Alison E. Glassie v. Paul Doucette, in his capacity as of the Estate of Donelson C. Glassie, Jr. ( 2017 )

Supreme Court
No. 2014-108-Appeal.
(NC 12-262)
Alison E. Glassie et al. :
v. :
Paul Doucette, in his capacity as Executor :
of the Estate of Donelson C. Glassie, Jr.
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Supreme Court
No. 2014-108-Appeal.
(NC 12-262)
Alison E. Glassie et al. :
v. :
Paul Doucette, in his capacity as Executor :
of the Estate of Donelson C. Glassie, Jr.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
OPINION
Justice Goldberg, for the Court. This appeal came before the Supreme Court on
February 10, 2017, and requires the Court to determine whether the law of contracts or the law of
trusts governs the resolution of this dispute. An allegedly underfunded trust that was created by
the decedent, Donelson C. Glassie, Jr. (Donelson), for the benefit of his daughter, the late
Jacquelin Caffrey Glassie (Jacquelin),1 in accordance with a property settlement agreement
between her divorcing parents, Donelson and Jacquelin’s mother, Marcia Sallum Glassie
(Marcia), is the genesis of this dispute.
The plaintiff, Alison E. Glassie (plaintiff or Alison), Executrix of the Estate of Jacquelin
Caffrey Glassie, appeals from a grant of summary judgment in favor of defendant, Paul
Doucette, in his capacity as Executor of the Estate of Donelson C. Glassie, Jr. (defendant) on
plaintiff’s breach of contract claim. The Superior Court justice applied the law of trusts and
declared that plaintiff lacked standing to sue the estate because, except in limited circumstances,
only a trustee may institute an action on behalf of the beneficiaries of a trust. Before this Court,
1
Jacquelin unexpectedly passed away on November 15, 2012, while this case was pending in
Superior Court.
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plaintiff argues that the trust created for Jacquelin’s benefit is not the basis of this suit and that
her standing to sue arises from her status as a third-party beneficiary to the property settlement
agreement entered into by her divorcing parents. For the reasons discussed herein, we affirm the
judgment of the Superior Court.
Facts and Travel
This case is but one chapter2 in what is a complicated, multistate continuing saga over the
decedent’s estate, arising in the context of a legacy of wealth. On February 14, 1986, Donelson
and Marcia were married; they had three children, Alison, Georgia, and the youngest, Jacquelin,
the subject of this dispute. Prior to Jacquelin’s birth, Donelson’s mother, Sara Madison Eccles,
created two trusts, with a principal of $100,000 each, for the benefit of Jacquelin’s older sisters,
Alison and Georgia. Donelson and Marcia eventually ended their marriage and entered into a
property settlement agreement on July 1, 1993. Article SEVENTEENTH provided as follows:
“Whereas there is presently in existence two Trusts for the
benefit of the minor child, Alison and the minor child, Georgia.
Said Trusts are in the principal amount of $100,000. Therefore,
the Husband agrees to create a similar trust within 45 days for the
minor child, Jacquelin. He shall pay into said Trust the sum of
$10,000 each and every year until said Trust is equal to the amount
of the Trusts for Alison and Georgia. Said Trust shall be used to
pay for the college and higher education of the minor child,
Jacquelin.”
On August 11, 1993, Donelson established the Jacquelin Caffrey Glassie Trust II (the
Trust). Section 3.1 of the Trust states that the declared purpose of the Trust was “to provide
benefits for the primary beneficiary through a trust providing benefits substantially similar to
2
A related case concerning Donelson’s estate is additionally pending before us. The defendant
has appealed a grant of summary judgment entered in favor of Jacquelin’s mother, declaring that
Marcia was entitled to additional monies under Donelson’s Last Will and Testament, in
accordance with the property settlement agreement. Glassie v. Doucette, No. 2015-276-A., No.
2015-277-A.
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those provided for Alison Glassie and Georgia Glassie by trusts created by Trustor’s mother,
Sara Madison Eccles, on August 30, 1989 * * *.” Section 2.7 of the Trust indicates that the
Trust would terminate “upon the death of the primary beneficiary.” In the event that Jacquelin,
the primary beneficiary, failed to exercise a power of appointment, the Trust was to be
distributed in equal shares to Jacquelin’s living issue, or in the case of no living issue, in equal
shares to Donelson’s living issue, “with the Trustee of any trust created by Trustor’s mother
* * * for the benefit of such issue similar to this trust receiving the share for such issue * * *.” Id.
at 2.7(b). Notably missing from the Trust language is any provision that indicates that the Trust
was created pursuant to the property settlement agreement, or that Donelson was required to
contribute $10,000 a year until the Trust was “equal to the amount of the Trusts for Alison and
Georgia.” The record discloses that Donelson conveyed property to the trustee of the Trust, First
Security Bank of Utah, National Association,3 in accordance with Schedule A, a document which
has not been produced. According to an affidavit of the Executor, Donelson made two cash
contributions of $10,000, and all other contributions were transfers of equity securities.
On February 3, 2011, Donelson died. According to the Executor, Donelson had
contributed $123,336.82 to the Trust at the time of his death, resulting in a market value of
$175,425.70. Jacquelin filed a claim against her father’s estate, alleging that her father breached
the property settlement agreement by failing to fund the Trust until it was equivalent to that of
her sisters. After the Executor denied Jacquelin’s claim, she filed a petition for a determination
of disallowed claim in the Newport Probate Court. On June 15, 2012, the Probate Court,
pursuant to G.L. 1956 § 33-11-16,4 ruled that Jacquelin’s claim should be decided by the
3
Wells Fargo Bank, N.A. (the Trustee) is the successor in interest to First Security Bank of Utah,
National Association, and the present trustee of the Trust.
4
General Laws 1956 § 33-11-16 states, in pertinent part:
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Superior Court, and this action ensued. Jacquelin alleged breach of contract in that “[Donelson]
failed to carry out [the] provisions of the property settlement agreement.” She also averred that,
had the Executor allowed her claim to fund the Trust in accordance with Donelson’s obligations,
the Trust would have had a value of approximately $1,600,000.
On November 15, 2012, almost five months after the complaint was filed, Jacquelin
unexpectedly passed away. Alison, the eldest Glassie sister, was appointed Executrix of
Jacquelin’s estate and was substituted as plaintiff in this action.5 On April 29, 2013, defendant
moved for summary judgment, arguing that plaintiff lacked the requisite standing to sue because
generally only the trustee has capacity to file suit on behalf of the beneficiaries of a trust and that
plaintiff’s claim was not cognizable since the Trust had terminated on Jacquelin’s death. The
plaintiff filed a cross-motion for summary judgment and raised a new argument, contending that
she was not suing on behalf of the Trust, but as a third-party beneficiary to the property
settlement agreement. On December 2, 2013, after hearing, summary judgment was granted in
favor of defendant on the basis that the right to bring the claim rested with the Trustee.
Immediately following this pronouncement, plaintiff requested that summary judgment be
“[I]f the probate court in its sole discretion finds that pleading,
discovery and trial of the issues presented would be more
efficiently presented in the * * * superior court * * *, the
disallowance shall be affirmed by order of the probate court and
the claimant shall bring civil action on the disallowed claim
pursuant to § 33-11-48 * * *.”
5
Because Jacquelin did not execute a power of appointment for the Trust, pursuant to Section
2.7(b), Donelson’s children are entitled to equal shares of the Trust assets. The Trustee filed a
petition for interpretation of trusts and authorization to distribute trust assets in Utah, contending
that Section 2.7(b) of the Trust did not limit the distribution of assets to Jacquelin’s sisters.
Alison and Georgia filed a counterclaim for, inter alia, a declaratory judgment that Section 2.7(b)
required that the Trust assets solely be distributed to the two trusts established for their benefit.
It was represented to the Court at oral argument that a settlement has been reached in the Utah
case.
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granted “without prejudice,” in order for plaintiff to substitute the Trustee as plaintiff. Counsel
for defendant responded that the Trustee would have to make a claim if it deemed fit, and the
Superior Court justice responded “[t]hat’s true.”6 No ruling was made on plaintiff’s request.
Judgment for defendant was entered on December 10, 2013.7 The plaintiff timely
appealed on December 20, 2013.
Standard of Review
“This Court reviews de novo a trial justice’s decision granting summary judgment.” Sola
v. Leighton, 45 A.3d 502, 506 (R.I. 2012) (quoting Lynch v. Spirit Rent-A-Car, Inc., 965 A.2d
417, 424 (R.I. 2009)). “Summary judgment is appropriate only when the ‘pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to judgment
as [a] matter of law.’” Id. (quoting Plunkett v. State, 869 A.2d 1185, 1187 (R.I. 2005)). “Only
when a review of the admissible evidence viewed in the light most favorable to the nonmoving
party reveals no genuine issues of material fact, and the moving party is entitled to judgment as a
matter of law, will this Court uphold the trial justice’s grant of summary judgment.” Id. (quoting
6
In May 2015, plaintiff inquired whether the Trustee would assign its rights to any claims
against defendant arising out of the property settlement agreement. On January 7, 2016, as part
of a partial settlement in the Utah litigation, the Trustee assigned to plaintiff any “claims that [the
Trustee] may possess, in its capacity as Trustee of [the Trust], against [defendant] arising out of
an alleged breach of Donelson’s obligations under a [p]roperty [s]ettlement [a]greement dated
July 1, 1993[.]” On May 10, 2016, plaintiff filed a petition for leave to file a claim out of time in
the Newport Probate Court, seeking to, again, file a claim for breach of the property settlement
agreement against defendant. On June 14, 2016, the petition was denied. A probate appeal is
currently pending before the Superior Court. In re Estate of Glassie, NP-2016-265.
7
It was brought to this Court’s attention that the final judgment entered on December 10, 2013,
did not dispose of defendant’s counterclaim for disinheritance based on a no-contest clause
found in Donelson’s Last Will and Testament. On May 8, 2015, the papers in this case were
remanded to the Superior Court. On June 8, 2015, final judgment was entered pursuant to Rule
54(b) of the Superior Court Rules of Civil Procedure, nunc pro tunc, in place of the final
judgment entered on December 10, 2013. The counterclaim is still pending in the Superior
Court.
-5-
National Refrigeration, Inc. v. Standen Contracting Co., 942 A.2d 968, 971 (R.I. 2008)).
“[S]ummary judgment is a drastic remedy, and a motion for summary judgment should be dealt
with cautiously.” Cruz v. DaimlerChrysler Motors Corp., 66 A.3d 446, 451 (R.I. 2013) (quoting
DeMaio v. Ciccone, 59 A.3d 125, 129 (R.I. 2013)).
Analysis
In addressing the issues in this case, we undertake a task that is familiar to many aspiring
attorneys facing a law school exam: examine the facts, spot the issue, and apply the applicable
area of law. The plaintiff contends that her claims are governed by the law of contracts,
specifically the principles relating to third-party beneficiaries. She argues that, because she was
the intended third-party beneficiary under the property settlement agreement between her
parents, she has standing to maintain this action. At a minimum, she contends, a genuine issue
of material fact remains as to whether Jacquelin or the Trustee was the third-party beneficiary
under what she characterizes as the ambiguous language of the property settlement agreement.
The plaintiff also argues that Jacquelin’s death did not affect the viability of this action because
Jacquelin’s right to redress survived her death.8
The defendant, on the other hand, posits that the law of trusts governs this action.
Specifically, he maintains that, except in limited, unrelated circumstances, only a trustee is
vested with standing to sue on behalf of trust beneficiaries. Similarly, defendant claims that the
purpose of the Trust—to provide for Jacquelin’s welfare—is no longer relevant because the
Trust terminated on Jacquelin’s death, in accordance with its provisions, and that any cause of
action that the Trustee may have had also was extinguished.
Additionally, plaintiff argues that, should this Court determine that the Trustee was the
8
Because we conclude that only the Trustee has standing to bring suit in this case we do not
address this issue.
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proper party to file suit, the Superior Court justice abused his discretion when he denied her
motion to amend and substitute the Trustee as plaintiff in this action.
A
Standing
It is well settled that “[w]hen one party for valuable consideration, engages another by
contract to do some act for the benefit of a third party, the latter who would enjoy the benefits,
may maintain an action for breach of contract.” Davis v. New England Pest Control Co., 576
A.2d 1240, 1242 (R.I. 1990); see also Cathay Cathay, Inc. v. Vindalu, LLC, 962 A.2d 740, 745-
46 (R.I. 2009) (“This Court has long upheld ‘the right of a third person to enforce a promise
made by one person to another for the benefit of said third person, although the consideration
does not move from such third person and although he was not cognizant of the promise when it
was made.’” (quoting Blake v. Atlantic National Bank, 33 R.I. 464, 467, 82 A. 225, 226
(1912))). In order to prevail on a contract claim as a third-party beneficiary, the claimant must
prove that he or she is an intended beneficiary of the contract. See Cathay Cathay, Inc., 962
A.2d at 745; see also Davis, 576 A.2d at 1242 (“If the third party is an intended beneficiary, the
law implies privity of contract.”). An intended beneficiary of a contract “stands in the shoes” of
the promisee. Cathay Cathay, Inc., 962 A.2d at 746 (quoting Campione v. Wilson, 661 N.E.2d
658, 664 (Mass. 1996)).
When discussing the rights of third-party beneficiaries, this Court has looked to the
Restatement (Second) Contracts § 302 (1981). See Cathay Cathay, Inc., 962 A.2d at 745.
Section 302 of the Restatement delineates in part:
“Unless otherwise agreed between promisor and promisee,
a beneficiary of a promise is an intended beneficiary if recognition
of a right to performance in the beneficiary is appropriate to
effectuate the intention of the parties and either
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“(a) the performance of the promise will satisfy an
obligation of the promisee to pay money to the beneficiary; or
“(b) the circumstances indicate that the promisee intends to
give the beneficiary the benefit of the promised performance.”
In Curato v. Brain, 715 A.2d 631, 634 (R.I. 1998), we affirmed a Superior Court justice’s
determination that a property settlement agreement between two divorcing parents, which
provided that the parties’ daughters would be entitled to receive real property under certain
circumstances, was a third-party beneficiary contract for the daughters, who were the intended
beneficiaries under the agreement. We declared that “there is no question that an intended third-
party beneficiary, in this case the children, may sue on a contract made for his or her benefit.”
Id. at 635 (citing Davis, 576 A.2d at 1242; Elliott Leases Cars, Inc. v. Quigley, 118 R.I. 321,
330, 373 A.2d 810, 814 (1977)). Other jurisdictions also recognize that children who receive
property under a property settlement agreement are third-party beneficiaries with standing to
enforce the terms of the contract. See, e.g., Flanigan v. Munson, 818 A.2d 1275, 1280 (N.J.
2003) (“The law also is well settled that children of a marriage are third-party beneficiaries of a
settlement agreement between their parents. * * * Based on the foregoing principles, we have no
doubt that [the children] are beneficiaries of the property settlement agreement between their
biological parents. As such, they have standing to enforce that agreement, including its insurance
provision.”); Orr v. Orr, 592 N.E.2d 553, 555-56 (Ill. Ct. App. 1992) (“[A]n adult child of
divorced parents has standing to enforce the educational provision of the divorce decree on the
basis that he or she is a third-party beneficiary. * * * [C]hildren who are beneficiaries under a
contract entered into by their parents have standing to bring suit against their father to compel his
compliance with the contract terms.”); see also Noble v. Fisher, 894 P.2d 118, 123 (Idaho 1995).
Nevertheless, in the circumstances of this case, the record is clear that the property
settlement agreement required Donelson to create a trust for Jacquelin’s benefit and,
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indisputably, he did so. Jacquelin’s estate is before the Court challenging the amount of
contributions made by her father and the manner in which the Trust was funded. The defendant
argues that, once the Trust was created, Donelson’s obligations to Jacquelin as a third-party
beneficiary were fulfilled. In fact, defendant concedes that, if Donelson did not create the Trust
as obliged, “[c]onceivably, Jacquelin * * * could have sought enforcement of the promise as [a]
third-party beneficiary of the [property settlement agreement].” The defendant directs our
attention to Restatement (Second) Contracts § 302 at cmt. f., illustration 20 (1981), “Trust and
agency,” which presents a complicated fact pattern that also could appear on a law school exam:
“A, an insurance company, promises B in a policy of
insurance to pay $10,000 on B’s death to C as trustee for B’s wife
D. C is an intended beneficiary and may enforce his rights as
trustee; D’s rights as beneficiary of the trust and the contract are
enforceable only in the manner in which rights of other trust
beneficiaries are enforced.”9
Importantly, cmt. f. at § 302 expounds: “[A]lthough the beneficiary of such a trust is a
beneficiary of the promise [under the contract], his rights must be enforced in accordance with
the law of [t]rusts.” The plaintiff argues that the law of contracts applies in this case because the
Trust was not in existence at the time her parents executed the property settlement agreement.
We disagree.10
It is undisputed that the Trust was in fact created by Donelson, for Jacquelin’s benefit, as
required by the property settlement agreement. That benefit that was intended by the parties to
the property settlement agreement was thereby achieved. The plaintiff’s complaint is that
9
In the instant case, Donelson would be A; Marcia would be B; the yet-to-be formed Trust
would be C; and Jacquelin would be D.
10
We note that it was represented by counsel at oral argument that the Trust provisions closely
mirror those set forth in the trusts for Alison and Georgia, including common trustees, and that
the trusts were drafted by the same attorney, who was provided with a copy of the property
settlement agreement.
-9-
Donelson nonetheless was in breach because he failed to adequately fund the Trust: “[Donelson]
shall pay into said Trust the sum of $10,000 each and every year until said Trust is equal to the
amount of the Trusts for Alison and Georgia.” However, this clause relates to Jacquelin’s status
as a beneficiary of the Trust and not as a third-party beneficiary of the property settlement
agreement. Whether the Trust was in existence when the property settlement agreement was
executed has no bearing on this analysis. Similar to the trust beneficiary in the above-noted fact
pattern, Jacquelin is attempting to enforce a provision that requires funds to be contributed to a
trust created for her benefit. Jacquelin’s status is not that of a third-party beneficiary, but that of
a “beneficiary,” in the colloquial sense of the word, based on her status as the sole beneficiary of
the Trust. Cf. Saks v. Damon Raike and Co., 8 Cal. Rptr. 2d 869, 877 (Cal. Ct. App. 1992)
(holding that “trust beneficiaries [have no authority] to maintain an action as third party
beneficiaries of contracts between the trustee and agents of the trustee concerning the internal
affairs of the trust”).
We also note that cmt. f. emphasizes the intent of the promisor and promisee when
determining the relationships that arise when a trust is contemplated. A trust is recognized as a
legal “entity.” See Restatement (Third) Trusts § 2, cmt. a. (2003) (“[M]odern common-law and
statutory concepts and terminology tacitly recognize the trust as a legal ‘entity,’ consisting of the
trust estate and the associated fiduciary relation between the trustee and the beneficiaries.”).
Upholding this distinction is important when distinguishing between persons acting in their
individual and representative capacities. See id. A settlor may opt to create a trust for a variety
of beneficial reasons. We decline the invitation to blur the distinction between gifting to a
beneficiary directly and doing so through a trust instrument.
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Lastly, the Restatement (Third) Trusts § 107(1) (2012) provides that “[a] trustee may
maintain a proceeding against a third party on behalf of the trust and its beneficiaries.”
Critically, a trust beneficiary may maintain a proceeding in limited circumstances when: “(a) the
beneficiary is in possession, or entitled to immediate distribution, of the trust property involved;
or (b) the trustee is unable, unavailable, unsuitable, or improperly failing to protect the
beneficiary’s interest.” Section 107(2). Comment b. to § 107 reiterates this principle:
“As holder of the title to trust property * * * and as the
representative of the trust and its beneficiaries, the trustee is
normally the appropriate person to bring * * * an action against a
third party on behalf of the trust. * * * [A] beneficiary has no
standing to sue a third party on behalf of the trust.”
This principle is consistent with the basic concept that the beneficiaries of a trust instrument hold
equitable title, while the trustee generally holds legal title. Whenever third-party liability is
alleged, § 107 of the Restatement controls. “Third-party liability may arise not only from trust
law * * * but also from other bodies of law * * *.” Section 107, cmt. a. Therefore, whether the
cause of action arises from trust law or, as in this case, from a contract dispute, standing to sue is
controlled by the law of trusts.11
Because we are of the opinion that a trustee is the appropriate party to bring suit against
third parties on behalf of trust beneficiaries, we conclude that plaintiff does not have standing to
maintain this cause of action. In our opinion, once the Trust was created, the law of trusts
became the governing law. From that point forward, Jacquelin’s beneficiary status was that of a
trust beneficiary, not of a third-party beneficiary to a contract. Accordingly, plaintiff lacked the
11
Cf. Putnam Resources v. Pateman, 958 F.2d 448, 465 (1st Cir. 1992) (“[I]t is important to
understand the principle of depecage. In legal parlance, depecage erects the framework under
which different issues in a single case, arising out of a common nucleus of operative facts, may
be decided according to the substantive law of different states.”).
- 11 -
requisite standing to sue her father’s estate for benefits she would have received based on her
status as the beneficiary of the Trust.
B
Motion to Amend
The plaintiff argues that the Superior Court justice erred in denying her motion to amend
the complaint in order to substitute the Trustee as plaintiff in this action. After the Court granted
summary judgment, plaintiff requested that the “dismissal” be “without prejudice to substituting
the trustee in[.]” The following colloquy ensued:
“THE COURT: Well, I mean –
“[Defendant’s Counsel]: If the trustee makes a claim, the
trustee makes a claim. I don’t think
it’s a matter of substituting in. This
trustee would have to make a claim.
“THE COURT: That’s true.
“[Plaintiff’s Counsel]: All right. Thank you, your Honor.”
We are hard-pressed to conclude that this discussion rises to the level of a motion to
amend the complaint in order to substitute the proper party, or that the plaintiff properly
preserved this issue for appellate review. Notably absent from the dialogue is any request to
amend the complaint; rather, the plaintiff asked that summary judgment be without prejudice.
We deem this issue waived.
Conclusion
For the reasons set forth herein, we affirm the judgment of the Superior Court. The
papers in this case are remanded to the Superior Court.
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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
SUPREME COURT – CLERK’S OFFICE
OPINION COVER SHEET
Alison E. Glassie et al. v. Paul Doucette, in his
capacity as Executor of the Estate of Donelson C.
Title of Case
Glassie, Jr.
No. 2014-108-Appeal.
Case Number
(NC 12-262)
Date Opinion Filed April 20, 2017
Suttell, C.J., Goldberg, Flaherty, Robinson, and
Justices
Indeglia, JJ.
Written By Associate Justice Maureen McKenna Goldberg
Source of Appeal Newport County Superior Court
Judicial Officer From Lower Court Associate Justice Bennett R. Gallo
For Plaintiff:
Melissa M. Horne, Esq.
Attorney(s) on Appeal
For Defendant:
R. Daniel Prentiss, Esq.
SU-CMS-02A (revised June 2016)