IMO Restatement of Declaration of Trust Creating the Survivor's Trust Created Under the Ravet Family Trust

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: May 8, 2014
Date Decided: June 4, 2014
Harold W. T. Purnell, II William M. Kelleher
David W. Carickhoff, Jr. Gordon, Fournaris & Mammarella
Archer & Greiner, P.C. 1925 Lovering Avenue
300 Delaware Avenue, Suite 1370 Wilmington, Delaware 19806
Wilmington, Delaware 19801
Re: In the Matter of Restatement of Declaration of Trust Creating
the Survivor’s Trust Created Under the Ravet Family Trust
Dated February 9, 2012,
Civil Action No. 7743-VCG
Dear Counsel:
This Letter Opinion addresses the Petitioner’s outstanding Motion to Alter
or Amend Judgment or, in the Alternative, to Reconsider the Judgment, or, in the
Alternative, for Relief from Judgment. The judgment in question is my bench
decision of January 29, 2014, in which I found that the Petitioner’s claims are
time-barred. The Petitioner in this action is the son of Shirley Ravet, settlor of the
Restatement of Declaration of Trust Creating the Survivor’s Trust Created Under
the Ravet Family Trust Dated February 9, 2012 (the “Trust”). He brings this
action to contest the validity of the Trust on the basis that it was the product of his
sisters’ exercise of undue influence over their mother, the settlor. On January 29,
2014, the Court conducted an evidentiary hearing on the limited issue of whether
the Petitioner had been given written notice of the Trust by March 27, 2012, the
last day on which such notice would effectively time-bar this action pursuant to 12
Del. C. § 3546, Delaware’s pre-mortem validation statute. That Section provides:
(a) A judicial proceeding to contest whether a revocable trust or any
amendment thereto, or an irrevocable trust was validly created may
not be initiated later than the first to occur of:
(1) One hundred twenty days after the date that the trustee
notified in writing the person who is contesting the trust of the
trust’s existence, of the trustee’s name and address, of whether
such person is a beneficiary, and of the time allowed under this
section for initiating a judicial proceeding to contest the trust
provided, however, that no trustee shall have any liability under
the governing instrument or to any third party or otherwise for
failure to provide any such written notice. For purposes of this
paragraph, notice shall have been given when received by the
person to whom the notice was given and, absent evidence to
the contrary, it shall be presumed that delivery to the last
known address of such person constitutes receipt by such
person.1
At that hearing, the parties disputed the meaning of the italicized language above:
the Respondent contended that, absent evidence demonstrating that written notice
was not delivered to the Petitioner’s last known address, delivery of that notice
was effective to trigger a presumption of receipt, while the Petitioner argued that
“absent evidence to the contrary” refers to any evidence—including the
Petitioner’s own self-serving testimony—indicating that he had not actually
received the notice. If the statutory language refers to mailing notice to the last
1
12 Del. C. § 3546(a) (emphasis added).
2
known address, it is unquestionable that the Respondent is entitled to the statutory
presumption of receipt; if it refers to receipt itself, my decision must turn on a
review of the “evidence to the contrary” of receipt.
Evidence presented at the January 29 hearing included testimony from
Daniel Hayward, counsel for the Trust’s co-trustees, indicating that written notices
were mailed to the Petitioner’s last known address and P.O. Box by first class mail
on February 23, 2012; that notices were mailed to the Petitioner’s last known
address and P.O. Box by certified mail on the same day, February 23, 2012, but
that, after delivery was twice attempted and two package slips left, those letters
were returned to Hayward; and that a Federal Express package containing notice of
the Trust was delivered to the Petitioner’s home address on March 27, 2012. At
the conclusion of the hearing, I issued a bench ruling, in which I explained:
So the question is, given the fact that there was first class mail that did
not come back, sent to the correct address, and that there were more
than 30 days for that to have been delivered sufficient to toll this suit,
whether I should find that there has been delivery to the last known
address under the statute. It seems clear to me that the evidence is
overwhelming here that there was delivery during that time, prior to
March 28. Why do I say that? Because the only evidence that that
wasn’t delivered is the testimony of the Petitioner here. He obviously
has an interest in this matter, but that doesn’t necessarily make his
testimony less than credible. However, to believe him, I would have
to believe that the first class mail to his home went missing; the notice
of certified mail to his home went missing; the first class mail sent to
his post office box went missing; the notice of certified mail to his
post office box went missing; two more notices of certified mail, one
to his home and one to the post office box, went missing; all these
things went missing. And yet the certified mail obviously went
3
through because we have the returns. So it seems incredible to me
that all of these things can have gone missing, at least three of them in
a post office box to which no one but the Petitioner had access, and
that they simply disappeared. More than that, he testified that the Fed
Ex, which we know was delivered to his house on the 27th, also went
missing. I don’t find that to be “evidence to the contrary of delivery,”
assuming that phrase modifies the delivery requirement [rather than
the requirement that notice be sent to the “last known address”],
because it’s simply not credible evidence. It’s absolutely not credible
to me. . . . But in any event, I find no credible evidence that the first
class mail was not delivered to this residence, to the extent that
modifier applies. To the extent the modifier doesn’t apply, I simply
make a positive finding that given the two first class mailings and the
two contemporaneous certified mailings, which we clearly know
reached his two addresses, that it is extremely likely that delivery was
made before the 27th of March.2
On February 7, 2014, the Petitioner filed a Motion to Open Judgment to
Allow Ruling on Motion in Limine and to Alter or Amend Judgment or, in the
Alternative, to Reconsider the Judgment. On March 17, the Petitioner moved to
amend that Motion to include a motion for relief from judgment, on the basis that:
While preparing a letter to trustees of the various trusts involved in
this action and actions pending in California, on March 3, 2014,
Petitioner discovered first class mail envelopes from counsel for the
Co-trustees—one envelope addressed to his residence and one
envelope addressed to his P.O. Box. The postage stamp on each
envelope indicates that it was mailed on March 26, 2012—more than
a month after counsel for the Co-trustees, Mr. Hayward, testified that
he had sent such first class mailings. Upon opening the envelopes,
Petitioner found in each of the two envelopes . . . an original cover
letter signed and dated February 15, 2012 (with original signatures in
blue ink) . . . .3
2
Trial Tr. 125:13-128:13.
3
Pet’r’s Op. Br. in Supp. of Mot. to Amend at 2.
4
The Petitioner contends that the March 3 first class mailings constitute newly
discovered evidence justifying relief from my January 29 ruling.
On May 8, 2014, I heard oral argument on all pending motions in this action.
After argument, I issued a bench ruling denying the Petitioner’s Motion to Open
Judgment to Allow Ruling on Motion in Limine. This Letter Opinion addresses the
Petitioner’s pending Motion to Alter or Amend, Motion for Reconsideration, and
Motion for Relief.
I. Analysis
The Petitioner moves (1) to alter or amend the January 29 judgment, (2) for
reconsideration of the judgment, and (3) for relief from the judgment. I address
those Motions in turn, below.
1. Motion to Alter or Amend
The Petitioner brings his Motion to Alter or Amend pursuant to Court of
Chancery Rule 59(e). “Under Rule 59(e), a motion to alter an Order may be
granted if the plaintiff demonstrates (1) an intervening change in controlling law;
(2) the availability of new evidence not previously available; or (3) the need to
correct a clear error of law or to prevent manifest injustice.”4
The Petitioner suggests that his Motion to Alter or Amend is appropriate to
correct several clear errors of law made in my January 29 bench ruling. Although
4
Nash v. Schock, 1998 WL 474161, at *1 (Del. Ch. July 23, 1998).
5
the Petitioner’s Motion to Alter or Amend seeks merely to restate arguments
presented at trial, and to express disagreement with my resolution of those issues
addressed at trial, I nevertheless address his contentions in turn. First, the
Petitioner contends that in interpreting 12 Del. C. § 3546, I erred by “giving the
Co-trustees the benefit of the statute’s presumption of receipt even though the Co-
trustees had no evidence to prove that their alleged first class mailings were
actually delivered to Petitioner’s home or P.O. Box.”5 Despite the Petitioner’s
suggestion, however, I determined in my bench ruling that “the evidence
[presented at trial was] overwhelming . . . that there was delivery . . . .”6 To the
extent the Petitioner suggests I misunderstood the statute’s presumption of receipt
to require only that notice be mailed, as opposed to delivered, therefore, that
argument must fail.
Second, the Petitioner suggests that I erred as a matter of law by “giving the
Co-trustees the benefit of the statute’s presumption of receipt even though
‘evidence to the contrary’ of receipt was presented.”7 The Petitioner fails to
acknowledge, however, that in my January 29 bench ruling, I found that the
Petitioner had presented “no credible evidence that the first class mail was not
5
Pet’r’s Op. Br. in Supp. of Mot. to Open J. at 5.
6
Trial Tr. 125:20-21.
7
Pet’r’s Op. Br. in Supp. of Mot. to Open J. at 5.
6
delivered to this residence . . . .”8 Next, the Petitioner contends that I erred by
“injecting the common law presumption concerning mailing into the statute’s
limited presumption of receipt . . .” and by “creating a burden of rebuttal for the
Petitioner that does not exist under the statute . . . .”9 In fact, my bench ruling
made no reference to that common law presumption, nor did I implicitly adopt or
rely on it; instead, I construed only the language of the statute, determining that, to
the extent the statute could be interpreted, as the Petitioner argued, to create a
presumption of delivery (or receipt) rebuttable by “evidence to the contrary,” such
evidence must at a minimum be credible evidence. I found, and continue to find,
that no such credible evidence was presented.10 Importantly, I addressed the
parties’ interpretations of the statutory presumption in the alternative: I did not
determine whether “evidence to the contrary” modified mailing to the last known
address or receipt, but explained that under any standard, evidence must be
credible, and that such evidence is lacking here.
Finally, the Petitioner argues that I committed error because:
The Court’s decision effectively imposes a burden of diligence
upon a notice party that does not exist under the statute. Specifically,
under the Court’s ruling, a notice party now has a burden to diligence
whether he could be presumed to have received notice sooner than
8
Trial Tr. 128:5-8 (emphasis added).
9
Pet’r’s Op. Br. in Supp. of Mot. to Open J. at 5.
10
The Petitioner contends that I failed to consider evidence apart from the Petitioner’s self-
serving testimony, including evidence of communications between the Petitioner and the settlor’s
legal counsel. In fact, I did consider that evidence, but determined it was not credible evidence
“to the contrary” of delivery.
7
when he actually received notice. However, this burden does not exist
under the plain reading of the statute, which focuses on the party’s
receipt.11
Though expressing disagreement with my holding, that argument does not suggest
error, and in fact runs contrary to the statutory presumption that “delivery to the
last known address . . . constitutes receipt . . . .”12 Of course, any presumption of
receipt—anything short of a requirement that a respondent prove actual receipt—
would result in the “burden of diligence” to which the Petitioner refers. For the
reasons explained above, the Petitioner’s Motion to Alter or Amend is denied.
2. Motion for Reconsideration
In addition to his Motion to Alter or Amend, the Petitioner brings a Motion
for Reconsideration pursuant to Court of Chancery Rule 59(f). “A court may grant
reargument under Rule 59(f) when it appears that ‘the [c]ourt has overlooked a
decision or principle of law that would have controlling effect or the [c]ourt has
misapprehended the law or the facts so that the outcome of the decision would be
[affected].’”13
The Petitioner contends that “the Court either erred as a matter of law in
reaching its decision or misapprehended the facts or the law such that the outcome
11
Pet’r’s Op. Br. in Supp. of Mot. to Open J. at 7-8.
12
12 Del. C. § 3546(a).
13
Chrin v. Ibrix, Inc., 2005 WL 3334270, at *1 (Del. Ch. Nov. 30, 2005) (citing Miles, Inc. v.
Cookson Am., Inc., 677 A.2d 505, 506 (Del. Ch. 1995)).
8
is different than it would be without such misapprehension.”14 The Petitioner’s
arguments that the Court erred as a matter of law under Rule 59(e), and that I
misapprehended the law under Rule 59(f), are coterminous, and have therefore
been addressed and rejected above. The Petitioner’s contention that I
misapprehended the facts of this case must similarly be rejected. The Petitioner
suggests that the “Co-trustees have no evidence to prove that their alleged first
class mailings were actually delivered to Petitioner’s home or P.O. box.”15 Despite
that contention, I decline to reconsider my finding, based on Hayward’s testimony,
that “given the two first class mailings and the two contemporaneous certified
mailings, which we clearly know reached [the Petitioner’s] two addresses, that it is
extremely likely that delivery was made before the 27th of March.”16 The
Petitioner also disputes my factual finding that his testimony provided no credible
evidence to the contrary of delivery, and indicates that he “has produced ‘evidence
to the contrary’ that he never received notice of the Trust until March 29,
2012 . . . .”17 The substance of the Petitioner’s testimony at trial was that he never
received three mailings and four notices left at his home. That is the testimony I
14
Pet’r’s Op. Br. in Supp. of Mot. to Open J. at 3.
15
Id. at 8.
16
Trial Tr. 128:9-13 (emphasis added). The Petitioner also contends that I misapplied the
applicable evidentiary burden, and that the evidentiary standard contemplated by the statute is
clear and convincing evidence of delivery. Oral Arg. Tr. 18:9-10. Even if a showing of clear
and convincing evidence is required by the statute, however, my finding that it was “extremely
likely” that delivery was made satisfies such a standard.
17
Pet’r’s Op. Br. in Supp. of Mot. to Open J. at 9.
9
found not credible, and I continue to find it not credible. The Petitioner’s Motion
for Reconsideration is therefore denied.
3. Motion for Relief
Finally, the Petitioner brings a Motion for Relief from Judgment pursuant to
Court of Chancery Rule 60(b), which permits this Court to relieve a party from a
judgment under the following circumstances:
(1) Mistake, inadvertence, surprise, or excusable neglect; (2) newly
discovered evidence; (3) fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation or other misconduct of an
adverse party; (4) the judgment is void; (5) the judgment has been
satisfied, released, or discharged, or a prior judgment upon which it is
based has been reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective application; or
(6) any other reason justifying relief from the operation of the
judgment.18
The Petitioner contends that relief from judgment is appropriate under subsections
(2), (3), and (6) of Rule 60(b). I address those contentions below.
A. Newly Discovered Evidence
In support of his Motion for Relief, the Petitioner primarily relies on Rule
60(b)(2), which provides that the Court may relieve a party from judgment based
on newly discovered evidence. In order to obtain relief on that basis,
the moving party must demonstrate that: (1) the newly discovered
evidence has come to his knowledge since the trial; (2) that it could
not, in the exercise of reasonable diligence, have been discovered for
use at the trial; (3) that it is so material and relevant that it will
18
Ct. Ch. R. 60(b).
10
probably change the result if a new trial is granted; (4) that it is not
merely cumulative or impeaching in character; and (5) that it is
reasonably possible that the evidence will be produced at the trial.19
The “newly discovered” evidence presented by the Petitioner consists of two first
class envelopes, postmarked March 26, 2012, providing the Petitioner with written
notice of the Trust. According to the Petitioner, Hayward’s failure to testify at trial
that, in addition to first class and certified mailings sent on February 23, 2012,
Hayward mailed first class letters on March 26, 2012, demonstrates (1) that
Hayward’s testimony that first class letters were mailed on February 23 was false,
and (2) that the first class letters described by Hayward at trial must have been
mailed on March 26 rather than February 23.
The Petitioner’s production of the March 26 mailings provides an
insufficient basis for relief from judgment for at least two reasons. First, despite
the Petitioner’s contention that, “[a]s the envelopes had fallen between hanging file
folders [in a box he used as a file cabinet] and out of sight, they could not in the
exercise of reasonable diligence have been discovered for use at the January 29,
2014 hearing,” I believe that with any minimal diligence the Petitioner would have
discovered the March 26 mailings, which had been in his possession for almost
two years prior to the January hearing. Perhaps more importantly, even if I were to
admit those mailings as evidence, they would not alter my prior determination.
19
99-Year Lease Tenants of Lynn Lee Vill. v. Key Box 5 Operatives, Inc., 2005 WL 5756435, at
*3 (Del. Ch. Aug. 4, 2005).
11
Notably, the Petitioner contends that the March 26 mailings demonstrate that
Hayward testified falsely, an argument that relies solely on the mailing’s
impeachment value. I find, however, that the facts that the Petitioner actually
received the mailings and never opened them, but instead filed them away with
other trust-related documents, and that he claims to have had no memory of those
mailings until their re-discovery nearly two years after receipt, serve to further
discredit the Petitioner’s testimony that he never received any February 23, 2012
mailings. As a result, I deny the Petitioner’s Motion on the basis of newly
discovered evidence.
B. Fraud or Misrepresentation
The Petitioner also claims that his Motion for Relief is appropriate under
Rule 60(b)(3) on the basis of fraud, misrepresentation, or other misconduct. The
Petitioner suggests that “[t]he newly discovered evidence indicates that Mr.
Hayward’s testimony concerning his attempts at noticing Petitioner of the Trust
was, at best, a mistaken misrepresentation.”20 I find that it does not. The March 26
mailings indicate only that the Petitioner received at least one notice from
Hayward. Those mailings indicate that it was the Petitioner’s testimony at trial—
that he never received any mailings providing notice of the Trust—that was false.21
20
Pet’r’s Op. Br. in Supp. of Mot. to Amend at 13.
21
See, e.g., Trial Tr. 59:1-5. I find unpersuasive the Petitioner’s contention that, because the
letters contained in the March 26 mailings were notarized and dated in February, those mailings
12
Those mailings do not require the Court to find a misrepresentation in Hayward’s
credible testimony that he “recall[ed] at the time [in February 2012] having the
stacks of the certified mailing packages and stacks of the first class mailing
packages laid out in [his] office and outside of [his] office, along with [his]
paralegal, to make sure that [they] weren’t missing anything when these went
out,”22 and that, “knowing that the first class mailings were picked up and sent out
on the 23rd, there [was] no doubt in [his] mind that the first class mailings were
sent at that same time because those packages would have been together.”23 The
fact that a first class mailing accompanied the Federal Express mailing in March
2012 does not, to my mind, impeach Hayward’s testimony that a prior mailing was
sent on February 23 of that year. The Petitioner’s Motion for Relief on the basis of
fraud or misrepresentation is therefore denied.
C. “Any Other Reason”
Relief under Court of Chancery Rule 60(b)(6) is appropriate under
circumstances constituting “an ‘extreme hardship,’ or [where] ‘manifest injustice’
must have been sent instead of, rather than in addition to, the February first class mailings. That
the notices contained in the “newly discovered” March mailings were notarized in February is
unsurprising given the credible representation of Respondent’s counsel that multiple copies of
the notice letter were notarized in February for convenience. Oral Arg. 37:12-14. Further, the
fact that the notice letters were notarized in February serves only to bolster the Trustee’s
testimony that notices were in fact first sent in February.
22
Trial Tr. 9:17-22.
23
Id. at 10:2-6.
13
would occur if relief were not granted.”24 The Petitioner submits that “[t]he newly
discovered information reveals that extraordinary circumstances exist in that the
critical unsubstantiated testimony the Court relied upon in reaching its decision
was unreliable and, at best, a mistaken misrepresentation.”25 However, in support
of his contention that “extraordinary circumstances” exist, the Petitioner suggests
only that the March 26 mailings demonstrate a misrepresentation by Hayward.
That argument has been rejected above, and accordingly does not provide an
appropriate basis for relief under Rule 60(b)(6).
II. Conclusion
For the foregoing reasons, the Petitioner’s outstanding Motions are denied.
However, because I find that the Motions were not brought in bad faith, I deny the
Respondent’s request to shift fees. To the extent an Order is necessary for the
foregoing to take effect, IT IS SO ORDERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
24
Saito v. McCall, 2004 WL 3048949, at *1 (Del. Ch. Aug. 18, 2004), aff’d sub nom. Saito v.
McKesson HBOC, Inc., 870 A.2d 1192 (Del. 2005).
25
Pet’r’s Op. Br. in Supp. of Mot. to Amend at 13-14.
14