Sue’s actions appear reasonable; when Richard Sr.
no longer lived in the property, she secured the property by safeguarding valuables
and removing clutter. Therefore, there is no evidence of a breach of fiduciary duty
under the DPPAA on these facts.
H. Sue’s Instruction that Richard Sr.’s Health Care Providers not
Communicate with David
Finally, David contends that Sue’s instruction to “at least one health care
professional to not provide information to David, evidences a breach of fiduciary
duty.118 This allegation does not pertain to a breach of fiduciary duty under the POA,
since the POA does not address decisions related to the principal’s health care.119
And, the DPPAA governs durable personal powers of attorney, not health care
powers of attorney.120
116
D.I. 22, Ex. A, ¶ 5.
117
David claims that Sue did not include him in the process of cleaning out the family
home. D.I. 44, at 6. That, by itself, is not sufficient to demonstrate a lack of care,
competence, or diligence on behalf of Richard, Sr.
118
Id.
119
See D.I. 22, Ex. A. Richard Sr. has a separate power of attorney for health care. See
D.I. 42, Ex. G.
120
12 Del. C. §49A-103(a)(4).
22
I. Sue’s Use of Richard Sr.’s Funds to Give Gifts
While not argued on summary judgment,121 David’s petition alleges that Sue
gave “expensive gifts [to] family and friends” out of Richard Sr.’s funds.122 For
purposes of completeness, I address this issue. There is no evidence of such gifts in
the record, which shows only that Sue gave modest periodic bonuses near holidays
to Richard Sr.’s caregivers,123 and a gift of $200 from Richard Sr. to Sue’s son upon
his graduation from law school.124 Additionally, Sue used Richard Sr.’s credit card
to purchase dinner and food items for Richard Sr. and family members from the
West Coast visited Rehoboth Beach.125
The POA authorizes Sue to make gifts, including gifts to family members, in
amounts up to $13,000.00 annually.126 Again, Sue’s duties under the DPPAA
include the duties to act “in accordance with the principal’s reasonable expectations
to the extent actually known by the agent and, otherwise, in the principal’s best
interest,” and “with the care, competence, and diligence ordinarily exercised by
121
See D.I. 44.
122
D.I. 22, ¶ 17.
123
See, e.g., D.I. 44, Ex. K, at 12-13.
124
Sue Dep. Tr. 55:16-24.
125
Id., 39:13-18; 56:11-17.
126
D.I. 22, Ex. A, ¶ 27.
23
agents in similar circumstances.”127 These modest gifts were authorized by the POA
and do not evidence a breach of Sue’s duties under the DPPAA.
V. CONCLUSION
I recommend that the Court grant Petitioner Sue Tikiob-Carlson’s Motion for
Summary Judgment, dismissing the Amended Petition. I find Sue has met her
burden of showing there is no genuine issue of material fact because Respondent
David Tikiob has offered no specific, admissible evidence to show Sue breached any
duty she has as an agent under the POA or the DPPAA, after having an abundant
opportunity – over the 20 months of this litigation (and the extensive discovery
conducted) – to do so. Accordingly, I find David has failed to establish a material
factual dispute and Sue is entitled to judgment as a matter of law. This is a final
Master’s Report, and exceptions may be taken under Court of Chancery Rule 144.
127
12 Del. C. §49A-114(a)(1); 12 Del. C. §49A-114(b)(3).
24