Ralph Paul Deputy v. Jay Christian Deputy

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
RALPH PAUL DEPUTY, )
)
Petitioner, )
)
v. ) C.A. No. 10874-VCZ
)
JAY CHRISTIAN DEPUTY, )
individually and as Trustee of the )
Revocable Trust of Lillian K. Deputy )
under Agreement dated 01/21/03; and as )
Trustee of the Revocable Trust of Lillian )
K. Deputy under Agreement dated )
03/10/05; and as Trustee of the Amended )
and Restated Lillian K. Deputy )
Revocable Charitable Trust under )
Agreement dated 02/21/08; and as )
Trustee of the One Flintlock Trust )
Irrevocable Trust under Agreement dated )
09/15/03; and as Trustee of Unknown )
Trust, )
)
Respondent. )
MEMORANDUM OPINION
Date Submitted: November 18, 2019
Date Decided: March 2, 2020
Sharon Oras Morgan, Beth B. Miller, and E. Chaney Hall, FOX ROTHSCHILD
LLP, Wilmington, Delaware, Attorneys for Petitioner Ralph Paul Deputy.
Christopher M. Coggins, COGGINS LAW LLC, Wilmington, Delaware, Attorney for
Respondent Jay Christian Deputy.
ZURN, Vice Chancellor.
Strife between brothers, particularly over the apportionment of resources like
money or affection, is a familiar aspect of the human condition. According to the
Bible, the first set of brothers on the earth suffered such conflict. In the book of
Genesis, Cain was jealous of his brother Abel’s relationship with the Lord.
Then the Lord said to Cain, “Why are you angry? Why is your face
downcast? If you do what is right, will you not be accepted? But if
you do not do what is right, sin is crouching at your door; it desires to
have you, but you must rule over it.1
So cautioned, Cain took Abel out to a field and killed him. When the Lord asked
Cain where Abel was, Cain replied, “I don’t know. Am I my brother’s keeper?” 2
As punishment for his crime, the Lord made Cain a restless wanderer of the earth.
This case follows the same narrative arc. Paul and Jay Deputy are brothers;
strife has existed between them for decades, in part due to the fact that Paul is
adopted, and in part due to Jay’s difficulty in doing what is right. 3 Jay is, in fact, his
brother’s keeper: he is the trustee of two family trusts, of which both Jay and Paul
are beneficiaries. Paul placed his full confidence in Jay and relied on him to keep
what was Paul’s and act in Paul’s best interest. But sin crouched at Jay’s door, and
he failed to rule over it.
1
Genesis 4:6–7.
2
Genesis 4:9.
3
In this family dispute, I use the parties’ preferred first names in pursuit of clarity. I intend
no familiarity or disrespect. Paul’s full name is Ralph Paul Deputy; he prefers to be called
Paul.
1
Jay’s actions with respect to each trust followed the same pattern: charm a
vulnerable settlor, persuade the settlor to adopt Jay’s suggested estate plan for his
benefit and ease of manipulation, and ultimately disenfranchise Paul and take the
whole for himself, all the while creating a paper trail to justify and obscure his
fiduciary misdeeds.
Originally, both trusts named Jay as successor trustee after the original trustee.
Integral to Jay’s scheme, both settlors executed a durable power of attorney naming
Jay as attorney-in-fact. Purportedly acting under the authority of that durable power
of attorney, Jay drafted and executed an amendment to each trust that included a no-
contest provision. Both amendments granted Jay, as trustee, the authority to revoke
the beneficiary status of any trust beneficiary when Jay concluded the beneficiary
had contested the trust or related documents. Jay never provided Paul with a copy
of either amendment, failed to promptly inform Paul that he had amended the trusts,
and did not explain the amendments’ material effects on Paul’s interests.
Neither of the “amendments” are valid. And both amendments were executed
under suspicious circumstances. Little suggests that either settlor was aware that Jay
executed the amendments, or authorized him to do so. Each amendment was a
departure from each settlor’s estate plan. Jay executed these amendments in the
shadows while each settlor’s well-being hung in the balance. Knowing that each
2
settlor would have likely protested his efforts, Jay did so in order to take control of
the trusts and secure their benefits for himself.
Satisfied he had laid sufficient groundwork, Jay confidently proceeded as
though both amendments were legally operative. Much suggests that Jay keenly
awaited the moment at which he could exercise his revocation powers to excise Paul
from both trusts. Eventually, Paul asked enough questions that Jay pounced and told
Paul that his interests were revoked under the amendments. Jay’s “revocations,” if
valid, would have the effect of transferring 100% of the interest in each trust to Jay.
But Jay did not clearly inform Paul of the supposed revocations. Rather, Jay
sent his brother mixed messages about his beneficial interest, allowing Paul to
proceed under the assumption that Jay’s revocations were merely empty threats and
that Jay was maintaining Paul’s interests. Paul operated under this assumption for a
number of years, despite a number of red flags to the contrary, such as not receiving
distributions or information about the trusts. At different junctures, Paul even sought
the advice of counsel, but with his focus elsewhere, Paul did not act to protect
himself against Jay.
Now, over ten years after this saga began, Paul contends that Jay, as trustee,
breached his fiduciary duties to inform, of loyalty, and of care, and was unjustly
enriched by those alleged breaches. Paul seeks inventories and accountings for the
trusts, damages, removal of Jay as trustee of the trusts, and attorneys’ fees. In his
3
defense, Jay contends that Paul’s claims are barred by the equitable doctrine of
laches. Based on the preponderance of the evidence presented at trial, Paul must
prevail in this action. My findings of fact—of biblical proportions due to the
complexity and extent of Jay’s sins—and reasoning follow.
And based on those findings, Paul is entitled to relief. Cain’s misdeeds led
the Lord to sentence him to be a restless wanderer of the earth: “Now you are under
a curse and driven from the ground, which opened its mouth to receive your brother’s
blood from your hand. When you work the ground, it will no longer yield its crops
for you.”4 The trusts at issue will no longer yield their assets to Jay. Jay is removed
as trustee of both trusts and replaced by Paul. Jay must give Paul and this Court an
inventory and accounting of both trusts. And Jay must disgorge his ill-gotten gains,
and pay Paul’s attorneys’ fees.
I. BACKGROUND5
In this breach of trust action, Petitioner Ralph Paul Deputy claims that
Respondent Jay Christian Deputy, as trustee of certain trusts, breached his fiduciary
duties to inform, of loyalty, and of care, and was unjustly enriched by those alleged
fiduciary duty breaches. In particular, Paul contends that his brother Jay has
4
Genesis 4:11–12.
5
Citations in the form of “[Name] Tr. ––” refer to witness testimony from the trial
transcripts. Citations in the form of “[Name] Dep. ––” refer to deposition transcripts in the
record. Citations in the form of “PTO ¶ ––” refer to stipulated facts in the pre-trial order.
See Docket Item (“D.I.”) 118. Citations in the form of “JX –– at ––” refer to a trial exhibit.
4
attempted to divest Paul of his interests in two trusts: (1) the One Flintlock Trust by
Agreement dated September 15, 2003, as amended, established by the parties’ aunt,
Georgene Castor (the “One Flintlock Trust”); and (2) the Amended and Restated
Lillian K. Deputy Revocable Charitable Remainder Trust under Agreement dated
February 21, 2008, as amended, established by the parties’ mother, Lillian K. Deputy
(the “Deputy Trust” and with the One Flintlock Trust, the “Trusts”). Paul now seeks
inventories and accountings for the trusts, damages, removal of Jay as trustee of the
trusts, and attorney’s fees.6 Jay maintains that the doctrine of laches bars Paul’s
claims.7
Paul initiated this action in 2015, 8 and the case proceeded through discovery.
Paul filed his Amended Petition in January 2018.9 Count I asserts a claim for breach
of Jay’s duty to inform. Count II asserts a claim for breach of Jay’s duties of loyalty
and care. Count III asserts a claim for unjust enrichment. In December 2018, the
parties filed cross motions for summary judgment.10 I denied the motions for reasons
6
D.I. 51 at 7–8 (“prayer for relief”).
7
See generally D.I. 132.
8
D.I. 1; JX 125.
9
D.I. 51.
10
D.I. 73, 74.
5
associated with the laches analysis, concluding outstanding issues of fact remained
as to when Paul was on inquiry notice of his claims.11
The case proceeded to trial on June 19 and 20, 2019. 12 At trial, the parties
presented three witnesses: Paul Deputy, Jay Deputy, and Thomas Fairchild. In
addition, the parties submitted 174 exhibits. These are my findings of fact based on
the preponderance of the evidence.
A. The Deputy Family History And The Court’s Credibility
Determinations
Paul lives and works in Hagerstown, Maryland. 13 He has very little
accounting experience, no background in investment management, and no training
in estate administration.14 As such, he has relied on Jay’s advice regarding
investments and family assets.15 Paul attended college for three years, and
eventually opened his own restaurant in Hagerstown. 16 He has operated that
restaurant for nearly nineteen years. 17 Paul suffered a stroke in 2014 and has been
11
Deputy v. Deputy, 2019 WL 2452550, at *4 (Del. Ch. June 10, 2019) (ORDER). In July
2019, Respondent requested the Court refer the action to mandatory mediation. D.I. 123.
I ultimately denied the request. D.I. 129.
12
D.I. 126 (Trial Transcript Vol. I); D.I. 127 (Trial Transcript Vol. II).
13
Paul Tr. 5:20–21.
14
Paul Tr. 5:6–16.
15
See, e.g., Paul Tr. 19:3–20:12, 22:12–16.
16
Paul Tr. 4:18–5:5.
17
Paul Tr. 6:20–24; see also Paul Tr. 5:1–2; Paul Dep. 25:12–18 (Paul stating at his
deposition that he did not file suit in 2008 because he “ha[d] a restaurant . . . , so [he]
6
cognitively impaired since.18 As a result, Paul has “problems speaking every once
in awhile,” and “every once in awhile [his] numbers don’t come out right, but [he]
knows them in [his] brain.”19 Despite this setback, he remains devoted to his
restaurant.20
Jay is a resident of Wilmington, Delaware, but sometimes stays at the home
that belonged to his mother, located at 6744 North Circle, Seaford, Delaware (the
“North Circle House”). 21 Prior to settling in Delaware around 2008, Jay split his
time between Delaware and New York, New York, where his spouse, John Walton,
owned a loft.22 Jay is very educated, has substantial market experience, and touts
his education and experience to others.23 Jay has a bachelor’s degree from Salisbury
couldn’t give [his] time to this [dispute] until [he] finally got [himself] together with the
restaurant”); JX 97 at RDEPUTY_000007 (“[T]he restaurant is taking a lot of time these
days.”).
18
Paul Tr. 5:17–22.
19
Paul Tr. 5:23–6:2.
20
See Paul Tr. 5:1–2.
21
Jay Tr. 335:17–18, 336:1–9, 344:15–345:20.
22
Jay Tr. 335:19–24, 396:13–15.
23
See, e.g., JX 78 at JDEPUTY_00791 (“Prior to returning to Delaware, I was a real estate
broker and investor in the Twin Cities for 15 years. As well, I was real estate developer of
historic properties. At present, I am writing a doctoral dissertation from Columbia
University in real estate development and local economic development involving
university communities. I am, therefore, very familiar with both a seller’s and buyer’s
perspective in real estate transactions . . . .”); JX 97 at RDEPUTY_000024 (Jay writing:
“Things are certainly tough . . . . It really seems to be part of the capital markets
correction(s) that is taking place. Almost a survival of the fittest . . . so to speak.”),
REPDUTY_000021 (Jay writing: “The trust is in bonds, which when the stock market
goes down, bonds go up (an inverse relationship). Again, it is my understanding we’re
7
University; a master’s degree in urban planning and real estate from the University
of Michigan; and additional postgraduate degrees in landscape architecture,
horticulture, interior design, and American art history from the University of
Minnesota.24 He earned his doctorate from Columbia University in 2008, 25 and is
currently pursuing an MFA in painting at the University of Delaware.26 For the past
ten years, Jay has been “just a house husband.” 27
Jay and Paul are brothers.28 Lillian K. Deputy and her late husband, A. John
Deputy, were Jay’s biological parents. 29 They adopted Paul when he was a young
boy.30 Paul’s adoption has been a source of animosity between the brothers for some
somewhat sheltered by the recent turn of events in the stock market, but until there is
confidence in the market, who knows what will happen.”); JX 99 at JDEPUTY_00792–94
(Jay writing: “The purchase of real property is predicated on present facts and rationale of
both the national residential real estate market’s collapse as well as other financial markets’
collapse at the beginning of the Great Recession in mid-2008. . . . It is the Trustee’s
opinion, and based on his professional experience, this was not a time to sell the house at
a greatly reduced price in order to simply place monies in trust. . . . Therefore, it is my
educated and informed opinion as a former real estate broker and developer as well as an
urban real estate market academic that the real estate market will continue to be non-
performing for the next five to eight years . . . . The financial and lending markets full
recovery remains uncertain.” (emphases added)).
24
Jay Tr. 334:17–335:10.
25
Jay Tr. 335:11–12.
26
Jay Tr. 533:2–3.
27
Jay Tr. 335:13–16.
28
PTO ¶ 14.
29
PTO ¶ 16.
30
PTO ¶ 15; Paul Tr. 6:6–10.
8
time.31 Lillian and John treated Paul as their biological son, and Lillian resolved to
have her assets distributed to her sons equally after her death. 32
Throughout adulthood, Paul and Jay maintained close relationships with their
mother, as well as her sister and their aunt, Georgene Castor. 33 As Lillian and
Georgene grew older, the brothers visited and helped care for them. 34 Memorializing
the importance of these relationships, both Lillian and Georgene adopted estate plans
favoring Jay and Paul through trusts for the settlors’ benefit during their lifetimes
and for the benefit of Jay and Paul after the settlors’ deaths. 35
These trusts, as well as their amendments and restatements, are the foundation
of this case. Each trust named Jay as trustee. But as I expressed at trial, Jay used
his trustee positions to misappropriate his brother’s interests in both Georgene’s
31
See Jay Tr. 429:2–430:5.
32
See JX 58 at 8–9 (noting that Lillian was “becoming convinced that ‘outright, equally’
[was] the best method of disposition” and that “she agree[d]” that “[o]utright to each leaves
Jay the option of reserving principal, but trust for total removes flexibility from [Paul]”).
33
PTO ¶ 20; see Paul Tr. 6:22–7:4 (“My aunt was my favorite aunt of all, and we had a
good relationship. We – we’d go to her house, help her out, and things like that.”); Jay Tr.
361:5–362:1 (Jay describing his frequent visits to his aunt’s house in New Jersey while he
lived in New York).
34
Jay Tr. 362:9–368:17.
35
See generally JX 1, JX 7. As discussed below, Georgene’s original trust document has
not been provided. The first of Georgene’s trust documents names both Jay and Paul as
beneficiaries. See JX 7.
9
estate and Lillian’s estate.36 Before explaining my findings of fact that led to this
conclusion, I will first explain my underlying credibility determinations.
While much of the dispute between Jay and Paul requires my evaluation of
their conflicting testimony, this endeavor is aided by the credible testimony of
Lillian’s financial advisor, Thomas Fairchild. 37 Fairchild owns an Ameriprise
Financial Services, Inc. (“Ameriprise”) branch that provides private wealth services
to retired individuals, and has been a financial advisor with Ameriprise for twenty-
six years.38 Through Ameriprise, Fairchild served as Lillian’s financial advisor from
1996 until her death in 2008; until her death, he met with her in person at least two
times per year and communicated with her frequently.39 He advised her on account
management, general planning regarding required retirement plan distributions, and
general estate planning.40 Fairchild also served as Jay’s financial advisor from 2001
to 2007.41 He began acting as Paul’s financial advisor in 1998, and still acts in that
36
Tr. 539:22–540:2.
37
Fairchild earned his B.A. from University of Delaware in 1981. Fairchild Tr. 200:21–
24. He has also earned four certifications: Certified Financial Planner, Certified
Investment Management Analyst, Certified Private Wealth Advisor, and Certified Trust
Financial Advisor. Id. 201:2–6.
38
Fairchild Tr. 201:13–16.
39
Fairchild Tr. 205:2–18.
40
Fairchild Tr. 205:23–206:4.
41
Fairchild Tr. 204:1–5.
10
capacity today.42 By virtue of these roles, Fairchild has developed an intimate
knowledge of the Deputy family’s assets and Lillian’s intended estate plan, as well
as the events that occurred with respect to Georgene’s estate.
At trial, I found Fairchild to be objective and fair, with a strong fiduciary
aptitude. He cared deeply for his long-time client, Lillian. 43 According to Fairchild,
Lillian “was a dear. She was lovely, and she traveled and was very good at
shorthand. And so . . . I always thought about what I said, because I knew she would
know after the fact.” 44 As a fiduciary, he always had Lillian’s wishes and intent in
mind.45 Even if he was unhappy with the means of distributing Lillian’s assets, he
was satisfied if the ultimate end was consistent with her wishes. 46 Fairchild
contemporaneously recorded his dealings with the Deputy family, and cataloged his
reactions to events as they unfolded in real time. 47 His testimony was entirely
42
Fairchild Tr. 203:17–21.
43
Paul Tr. 52:3–9 (noting Fairchild visited Lillian in the hospital); Fairchild 266:2–7
(noting Fairchild attended Lillian’s funeral).
44
Fairchild Tr. 205:19–22.
45
See, e.g., Fairchild Tr. 206:20–24, 208:24–210:24, 212:16–23, 223:16–21, 234:11–
235:1, 237:14–24, 259:5–15, 276:23–277:14.
46
See, e.g., Fairchild Tr. 259:7–15 (expressing displeasure over how Ameriprise corporate
handled forgery claims, but noting he was happy the ultimate outcome accorded Lillian’s
wishes); JX 58 at 1 (Fairchild noting in April 2008 his displeasure with the estate plan’s
tax structure but his belief that he could “restore most of the tax-deferred value while
keeping much of the intended control”).
47
Fairchild Tr. 208:17–23 (“Q. Is it your regular practice to keep notes of your meetings
with clients? A. Yes, of course. Q. How do you record those notes? A. During meetings,
11
consistent with the documentary record and corroborated by it. Therefore, much of
his testimony serves as the objective touchpoint for my findings of fact.
Fairchild testified, “I think Jay is dishonest, and I think Jay is vindictive.” 48
He explained:
From a dishonesty standpoint, from my perspective, things like asking
a member of my staff to notarize a document after the fact is dishonest.
Forging signatures is dishonest. Creating documents after the fact,
post-hoc documents, to create a story is dishonest. Not reporting his
mother’s death on a retirement account, and accepting four or five years
worth of required distributions payable to his mother, I think is
dishonest.49
Fairchild’s impressions of Jay are consistent with my impressions at trial. I did not
find Jay’s testimony credible or sincere. To effectuate his misappropriations, Jay
has created an extensive fraudulent paper trail, which I will describe in detail below.
Jay regularly doctors stories and documents for his own benefit. At trial, Jay evaded
direct answers and had difficulty explaining discrepancies in his story. His
explanations were predominantly consistent only with the inauthentic paper record
that Jay himself manufactured.
In contrast, I found Paul’s testimony to be sincere and credible. He answered
questions directly and truthfully. His testimony was consistent with reliable,
with handwritten notes on a meeting page. During telephone calls, on a computer log.”);
see generally JX 58; JX 102.
48
Fairchild Tr. 204:7–8.
49
Fairchild Tr. 204:10–18.
12
authentic exhibits. Communications between Paul and Jay corroborate Paul’s
understanding of the facts as they unfolded. Further, Paul’s story is consistent with
Fairchild’s contemporaneous business records. To the extent that Paul could not
accurately recall events from many years ago, the documentary record neatly fills
the gaps. He only relies on one self-drafted document to support his timeline of
events: one handwritten list, which he prepared on Fairchild’s advice in March
2008.50 Even Paul’s handwritten list bears many indicia of reliability, including
Fairchild’s corroborative testimony and business records. With these credibility
determinations, I make the following factual findings.
B. The 2003 Agnes Pfeiffer Estate
Jay’s misdealings with family assets began as early as 2003, when Lillian and
Georgene’s aunt, Agnes Pfeiffer, passed away.51 Agnes’s trust was the first trust Jay
“had any relationship with.”52 Jay, acting as agent of Agnes’s estate, took everything
from Agnes’ estate; Lillian received nothing.53 Lillian told Fairchild she was
suspicious of Jay’s intentions at that time.54 Lillian “felt that Jay had insinuated
50
JX 52; see Paul Tr. 61:23–62:10.
51
Fairchild Tr. 216:2–4.
52
Jay Tr. 369:20–21.
53
Fairchild Tr. 216:10–17.
54
See JX 58 at 4–5 (entries dated 2/22/2005 at 2:21 PM, 2/22/2005 at 2:30 PM, and
3/7/2005 at 10:07 AM).
13
himself into her estate and inherited against Agnes’s original wishes,”55 and “felt
that Jay inherited away from her.” 56
Lillian considered contacting an attorney in hopes of reopening Agnes’s
estate, and she made an appointment with the Pennsylvania Bar Association to
discuss the “Agnes situation.”57 Paul remained unaware of Jay’s actions with respect
to Agnes’s estate for many years.58 Once he learned of Jay’s actions, he was “angry”
and “behind the effort to re-open the estate.”59 Lillian ultimately decided not to
pursue that course. Instead, in July 2005, Jay visited Lillian, and they resolved the
issue by agreeing Jay would pay Lillian $500 per month toward her share of Agnes’s
estate.60 While that resolved Jay’s dispute with Lillian over Agnes’s estate, Paul was
“not convinced yet that Jay is genuine.”61
Indeed, Jay continued to try to manipulate Agnes’s estate. In August 2005,
Jay contacted Fairchild and informed him that “[h]e wanted[ed] to give his mother
a copy of the Agnes trust to demonstrate that she was not included in the estate,” and
55
Fairchild Tr. 215:20–23.
56
Fairchild Tr. 216:2–4.
57
JX 58 at 4–5 (entries dated 3/7/2005 at 10:07 AM and 3/4/2005 at 1:10 PM).
58
JX 58 at 5 (entry dated 2/22/2005 at 2:21 PM).
59
JX 58 at 4 (entry dated 3/7/2005 at 10:49 AM).
60
JX 58 at 4 (entry dated 7/28/2005 at 9:04 AM).
61
JX 58 at 4 (entry dated 7/28/2005 at 9:04 AM).
14
asked whether Fairchild’s employee “could notarize a copy as authentic.”62
Fairchild informed Jay that “the notary stamp only confirms that a signer’s signature,
not the authenticity of a document,” and told Jay “[h]e could write and sign that the
copy is authentic and have his signature notarized.” 63 Fairchild recorded that he
“would not have notarized copy as it may have mislead [sic] others . . . Notary stamp
simply says signature is his, nothing more. No reason to validate his signature in
this case.”64 Jay never followed up.
C. Georgene’s 2003 One Flintlock Trust
The brothers’ aunt and Lillian’s sister, Georgene Castor, was a resident of
Warren, New Jersey.65 After her husband passed away in 2000, Georgene lived
alone with her four small dogs.66 When Jay moved to New York City in 2000, he
and Georgene would regularly have lunch or dinner together. 67 Because he was
nearby in New York City, he parked his car at her house, and would see his aunt at
62
JX 102 at 1 (entry dated 8/1/2005 at 10:30 AM).
63
JX 102 at 1 (entry dated 8/1/2005 at 10:30 AM).
64
JX 102 at 1 (entry dated 8/23/2005 at 1:01 PM).
65
Jay Tr. 360:2–3.
66
Jay Tr. 360:10–14, 362:18–23.
67
Jay Tr. 361:8–362:1.
15
least every other weekend when he retrieved his car to travel to Wilmington. 68 He
visited often enough that he had a key her home. 69
In September 2003, at nearly seventy-one years old, Georgene was in
relatively good health. 70 But that month, on September 14, Georgene fell while
home alone and broke her hip. 71 Jay discovered Georgene had fallen after visiting
her at her home.72 She was hospitalized and admitted to a rehabilitation center that
same day.73
The next day, while under medical care, Georgene executed a General
Durable Power of Attorney appointing Jay as her attorney-in-fact.74 That document
was executed under seal.75 The parties stipulated that Georgene established the One
Flintlock Trust by executing the One Flintlock Trust “by Agreement dated
September 15, 2003” (the “2003 OFT Agreement”) with the assistance of counsel.76
68
Jay Tr. 361:8–362:1.
69
Jay Tr. 362:2–8.
70
Jay Tr. 364:8–14.
71
Jay Tr. 362:9–363:11.
72
Jay Tr. 362:9–363:11.
73
Jay Tr. 363:12–364:7.
74
JX 5. Paul has not challenged the validity of the power of attorney.
75
JX 5 at WF_000407.
76
PTO ¶ 25. This stipulation is not supported by the record. The document itself was not
submitted to the Court. The first One Flintlock Trust document appearing in the record is
a “restated agreement of trust” dated November 21, 2003. See JX 7. Jay did not testify as
to why the 2003 OFT Agreement is absent from the record.
16
The 2003 OFT Agreement named Georgene as trustee.77 The 2003 OFT Agreement
was not submitted to the Court.78 According to Jay, the 2003 OFT Agreement
disinherited Paul and named only Jay and Lillian as beneficiaries.79 Jay testified that
Georgene decided that Jay would have 51% of the Trust, Lillian would have 49% of
the Trust, and Paul would have nothing.80 This was inconsistent with what Georgene
And Jay’s testimony about its execution is inherently confusing. He testified that
Georgene’s financial advisor, John Brady, “visited her fairly frequently” while she was in
rehab after her fall, and that they then began “talking about wills and trusts and those sorts
of things.” Jay Tr. 369:4–8. Jay testified:
[M]y aunt knew a couple of her neighbors had charitable remainder trusts.
So John Brady arranged for a man named Ian Richard Ploss . . . to talk to my
aunt, see if this was something she wanted to do, how she wanted to do it,
and the like. And this was a bit of a process, actually. And my aunt thought
about it, discussed things with Ploss initially, and once she had a sense in her
mind of what she wanted to do, she asked me if this made any sense. I had
no experience with trusts per se. I mean, you know, my Aunt Agnes’s trust
was the first trust I had any relationship with. But anyway, my aunt and Mr.
Ploss worked out what my aunt wanted.
Id. 369:9–23. If true, these frequent visits and the “process” must have occurred after
Georgene was hospitalized on September 14, but before she signed the 2003 OFT
Agreement on September 15. This is not credible. But Paul stipulated to the purported
fact that the 2003 OFT Agreement was created on September 15.
More globally, Jay contends that this stipulation, and others like it, mean that Paul
concedes the document thereunder is a valid and legally binding document. See D.I. 133
at 40–41. I do not read Paul’s stipulations to concede more than the fact that the document
was purportedly executed on the stated date.
77
PTO ¶ 26.
78
See supra note 76.
79
Jay Tr. 368:18–369:2, 369:4–371:4.
80
Jay Tr. 370:1–4.
17
told Paul and Lillian: both believed that Georgene intended for her estate to be
distributed in equal thirds.81
1. Georgene’s 2003 OFT Amendment
Georgene remained in a medical facility from September 14 until the second
week of November, when she returned home. 82 From Georgene’s fall through the
end of November, Jay travelled to New Jersey each evening to care for Georgene’s
dogs and to visit her.83 During that time, Georgene executed a will, a document
naming Jay as her power of attorney, and an amendment to the One Flintlock Trust. 84
Georgene had already named Jay as her attorney-in-fact on September 15.85
But, as the parties stipulated, on November 21, assisted by legal counsel, Georgene
executed a General Durable Power of Attorney appointing Jay as her attorney-in-
fact (“Georgene’s POA”). 86 Georgene’s POA enumerates the attorney-in-fact’s
powers; it omits the authority to amend Georgene’s established trusts, and it limits
Jay’s ability to make gifts.87
81
See Paul Tr. 125:1–128:19; JX 58 at 5 (entry dated 2/22/2005 at 2:21 PM).
82
Jay Tr. 363:24–364:7.
83
Jay Tr. 363:24–364:7.
84
See JX 7, JX 8, JX 9.
85
JX 5.
86
PTO ¶ 29.
87
JX 9, ¶¶ 17–22.
18
The parties also stipulated that Georgene, assisted by legal counsel, executed
an amendment and restatement of the One Flintlock Trust, dated November 21
(“Georgene’s 2003 OFT Amendment”).88 This document was signed under seal.89
Georgene’s 2003 OFT Amendment named Georgene and Jay as co-trustees and
Lillian as successor co-trustee of the One Flintlock Trust.90 At trial, when explaining
that he served as trustee of the One Flintlock Trust since Georgene executed this
amendment, Jay was surprised to learn that the amendment actually named him as
co-trustee.91
Georgene’s 2003 OFT Amendment explicitly states that the settlor reserved
the right to amend or revoke the trust: only Georgene had these powers.92
Georgene’s 2003 OFT Amendment also limits a trustee’s ability to make gifts to
himself during the Settlor’s lifetime. 93 Reading the terms of Georgene’s POA and
Georgene’s 2003 OFT Amendment together—especially considering that Georgene
executed the documents on the same day with counsel’s assistance—it is clear that
only Georgene, and not Jay, had the authority to amend the One Flintlock Trust. 94
88
PTO ¶ 27.
89
JX 7 at 31.
90
PTO ¶ 28.
91
Jay Tr. 359:9–20.
92
JX 7, § 2.
93
JX 7, § 3(2).
94
See JX 9, ¶¶ 17–22; JX 7, § 2.
19
Under Georgene’s 2003 OFT Amendment, Georgene was the sole beneficiary
of the One Flintlock Trust during her life. 95 Georgene’s 2003 OFT Amendment
permits the co-trustees to distribute trust principal to Georgene as they, in their sole
discretion, deem appropriate. 96 The trustee need not treat all beneficiaries equally.97
Contrary to Jay’s testimony at trial, Georgene’s 2003 OFT Amendment does not
contain a similar provision permitting the trustee to make discretionary distributions
of principal after Georgene’s death.98 Upon Georgene’s death, Georgene’s 2003
OFT Amendment strictly requires the trust principal to be distributed to three sub-
trusts: 51% to Jay, 25% to Lillian, and 24% to Paul. 99 Jay is named as trustee of
both Lillian’s and Paul’s sub-trusts.100 The trustee does not have the discretion to
distribute principal. 101 Rather, Georgene’s 2003 OFT Amendment mandates that the
trustee distribute net income semi-annually to each beneficiary from their respective
sub-trust.102
95
PTO ¶ 33; JX 7, §§ 2(a)(1–2).
96
JX 7, §§ 3(A)(2), 3(B)(1).
97
JX 7, § 7(F).
98
Compare Jay Tr. 379:24–380:13, with JX 7, §§ 3(A)(2), 3(B)(1), and JX 7, §§ 5‒8.
99
PTO ¶ 36; JX 7, § 5(A).
100
JX 7, §§ 6, 7.
101
JX 7, §§ 6, 7, 8.
102
PTO ¶ 36; JX 7, § 5.
20
Upon Lillian’s death, her share of the One Flintlock Trust would pass to Jay.103
Thus, once Lillian passed away and her share was added to Jay’s sub-trust, his sub-
trust would hold 76% of the trust principal, and he would continue to receive income
distributions.104 If both Lillian and Paul predeceased Jay, Jay would receive
everything.105 But Paul’s share only increases if both Lillian and Jay predecease
him.106 Finally, upon the death of the last surviving beneficiary, the principal is
distributed to the urban planning program at Columbia University—Jay’s alma
mater.107
2. Jay’s OFT Amendment
Jay continued to play an active role in Georgene’s recovery as her medical
needs increased. Georgene required occupational and physical therapy. 108 In
December 2003 and January 2004, her health deteriorated rapidly. 109 Toward the
end of her life, Georgene required round-the-clock care.110 Jay initially arranged for
103
PTO ¶ 38; JX 7, § 6.
104
Jay Tr. 375:22–376:21.
105
JX 7, § 7.
106
JX 7, §§ 6, 8.
107
PTO ¶ 40; JX 7, § 9 (“Ultimate Gift-Over”).
108
Jay Tr. 364:23–365:4.
109
Jay Tr. 365:5–366:9.
110
Jay Tr. 365:21–23.
21
the Visiting Nurse Association to come in daily to assist Georgene, but she grew
uncomfortable with different individuals coming to her home each day. 111
Jay arranged what he believed to be a more comfortable situation for
Georgene. While in the hospital, Georgene befriended a nursing student, Paula
Munoz.112 Knowing that Paula had given Georgene her contact information, Jay
reached out to Paula and her partner, Pilar Sanchez, whom Jay did not know at the
time.113 He inquired as to whether they would be interested in helping Georgene,
and they were.114 But because they lived nearly one hour away from Georgene, Jay
suggested that Paula and Pilar move into Georgene’s home. 115 Jay continued to visit
Georgene “maybe three times a week.”116
During this time, Jay amended the One Flintlock Trust,117 even though neither
Georgene’s 2003 OFT Amendment nor Georgene’s POA empowered Jay to do so.118
Purportedly under Georgene’s POA, Jay prepared and executed an amendment to
111
Jay Tr. 367:1–8.
112
Jay Tr. 367:9–11.
113
Jay Tr. 367:11–21.
114
Jay Tr. 367:11–21.
115
Jay Tr. 367:22–368:8.
116
Jay Tr. 368:9–17.
117
JX 10.
118
See JX 9, ¶¶ 17–22; JX 7, § 2.
22
the Flintlock Trust, dated September 14, 2004 (“Jay’s OFT Amendment”). 119 Jay’s
OFT Amendment is signed by Jay as Georgene’s attorney-in-fact120 and witnessed
by Paula Munoz and Pilar Sanchez, 121 the individuals who Jay arranged to tend to
Georgene while living in her home. 122 Jay executed Jay’s OFT Amendment under
seal.123
Jay’s OFT Amendment authorizes him to revoke Paul’s or Lillian’s interest
in the One Flintlock Trust if either “legally challenges, threatens to challenge,
contests or attempt to overturn through legal action or any other means at any time
and for any reason” Georgene’s 2003 OFT Amendment, Jay’s OFT Amendment,
Georgene’s will, or Georgene’s POA. 124 It further provides that revocation is at
Jay’s “sole discretion” and that he “shall be held harmless for any actions taken while
acting in his full capacity as trustee.”125 Jay agreed that Jay’s OFT Amendment
makes substantial changes to his powers as trustee. 126 Yet Jay never provided Paul
119
PTO ¶ 30.
120
JX 10 at 13.
121
JX 10 at 13.
122
Jay Tr. 449:11–24.
123
JX 10 at 13.
124
PTO ¶ 31; see also JX 10 at 3.
125
PTO ¶ 31; see also JX 10 at 3.
126
Jay Tr. 450:1–12.
23
with a copy of Jay’s OFT Amendment; Paul did not receive a copy until this
litigation.127
At trial, Jay testified that “a lawyer who was a friend of [Georgene]” prepared
Jay’s OFT Amendment during the summer of 2004, without providing the name of
the attorney or the circumstances under which that attorney drafted the document. 128
He also testified that he was not provided with a copy of the document until its
signing.129 Jay further testified that Georgene elected to have the document
prepared:130
She was having discussions with my mother, and my mother kept
saying, “I want you to change your documents. I want you to leave
equal shares to all three of us.” And so my aunt, who had no intention
of doing so, simply because it was my aunt’s money and not my
mother’s, my aunt put a provision in her trust through this attorney for
challenge.131
I do not find Jay’s testimony credible. His testimony is inconsistent with Lillian and
Paul’s understanding that Georgene intended to divide her assets evenly among
Lillian, Paul, and Jay.132 Jay’s statements are also inconsistent: Jay signed the
127
Paul Tr. 191:7–192:3.
128
Jay Tr. 440:2–10.
129
Jay Tr. 440:11–15.
130
Jay Tr. 441:5–6.
131
Jay Tr. 440:16–24.
132
Paul Tr. 125:1–11 (“A. The conversations for a long time were always a third, a third,
a third. Q. The conversations between who? A. Jay and my mom. Jay, my mom, and
myself. Q. Okay. So the conversations -- I want to make sure I understand you -- that you
just described would be between you and Jay, you and your mom, or your mom and Jay,
24
document, but when referring to the document in later communications, Jay told
Paul that Georgene signed Jay’s OFT Amendment. 133 Jay contends that his
statement to Paul was a “mistake.”134 I believe it is only a mistake in covering his
own tracks.
or maybe all three of you. . . . A. All three of us.”); id. 125:12–15 (“Q. So your Aunt Gene
was not included in those conversations about a third, a third, a third. Is that correct? A.
Aunt Gene talked to my mom.”); id. 126:7–12 (“Q. Okay. So the basis of one-third -- your
belief, and it sounds like your mom's belief, of one-third, one-third, one-third between you,
Jay, and your mom was from conversations your mom had with her sister, Georgene
Castor? A. When she was alive, yes.”); id. 126:24–128:12 (“Q. . . . You had never had a
conversation with your Aunt Gene where she told you her estate or trust corpus was going
to be divided a third, a third, a third. Is that correct? A. Let’s say it’s hearsay, but yes. Q.
Well, it’s not hearsay if you tell me she never told you. So that was my question. So she
never told you that it would be divided? A. No, she told us. Q. She told you? A. Yes. Q.
You specifically? Not just your mom? A. (Witness nods head in the affirmative.) Q.
When did she tell you that? A. When we went to her house to help her out with her -- Q.
Did you go to her house more than once? A. Yes. Q. Okay. So which specific time when
you went to her house, or specific times that you went to her house that she told you a third,
a third, a third? A. Maybe 2003 and 2004. Q. So that’s after she had fallen and broken her
hip and was trapped in the bathroom, I understand, numerous hours until Jay found her. Is
that correct? A. I have no idea. Q. Well, had your Aunt Gene broken her hip at the times
you recall her telling you that it was a third, a third, a third? A. Before that. Q. Okay. So
it was before September 2003, because that’s when I understand she fell.”); see also JX 58
at 5 (entry dated 2/22/2005 at 2:21 PM) (“Mrs. Deputy remembers Jean saying two or three
years ago that house was to be divided by thirds to Jay, Paul, and Lillian (Paul perhaps a
witness to this declaration). Also remembers Jean saying few years ago ‘the stock all goes
to you, Lil’ (stockbroker might be a witness to this discussion).”).
133
JX 126 at JDEPUTY_00339 (referencing “the ‘No Contest and Revocation Clauses’ of
the One Flintlock Irrevocable Trust under the signature of Mrs. Georgene E. Castor”
(emphasis added)).
134
Jay Tr. 450:13–452:3.
25
I find that Jay drafted and executed Jay’s OFT Amendment without
Georgene’s knowledge or consent, without any power or authority via her estate
planning documents, and in contravention of her wishes.
3. Georgene’s 2004 OFT Amendment
The One Flintlock Trust was amended again on October 22, 2004. The parties
stipulated that Georgene, assisted by counsel, executed that amendment
(“Georgene’s 2004 OFT Amendment”).135 Jay witnessed this document under
seal.136 Georgene’s 2004 OFT Amendment does not mention Jay’s OFT
Amendment.137
With regards to Jay’s powers, Georgene’s 2004 OFT Amendment gives and
takes away.138 It overrides her exclusive amendment power and grants Jay, as co-
trustee, limited authority to amend the One Flintlock Trust: 139
135
PTO ¶ 32.
136
JX 11 at 3.
137
JX 11; Jay Tr. 452:4–453:4.
138
Jay contends that Jay’s OFT Amendment reflects Georgene’s wishes, but she executed
another Amendment with conflicting terms just one month later. Jay, the only witness with
knowledge of the circumstances under which Georgene allegedly directed both
amendments, has offered no explanation about the discrepancies and time between the
documents.
139
Compare JX 11 at 1, with JX 9, ¶¶ 17–21, and JX 7, § 2.
26
This Agreement of Trust and the trusts created hereby are irrevocable.
The Trustees acting unanimously may amend any portion of this
Agreement of Trust in writing from time to time in any manner that the
Trustees deem necessary or advisable. In exercising such power to
amend the provisions of this Agreement of Trust, the Trustees shall
observe the general fiduciary duties of loyalty, good faith, fairness and
due care.140
Further, this provision states that the Trust is irrevocable. 141
But Georgene’s 2004 OFT Amendment limits Jay’s powers with regards to
Lillian and Paul’s sub-trusts; it names him “Administrative Trustee” with
specifically enumerated duties and powers and “shall have no other duties,
obligations, or authority.” 142 The enumerated list does not grant Jay revocation
power.143 In particular, Georgene amended the One Flintlock Trust to include an
additional provision relating to trustees.144
4. The Castor Estate Challenge
Georgene passed away “much sooner than expected” on January 14, 2005. 145
Georgene was a trustee and the sole beneficiary of the One Flintlock Trust until her
140
JX 11 at 1.
141
JX 11 at 1.
Compare JX 11 at 2–3 (“The following subsection L is hereby added to Section
142
FOURTEENTH of the Trust Agreement . . . .”), with JX 7, § 14.
143
JX 11 at 2–3.
144
JX 11 at 2–3.
145
PTO ¶ 23; JX 58 at 6 (entry dated 1/25/2005 at 10:32 AM).
27
death.146 Upon her death, the One Flintlock Trust, as amended by Georgene’s 2003
and 2004 OFT Amendments, divides the trust corpus into three beneficiaries’ sub-
trusts: Paul (24%), Jay (51%), and Lillian (25%) with net income to be distributed
semi-annually to each from their respective sub-trust.147 Jay became the sole trustee
of the One Flintlock Trust upon Georgene’s death, as well as the executor of her
estate.148
Lillian and Paul always understood that Georgene intended to divide her estate
in one-third shares equally among Lillian, Paul, and Jay.149 After Georgene’s death,
according to Paul, Jay initially assented to this understanding. 150 But then Jay
claimed that the will was “private” and began distributing Georgene’s assets in a
different manner. 151 As of March 7, 2005,
Jay took everything (physically), including the Mercedes; the house is
empty; the coin collection has been removed from the safe deposit box.
Will, made 9-13-03, says house is in trust and distributes probate assets
51% Jay, 24% Paul, 25% Mrs. Deputy. She[’s] unsure of estate value,
but thinks $500M for house. 152
146
PTO ¶¶ 23, 28, 33.
147
PTO ¶¶ 34, 36.
148
PTO ¶ 35; JX 8 at RDEPUTY_000089.
149
See, e.g., Paul Tr. 9:14–15; id. 122:17–129:10.
150
See Paul Tr. 125:1–19 (describing conversations after Georgene’s death between Paul,
Jay, and Lillian regarding the equal payout structure of Georgene’s trust).
151
JX 58 at 6 (entry dated 2/17/2005 at 3:40 PM); see Paul Tr. 9:10–17.
152
JX 58 at 4–5 (entry dated 3/7/2005 at 10:07 AM).
28
Then on May 19, 2005, Jay sold Georgene’s personal residence for $525,000. 153
Until Georgene’s death, Lillian and Paul were completely unaware that
Georgene’s plan was no longer to distribute one-third to each beneficiary. 154 Lillian
eventually received a copy of the One Flintlock Trust and shared the news with
Paul;155 “[s]he was angry, and she said, ‘I want to show you this, what Aunt Gene
did.’”156 When the One Flintlock Trust did not reflect the equal-thirds division,
Lillian blamed Jay.157 She believed “Jay had inherited assets away from her from
her sister’s estate.”158 Lillian believed Jay had exercised undue influence over his
great aunt, Agnes, and now over Georgene’s estate.159 Lillian told Fairchild, “Jay
has us skunked again.”160 Jay’s actions are unsurprising to those who have come to
know Jay and watch his schemes unfold over time. 161
153
PTO ¶ 39.
154
JX 58 at 5 (entries dated 3/7/2005 at 10:07 AM and 2/22/2005 at 2:21 PM); Paul Tr.
7:5–8:5. When asked about his understanding of the One Flintlock Trust, Paul stated
“[t]hat Jay’s the executor; and the distribution points, he has 51 percent, my mom had 25
percent, and I have 24 percent.” Paul Tr. 8:1–5. I interpret Paul’s use of the word
“executor” to refer to Jay in his fiduciary capacity as trustee.
155
Paul Tr. 123:7–124:15.
156
Paul Tr. 124:12–13.
157
JX 58 at 4–6; Paul Tr. 9:8–12.
158
Fairchild Tr. 213:7–9.
JX 58 at 4; Fairchild Tr. 298:21–24 (“I had seen what I was told by Paul and Mrs.
159
Deputy was undue influence by Jay on his great aunt and his aunt’s estate . . . .”).
160
Fairchild Tr. 216:10–17; JX 58 at 4.
161
See Fairchild Tr. 204:7–18, 215:14–216:17.
29
As a result, Lillian made three decisions. First, she decided to seek
recompense from Jay for lost inheritance from Agnes’s estate.162 Second, because
she was “infuriated” with Jay, Lillian decided to disinherit him. 163 I describe this
more in connection with the Deputy Trust, infra.
Finally, Lillian sued Jay to contest Georgene’s estate on May 19, 2005. 164
Among other things, Lillian alleged that Jay asserted undue influence over Georgene
and fraudulently converted her assets.165 But the lawsuit was short-lived.166 Jay
approached Paul and Lillian to talk about dropping the lawsuit and reparations for
Agnes’ estate.167 So the three met at Lillian’s home in Seaford in July 2005. 168 Jay
admitted to being a “jerk.”169
162
JX 58 at 4–5.
163
Fairchild Tr. 213:7–10 (“In 2005, Mrs. Deputy’s sister died, and she felt that Jay had
inherited assets away from her from her sister’s estate. And that infuriated her, so she
wanted to disinherit Jay.”); id. 215:5–6 (“[W]hatever happened infuriated Lillian to the
point that she disinherited a son.”); JX 58 at 6 (entry dated 2/17/2005 at 3:40 PM) (“Mrs.
Deputy is removing Jay as POA and beneficiary.”).
164
JX 20; Paul Tr. 8:23–9:17, 11:3–24.
165
JX 20 at RDEPUTY_000111, 000115, 000116.
166
Fairchild Tr. 216:23–24 (“[T]hat challenge lasted about five months before she
abandoned it.”).
167
Jay Tr. 387:18–19, 388:20–23, 453:5–13.
168
Paul Tr. 12:2–13:3; JX 22 at ASFI0000402.
169
JX 22 at AFSI0000403.
30
“Jay basically said that [he] did it for the family.” 170 Paul understood Jay’s
comment to mean “he was protecting the three of [them] against, like, cousins and
stuff like that” but did not understand why they would need such protection.171
Lillian was pleased by Jay’s turnaround and grateful he was back in her life after the
past two years with little communication.172 Lillian decided to dismiss the case.173
“Jay [] distributed [Georgene’s] personal items among the three of them
fairly,”174 and Lillian “was to relinquish her ¼ of [Georgene’s] estate to Paul.”175 As
a result, Lillian expected to change her will to include Jay again, to change the
account beneficiaries to include Jay again, and to drop the lawsuit despite an
upcoming court date.176 Jay “agreed to pay Lillian $500/mo toward her $150M share
of Agnes estate.”177
On July 28, Lillian informed Fairchild that she was contacting her attorney,
David Baker, Esq., to return Jay to her estate, and she instructed Fairchild “to send
170
Paul Tr. 12:3–7 (internal quotation marks omitted); see also id. 148:11–22.
171
Paul Tr. 12:8–13.
172
Fairchild Tr. 218:10–15.
173
Paul Tr. 12:17–19.
174
JX 22 at AFSI00004043. Ultimately, this never happened. See JX 80.
175
JX 22 at AFSI0000403.
176
Fairchild Tr. 219:7–15; JX 22 at AFSI 0000403.
177
JX 58 at 4 (entry dated 7/28/2005 at 9:04 AM).
31
beneficiary change forms for sons, equally.”178 Lillian then officially withdrew the
New Jersey lawsuit.179
Despite the fact that Lillian legally challenged the validity of the One Flintlock
Trust documents,180 Jay did not exercise the power Jay’s OFT Amendment
purportedly granted him to disinherit Lillian because of the New Jersey litigation.181
This, too, supports my finding that Jay’s OFT Amendment was fraudulently
executed and my suspicion that it was likely backdated.
D. The Deputy Trust
I turn now to the story of Lillian’s estate plan, which begins before the
litigation about Georgene’s. Lillian executed a basic will many years before she first
met Fairchild. 182 As he did with many new clients, Fairchild advised Lillian to get
her estate up-to-date.183 “[H]er plan was to distribute everything equally to her two
sons outright.”184 Fairchild encouraged her to see an attorney to develop an estate
178
JX 58 at 4 (entry dated 7/28/2005 at 9:04 AM).
179
PTO ¶ 42.
180
Jay Tr. 453:1–18.
181
PTO ¶ 43; Jay Tr. 453:14–454:3.
182
Fairchild Tr. 206:5–207:12.
183
Fairchild Tr. 206:5–19; see also JX 58 at 9 (entry dated 10/9/2002 at 9:25 AM).
184
Fairchild Tr. 206:20–24.
32
plan.185 Lillian hired David Baker,186 who was her estate attorney from 2003 to at
least 2005.187 With Baker’s assistance, Lillian established a trust.188 Before she did
so, Lillian spoke with Jay and Paul.189 Paul testified that “[s]he automatically said
to the two of us, that it’s 50-50 no matter what.”190
But Jay pressured his mother to deviate from this plan.191 Jay was eager to
see Lillian establish a trust but wanted her to do so on his terms. 192 Lillian
recognized that Jay was “strong willed and concerned that money not leave the
family,” and “insistent upon” her adopting his preferred estate plan. 193 On January
7, 2003, Fairchild recorded that Lillian was “[very] troubled with disposition of the
estate:”194
185
Fairchild Tr. 206:5–19.
186
Fairchild Tr. 206:16–19; Jay Tr. 459:17–19;
187
Paul Tr. 37:33–38:2.
188
Fairchild Tr. 206:8–207:12.
189
Paul Tr. 35:17–36:6.
190
Paul Tr. 35:22–23.
191
See JX 58 at 8–9 (entries dated 1/7/2003 at 2:00 PM, 1/7/2003 at 9:16 AM, and 1/6/2003
at 3:39 PM).
192
See JX 58 at 8–9 (entries dated 1/7/2003 at 2:00 PM, 1/7/2003 at 9:16 AM, and 1/6/2003
at 3:39 PM).
193
JX 58 at 8–9 (internal quotation marks omitted).
194
JX 58 at 8 (entry dated 1/7/2003 at 9:16 AM).
33
Jay insistent upon full estate in trust with income to him and [Paul].
[Paul] wants his share outright. She[’s] not inclined to place restrictions
and favors outright disposition but Jay urging strongly otherwise,
claiming “power in numbers” (perhaps thinking that the income
generated by the whole is somehow more than twice the income
generated by each half), suggesting that outright transfers will be taxed,
and questioning whether acceptable for [Paul’s] portion to end up with
his partner. I noted that transfers in trust most common when parents
worried about spendthrift children (she[’s] not). V. important to her
that the boys be treated equally. Urged she continue with living trust
and PoA’s (with outright disposition to both boys), recognizing that she
can change ultimate disposition if desired in the future. 195
Jay preferred that Lillian establish “some sort of continuing trust.” 196 Although Jay
was “strong willed,” Lillian was convinced that “outright equally” was the “best
method of disposition.”197 She revised her estate plan to reflect this decision. 198
Lillian executed several documents on January 21, 2003. First, she executed
a Durable Power of Attorney appointing Jay and Paul as her attorneys-in-fact.199
Lillian intended for both Jay and Paul to serve thereunder. 200
Second, Lillian executed the Revocable Trust Agreement of Lillian K.
Deputy, which Baker prepared (the “2003 Deputy Trust Agreement”).201 The 2003
195
JX 58 at 8–9 (entry dated 1/7/2003 at 9:16 AM).
196
Fairchild Tr. 210:2–8.
197
JX 58 at 8–9 (entry dated 1/7/2003 at 2:00 PM).
198
Paul Tr. 35:17–36:6.
199
JX 2 at AFSI0000711; Fairchild Tr. 211:8–12.
200
Paul Tr. 34:19–35:16; Fairchild Tr. 211:8–15.
201
PTO ¶ 48; JX 1.
34
Deputy Trust Agreement named Lillian as trustee and named Paul and Jay as
substitute co-trustees.202 Thereunder, Lillian established a “standard revocable trust
that leaves everything to her two sons equally outright.” 203
Lillian transferred the majority of her Ameriprise accounts to the Deputy
Trust.204 But she also had annuity and IRA accounts that were not transferred, but
rather were governed by beneficiary designations. 205 These would be distributed to
Jay and Paul, “equally outright.”206
After Lillian executed the 2003 Deputy Trust Agreement, Baker and Lillian
informed Jay and Paul that the new estate planning documents treated them
equally.207 She anticipated that Jay would be unhappy with this structure because
Jay “was pressuring her to change the dispositive provisions from the boys outright
202
PTO ¶¶ 49, 50. Neither Jay nor Paul served as trustee of the Deputy Trust under the
2003 Deputy Trust Agreement. PTO ¶ 54.
203
Fairchild Tr. 208:11–12.
204
JX 3; Fairchild 211:24–212:13. Her regular brokerage account, which had been owned
by her individually, was owned by the Deputy Trust after she requested that it be
transferred. Fairchild Tr. 212:6–23.
205
Fairchild Tr. 212:6–23.
206
Fairchild Tr. 212:6–23.
207
Paul Tr. 38:10–12 (“In 2003 we had a telephone call with Jay involved and saying that
everybody -- it was 50-50 between us, me and Jay.”).
35
to some sort of continuing trust.”208 Lillian’s estate plan reflected her wishes, not
Jay’s.209
1. Lillian Revises The Deputy Trust In 2005.
In 2005, Lillian’s relationship with Jay took a dramatic turn, which spurred
her to revise her estate plans.210 Jay was unhappy with the 2003 Deputy Trust
Agreement because Lillian did not do what Jay wanted.211 Lillian and Jay scarcely
communicated for roughly two years. 212 Lillian and Jay’s relationship worsened
with Georgene’s death in January 2005, Jay’s management of Georgene’s estate, and
Lillian’s subsequent lawsuit against Jay. Lillian repeatedly referred to this series of
events as a “crisis.”213
208
Fairchild Tr. 210:3–5; see also JX 58 at 8.
209
See Fairchild Tr. 210:12–24; JX 58 at 8.
210
Fairchild Tr. 303:20–304:7. Fairchild testified that, in his twenty-six years of advising,
rarely do individuals change the general dispositive provisions in their estate plans:
“[P]eople’s estate plans develop and remain fairly consistent over time” and “the patterns
of an estate plan don’t vary dramatically.” Id. 300:2–6, 301:9–11. When they do occur,
significant changes in estate plans are typically the result of some “dramatic change” in the
testator’s life. Id. 300:2–6 (“The instances I can think of are where there was some
dramatic change of drug addiction, a terrible divorce, things like that. Otherwise, my
experience is that people’s estate plans develop and remain fairly consistent over time.”).
211
Fairchild Tr. 303:20–24.
212
Fairchild Tr. 303:20–24; see also JX 22 at AFSI 0000403.
213
See JX 22 at AFSI0000403; JX 58 at 8.
36
As a result of that crisis, Lillian decided to disinherit Jay. 214 On February 17,
2005, Lillian informed Fairchild that she was “removing Jay as POA and
beneficiary.”215 On March 10, 2005, again assisted by Baker, Lillian amended and
restated the Deputy Trust by Revocable Trust Agreement, dated March 10, 2005 (the
“2005 Deputy Trust Agreement”). 216 That same day, Lillian assigned all of her
tangible personal property and personal residence into her Trust. 217
The 2005 Deputy Trust Agreement left “all to Paul, none to Jay.”218 Article
III(B) names Paul as the sole beneficiary of the Deputy Trust upon Lillian’s death.219
Article III(C) explicitly disinherits Jay and includes a no-contest clause.220 The 2005
Deputy Trust Agreement named Lillian as the sole trustee and named Paul as
substitute trustee.221
After executing the 2005 Deputy Trust Agreement, Lillian contacted
Ameriprise to complete her revised estate plan. 222 Ameriprise completed new
214
Fairchild Tr. 304:1–7.
215
JX 58 at 6 (entry dated 2/17/2005 at 3:40 PM).
216
PTO ¶ 51.
217
JX 15, JX 16.
218
Fairchild Tr. 22:6–9; JX 13 at AFSI0000686.
219
JX 13 at AFSI0000687.
220
JX 13 at AFSI0000687.
221
PTO ¶¶ 52, 53; JX 13 at AFSI0000686.
222
See JX 17.
37
beneficiary forms naming Paul as the sole primary beneficiary of assets not owned
by the Deputy Trust.223 Lillian also submitted the Ameriprise forms to retitle her
trust assets, including her investment account, in the name of the 2005 Deputy Trust
Agreement. 224 Fairchild received this form, along with a copy of the 2005 Deputy
Trust Agreement, on March 11, 2005.225 Ameriprise produced its copy of the 2005
Deputy Trust Agreement in this litigation, marked as Joint Exhibit 13 (“JX 13”). 226
A different copy of the 2005 Deputy Trust Agreement, marked as Joint
Exhibit 14 (“JX 14”), was produced by Jay’s former counsel, Morris, Nichols, Arsht
& Tunnell LLP (“Morris Nichols”). 227 JX 13 and JX 14 have several differences.228
The first page of JX 13 bears Fairchild’s handwritten note, whereas the first page of
JX 14 bears a handwritten note that reads “JAY HAS ORIGINAL.” 229
Article III, the dispositive provision, appears on the second page of both
documents.230 In JX 13, Article III leaves “all to Paul, none to Jay.”231 But in JX
223
Fairchild Tr. 224:19–225:1.
224
Fairchild Tr. 225:2–15; JX 17.
225
JX 58 at 4 (entry dated 3/11/2005 at 12:13 PM).
226
See JX 13.
227
JX 14.
228
JX 13.
229
JX 14 at MNAT000052. Compare JX 14 at MNAT000052, with JX 13 at
ASFI0000686.
230
Compare JX 14 at MNAT000053, with JX 13 at ASFI0000687.
231
JX 13 at ASFI0000687 (Art. III(B), (C)); Fairchild Tr. 222:6–9.
38
14, Article III states that after Lillian’s death, the Trust property “shall be distributed
equally to the Grantor’s sons.”232 Paul and Fairchild testified that JX 14 is not
consistent with Lillian’s 2005 wishes for her estate plan. 233 As Lillian’s financial
advisor, Fairchild likely would have known about a revision to the Deputy Trust and
would have seen the proper document.234 He did: JX 13.235 Fairchild never received
a copy of JX 14.236 He explained, “To the best of my knowledge, [JX 14] is not a
copy of the original trust.”237 Accordingly, the preponderance of the evidence
suggests that Jay prepared JX 14 and provided it to Morris Nichols under the guise
that it was a true and correct copy of the 2005 Deputy Trust Agreement.238 I find JX
13, not JX 14, is the authentic copy of the 2005 Deputy Trust Agreement. Pursuant
to JX 13, Lillian disinherited Jay in 2005 in light of the actions he took with respect
to Georgene’s estate and the One Flintlock Trust.
232
JX 13 at ASFI0000687 (Art. III(B)).
233
See Paul Tr. 41:13–42:3; Fairchild Tr. 223:16–224:16.
234
Fairchild Tr. 224:7–12.
235
Fairchild Tr. 222:6–9.
236
Fairchild Tr. 224:2–6.
237
Fairchild Tr. 224:15–16.
238
Jay Dep. 72:1–24. Jay did not testify at trial regarding JX 14. But at his deposition, he
testified that he produced the 2005 Deputy Trust Agreement to Morris Nichols without
having read it because he respected his mother’s privacy. Id. 72:7–13. Jay’s ignorance is
unconvincing. To the contrary, both Paul and Fairchild testified at trial that JX 13 is a true
and correct copy of the 2005 Deputy Trust Agreement. Fairchild confirmed that Lillian
provided this copy to Ameriprise, as required, when she submitted a beneficiary change
form.
39
As discussed, Jay extinguished Lillian’s qualms when he extended an olive
branch to Paul and Lillian in July 2005. She decided to abandon the 2005 lawsuit
and change her estate plan, including the beneficiary designations of her accounts
and the Deputy Trust, to once again include Jay.239 She did not take any immediate
steps to effectuate these changes.
2. Lillian Falls Ill, And The Deputy Trust Is Revised
Again.
A number of documents exist that purportedly revised the Deputy Trust in
2008. Jay drafted and executed these documents for his own benefit while acting as
Lillian’s power of attorney. Jay did so shortly before Lillian passed away on March
5, 2008.240 I have reservations about the authenticity of these documents, which are
integral to this action.
During the 2007 Christmas season, Lillian visited Jay and his husband in New
York.241 On December 26, 2007, Lillian was admitted to the emergency room of St.
Vincent’s Hospital in New York. 242 Lillian was diagnosed with congestive heart
239
See JX 24 at AFSI0000399; JX 58 at 4 (entry dated 7/28/2005 at 9:04 AM) (“She [left
message] with Jeff Berezni (sp?) to drop lawsuit. We to send beneficiary change forms for
sons, equally WROS. She will call atty Baker to return Jay to her estate. [Paul] not
convinced yet that Jay is genuine. . . . She thanked us for everything we did during the
crisis.”).
240
PTO ¶¶ 24, 58.
241
Paul Tr. 44:23–45:4.
242
PTO ¶ 21.
40
failure.243 In February 2008, Lillian was admitted to the emergency room in Milford,
Delaware.244 Doctors informed Lillian that she required a quadruple bypass
surgery.245 The surgery was scheduled for February 26, 2008. 246
According to Jay, Lillian was adamant that she revise her estate documents.247
When the surgeon informed Lillian that she needed surgery as soon as possible, she
allegedly responded, “No; I have to finish my documents.”248 Paul testified
differently.249 According to Paul, Lillian was “very frightened” by her health and
did not discuss any changes to her estate plan at that time. 250 Lillian was a Christian
Scientist, so according to Paul, her beliefs had kept her out of hospitals until this
surgery.251 Paul testified that in the days between finding out that she needed surgery
and actually undergoing the surgery, Lillian did not discuss any changes to her trust
despite meeting with her two sons together for dinner on February 25, 2008. 252 I
believe Paul.
243
Paul Tr. 44:23–45:14; see also JX 58 at 1 (entry dated 1/30/2005 at 3:36 PM).
244
JX 55 at Bayhealth00003.
245
Paul Tr. 45:11–17; see JX 55 at Bayhealth00003.
246
Paul Tr. 45:11–17; see JX 55 at Bayhealth00003.
247
Jay Tr. 387:10–389:17.
248
Jay Tr. 389:11–12.
249
See Paul Tr. 45:18–46:22.
250
Paul Tr. 45:22–23.
251
Paul Tr. 45:23–46:4.
252
Paul Tr. 46:5–49:19.
41
While Lillian’s health was failing, Jay reached out to his attorney, Thomas
Pulsifer, Esq. of Morris Nichols, to revise Lillian’s 2005 trust and estate plan. 253
Lillian, though, had relied on Baker for her estate planning for years and had not met
Pulsifer. 254 On January 17, 2008, Jay wrote Pulsifer:
My mother has asked me to carry out her requests to have her will and
trust amended. She originally asked me to do this in August, 2007, and
I have neglected to get this underway. The original documents which
were prepared by a lawyer in Georgetown, David W. Baker, have been
in my possession since September, 2007. She chooses not to employ
Mr. Baker to undertake the amendments. She has asked me numerous
times within the last couple of months if I have gotten the process
underway. The amendments to her will and trust reflect her desires to
retain her monies, in trust, within her immediate family, (between my
brother and me) and without any outside influences. As well, she does
not want her monies to pass on to people outside the family once either
brother has passed on, but rather to support the surviving brother until
his passing when the trust will pass onto the charity she has chosen. My
mother’s sister employed a “pour over” will that allowed her trust’s
invested assets to benefit my mother, my brother and I. (Through your
amending my aunt’s trust, the situs of the trust moved from the State of
New Jersey to the State of Delaware). My mother would like to do the
same, however, with only two beneficiaries.255
253
See JX 30; JX 35.
254
See JX 30 at MNAT000001.
255
JX 30 at MNAT000001. This excerpt suggests that Pulsifer aided Jay with the One
Flintlock Trust. But the parties offered no testimony as to Pulsifer’s participation with
Georgene’s estate and the One Flintlock Trust.
42
Jay dictated the terms of Lillian’s 2008 trust revision. 256 Neither Paul nor Fairchild
knew that Pulsifer and Jay were working on a revised trust and estate plan.257
Fairchild first learned of the 2008 Deputy Trust revisions shortly before they
were purportedly executed.258 On January 30, 2008, Jay contacted Fairchild and
informed him of Lillian’s poor health and her purported desire to change the
beneficiary designations on her Ameriprise accounts to a revised trust.259 Fairchild
told Jay he needed a beneficiary change form signed by Lillian, along with a full
copy of the latest Deputy Trust document.260 Jay responded that Jay and Lillian were
amending the Deputy Trust and that it was “not ‘ready yet.’” 261 When Fairchild
asked whether the new Deputy Trust documents were being prepared by an attorney,
Jay became defensive, but informed Fairchild that he was working with a Morris
Nichols attorney. 262
Pulsifer drafted revisions to the Deputy Trust, as well as Lillian’s then-
existing will and power of attorney, and sent them to Jay for his review on February
256
See JX 30, JX 31, JX 35, JX 36. Nothing in the record suggests that Lillian herself
informed Pulsifer of her desired changes to her estate plan.
257
See Paul Tr. 46:8–22; Fairchild Tr. 226:5–7.
258
Fairchild Tr. 227:1–7.
259
JX 58 at 2 (entry dated 1/30/2008 at 3:36 PM).
260
JX 58 at 2 (entry dated 1/30/2008 at 3:36 PM).
261
JX 58 at 2 (entry dated 1/30/2008 at 3:36 PM).
262
JX 58 at 2 (entry dated 1/30/2008 at 3:36 PM).
43
19, 2008.263 Pulsifer suggested that, if the drafts were satisfactory, he meet with
Lillian and Jay so he could explain the changes to her and assess her capacity, and
so she could execute the documents.264 On February 20, Jay responded with a
number of proposed changes that he wanted, to address potential issues he wished
to avoid.265 Jay asked whether Lillian’s revised will and trust would contain a
provision directing the assets from “any outstanding bank accounts, policies of
insurance, and so forth, where the beneficiaries have not been changed from [Paul]
and [Jay]”266 to be poured over into the Deputy Trust, and whether there was
“language that can be included which directs the Trust to be the recipient of these
sums replacing or superceding [sic] [Paul] and [Jay].”267 Pulsifer replied that the
beneficiary designations on those assets would govern and must be changed into the
263
See JX 35 at MNAT000007.
264
JX 35 at MNAT000007.
265
See JX 36 at MNAT000010 (“I’ve taken the opportunity to read through the drafts, and
they are fine and are in good order. I have just a few questions. . . . The Trust’s
amendments are also fine with a couple of minor questions/points. On page 2, I’m not
really comfortable with the ability for the Successor Trustee having the ability to reduce
the principal or corpus of the Trust, but rather to merely receive net income from the corpus.
Is the ability to reduce principal standard in case of some dire emergency? I don’t want
[Paul] to sue the Trust just to have the supposed ability to gain access to his portion of the
principal. . . . The ‘Spendthrift Clause’ allows [Paul] and me to have the right to receive
income. [Paul] and I are not married (but who knows what the future holds with respect to
civil unions). I don’t want [Paul’s] partner declaring he has the right to receive income
from the Trust (and I think that is somewhat clear in Section IV).” (emphases added)).
266
JX 36 at MNAT000010.
267
JX 36 at MNAT000010.
44
name of the revised Deputy Trust,268 consistent with what Fairchild’s January 30
statement.269
Jay also asked Pulsifer about “the ability for the Successor Trustee having the
ability to reduce the principal or corpus of the Trust.”270 In particular, Jay expressed
concern that Paul would sue: “I don’t want [Paul] to sue the Trust just to have the
supposed ability to gain access to his portion of the principal.”271 Pulsifer informed
Jay that “language permitting invasions of the trust principal for health, education,
support and maintenance is common as it protects against emergencies but is not
necessary,” and stated that they could “take out the principal invasion provisions if
your mother wishes.”272 In fact, Pulsifer’s response emphasized that the documents
should be drafted in accordance with Lillian’s wishes, despite Jay’s personal
concerns: “[Y]our mother can write the agreement in any manner she wishes.” 273
The next day, February 21—five days before Lillian’s scheduled open heart
surgery—Jay took Lillian to meet Pulsifer for the first time. 274 During that meeting,
Lillian executed (i) a pour-over Last Will and Testament dated February 21, 2018
268
JX 36 at MNAT000009.
269
JX 58 at 2 (entry dated 1/30/2005 at 3:36 PM).
270
JX 36 at MNAT000010.
271
JX 36 at MNAT000010.
272
JX 36 at MNAT000009.
273
JX 36 at MNAT000009.
274
See JX 35 at MNAT000007–08.
45
(the “2008 Will”);275 (ii) a Durable Power of Attorney (the “2008 Deputy POA”);276
and (iii) the Agreement amending and restating the Deputy Trust titled the
“Amended and Restated Lillian K. Deputy Revocable Charitable Remainder Trust”
dated February 21, 2008 (the “2008 Deputy Trust Agreement”).277 Pulsifer prepared
each document.278
These documents recast the estate to the format that Jay had pressured his
mother to adopt before she first established the Deputy Trust.279 The 2008 Will and
2008 Deputy Trust Agreement name Jay as the executor and successor trustee,
respectively.280 The 2008 Deputy Trust Agreement reinstates Jay as a 50%
beneficiary. 281 But instead of dividing Lillian’s estate outright equally to her sons,
as she had always intended, the 2008 Deputy Trust Agreement distributes income to
the brothers during their lives and leaves the remainder of the trust to two charities.282
In addition, the 2008 Deputy Trust Agreement requires the Trustee “to pay to [Paul
275
PTO ¶ 56; JX 37.
276
PTO ¶ 56; JX 38.
277
PTO ¶ 56; JX 39.
278
PTO ¶ 57.
279
Fairchild Tr. 240:20–241:2.
280
JX 37, Art. I; JX 39 § VII(1)(b).
281
See JX 39, § IV(1).
282
PTO ¶¶ 62, 65; JX 39, § IV(1)–(2). Following the death of the survivor of Jay and Paul,
the remaining trust corpus of the Deputy Trust is to be distributed outright in 50/50 shares
to Lynn House of Potomac Valley, Inc. of Alexandria, Virginia, and the Department of
Education at Principia College, Elsah, Illinois.
46
and Jay] or either of them, in equal or unequal shares, so much of the principal of
the trust, as Trustee in its sole discretion deems advisable, considering the property
available to them from other sources, to provide for their health, education, support
and maintenance.283 A non-liability clause also provides that “[u]pon the delivery
of the trust property to a successor Trustee,” the predecessor trustee is not liable for
future liability, and the successor “shall have responsibility only with respect to the
property actually delivered to it by its predecessor trustee.”284
The 2008 Deputy Trust Agreement provides that with respect to revocation,
“[a]t all times during her life, Trustor shall have the right by an instrument executed
by her . . . to amend or terminate this agreement.”285 Thus, only Lillian, as trustor,
has the authority to amend the Deputy Trust during her life. 286 But the 2008 Deputy
POA empowers Jay, as Lillian’s attorney-in-fact, to establish and amend trusts on
Lillian’s behalf:
I, Lillian K. Deputy; of Sussex County, Delaware, hereby appoint my
son, Jay C. Deputy, my attorney-in-fact . . . [t]o establish trusts on my
behalf, on terms which my attorney-in-fact shall to his or her belief
understand to be my wishes for my estate, and to amend trusts which I
may have heretofore executed. 287
283
JX 39, Art. IV(1); PTO ¶ 63.
284
JX 39, Art. VII(1)(C); PTO ¶ 66.
285
JX 39, § VIII(6).
286
JX 39, § VIII(6).
287
JX 38, § 5.
47
This language empowering Jay to establish and amend Lillian’s trusts is broadly
permissive, but the 2008 Deputy POA does not empower Jay to make gifts to himself
absent written consent of all of Lillian’s “then living adult issue.” 288
The 2008 Deputy Trust surprised Fairchild, who testified that “it was contrary
to everything [he] had seen for 12 years.”289 He added that he was concerned about
Jay’s undue influence because
after 12 years of hearing one thing repeatedly from Mrs. Deputy, days
before her death, after Jay returned to her life, there is suddenly a big
change in her estate plan along the lines that Jay had been interested in
for some time for Mrs. Deputy and, in fact, for Mrs. Deputy’s sister,
Georgene.290
Fairchild first learned of Lillian’s decision to revise the Deputy Trust during his
January 30 conversation with Jay, during which Jay informed Fairchild that the “new
trust is going to be like Aunt Gene’s.”291 He learned of her decision to revise her
power of attorney at the same time or shortly thereafter.292 He never saw or received
a copy of the 2008 Deputy POA or 2008 Will.293 Jay provided Fairchild with a copy
288
JX 38, §§ 10–11.
289
Fairchild Tr. 296:19–297:1.
290
Fairchild Tr. 240:20–241:2.
291
Fairchild Tr. 226:23–227:7; JX 58 at 2 (entry dated 1/30/2008 at 3:36 PM); see also JX
90 at AFS0000673 (entry dated 02/19/2008).
292
Fairchild Tr. 227:15–24; JX 58 at 2 (entry dated 1/30/2008 at 3:36 PM); see also JX 90
at AFS0000673 (entry dated 02/19/2008).
293
Fairchild Tr. 228:1–4, 291:5–14.
48
of the 2008 Deputy Trust Agreement just a few days before Lillian’s surgery in
February 2008.294
Lillian did not consult Fairchild about the changes to the Deputy Trust,295
which deviated from their usual course of dealing. 296 Fairchild suspected that the
sudden changes in Lillian’s estate plans were the result of Jay’s influence. 297 In the
past, Jay had admitted to Fairchild that he had a “controlling nature” and that “he
was not happy with his mother because she didn’t do what he wanted her to do.” 298
Fairchild testified: “I had seen what I was told by Paul and Lillian was undue
influence by Jay on his great aunt and his aunt’s estate, and this seemed to be
consistent with that pattern.” 299
Concerned, Fairchild resolved to discuss the changes “being so different” with
Lillian “to make sure that [he] understood what she had in mind.”300 Fairchild and
Lillian had intended to meet on February 26, but on February 22, Lillian called
Fairchild to reschedule in light of her surgery. 301 She referred to herself as a
294
Fairchild Tr. 227:11–14.
295
Fairchild Tr. 226:5–7.
296
See generally JX 58.
297
Fairchild Tr. 291:23–292:18.
298
Fairchild Tr. 291:23–293:11.
299
Fairchild Tr. 296:19–297:1; see also id. 314:2–315:8, 316:7–14.
300
Fairchild Tr. 226:14–17.
301
Fairchild Tr. 226:17.
49
“walking time bomb.”302 Lillian was “rattled” by the sudden need for surgery. 303
Unfortunately, Fairchild was never able to meet with Lillian. 304
While Paul has not challenged the 2008 Deputy Trust as the product of undue
influence, I note that the circumstances surrounding its execution are suspect, and
Jay’s testimony is not credible. Jay testified that Lillian wanted to revise the Deputy
Trust because “after reading [his] aunt’s trust quite carefully, she wanted that money
to go further than just [Paul] and [Jay].”305 She thought establishing a trust similar
to the One Flintlock Trust was a “wonderful idea.”306 To support this testimony, Jay
relies on what he calls “transcripts” of conversations he purportedly had with his
mother about her estate.307 He testified: “[I]n the transcripts, she – or the notes of
our meetings specifically notes that she doesn’t want lump sums of money to be
distributed.”308
These “transcripts” are marked as Joint Exhibit 112 (“JX 112”). 309 Jay drafted
the 99-page document, which includes summaries of purported conversations
302
JX 90 at AFSI000672 (entry dated 2/22/2008); Fairchild Tr. 236:4–10.
303
Fairchild Tr. 236:11–16.
304
Fairchild Tr. 226:20–22.
305
Jay Tr. 419:1–12.
306
Jay Tr. 428:14–22.
307
Jay Tr. 419:1–12; see JX 112.
308
Jay Tr. 419:1–12
309
JX 112.
50
between Jay and Lillian. 310 He likens JX 112 to “board minutes or meeting
minutes.”311 The document itself is dated June 4, 2019.312 Within the document,
summaries are dated from July 24, 2007 to February 27, 2008, one day after Lillian’s
surgery.313 The most recent entry—a cover letter Jay drafted—is dated September
15, 2011, over three years after Lillian’s death.314 That letter states, in relevant part:
As Trustee of the Lillian K. Deputy Charitable Remainder Trust, it is
my desire to give to this Trust, and through this memorandum, the
working documents/transcript papers to become part of the record and
property of this Trust. This gift is to protect the historical and present
record and integrity of the trust and Mrs. Deputy’s thought process in
the creation of the Lillian K. Deputy Charitable Remainder Trust. It is
my intention for these documents to support and, if needed, to be used
in defense of the Trust.
It is intended for these documents to have a neutral purpose, and to be
greater than any self-serving interests. The documents’ core purpose is
to demonstrate a continuity of thought surrounding the trust’s creation
and establishment as well as the explanation of an open and honest
discussion of ideas related to a greater purpose beyond its
beneficiaries.315
This exhibit contains nearly 100 pages of typewritten notes of conversations
involving Jay regarding changes to the Deputy Trust. 316
310
JX 112.
311
Jay Tr. 429:15–16.
312
JX 112.
313
JX 112.
314
JX 112 at 2.
315
JX 112 at 2 (emphasis added).
316
JX 112.
51
Jay only has one copy of this document.317 He testified that Lillian recorded
their conversations with a tape recorder, and he then drafted the summaries in either
typed or handwritten form.318 He has not produced any tapes and testified that those
tapes—which he “held” through 2012—no longer exist.319 I find this peculiar given
the stated “purpose” of the “transcripts” and the fact that, according to Jay, Paul had
allegedly mounted a “legal challenge” to the Deputy Trust as early as 2008.320 It
seems odd that Jay would dispose of the tapes when they might “be used in defense
of the Trust” in a potential lawsuit.321 Jay also claims he emailed these summaries
once drafted to Lillian.322 Jay has not produced these emails in this action, and he
conveniently testified that he no longer has them: “I can certainly say to you that,
you know, the files were just kind of purged one after the other. I should have saved
them, but I didn’t. My fault.”323
Further, each entry was purportedly “signed” by Lillian and “witnessed” by
Mary Swanson, Lillian’s friend who has since passed away.324 Jay’s testimony on
317
See Jay Tr. 428:1–7.
318
Jay Tr. 431:3–17.
319
Jay Tr. 431:18–432:2.
320
See JX 112 at 2; JX 123 at JDEPUTY_00347.
321
JX 112 at 2.
322
Jay Tr. 432:3–24.
323
Jay Tr. 434:10–17. Jay apparently does not have these emails, but he has produced
other emails from the same email address in this action. See Jay Tr. 468:14–22.
324
JX 112.
52
this point is extraordinary: he claims that Swanson “purposefully” witnessed each
document and made a point to meet Jay and Lillian to watch them sign each entry. 325
I do not find his testimony regarding the supposed process of drafting and signing
JX 112 to be credible.
I find that Jay prepared JX 112 to create a paper trail that justifies his actions
and that he likely drafted the document after Lillian’s passing. I believe that Jay
forged the signatures of Lillian and Swanson. This behavior is consistent with Jay’s
history of similar misdeeds, recited herein. Jay cannot use JX 112 to bolster his
claims that Lillian thought revising the Deputy Trust to mirror the One Flintlock
Trust was a “wonderful idea.”326 Consequently, I do not find Jay’s testimony on that
point to be credible.
More generally, Paul objected to JX 112 as hearsay not subject to any relevant
exception.327 I conclude JX 112 must be excluded as hearsay for which no exception
applies.328 “Hearsay is a statement made by a declarant outside the courtroom that
325
Jay Tr. 437:8–24.
326
Jay Tr. 428:14–22.
327
Jay Tr. 419:14–420:16. It was unclear at trial if JX 112 was ever produced during
discovery, since Paul’s counsel represented that the only version of JX 112 produced in
discovery included a bates stamp, and JX 112 does not. Jay Tr. 424:18–22
328
Jay contends that JX 112 falls within the following hearsay exceptions: D.R.E. 803(3),
Then-Existing Mental, Emotional, or Physical Condition; D.R.E. 803(5), Recorded
Recollection; and D.R.E. 807(a), Residual Exception. See D.I. 133 at 61–62. Aside from
a conclusory allegation that these exceptions apply, Jay offers no substantive argument as
to why JX 112 should not be excluded by the rule against hearsay. See id. For the reasons
53
is offered to prove the truth of the contents of the statement,”329 and unless the
statement is offered for a nonhearsay purpose or falls within a hearsay exception, it
is inadmissible.330 Jay kept these notes “to support and, if needed, to be used in
defense of the Trust.” 331 Further, I find that Jay prepared JX 112 recently in the face
of Paul’s claims against him, and that JX 112 lacks the necessary degree of
trustworthiness to overcome a hearsay challenge. 332 JX 112 is inadmissible.
3. Jay Purports to Amend the 2008 Deputy Trust.
Jay contends that the day before Lillian’s surgery, Jay, as her attorney-in-fact
under the 2008 Deputy POA, prepared and executed an amendment to the Deputy
Trust, dated February 25, 2008 (“Jay’s Deputy Trust Amendment,” and together
with Jay’s OFT Amendment, “Jay’s Amendments”). Jay’s Deputy Trust
Amendment purportedly gives Jay the power to remove and exclude a beneficiary
as a recipient of trust income and as a successor trustee if that beneficiary “legally
challenges, contests, or registers complaint or through written instrument attempts
set forth in Paul’s post-trial reply brief, D.I. 134 at 27–28, I do not agree that these
exceptions apply and conclude that JX 112 is inadmissible hearsay.
329
Brown v. Liberty Mut. Ins. Co., 774 A.2d 232, 238 (Del. 2001) (citing D.R.E. 801(c)).
330
D.R.E. 802.
331
JX 112 at 2.
332
See, e.g., Smith v. State, 647 A.2d 1083, 1088 (Del. 1994) (“A hearsay declaration is
admissible, usually under a specific exception, only where the declaration has some
theoretical basis making it inherently trustworthy. Thus, absent some special indicia of
reliability and trustworthiness, hearsay statements are inadmissible.” (citations omitted)).
54
to overturn” any of Lillian’s February 21 estate documents. 333 And it specifies that
the trustee has no duties to, and need not provide an accounting to, a revoked
beneficiary. 334 The Amendment simply requires notice of revocation to be mailed
to the beneficiary’s last known address.335 The Amendment also purports to relieve
the trustee of any obligation to provide an accounting to this Court, to the
beneficiaries, or to any other representative.336 The language of Jay’s Deputy Trust
Amendment tracks the language of Jay’s OFT Amendment; Jay testified that he used
Jay’s OFT Amendment when drafting Jay’s Deputy Trust Amendment. 337
The 2008 Deputy POA gave Jay the authority to amend the Deputy Trust, but
Jay has failed to authenticate any instrument implementing that power. 338 The
333
JX 45 at 2; PTO ¶ 59. Jay’s Deputy Trust Amendment further provides, in part:
Trustee shall hold the trust fund in further trust for the benefit of the
unrevoked beneficiary (either “Jay” or “[Paul]”) as is then and at any time
during his lifetime. During the lifetime of the unrevoked or survivor
beneficiary, Trustee shall distribute all of the net income, in convenient
installments but not less frequently than annually to beneficiary. In addition,
during lifetime of the beneficiary, Trustee shall pay to him, so much of the
principal of the trust, as Trustee in its sole discretion deems advisable,
considering the property available to him from other sources, to provide for
his health, education, support and maintenance.
JX 45 at 2; accord PTO ¶ 64.
334
JX 45 at 5.
335
JX 45 at 5.
336
JX 45 at 5.
337
Compare JX 45, with JX 10; Jay Tr. 441:12–442:4.
338
See D.R.E. 901 (“To satisfy the requirement of authenticating or identifying an item of
evidence, the proponent must produce evidence sufficient to support a finding that the item
is what the proponent claims it is.”); Hardy v. Hardy, 2014 WL 3736331, at *14 & n.114
55
circumstances surrounding the execution of Jay’s Deputy Amendment are suspect at
best. Jay testified that, after the 2005 lawsuit, Lillian asked Jay to be trustee of the
Deputy Trust three times, and each time he refused.339 Finally, according to Jay, he
agreed:
I said to my mom, “Look, if you want me to be trustee, I shall consider
it, but I needed revocation powers, and I needed sole authority in the
trust. And those are my two conditions.” And those conditions were
talked about and mulled over for two months, maybe three months. 340
Jay claims that the 2008 Deputy Trust Agreement was prepared rather quickly due
to Lillian’s insistence on revising her estate plan before her surgery in February
2008.341 The 2008 Deputy Trust Agreement did not address Jay’s revocation
powers.342 Jay testified that he tried to put the “revocation aspect of it” on “hold”
because he was “concerned,”343 and that Lillian agreed “[to] hold off on even talking
(Del. Ch. July 29, 2014) (excluding documents under D.R.E 901 where the Court
determined they “d[id] not constitute reliable evidence”).
339
Jay Tr. 387:17–24. Jay claims “this is all in the transcripts,” id. 387:21, but as stated,
JX 122 is inadmissible, so I do not consider it here.
340
Jay Tr. 388:4–14. Jay’s testimony on this point was inconsistent. He testified that
revocation powers were not a condition precedent to him assuming the role of trustee, but
rather to assuming responsibility under the 2008 Deputy DPA. Id. 462:5–24. He also
testified, “I had decided that revocation was something I didn’t want to handle. I was
scared of it.” Id. 388:19–23.
341
Jay Tr. 388:21–389:17.
342
Jay Tr. 389:13–17, 464:10–17.
343
Jay Tr. 389:13–17.
56
further about revocation” until after her surgery. 344 But the 2008 Deputy Trust
Amendment does give the trustor the right to amend or terminate the trust. 345
Jay testified that he began drafting his amendment on February 22, 2008, the
day after Jay, Lillian, and Pulsifer met to execute the 2008 revisions.346 Jay never
asked Pulsifer to review Jay’s Deputy Trust Amendment, and he never spoke to
Pulsifer about revocation. 347
Rather, Jay testified that after they had “just finished with Pulsifer,” Lillian
became “panicked” and said, “I made this promise to you, and you need to get the
document done.”348 Jay believed he had the power to execute an amendment as her
attorney-in-fact.349 According to Jay, “[s]he read the power of attorney, and through
that discussion and her agreement to put this in place as a promise to me, as a
protective measure to the trust, she said, ‘Please do this.’ So that’s what
happened.”350
344
Jay Tr. 389:19–23.
345
JX 39, § VIII(6); Jay Tr. 463:1–5.
346
Jay Tr. 387:11–12.
347
See Jay Tr. 390:19–23.
348
Jay Tr. 390:1–9.
349
Jay Tr. 390:10–17.
350
Jay Tr. 390:13–17. But Paul’s testimony about his mother’s concerns prior to her
surgery are inconsistent with Jay’s testimony. Paul testified that in his discussions with
Lillian before her surgery, she was “very frightened” by her health and did not discuss any
changes to her estate plan at that time. Paul Tr. 45:18–46:22. I believe Paul.
57
Jay then prepared the Deputy Trust Amendment between February 22 and
24,351 purportedly “at [his] mother’s request.”352 Curiously, Jay produced three
versions of Jay’s Deputy Trust Amendment, marked as Joint Exhibit 44 (“JX 44”),
Joint Exhibit 45 (“JX 45”), and Joint Exhibit (“JX 46”); they are substantively
identical but contain different handwritten markings and signature pages.353 The
documents are not notarized or otherwise authenticated, but they are sealed.354
According to Jay, JX 44 is a copy that Lillian initialed. Jay testified that
Lillian reviewed Jay’ Deputy Trust Amendment on February 24, but did not sign it
at that time. 355 Jay claims he emailed Jay’s Deputy Trust Amendment to his mother
around February 24, and she then returned a hard copy that she had marked up by
herself, appearing as JX 44.356 JX 44 is initialed “LKD” and bears check marks, but
no signature or date.357 Paul testified the initials are not in Lillian’s handwriting.358
The back of JX 44 bears Jay’s handwritten note: “signed at BH on 2/27/08 12:05
351
Jay Tr. 467:6–7.
352
Jay Tr. 387:7–17.
353
Compare JX 44 at JDEPUTY_00659, with JX 45 at JDEPUTY_006667, and JX 46 at
JDEPUTY_00674.
354
JX 44 at JDEPUTY_00659; JX 45 at JDEPUTY_006667; JX 46 at JDEPUTY_00674.
355
Jay Tr. 467:9–18.
356
Jay Tr. 394:12–395:15. This email was not produced.
357
JX 44 at JDEPUTY_00659.
358
Paul Tr. 193:21–23. Fairchild could not confirm whether Lillian made the initials.
Fairchild Tr. 235:5–13.
58
p.m.”359 At that time, Lillian was resting in her hospital bed after her surgery. 360 I
do not accept JX 44 as being initialed or signed by Lillian.
JX 46 was purportedly signed by Jay as Lillian’s attorney-in-fact, and
witnessed by Mary Swanson, on February 25. 361 Jay signed JX 46 without an
accompanying indicator that he did so as Lillian’s attorney-in-fact. Swanson’s
purported signature appears as “Mary Swason.”362 At trial, Jay could not explain
why Swanson would have misspelled her own name. 363 JX 46 contains no initials
or handwritten note. In his deposition, Jay testified that he, Lillian, and Swanson
met in the afternoon of February 25 at Lillian’s house.364 At trial, Paul credibly
testified that on that day (the day before Lillian’s surgery), Paul spent the entire day
with Lillian beginning at approximately 9 a.m., and that Jay was never alone with
Lillian.365 After Jay heard Paul testify that Paul was with Lillian beginning at 9 a.m.,
Jay changed his testimony to claim that he and Swanson met with Lillian at 7 a.m.366
Jay testified that he and Swanson signed JX 46 on February 25 in the sunroom of
359
JX 44 at JDEPUTY_006600; Jay Tr. 397:7–13.
360
Paul Tr. 53:5–55:18; Fairchild Tr. 235:24–236:3; Jay Tr. 471:4–18.
361
Jay Tr. 467:9–18.
362
JX 46 at JDEPUTY_00674; Jay Tr. 399:17–23.
363
Jay Tr. 472:24–473:4.
364
Jay Dep. 123:16–124:24.
365
Paul Tr. 47:1–50:7.
366
See Jay Tr. 400:2–13, 473:3–16.
59
Lillian’s North Circle House, at around 7:00 a.m., before going to Bayhealth “for
pre-op sorts of things.”367 I do not accept JX 46 as being witnessed by Swanson, nor
do I believe Jay’s testimony that she met with Jay and Lillian at any time on February
25.
The third version of the amendment, JX 45, is signed by “Jay Deputy, DPOA”
and witnessed by John Walton (Jay’s husband), but it contains no initials or
handwritten note.368 JX 45 is also dated February 25.369 At trial, Jay confirmed that
he backdated this document. 370 Referring to his handwritten note on JX 44, Jay
testified that he and John signed JX 45 on February 27, at noon in the hospital
lobby—not in front of Lillian, who was in her hospital bed. 371 JX 45 does not bear
Lillian’s purported initials present on JX 44.
I do not believe JX 45 was signed at that time. On February 27 at 9:30 a.m.,
Paul arrived at Kent General to visit his mother. 372 He spent the morning by her
side, comforting her while she was in immense pain.373 Paul was the only person
367
Jay Tr. 400:5–10.
368
JX 45 at JDEPUTY_00667.
369
JX 45 at JDEPUTY_00667.
370
Jay Tr. 397:1–398:17; JX 45 at JDEPUTY_00667.
371
Jay Tr. 397:1–398:17.
372
Paul Tr. 52:18–23.
373
Paul Tr. 52:18–53:6.
60
with Lillian at noon on February 27. 374 Paul testified that Jay arrived at Bayhealth
after 1 p.m. on February 27, just minutes before Paul had to leave to work at his
restaurant.375 This was the first time Paul saw Jay that day.376 Paul’s testimony on
this point is detailed and credible. Jay did not sign JX 45 at the hospital at noon.
Under the 2008 Deputy POA, Jay has the authority to amend the Deputy Trust.
But Jay has failed to authenticate any document implementing that power. He
produced three different versions, all of which present plain authentication problems,
and all of which inspired conflicting testimony. JX 44, JX 45, and JX 46 have not
been authenticated under Delaware Rule of Evidence 901, and so they are not
admissible.377
Paul first learned that changes had been made to Lillian’s estate plan shortly
after her death.378 Paul would not see any of the revised estate planning documents
374
Paul Tr. 54:3–8.
375
Paul Tr. 53:9–11.
376
Paul Tr. 53:12–14.
377
D.R.E. 901. Jay has failed to “produce evidence sufficient to support a finding that the
item is what the proponent claims it is,” even in the face of the low burden to do so. His
testimony, often inconsistent, as well as the documents themselves, fail to substantiate
Jay’s claims that these are legally valid and binding documents. See Hardy, 2014 WL
3736331, at *14 & n.114.
378
See Paul Tr. 67:18–68:4. Lillian never told Paul she had revised her estate plan. See
Paul Tr. 138:3–6; Fairchild Tr. 235:2–4. Jay testified that Lillian told Paul about the
revisions the night before her surgery, when she and the brothers met for dinner at Peggy’s
Diner in Harringon, Delaware. Jay Tr. 473:20–474:4. Paul testified that neither Lillian
nor Jay mentioned any amendments or revisions to Lillian’s estate plan or trust during the
dinner. Paul Tr. 49:4–19. Jay’s testimony is undermined by an October 13, 2009, email
61
until 2017.379 Jay never informed Paul of Jay’s Deputy Trust Amendment, 380 and
Paul never saw a copy of it until this litigation. 381
Likewise, Fairchild was unaware of Jay’s Deputy Trust Amendment.382
Lillian never mentioned any further amendment to the Deputy Trust to Fairchild. 383
Jay’s Deputy Trust Amendment was not consistent with Fairchild’s understanding
of Lillian’s estate plans.384 According to Fairchild, “these amendments go to great
length, as I read them, to prepare to remove Paul as a beneficiary of the trust.” 385 I
agree.
4. Lillian Dies, Fairchild Raises The Alarm, And
Paul Begins To Investigate.
On the morning of February 26, Paul drove Lillian to the hospital for her
surgery.386 Before the surgery, Paul asked his mother whether she had a power of
from Jay to Paul, suggesting that Lillian did not discuss any changes with Paul at Peggy’s
Diner. Jay wrote Paul, “I’m sorry you probably feel left out of all of the changes to the
documents. Mom had intended to go over the changes with you after her recovery.” JX
97 at RDEPUTY_000006. I find Paul’s testimony credible and conclude that the trio did
not discuss Jay’s Deputy Trust Amendment on February 25 and that Paul was unaware of
Jay’s Deputy Trust Amendment.
379
See Paul Tr. 69:5–18.
380
Jay Tr. 467:19–21.
381
See Paul Tr. 138:3–6.
382
Fairchild Tr. 233:17–23.
383
Fairchild Tr. 234:8–13.
384
Fairchild Tr. 234:14–235:1.
385
Fairchild Tr. 234:23–235:1.
386
Paul Tr. 49:21–50:1.
62
attorney, and Lillian said that she did not. 387 Paul stayed with his mother all day.388
When Lillian emerged from surgery, she could hardly speak because she was in so
much pain.389 That day, Fairchild came to visit Lillian in the hospital, but Paul
informed him that “she’s not up to that.”390 Jay did not visit his mother in the hospital
on February 26.391 As stated, Paul spent the morning with Lillian on February 27,
and Jay visited her that afternoon.392 When Paul left on February 27, Lillian was in
pain, so the nurses brought her pain medication. 393 When Paul called Lillian that
evening, “she was groggy because of the medicines.” 394
The next morning, Paul called the hospital to check on Lillian.395 Lillian “was
complaining about pain” and told Paul, “I think there’s something wrong. I feel it.
I think there’s something wrong.”396 A few days later, on March 4, Paul called the
hospital to check on Lillian. 397 A nurse informed him that she could not speak to
387
Paul Tr. 50:12–14.
388
Paul Tr. 51:10–52:17.
389
Paul Tr. 51:10–52:1.
390
Paul Tr. 52:3–9.
391
Paul Tr. 52:10–14.
392
Paul Tr. 54:3–55:18.
393
Paul Tr. 54:3–55:18.
394
Paul Tr. 55:1–3.
395
Paul Tr. 55:19–23.
396
Paul Tr. 56:1–4.
397
Paul Tr. 56:9–14.
63
him because Jay, as power of attorney, had not added Paul’s name to the list of
authorized individuals. 398 This was a surprise to Paul, as Lillian told him days earlier
that she did not have a power of attorney. 399 At that time, Paul concluded that Lillian
must have appointed Jay as her medical power of attorney for the duration of her
time at the hospital.400 Paul immediately called Jay.401 Jay said he “forgot” to add
Paul’s name to the list. 402 Jay added Paul’s name to the list after their
conversation. 403
Also on March 4, Fairchild called Paul.404 Paul informed him that Lillian’s
bypass was successful, but she was “still weak” and “in lots of pain and
uncomfortable” due to gastrointestinal side effects from the surgery and
medications.405 Fairchild asked whether Paul was aware of the recent changes to
Lillian’s estate plan.406 Aside from recently learning that Jay was named as his
mother’s power of attorney, Paul responded that he was not and that “they don’t tell
398
Paul Tr. 56:15–57:5.
399
Paul Tr. 57:6–8; 50:12–14.
400
Paul Tr. 57:9–16.
401
Paul Tr. 57:20–23.
402
Paul Tr. 58:6–8.
403
Paul Tr. 58:9–10.
404
JX 90 at AFSI0000672 (entry dated 03/04/2008).
405
JX 90 at AFSI0000672 (entry dated 03/04/2008).
406
JX 90 at AFSI0000672 (entry dated 03/04/2008).
64
[him] anything anymore.” 407 Fairchild asked Paul to inform him as to when Lillian
would be strong enough to discuss her estate plan.408
That same day, Fairchild left a message with his registered principal and
compliance supervisor.409 He stated, “I believe Jay [is] exerting undue influence
over Lillian and her estate plan at the expense of Paul,” and noted that he has “lots
of notes in file to back up feeling.”410 He was uneasy, asked what was required of
him as an advisor in this situation, and wanted to know whether he could simply
resign the accounts.411 The Ameriprise compliance team instructed Fairchild to
“take good notes and be sure to respect the confidentiality of the different parties.”412
When Paul contacted the hospital again on March 4, they informed him that
Lillian required an emergency surgery for a blockage in her intestines. 413 The next
day, March 5, Lillian passed away.414 Jay called Paul at 8:30 a.m. to share the sad
news.415 Paul was devastated.416
407
JX 90 at AFSI0000672 (entry dated 03/04/2008).
408
JX 90 at AFSI0000672 (entry dated 03/04/2008).
409
JX 90 at AFSI0000672 (entry dated 03/04/2008); Fairchild Tr. 240:7–17.
410
JX 90 at AFSI0000672 (entry dated 03/04/2008); Fairchild Tr. 240:18–241:2.
411
JX 90 at AFSI0000672 (entry dated 03/04/2008); Fairchild Tr. 240:7–241:2.
412
Fairchild Tr. 241:3–13.
413
Paul Tr. 58:11–15.
414
PTO ¶ 24.
415
Paul Tr. 58:17–19.
416
Paul Tr. 58:24–59:7.
65
That day, Paul called Fairchild to tell him of Lillian’s death.417 Fairchild was
surprised that Jay, as agent of Lillian’s estate, did not contact Ameriprise. 418 He
testified: “I think Jay knew we were on to him, and I think he didn’t want to talk to
us.”419 On that same call, Paul asked about the recent changes to Lillian’s estate
plan.420 In another call on that same day, Paul asked Fairchild which trust document
governed the estate, and Fairchild explained that it was the 2008 Deputy Trust
Agreement. 421 Because Paul was unaware of the changes, Fairchild explained the
new Deputy Trust structure and even had to inform Paul of the nature of the two
charitable beneficiaries.422 Paul was “adament [sic] that she wanted everything
simply split equally.”423 Paul said he would consider contesting the estate, but
decided to postpone his decision until after the funeral. 424 Fairchild advised Paul to
417
Paul Tr. 60:15–20; Fairchild Tr. 265:22–266:1; JX 90 at AFSI0000672 (entry dated
03/05/20078).
418
JX 66 at AFSI0000045 (“[W]e find it curious that Jay, as trustee of the 2008 trust that
is either the owner or beneficiary of Mrs. Deputy’s Ameriprise assets, has not notified us
of her death.”).
419
Fairchild Tr. 266:8–13.
420
JX 90 at AFSI0000672 (entry dated 03/05/2008).
421
JX 90 at AFSI0000671 (entry dated 03/05/2008).
422
JX 90 at AFSI0000671 (entry dated 03/05/2008).
423
JX 90 at AFSI0000672 (entry dated 03/05/2008).
424
JX 90 at AFSI0000672 (entry dated 03/05/2008).
66
make a careful record of the events leading up to Lillian’s death, and Paul followed
Fairchild’s advice.425
Fairchild also encouraged Paul to contact an attorney, and on March 7, Paul
hired James Deakyne, Esq.426 On March 12, Ameriprise sent a copy of the 2008
Deputy Trust Agreement to Deakyne at Paul’s request,427 and on March 17, Fairchild
sent Deakyne copies of the 2003 Deputy Trust Agreement and the 2005 Deputy
Trust Agreement.428 Fairchild did not include a copy of Jay’s Deputy Trust
Amendment because he did not know about it at that time. He would not see it until
this litigation. 429
At this juncture, readers may appreciate a summary of the ownership of
Lillian’s assets. Upon Lillian’s death, her share of the One Flintlock Trust was
transferred to Jay’s One Flintlock sub-trust. Jay, as trustee, remained obligated to
pay himself 76% and Paul 24% of the One Flintlock Trust’s income. Upon the death
of the last surviving beneficiary, the remaining principal was to be distributed to
Columbia University. Jay also became the successor trustee of the Deputy Trust,
425
Paul Tr. 61:4–6, 61:20–62:10; Fairchild Tr. 319:10–16. Paul’s record of the events
leading up to Lillian’s death is admitted as JX 52.
426
Fairchild Tr. 268:6–18, 323:4–12.
427
JX 63 at AFSI0000052.
428
PTO ¶ 72.
429
Fairchild Tr. 269:15–24; see also JX 62 at AFSI0000648 (“To the best of my
knowledge, you mother did not establish any other trust agreements that pertain to the
situation.”)
67
which was not divided into sub-trusts. He was obligated to pay himself and Paul
each 50% of the Deputy Trust’s income. Principal was to be distributed according
to the trustee’s discretion to provide for the recipient’s health, education, support,
and maintenance. The North Circle House was an asset of the Deputy Trust. Some
of Lillian’s Ameriprise accounts were titled in the name of the Deputy Trust. Others
passed outright via beneficiary designations; by 2008, Lillian had reinstated Jay as
a beneficiary on some of those accounts, equally with Paul. Lillian also held one
money market account jointly with Paul, and to the exclusion of Jay. 430
Jay wreaked havoc on this state of affairs, doing whatever he could to ensure
Lillian’s assets were disposed of consistent with his demands and for his personal
benefit.
5. Jay Forges Ameriprise Change Forms.
Lillian owned 20 shares of AT&T stock in an Ameriprise account.431 She had
always intended the stock to pass to Jay.432 By letter dated February 21, 2008, Lillian
asked Fairchild to change the transfer on death provision of her AT&T stock, then
owned by the Deputy Trust, to Jay’s name. 433 Fairchild knew that those shares of
430
See Fairchild Tr. 332:7–333:14; Paul Tr. 79:23–80:11.
431
See JX 90 at AFSI0000672 (entry dated 02/22/2008).
432
See JX 90 at AFSI0000672 (entry dated 02/22/2008). The stock was originally held by
Lillian’s husband, as custodian for Jay. PTO ¶ 17.
433
JX 41; see also JX 90 at AFSI0000672 (entry dated 02/22/2008).
68
stock had been “earmarked” for Jay.434 On February 22, 2008, Fairchild spoke with
Lillian and confirmed that he received her letter. 435
The letter alone was not sufficient to place the AT&T shares in Jay’s name.436
Ameriprise needed three forms to make that change.437 “If Mrs. Deputy had died
with that AT&T stock in the account owned by her trust, it would have been split
according to the dispositive provisions of the trust,” even if she intended
otherwise.438
On March 6, 2008, Fairchild received the three necessary forms.439 They were
postmarked March 5, the day that Lillian died.440 Jay told several stories about these
forms. In one version, Lillian signed the forms on March 1.441 In a February 17,
2010 letter to Ameriprise, Jay wrote, “My mother understood the form she was to
sign, and signed it seated upright in her hospital bed with intervenes tubes taped to
434
Fairchild Tr. 237:14–24.
435
JX 90 at AFSI0000672 (entry dated 02/22/2008).
436
Fairchild Tr. 241:14–24.
437
Fairchild Tr. 242:1–9. Fairchild testified that Ameriprise would need to create a new
account to transfer the stock into; Ameriprise would then add a transfer on death provision,
which is a beneficiary designation. Id. 242:3–9.
438
Fairchild Tr. 243:1–7.
439
JX 74 at 1.
440
JX 74 at 1; Fairchild Tr. 249:18–250:5.
441
JX 47 at AFSI0000173, AFSI0000179; JX 49 at 7; JX 50 at 4.
69
her right hand.”442 In an October 13, 2009 email to Paul, Jay also wrote: “While
she asked me to sign the document on her behalf (which I could as Durable Power
of Attorney) I asked her to sign it which she did. There is a third party document
that attests and witnessed her signature.”443
Fairchild believed Jay forged Lillian’s signature on the three documents. 444
He believed the signatures did not look like known signatures Ameriprise had in
Lillian’s file and was concerned that the signing date was between her surgery and
death, during a period in which she was known to be very uncomfortable; he believed
the signatures were “remarkably clear” to have been signed during that time. 445
On March 7, 2008, Fairchild signed the two forms that required his signature
but noted that he was doing so “with doubt about client signatures herein.” 446 He
was not required to sign the third form, but he noted his suspicions about Lillian’s
signature on it as well.447 The same day, Fairchild reported the suspicious signatures
to Ameriprise, as he is required to do. 448 Fairchild also contacted Paul to ask if he
442
JX 100 at AFSI0000017.
443
JX 97 at RDEPUTY_000006.
444
Fairchild Tr. 245:11–14, 246:15–17.
445
See JX 57; see also JX 51; JX 65 at AFSI0000057.
446
JX 47 at AFSI0000179; JX 49 at 7.
447
See JX 50 at 4.
448
Fairchild Tr. 248:8–249:5; see also JX 66.
70
could verify his mother’s signature.449 Paul, familiar with his mother’s signature,
agreed.450 Ameriprise sent Paul a set of two signatures: a top verified signature
above a bottom suspicious signature. 451 Paul identified the top signature as his
mother’s and the bottom signature as inauthentic.452
Fairchild contacted Jay about the forged signatures. 453 Although inconsistent
with other statements indicating that Lillian was unable to sign forms at that time
due to tubes in her hand,454 Jay was insistent that he “watched Mrs [sic] Deputy sign
the form in the hospital.” 455 Jay was “adament [sic] that the AT&T stock was always
meant to be his,” and Fairchild agreed.456 While acknowledging his suspicions about
the forged signatures, Fairchild submitted the change forms.457 Because Lillian had
449
JX 56; Paul Tr. 63:4–6; Fairchild Tr. 250:20–251:16.
450
Paul Tr. 34:4–6, 63:9–10.
451
JX 56; JX 57.
452
JX 65 at AFSI00000056; Paul Tr. 63:9–11.
453
JX 71 (entry dated 04/18/2008).
454
JX 51 at JDEPUTY_00619; JX 97 at RDEPUTY_000006; Jay Tr. 492:10–493:4.
455
JX 71 (entry dated 04/18/2008).
456
JX 71 (entry dated 04/18/2008). Jay also expressed his willingness to send Paul to “jail”
because he felt that Paul had stolen one of his mother’s money market accounts. Id. Paul,
in fact, jointly owned those accounts with Lillian at the time of her death. See Fairchild
Tr. 332:7–333:14; Paul Tr. 79:23–80:11. Fairchild was not surprised that Jay said these
things because it was “consistent with Jay’s nature. He was surprised that there was an
account owned jointly, and he didn’t like that. His nature is vindictive . . . .” Fairchild Tr.
332:7–333:14.
457
Fairchild Tr. 258:22–259:2.
71
died and could not contest the signatures, Ameriprise did not act on the forgeries. 458
Ameriprise ultimately transferred the stock to Jay by way of the company’s estate
settlement process.459 The forged forms did not effectuate the transfer. 460 Fairchild
was “completely satisfied” that the AT&T stock ended up with Jay because that was
Lillian’s “long-term intention”: “the outcome was what everybody wanted.”461
In addition to the three forms Fairchild received from Jay, Jay claims that he
sent Fairchild one “revised” stock transfer form dated March 2, 2008, under a cover
letter dated March 3 (the “Revised Form”).462 Jay produced this Revised Form at
trial. He signed the Revised Form himself, as “Lillian K. Deputy jd/dpoa.” 463 Lillian
did not sign the Revised Form.464 The form bears Jay’s handwritten note: “resigned
at [sic] DOPA and re-sent to TF[,] same w/ last page.”465 According to the note and
Jay’s trial testimony, Jay signed the Revised Form because Lillian was “unable to
458
Fairchild Tr. 289:18–22, 290:5–12. Fairchild continued to contact Ameriprise’s home
office about the forgeries. See, e.g., JX 74; JX 65; JX 90 at ASFI00000667 (entry dated
08/01/2008).
459
Fairchild Tr. 224:22–2, 285:6–10, 286:10–24, 288:20–289:22, 290:3–291:4.
460
Fairchild Tr. 224:22–2, 285:6–10, 286:10–24, 288:20–289:22, 290:3–291:4.
461
Fairchild Tr. 259:7–15.
462
See JX 48 (revised form); JX 51 (cover letter); Fairchild Tr. 261:20–22, 263:6–8.
463
JX 48 at JDEPUTY_00611, JDEPUTY_00617. My own observation is that Jay’s
“revised” signature, bearing his mother’s name and his initials, looks as though it was made
to look remarkably similar to Lillian’s own, verified signature. Compare JX 56 (top
signature), with JX 48 at JDEPUTY_00611, JDEPUTY_00617.
464
See Jay Tr. 492:10–493:4.
465
JX 48 at JDEPUTY_00610.
72
sign as she has tubes in her hand,” and did so in Lillian’s presence. 466 Jay also
produced a handwritten letter to Fairchild stating that Jay “resigned this document
to include JD/POA,” which he “forgot” to include while being “hurried” in the
hospital.467
The Revised Form bears Fairchild’s signature, dated March 7, 2008.468 But
Fairchild never received the Revised Form, the purported cover letter, or the later
handwritten letter, so he could not have signed the Revised Form after Jay signed
it.469
Jay provided a Revised Form to replace only one of the three necessary
Ameriprise forms.470 Fairchild believes that Jay created a doctored stock transfer
form bearing Fairchild’s signature recently, and that Jay simply forgot that three
forms were required to effect the beneficiary change:
466
JX 51 at JDEPUTY_00619; Jay Tr. 492:10–493:4.
467
JX 51 at JDEPUTY_00619.
468
JX 48 at JDEPUTY_00617.
469
Fairchild Tr. 261:20–22, 263:6–8. Fairchild testified that Ameriprise sends forms to the
client without signatures. That form is then returned to Ameriprise with the client’s
signature. Then Fairchild signs the document and sends it to the corporate office, where it
typically becomes “trapped.” Id. 264:17. So, Jay must have doctored these forms after he
saw the original signed copies at his deposition. Id. 264:24–265:3.
470
Fairchild Tr. 265:4–20.
73
And I think what happens is that Jay creates a fun house of mirrors so
that he can reflect any story later that he wants. And in this time,
understandably, ten years later, he forgot that there were three forms
that he needed to re-sign. He only re-signed this one, I think only about
a year ago, when he realized he got caught in his own house of mirrors.
And then to cover himself, he created JX 51, which we had also never
signed. And I think that, understandably, because it was ten years
before, Jay wouldn’t remember there were three documents. So in his
little handwritten note that I’m convinced is post hoc, he says he’s re-
signed the document, instead of documents. If they had been
contemporaneous, a day or so later, he would have remembered there
were all three. And unfortunately, I think he caught himself up. 471
Fairchild further explained, “I can only surmise that somehow Jay realized that he
tripped himself up when, during depositions a year ago, he saw this document with
my notes about the questionable signatures.”472 I agree. Like many other documents
produced in this matter, Jay recently wrote the letter and created the Revised Form
to evidence his false narrative. They are inauthentic and inadmissible. 473
In addition to the forged AT&T stock forms, Jay also produced false
documents purporting to change the beneficiaries on Lillian’s Ameriprise accounts
from the brothers outright to the Deputy Trust. At trial, Jay produced three copies
of a letter written to Fairchild dated February 21, the same date as Lillian’s authentic
letter to Fairchild regarding the stock. 474 The letters request an “immediate” transfer
471
Fairchild Tr. 265:4–20.
472
Fairchild Tr. 264:24–265:3.
473
D.R.E. 901; Hardy, 2014 WL 3736331, at *14 & n.114.
474
See JX 40, JX 42, JX 43.
74
of the beneficiary designations on Lillian’s accounts to the Deputy Trust, rather than
to Jay and Paul equally outright. 475 They bear different signatures and subject
lines.476 All three refer to a memorandum purportedly sent to Fairchild on
February 10, 2008, which Fairchild never received. 477
Jay contends he sent these letters to Fairchild, but Fairchild never saw or
received them.478 Fairchild testified he would have remembered and recorded
receipt of the letters, and the purported memorandum, because “being aware of Jay’s
nature, we were highly sensitive to anything to do with the Deputy family and
case.”479 If any of the produced letters were sent to Fairchild’s office, they would
have been carefully logged via Ameriprise’s correspondence system: they were
not.480 I find that Jay’s February 21 letters, as well as the memorandum referred to
therein, are disingenuous post hoc documents that Jay drafted to mirror the genuine
letter Lillian sent to Fairchild on February 21, 2008.481 These letters are inauthentic
and inadmissible.482
475
See JX 40, JX 42, JX 43.
476
Compare JX 40, with JX 42, and JX 43.
477
Fairchild Tr. 230:12–20.
See, e.g., JX 40 at JDEPUTY_00061 (bearing handwritten note reading “faxed to
478
THF”); Fairchild Tr. 230:21–232:12.
479
Fairchild Tr. 228:16–18.
480
See Fairchild Tr. 228:5–229:5.
481
Compare JX 41, with JX 40, and JX 42, and JX 43.
482
D.R.E. 901; Hardy, 2014 WL 3736331, at *14 & n. 114.
75
E. Jay Administers The One Flintlock Trust And The Deputy
Trust.
After Lillian and Georgene died, Jay assumed his role as trustee of both of
their trusts. In that capacity, Jay administered those trusts to his benefit and to Paul’s
detriment.
1. Paul Receives Distributions From The One
Flintlock Trust From 2006 To 2009.
While Lillian was alive, she received distributions of 25% of the One Flintlock
Trust in accordance with Georgene’s 2003 OFT Amendment. 483 Jay also testified
that he provided his mother with information about her sub-trust that she
requested.484 Initially, he provided her with both annual K-1 forms and statements
from Wachovia, the bank that held the One Flintlock Trust’s assets.485 But after they
settled the 2005 lawsuit and Jay provided the One Flintlock Trust agreement to
Lillian, “she wasn’t as much interested in the statements. She just was interested in
the K-1. So she declined, actually, statements from Wachovia.” 486 When Lillian
died, her 25% interest in the One Flintlock Trust was added to Jay’s sub-trust.487
483
JX 7, § 6; Jay Tr. 373:7–10.
484
Jay Tr. 373:23–374:24.
485
Jay Tr. 373:23–374:24.
486
Jay Tr. 374:5–9.
487
See PTO ¶¶ 37, 38.
76
When Jay became trustee of the One Flintlock Trust, he did not give Paul
complete copies of the One Flintlock Trust documents, including Jay’s OFT
Amendment. Jay reassured Paul that his interest in the One Flintlock Trust was
secure. On November 30, 2008, Jay sent a letter to Paul confirming that Paul’s
“portion [of the One Flintlock Trust] will remain at 24-percent, and will always
remain so as long as I’m alive.”488 Paul received monthly distributions and bank
statements, and annual K-1 forms for the One Flintlock Trust until 2009.489
In late 2009, Jay contacted Paul to discuss the One Flintlock Trust. Jay
explained that the market was in turmoil and that they should defer distributions and
reinvest any dividends. 490 Although Paul had some knowledge of the stock market,
he felt that Jay was more knowledgeable and, therefore, trusted Jay’s advice and
believed Jay was correct. 491 Accordingly, Paul agreed with Jay’s recommendation
to stop distributions. 492 Paul received his last distribution from the One Flintlock
Trust on December 3, 2009.493 Paul “figured the stock market’s going to be crashing
488
JX 80 at RDEPUTY_000093.
489
See PTO ¶¶ 44, 77; Paul Tr. 17:11–23, 18:9–19:2, 151:3––152:6; Jay Tr. 374:5–21.
490
Paul Tr. 19:3–10; see generally JX 97.
491
Paul Tr. 19:24–20:12.
492
Paul Tr. 19:9–10.
493
PTO ¶ 44; Paul Tr. 18:24–19:2.
77
for a long time,” so he did not inquire as to whether and when distributions would
resume.494
Paul also stopped receiving statements for the One Flintlock Trust. 495 He did
not press Jay for information despite the fact that he stopped receiving trust
statements: “we didn’t have distributions, I didn’t get a statement.” 496 Paul has
received no further distributions from the One Flintlock Trust. 497 Despite a number
of potential red flags, Paul claims he did not suspect Jay’s wrongdoing resulting in
the lack of distributions for many years.498
2. Jay Mismanages The Deputy Trust.
Lillian served as the sole trustee of the Deputy Trust until her death. 499 Jay
became trustee of the Deputy Trust, as well as executor of Lillian’s estate, on March
5, 2008.500 Jay collected the 2008 Will from Pulsifer, and recorded it with the Sussex
County Register of Wills.501 He filed a Small Estate Affidavit, stating that Lillian’s
494
Paul Tr. 20:18–19.
495
Paul Tr. 20:20–23.
496
Paul Tr. 21:2–3.
497
PTO ¶ 44.
498
Paul Tr. 21:19–22:16 (Paul testifying that he did not question Jay in 2011 because he
“trusted him”), 24:8–10 (Paul testifying that he emailed with Jay in 2011 for an update),
27:18–28:17 (Paul confirming that in April 2013, he “didn’t believe that Jay had any
authority to revoke [his] interest in the trust”).
499
PTO ¶ 60.
500
JX 39 § IV(1); Jay Tr. 337:8–14.
501
See JX 72.
78
probate estate was less than $30,000.502 Accordingly, no estate was probated.503 At
trial, Jay testified that the combined value of Lillian’s estate and the Deputy Trust
totaled $644,000.504 Relying on that value, in 2008, Jay calculated a commission of
roughly $18,000, purportedly for his services as executor of Lillian’s estate, and
contends he paid himself roughly $14,000 or $15,000.505 The Deputy Trust requires
its trustee to serve without compensation. 506
After Lillian died, Jay and Paul went through Lillian’s house and belongings
and discussed selling or renting the North Circle House home.507 After combing
through Lillian’s home and personal property, Jay turned to the financials. 508 Jay
testified that since the stock market crashed in 2008, “it was incumbent upon [him]
. . . to put the house on the market as quickly as [he] could.”509
Beginning in December 2009, Jay moved the Deputy Trust’s assets from
Ameriprise to Wells Fargo.510 Jay invested the trust funds in stocks, bonds,
502
JX 72.
503
JX 72.
504
Jay Tr. 477:12–13.
505
Jay Tr. 477:8–24.
506
JX 39, Art. VII(2).
507
Paul Tr. 71:2–9.
508
Jay Tr. 338:7–11.
509
Jay Tr. 338:12–18.
510
PTO ¶ 78; Jay Tr. 339:1–15.
79
securities, and money market funds.511 He also invested the Deputy Trust’s money
in two Florida properties sometime in 2010 or 2011.512 Jay later sold those properties
and deposited the proceeds into to the Deputy Trust. 513
The Deputy Trust owned Lillian’s personal residence, the North Circle
House.514 Shortly after Lillian’s death, Jay testified that he began using the North
Circle House as his “residence,”515 but he did not pay rent to the Deputy Trust.516 In
fact, Jay proudly displayed his “residence” in a Delaware Today article, which
touted Jay as a “collect[or of] homes and their furnishings.” 517 In that article, Jay
511
Jay Tr. 339:19–340:2.
512
Jay Tr. 340:2–21. At the time, the properties cost roughly $70,000, and $30,000,
respectively. Id. 340:22–341:6, 381–383. Jay also purchased a property in the name of
the One Flintlock Trust. Id. 381:7–382:17. Jay says he did not use the properties
personally, but rented them full-time on an annual basis. Id. 341:11–342:9. Jay did not
handle the leases, and hired a management company. Id. 342:10–344:4. That company
then deposited funds directly into the trust accounts after they took their fee from the rent.
Id. 344:5–14.
513
Jay Tr. 380:14–382:5. Jay sold the Deputy Trust properties sometime in 2010,
generating a total profit of roughly $110,000. Id. 381:3–13. At the same time, he sold the
One Flintlock Trust property and deposited the profits into the One Flintlock Trust. Id.
381:14–17.
514
See JX 15, JX 16.
515
Jay Tr. 338:6.
516
See Jay Tr. 480:9–21. Jay testified that he paid rent for one year in 2010. However,
the Delaware Today article touting the North Circle House as Jay’s personal getaway was
published in 2017. See JX 134. I do not find Jay’s testimony convincing and find that
personally he used the North Circle House more frequently than he let on at trial. And in
accordance with his testimony, he did not pay rent for those many years of personal use.
517
JX 134.
80
claimed that he inherited the North Circle House.518 The North Circle House “struck
[Jay] as the right place for a downstate getaway” where he could “comfortably”
entertain.519 Jay stated that, after the death of a loved one, “[p]art of moving on is
making a house one’s own,” and that he was renovating the home to “be more
intimate” for entertaining.520
But at trial, Jay retreated from his statement that the North Circle House was
his “residence” and insisted that he simply visited the North Circle House on
occasion for “logistical reasons.”521 According to Jay, it was “logistical[ly]”
convenient to stay at the North Circle House while restoring the property and
preparing it for a future sale.522 Jay completed a number of improvements to the
North Circle House by 2012 and 2013, using Deputy Trust funds. 523 He claims he
518
JX 134.
519
JX 134.
520
JX 134.
521
Jay Tr. 338:6.
522
Jay Tr. 344:19–347:12. But see JX 99 at JDEPUTY_00796.
523
Jay Tr. 351:14–354:8.
81
still has more to do.524 In addition to certain necessary repairs,525 Jay made multiple
cosmetic and unnecessary updates.526
In 2010, shortly before the majority of the North Circle House improvements
were completed, Jay granted himself an option to purchase the North Circle
House.527 Jay signed the option in his personal capacity and in his capacity as
Trustee.528 He testified that he carefully drafted the option for “the potential
purchase of the house if [he] chose to purchase it, or, actually [his] partner chose to
purchase it.”529 But the option lists “Jay Deputy as the purchaser.” 530 Paul never
approved the option. 531
In the option contract, Jay purports to value the North Circle House at
$140,000 based on the 2008 market crash, prices of comparable homes in Seaford,
524
Jay Tr. 351:14–354:8.
525
See Jay Tr. 351:14–354:8. Jay remedied termite damage; installed a new roof, new air
conditioner, and new ceilings; fixed water leaks in the attic; repaired floors; and removed
sick trees from the property. See JX 99 at JDEPUTY_00806.
526
See Jay Tr. 351:14–354:8. Among other things, Jay painted; purchased rugs; put in new
light fixtures, including two chandeliers; had draperies made and installed curtain rods;
installed skylights; and re-landscaped the property. According to Jay, he brought
“harmony of design . . . back to materials, and the visuals of the house.” Id. 353:9–11.
527
JX 99.
528
JX 99 at JDPEUTY_00805.
529
Jay Tr. 347:23–348.
530
JX 99 at JEPUTY_00795
531
See JX 99.
82
and “known improvements” to the property.532 Two years before Jay drafted the
option contract, in October 2008, Jay valued the North Circle House at $280,000 in
a letter offering to sell the property.533 Contradicting the terms of the 2010 option,
the October 2008 letter favorably frames the North Circle House and Seaford real
estate market despite the market crash. 534
Under the option contract, even if Jay chooses not to exercise the option, “Jay
Deputy has the right to furnish the house and to use the house as a residence
conducive with the full rights of ownership, either permanently or from time to time
without any issue or outside interference.” 535 The contract gave him the right to be
fully reimbursed for the North Circle House’s improvements and keep all
furnishings and decorations.536 Ultimately, as trustee, Jay gave himself an option to
purchase the North Circle House in the future, after substantial improvements had
been made and paid for with Deputy Trust funds, at a price much lower than fair
532
JX 99 at JDEPUTY_00792–94; see also Jay Tr. 348:16–349:21.
533
JX 78 at JDEPUTY_000790.
534
JX 78 at JDEPUTY_000790–91.
535
JX 99 at JDEPUTY_00796; see also JX 99 at JDEPUTY_00795 (“Jay Deputy as the
purchaser or who holds the option for purchase have shall full rights of ownership and use
of the property and without restrictions. Full rights of ownership shall include keeping and
maintaining the property while it is vacant as well as during the pre and post- renovation
and restoration periods, and at the sole discretion of Jay Deputy. Full rights of ownership
further include the use of Jay Deputy’s money to restore and renovate the house as he sees
fit based on his design, professional experience, and informed opinion and knowledge of
the local real estate market.”).
536
JX 99 at JDEPUTY_00796–97.
83
market value; and ensured he could enjoy the property without exercising the option
under the guise that he was improving it for the benefit of the Deputy Trust.
Jay still uses the North Circle House537 and believes it is worth substantially
more today.538 However, Jay has chosen not to exercise the option because the North
Circle House is two hours away from his home in Wilmington. 539 He further claims
that he refrained from exercising the option for the best interest of the Deputy
Trust.540 Even if that is the case, Jay secured for himself the entire upside of the
bargain: he reaps all benefits of ownership without having to pay rent or make a
purchase.541
According to Jay, he never sold the North Circle House because “[t]he real
estate market in Seaford is still fairly soft.” 542 But the house is currently listed for
“quiet” or “soft sale” because “there’s no one living there full time” and he does not
“want to draw attention to the house.”543 I find that Jay has retained the North Circle
537
Jay Tr. 346:19–21.
538
Jay Tr. 354:15–21.
539
Jay Tr. 354:22–3. Jay also included a requirement that he exercise the option within
one year of selling his Manhattan property. JX 99 at JDEPUTY_00795. Further, despite
drafting and executing the agreement, Jay testified that he “can’t answer if the option is
still available or not.” Jay Tr. 355:3–14.
540
Jay Tr. 356:3–21.
541
See JX 99 at Section J.
542
Jay Tr. 344:15–18.
543
Jay Tr. 344:19–347:12.
84
House—held in limbo due the 2008 option—in order to enjoy it for himself, to the
exclusion of Paul, and at the expense of the Deputy Trust.
Finally, Jay paid himself distributions from the Deputy Trust but failed to pay
Paul.544 The Deputy Trust, as amended, requires the trustee to distribute net income
to Jay and Paul in equal shares at least annually, and does not allow distributions of
principal.545 As discussed in more detail below, Jay never provided Paul financial
statements for or an inventory or accounting of the Deputy Trust. 546 Paul has
received no distributions from the Deputy Trust. 547
3. Jay Siphons Funds Out Of The Trusts.
Jay repeatedly transferred funds from both Trusts’ accounts548 to his personal
account ending in 6576 (“Jay’s Account”), 549 his dog rescue fund called Casey’s
Fund,550 and to other accounts, some of which Jay was unable to explain.551
544
See generally, e.g., JX 107, JX 108, JX 110, JX 111, JX 113, JX 114, JX 116, JX 158,
JX 159, JX 160, JX 161, JX 162, JX 162, JX 164, JX 165, JX 166, JX 167, JX 168, JX
169, JX 170, JX 171, JX 172, JX 173, JX 174.
545
PTO ¶ 62; JX 39 § IV(1).
546
PTO ¶ 69.
547
PTO ¶ 70.
548
See generally JX 158, JX 159, JX 160, JX 161, JX 162, JX 162, JX 164, JX 165, JX
166, JX 167, JX 168.
549
Jay Tr. 506:23.
550
Jay Tr. 497:13–14
551
See, e.g., Jay Tr. 504:16–505:2.
85
The One Flintlock Trust is the sole beneficiary of the Flintlock IRA
(“Flintlock IRA”).552 Thus, only the One Flintlock Trust should have received any
distributions from the Flintlock IRA. As of April 30, 2007, the Flintlock IRA had a
portfolio value of $327,855.50. 553 By October 2010, the Flintlock IRA’s value had
fallen to $213,075.53.554
On October 20, 2010, a distribution of $22,945.59 was made from the
Flintlock IRA to an unidentified account at Region’s Bank.555 Jay testified that the
One Flintlock Trust only had bank accounts at Wells Fargo, née Wachovia.556 Jay
could not explain this distribution.557 Despite Jay’s feigned ignorance, I suspect Jay
took this distribution for himself. In April 2012, the Flintlock IRA made two more
distributions.558 One was to Paul’s sub-trust for the One Flintlock Trust (“Paul’s
Flintlock Account”) and the other was to Jay’s personal account. 559 Paul did not
receive a distribution to his personal account after December 2009. 560
552
JX 29 at WF_006866.
553
JX 29 at WF_006865.
554
JX 107 at WF_007147.
555
JX 107 at WF_007155.
556
Jay Tr. 497:3–5.
557
See Jay Tr. 504:16–505:2.
558
JX 113 at WF_007588.
559
JX 113 at WF_007588.
560
Paul Tr. 18:24–19:2; PTO ¶ 44.
86
Beginning in 2013, Jay drained funds out of Paul’s Flintlock Account into
various accounts controlled by Jay. 561 Jay intensified his efforts in 2018. In July
2018, two months after Jay’s deposition in this matter, Jay took over $86,000 from
Paul’s Flintlock Account.562 As of the end of July 2018, there was $115.97 left in
Paul’s Flintlock Account.563 Between 2013 and 2018, Jay’s withdrawals from Paul’s
Flintlock Account totaled over $133,000.564 Jay represented to Paul that the brothers
must forego distributions due to poor market conditions at the end of 2009. Paul
took Jay at his word and trusted Jay’s superior knowledge and experience.
Unbeknownst to Paul, Jay continually siphoned off funds from the One Flintlock
Trust to Paul’s exclusion.
Jay took a similar approach with the Deputy Trust. Beginning in May 2008,
and continuing at least through July 2018, Jay slowly siphoned funds out of the
Deputy Trust into accounts controlled by Jay. 565 Jay’s withdrawals from the Deputy
561
See generally JX 169, JX 170, JX 171, JX 172, JX 173, JX 174.
562
JX 174 at WF_006493.
563
JX 174 at WF_006486.
564
See D.I. 130, Ex. A (collecting JXs).
565
See JX 158, JX 159, JX 160, JX 161, JX 162, JX 163, JX 164, JX 165, JX 166, JX 167,
JX 168. July 2018 is simply the date of the most recent statement that Paul received in
discovery. Jay’s siphoning may have continued.
87
Trust account total approximately $224,023.69.566 Jay continued this course of
conduct even after this litigation was filed.
F. Jay And Paul Communicate About The Status Of The
Trusts.
After Lillian died, Jay and Paul communicated about both Trusts. As stated,
Paul received One Flintlock Trust distributions from late 2005 through December
2009. During that same timeframe, Jay and Paul grappled over the Deputy Trust.
From 2009 on, the brothers disputed the status of both Trusts. Ultimately, Jay took
the position that Paul had mounted a legal challenge against the Deputy Trust, and
so, under Jay’s OFT Amendment and Jay’s Deputy Trust Amendment, he
purportedly revoked Paul’s interest in the Trusts. Although Paul was suspicious
about Jay’s motives as early as 2005,567 he believed Jay’s words were empty threats.
Many years went by without Paul receiving distributions or statements from both
Trusts, while Paul was preoccupied with other things. Eventually, Paul filed this
action.
566
See D.I. 130, Ex. B (collecting JXs).
567
See JX 58 at 4 (entry dated 7/28/2005 at 9:04 AM) (“She [left message] with Jeff Berezni
(sp?) to drop lawsuit. We to send beneficiary change forms for sons, equally WROS. She
will call atty Baker to return Jay to her estate. Ralph not convinced yet that Jay is genuine.
. . . She thanked us for everything we did during the crisis.”).
88
1. Jay Delays Distributions from the Deputy Trust.
In the year after Lillian died, Paul repeatedly asked Jay for information
regarding the Deputy Trust.568 Paul requested updates from Jay every month or
two.569 For example, in the fall of 2008, Paul asked about the Deputy Trust, and Jay
told Paul he needed more time.570 On August 7, 2008, Jay sent Paul an email stating,
“I’ve been concentrating on the house, so no other movement with monies has yet
happened . . . probably won’t for another month or two.”571 Then, on October 2,
2008, in response to Paul’s inquiry, Jay again stated that he had just finished working
on the house and it would be another month before he could turn to the estate’s other
holdings.572 Jay explained that the estate administration was “involved” and told
Paul to trust him. 573
Paul believed Jay,574 and he was glad that Jay contacted him with an update
about the status of the Deputy Trust. 575 Paul explained at trial, “I knew that was
568
PTO ¶ 68; see, e.g., JX 97.
569
Paul Tr. 77:23–78:1.
570
See JX 97 at RDEPUTY_000023.
571
JX 97 at RDEPUTY_000023.
572
JX 97 at RDEPUTY_000021.
573
Paul Tr. 78:–8.
574
Paul Tr. 77:15–17.
575
Paul Tr. 77:5–6.
89
going to be taking so long to do. . . . Aunt Gene’s took a really long time, too.” 576
Paul had no experience in trust administration, but he knew that Jay did.
Accordingly, Paul deferred to Jay’s superior knowledge and experience.
2. Jay Threatens to Revoke Paul’s Interest In The Deputy
Trust And Warns That His Interest In the One
Flintlock Trust Is In Jeopardy.
After Paul learned about the forged AT&T documents, he approached his
attorney, Deakyne, for assistance.577 On March 17, 2008, Deakyne wrote a letter to
Fairchild regarding the beneficiary designations on Lillian’s Ameriprise accounts,
focusing on the AT&T stock (the “March 2008 Letter”). 578 It does not mention or
question the 2008 Deputy Trust Agreement, any Deputy Trust amendments, or
Paul’s status as a Deputy Trust beneficiary. The March 2008 Letter states that
“[Paul] questions the validity of the [2008 Deputy POA] given the medical crisis his
mother was struggling with on the date the document purportedly signed by her,”
but proceeds presuming the 2008 Deputy POA is valid.579 It further explains that,
under the 2008 Deputy POA, Jay did not have the authority to transfer a 100%
interest in the stock to himself, and that Paul remains entitled to receive a share of
576
Paul Tr. 76:22–24.
577
Paul Tr. 64:7–9.
578
PTO ¶ 73; JX 65.
579
JX 65 at AFSI0000057.
90
Lillian’s Ameriprise accounts.580 The March 2008 Letter requested that Ameriprise
refrain from taking any action contrary to Lillian’s previously stated intentions. 581
Thereafter, Jay and Paul communicated about both the One Flintlock and
Deputy Trusts. During summer 2008, Jay and Paul exchanged a number of emails
about distribution checks from the One Flintlock Trust. 582 In August 2008, Jay
informed Paul that “the [North Circle House] is coming along okay,” and mentioned
that he was considering renting the property because “mom was thinking long term
investment strategies for the trust.”583 Jay further explained that “no other movement
with monies has yet happened . . . probably won’t for another month or two.”584
After the stock market crashed, Paul was concerned about the One Flintlock
Trust and contacted Jay on October 2, 2008.585 Jay and Paul then communicated
about One Flintlock Trust distributions and one of Georgene’s assets, a Lennox
Spring Garden set.586 Jay informed Paul that it was Paul’s “responsibility to provide
a correct inventory” as a One Flintlock Trust beneficiary, and asked that he provided
580
JX 65 at AFSI0000057.
581
JX 65 at AFSI0000058.
582
JX 97 at RDEPUTY_000022–24.
583
JX 97 at RDEPUTY_000023.
584
JX 97 at RDEPUTY_000023.
585
JX 97 at RDEPUTY_000022.
586
JX 97 at RDEPUTY_000019–20.
91
an updated and correct inventory,587 and reassured Paul that the One Flintlock Trust
was mainly invested in bonds. 588 Jay also addressed the Deputy Trust, stating that
“[i]t will be at least another month before I can get the financial stuff underway,”
and “[Deputy] trust monies are to be invested for the long term; these were [Lillian’s]
wishes.”589
On November 18, 2008, Jay wrote to Paul “upon the advice of [Pulsifer], the
attorney for mom’s trust and estate,” to dispute Paul’s withdrawal of funds from a
money market account Lillian had held jointly with Paul (the “November 2008
Letter”).590 Jay claimed that, although Paul’s understanding of the account’s
ownership was “accurate on the surface,” Paul actually had no right to that money. 591
Jay stated that although the account was not a Deputy Trust asset, “it was to be part
of the Trust.”592 In that letter, Jay proposed that he would
587
JX 97 at RDEPUTY_000019.
588
JX 97 at RDEPUTY_000019.
589
JX 97 at RDEPUTY_000019, RDEPUTY_000020.
590
JX 79 at JDEPUTY_00421.
591
JX 79 at JDEPUTY_00421–22. Jay even goes as far as to claim that Paul unduly
influenced Lillian into executing the 2005 Deputy Trust Agreement, disinheriting Jay and
removing Jay from Lillian’s accounts. Id. at JDEPUTY_00422. These claims are
unsubstantiated.
592
Jay Tr. 487:21–488:4.
92
use my legally granted powers as Trustee to escrow any net income
from [Deputy] Trust until this money is returned. You would not
receive any net income or benefit from the Trust until this money is
remitted to the Trust. In an amendment to the restated trust, income is
discretionary and not necessarily mandatory. As Trustee, net income
distributions are at my discretion to try and accommodate certain types
of investments . . . .593
He further explained that Paul “already compromised and jeopardized potentially
[his] beneficiary status in the One Flintlock Trust” and that it was “not [his] intention
for [Paul] to compromise [his] position in [the Deputy T]rust.”594 Jay gave Paul ten
days to “substantiate” his claim to the money market account to “make the estate
and [Deputy] Trust whole and to return the monies.”595
Then, on November 30, Jay wrote Paul again to “correct” a statement Lillian
made to Paul about her share of the One Flintlock Trust. 596 He informed Paul that,
upon Lillian’s death, the monies from her sub-trust were added to Jay’s share and
that “your portion will remain at 24-percent, and will always remain so as long as
I’m alive.”597
593
JX 79 at JDEPUTY_00423.
594
JX 79 at JDEPUTY_00423.
595
JX 79 at JDEPUTY_00423–24.
596
JX 80.
597
JX 80 at RDEPUTY_000093.
93
On December 8, Jeanne Singer, Paul’s then-counsel, sent a letter to Jay in
response to the November 2008 Letter (the “December 8, 2008 Letter”). 598 Singer
wrote, “it is clear from your letter that you do not have a firm grasp of your
responsibilities as Executor and Trustee:”599
[Y]our threats to use your position as Trustee to coerce my client into
returning money that rightfully belongs to him is a clear breach of your
fiduciary duty as Trustee. If you continue with this course of action,
we will be compelled to file suit to have you removed as Trustee and
have an independent Trustee appointed.600
In closing, the December 8, 2008 Letter asked that Jay complete tax returns in a
more timely fashion.601
Also on December 8, 2008, Jay learned of the March 2008 Letter in the
process of transferring Lillian’s accounts to Wells Fargo.602 Jay believed the March
2008 Letter constituted a legal challenge to the 2008 Deputy Trust and 2008 Deputy
POA under Jay’s Deputy Trust Amendment, and therefore saw the letter as grounds
598
PTO ¶ 74; JX 81 (responding to JX 80).
599
JX 81 at JDEPUTY_00414.
600
JX 81 at JDEPUTY_00414.
601
JX 81 at JDEPUTY_00414.
602
Jay Tr. 408:3–409:4 (referring to JX 65); JX 82 at JDEPUTY_00330 (“On or about 8
December I had a late-afternoon conversation with a Minneapolis representative from
American Express’ Death and Estates Department regarding Mrs. Deputy’s estate and trust.
I was informed by the representative, that through an attorney representing you (Mr. James
Dykean [sic], although the spelling of the sir name may not be correct) a Letter of
Challenge, on your behalf, had been received in their office at the end of March, 2008.”).
94
to revoke Paul’s beneficiary status.603 Jay called Paul on December 8 to ask about
the March 2008 Letter. Paul told Jay that it was “meant to protect my interests.” 604
On December 12, 2008, Jay wrote a letter to Paul threatening to revoke Paul’s
interest in the Deputy Trust if Paul did not talk to Jay (the “December 12, 2008
Letter”).605 Paul received this letter.606 Jay characterized the March 2008 Letter as
a “Letter of Challenge,” claiming he was
informed you were challenging and contesting the documents of Mrs.
Lillian K. Deputy to include, at least, her Last Will and Testament and
the Lillian K. Deputy Revocable Charitable Remainder Trust. This
letter only presented a written statement towards challenge and contest,
and no court order existed either impeding me from moving forward
with the estate and trust or presenting a “full stop” to the financial
administration of the estate and trust.607
The December 12, 2008 Letter further goes on to describe, in Jay’s own words, Jay’s
Deputy Trust Amendment, which Paul did not know about and had never seen. 608
603
Jay Tr. 406:2–407:7.
604
JX 82 at REDPUTY_00330.
605
PTO ¶ 75; JX 82.
606
PTO ¶ 75.
607
JX 82 at JDEPUTY_00330. As described above, the March 2008 Letter relates to the
Ameriprise accounts with beneficiary designations; it does not relate to the terms of the
Deputy Trust, and it does not formally challenge the 2008 Deputy DPA. See JX 65.
608
JX 82 at JDEPUTY_00330–31. The December 12, 2008 Letter also references the
alleged conversation about revocation that Jay, Paul, and Lillian had at Peggy’s Diner
before her surgery. Id. at JDEPUTY_00332. In a similar vein, the December 12, 2008
Letter repeatedly references the inadmissible transcripts, JX 112, which Jay prepared to
bolster his story. That conversation never happened, and those “transcripts” never existed
when they were allegedly drafted. These references are part of Jay’s effort to continue
gaslighting Paul.
95
Jay continued that Paul’s behavior and the March 2008 Letter “forced [Jay] to
become comfortable with the idea of revocation for the [Deputy Trust].” 609 He
writes:
For no other purpose, I believe the inherent action of the [March 2008
Letter] was meant directly to do harm to the trust, to disturb its peace
and unity, and to directly attack me. . . . Emanating from the language
of the trust, and your intent, I believe the presented legal arguments to
be sound in support of revocation. My decision is NOT based upon
self-enrichment. . . . Initiated, external legal action, therefore, becomes
the single act and purpose of revocation.610
The letter does not claim that revocation has occurred. Rather, emphasizing that the
“effect of revocation can be far-reaching,” Jay gave Paul five days to respond to the
December 12, 2008 Letter, stating that failure to respond would result in revocation
from the Deputy Trust. 611
Further, the December 12, 2008 Letter alleges that Paul and Fairchild “colluded
together . . . to generate the [March 2008 Letter] through the Georgetown, Delaware
attorney. The receipt of the [March 2008 Letter] at the principal office of [Ameriprise] has
clear implications that these things occurred without you or Mr. Fairchild possessing a full
set of documents.” Id. at RDEPUTY_00331. These claims are unsubstantiated.
609
JX 82 at JDEPUTY_00332–33 (“I have never been comfortable with the idea of
revocation. This is well documented in the transcripts between mom and I. (It was a much
discussed topic over a period of months). I believe it to be too much responsibility
weighted in the decision as to how this will affect your life in ways for which I never want
to be blamed. Your history, however, demonstrates that you cannot work cooperatively
with me, and subsequently, has forced me to become comfortable with the idea of
revocation . . . .”).
610
JX 82 at JDEPUTY_00333.
611
JX 82 at JDEPUTY_00333.
96
Paul did not respond to the December 12, 2008 Letter.612 He did not believe
Jay’s revocation threat was credible because he did not believe Jay had the authority
to revoke his interest in the Deputy Trust.613 Paul did not know about Jay’s Deputy
Trust Amendment, and Jay never gave Paul a copy of Jay’s Deputy Trust
Amendment.614 Rather, Paul believed that Lillian was the only person who could
revoke a beneficiary’s interest in the Deputy Trust. 615 Because Paul believed that
Jay’s December 12, 2008 Letter was an empty threat, Paul did not immediately
contact Jay to discuss the letter.616 Paul did not sue Jay in 2008 because he “ha[d] a
restaurant . . . so [he] couldn’t give [his] time to [this dispute] until [he] finally got
[himself] together with the restaurant.” 617
3. Jay Continues to Treat Paul As A Beneficiary Of The
Trusts.
The next time Paul and Jay communicated, on January 23, 2009, neither Jay
nor Paul mentioned the December 12, 2008 Letter or revocation.618 In fact, after the
December 12, 2008 Letter, Jay continued to treat Paul as a beneficiary of the Deputy
612
PTO ¶ 76.
613
Paul Tr. 27:20–28:1, 87:23–88:1.
614
Paul Tr. 88:8–24.
615
Paul Tr. 89:18–19.
616
See Paul Tr. 27:20–28:1, 87:23–88:1.
617
Paul Dep. 25:12–18; see also Paul Tr. 5:1–2; JX 97 at RDEPUTY_000007 (“[T]he
restaurant is taking a lot of time these days.”).
618
See JX 97 at RDEPUTY_000015–16.
97
Trust. On January 29, Jay provided an update on distributions, and he continued to
update Paul on the renovation and potential sale of the North Circle House.619
Throughout 2009, Jay continued to update Paul about the North Circle House. 620
In March, Jay and Paul discussed when Paul would receive his K-1 statement
for the One Flintlock Trust.621 In June, Jay again provided an update regarding the
delayed distributions.622 In October, Paul again inquired about K-1 statements.623
Jay responded that he had not attended to the matter, as he was continuing to work
with the accountants on Lillian’s estate tax matters. 624 Jay also brought up the joint
money market account again.625 Based on Jay’s representations, Paul believed that
Jay was working with the accountants to resolve tax matters with the estate before
Deputy Trust distributions could be made.626 As Jay continued to provide updates
619
JX 97 at RDEPUTY_000014–16.
620
JX 97 at RDEPUTY_000015–16.
621
JX 97 at RDEPUTY_000014.
622
JX 97 at RDEPUTY_000013.
623
JX 97 at RDEPUTY_000008.
624
JX 97 at RDEPUTY_000008 (“I am meeting with David this Thursday or Friday when
I’m next in Seaford to wrap up the estate tax stuff. I’m trying to finish this as my schedule
allows. I’m also trying to finish a few loose ends with the estate which I’ve mentioned to
you in previous e-mails. You seemed to ignore these things. First, I am waiting for the
clothing inventory. Second, I’m waiting for the resolve of the money market account and
the extant power of attorney agreement which was never canceled at Wilmington Trust by
mom, and therefore invalidated the name change to the account. I’m the one who is
ultimately responsible for these issues, and not you.”).
625
JX 97 at RDEPUTY_000008
626
Paul Tr. 92:20–93:4; see JX 97 at RDEPUTY_000008.
98
regarding the property of the Deputy Trust, Paul believed that he remained a Deputy
Trust beneficiary.627 Nonetheless, at that time, Paul had never received a distribution
or statement from the Deputy Trust.628
Paul responded to Jay’s email on October 13, 2009:
It is apparent that we need to meet up with each other. This hatred or
whatever it is towards me needs to stop. I have forgiven you because
mom is no longer here to fuel the fire that has put such a wedge in
between us. I say this because, you do not realize the anger and ill
feelings that she put us both thru. That is why I want to meet up with
you to resolve all of this between us. You need to know what I had
gone thru also. Stop the hatred and lets move on with this whole matter.
I will get You the inventory as I said I would, but the restaurant is taking
a lot of time these days. Let’s arrange a date and time. 629
627
Paul Tr. 91:3–7, 92:3–6.
628
PTO ¶ 70.
629
JX 97 at RDEPUTY_000007.
99
Jay responded that same day and raised a number of issues, 630 and proceeded to
inform Paul about Jay’s Deputy Trust Amendment:
Fortunately, mom’s trust contains an amendment which cannot be
challenged to any internal or external challenge of any document. This
was put into place because I refuse to go through what I did in 2005. Is
it now that your challenge didn’t hold up (and I’m assuming Mr.
Fairchild mentioned the monies have been consolidated out of
Ameriprise) that you want to meet to protect your interests in the trust?
Again, whatever sincerity might exist on your part is suspect given the
timing in all of this. 631
Jay then acknowledged that this was the first time Paul learned of Jay’s Deputy Trust
Amendment.632
At the end of 2009, Jay explained that the market was in turmoil and advised
that the brothers should stop distributions from the One Flintlock Trust. 633 Jay
630
JX 97 at RDEPUTY_000006 (“Let’s start with the letter to Ameriprise mailed one week
after mom was buried. First, the signature isn’t forged as the letter on your behalf claims.
Mom had tubes in her hand and writing her signature was difficult. While she asked me to
do [sic] sign the document on her behalf, (which I could as Durable Power of Attorney) I
asked her to sign it which she did. There is a third party document that attests and witnessed
her signature. I’m not that ‘green.’ As well, there are a few documents beyond
Ameriprise’s form which protect my interest [sic] the stock. You don’t realize very clearly,
but I could have pursued (and still can) the fraudulent Lennox Garden inventory within the
State of New Jersey, but I realized it would have potentially upset your life, and yet, in
turn, and very underhandedly, you were willing and did to me what I refused to do to
you.”).
631
JX 97 at RDEPUTY_000006.
632
JX 97 at RDEPUTY_000006–07 (“I’m sorry you probably feel left out of all of the
changes to the documents. Mom had intended to go over these changes with you upon her
recovery. I have e-mails dating back to August before her surgery in which she discusses
the changes and asks me to handle them. This wasn’t done underhandedly or to undermine,
yet again, what you think you deserve, but rather a living legacy beyond you and me.”).
633
Paul Tr. 19:3–10.
100
previously advised Paul that “[t]hings are certainly tough” due to the “market
correction(s) that is taking place.”634 Based on Jay’s advice, Paul agreed that they
would stop distributions from the One Flintlock Trust.635 Paul received his last One
Flintlock Trust distribution on December 3, 2009. 636
On September 26, 2010, Jay sent a letter to Paul providing an update as to
their mother’s estate (the “September 2010 Letter”). 637 Jay informed Paul that there
was one final issue with an annuity outstanding, but that Jay would be turning back
to his doctoral work, writing:
Therefore, with this outstanding and last piece of business, I must return
to my doctoral work. I really have no other choice. I will remind you
that during the course of events beyond Mrs. Deputy’s death, you have
not offered to assist. I understand your business is your first priority.
My doctoral degree is now my first priority.638
The September 2010 Letter calls Paul a beneficiary of the Deputy Trust. 639
In 2011, Paul asked Jay about the status of One Flintlock Trust.640 Jay advised
that the market still had not recovered and so distributions and statements could not
634
JX 97 at RDEPUTY_000024.
635
Paul Tr. 19:9–10; PTO ¶ 70.
636
PTO ¶ 44.
637
JX 106 at REDPUTY_00633.
638
JX 106 at REDPUTY_00633.
639
PTO ¶ 79; JX 106.
640
Paul Tr. 21:19–22:3.
101
resume.641 Paul again trusted Jay’s superior knowledge and experience. 642 Paul
believed that Jay kept him informed of the status of the One Flintlock Trust. 643
Even as late as 2017, Jay still treated Paul as if he were a beneficiary. 644 By
letter dated October 17, 2017, Jay demanded reimbursement of $61,868 for upkeep
and maintenance of Lillian’s home, which is a Deputy Trust asset.645
Paul was reassured by the regular contact with Jay regarding the Trusts. Paul
explained at trial, “I still thought I was 50-50 with [the Deputy Trust] because we
are communicating back and forth every once in awhile.”646
4. Paul Seeks Information About The Trusts And Jay
Retaliates By Purporting to Revoke Paul’s Interests In
The Trusts.
In early 2013, Paul called the Trusts’ Wells Fargo contact, John Brady, to
inquire about the Deputy Trust.647 Paul explained, “I contacted Mr. Brady and I said,
I have no problem with Aunt Gene’s trust because I know what’s going on, but I
641
Paul Tr. 22:4–5.
642
Paul Tr. 22:12–16.
643
Paul Tr. 25:6–8.
644
See JX 136.
645
JX 136 at JDEPUTY_00568–70.
646
Paul Tr. 96:24–97:2.
647
Paul Tr. 27:2–5.
102
need to know what’s going on with my mom’s trust because I have no idea what is
going on.”648 Jay learned about this phone call.649
In reaction, on April 21, 2013, Jay, as Trustee of the One Flintlock Trust, sent
a letter to Paul (the “April 2013 Letter”).650 Jay claimed that Paul purportedly
threatened to “instigate legal action” against him, and stated that “[y]our telephone
calls, from time to time, to Mr. Brady constitute a direct challenge to my authority
as Trustee as well as the investment, governance and administration decisions of the
Trust.”651 The April 2013 Letter informed Paul that Paul’s interest in the One
Flintlock Trust was revoked “effective immediately,”652 and discusses at length Jay’s
648
Paul Tr. 25:6–10.
649
JX 118 at RDEPUTY_000098.
650
JX 118.
651
JX 118 at RDEPUTY_000098.
652
JX 118 at RDEPUTY_000099.
103
OFT Amendment and the reasons the phone call amounted to a “legal challenge.”653
Jay concludes by stating:
It is my principal duty to fulfill the terms and conditions set forth in the
Trust, and to do so to through the best of my reasonable abilities as
Trustee. Further, it is my duty to defend the Trust in the event of a
challenge or legal action. My loyalty remains first with the Trust, and
second to its protected, named beneficiaries. The removal of you as a
beneficiary eliminates any potential and further legal disturbance of the
Trust.654
Paul did not believe this letter actually revoked his interest in the One
Flintlock Trust. Paul believed that this was another of Jay’s idle threats, and believed
that only Georgene had the authority to revoke a beneficiary’s interest. 655 As Paul
stated:
I thought it was another smoking gun, basically, because he writes
letters all – back – back in the day, before, and he’d always saying that
“you’re going to be revoked” and stuff like that. And I felt that he
didn’t have the power because my mom and my aunt had the power to
revoke.656
653
PTO ¶ 45; JX 118 at RDEPUTY_000098–100; see also id. at RDEPUTY_0000100
(“As Trustee, it is evident and has been again demonstrated you cannot exist peacefully
with the terms of the One Flintlock Trust as set forth by the Settlor and original Trustee,
Mrs. Georgene E. Castor, and any subsequent terms set forth and promulgated by the
Successor Trustee, Jay C. Deputy.”).
654
JX 118 at RDEPUTY_0000100.
655
Paul Tr. 27:18–28:1.
656
Paul Tr. 27:20–28:1. At trial, Paul repeatedly used the term “smoking gun” to mean an
idle threat, rather than a particularly strong indicator of guilt.
104
All the same, the April 2013 Letter was concerning enough to Paul to cause him to
contact an attorney.657
Because Paul was not receiving distributions or statements from the Deputy
Trust, he also contacted Fairchild and requested that he provide his non-legal
observations about the Deputy Trust and Jay’s performance as Trustee. 658 On March
11, 2014, Fairchild provided a summary.659 He stated, “I [] understand that Jay has
inexplicably ‘removed you’ as a beneficiary of the trust,” and “[t]o the best of my
knowledge, your mother did not establish any other trust agreements that pertain to
this situation.”660 Fairchild did not believe that Jay did not have revocation
powers.661 He told Paul that Jay was likely violating his fiduciary duties and
encouraged Paul to contact an attorney. 662
On August 5, 2014, Paul’s legal counsel sent a letter to Jay requesting
complete copies of all trust documents for the Trusts, tax returns, and an accounting
(the “August 2014 Letter”). 663 The August 2014 Letter stated that Paul, as
657
Paul Tr. 29:10–15.
658
Fairchild Tr. at 310:24–311:1, 313:1–13; JX 62 at AFSI0000648; accord JX 120 at
RDEPUTY_000047.
659
JX 62.
660
JX 62 at AFSI0000648; accord JX 120 at RDEPUTY_000047.
661
JX 62 at AFSI0000648–49; Fairchild Tr. at 274:2–275:1.
662
JX 62 at AFSI0000648–49; Fairchild Tr. at 274:2–275:1.
663
PTO ¶ 46; JX 122.
105
beneficiary, retained counsel to “investigate and, if appropriate, initiate proceedings
relating to” the Trusts.664 Counsel further informed Jay that Paul would initiate
proceedings if Jay did not respond by August 29.665
Jay did not provide the documents requested by the August 2014 Letter.666
Rather, Jay responded by letter dated October 3 (the “October 2014 Letter”).667 Jay,
as Trustee of the Deputy Trust, unequivocally informed Paul’s counsel that Paul was
not entitled to the requested documents because Paul had been removed as a
beneficiary of the Trusts:668
Beneficiary revocation for the One Flintlock Trust occurred formally
on 21 April 2013 (and informally occurred on 9 April 2009 after a
challenge to an agreed upon investment policy change) for which a
required letter was mailed by United States mail detailing my actions
and authority as trustee towards revocation. Beneficiary revocation for
Lillian K. Deputy Charitable Remainder Trust formally began on or
about 12 March 2008 when a written challenge from Mr. James
Deakine [sic], a Georgetown, Delaware attorney was received at
Ameriprise Financial Services’ Death and Estates Department in
Minneapolis, Minnesota by the end of March, 2008. My mother’s death
occurred on 5 March 2008. I was unaware of his letter until on or about
8 December 2008 when I began the trust’s administrative work upon
returning to Wilmington.669
664
JX 122 at JDEPUTY_00344.
665
JX 122 at JDEPUTY_00345.
666
PTO ¶ 47; Paul Tr. 32:4–6.
667
JX 123.
668
PTO ¶ 81; JX 123 at JDEPUTY_00347–49.
669
JX 123 at JDEPUTY_00347.
106
In response, Paul filed this action.670
II. ANALYSIS
The Trusts are governed by Delaware law.671 Paul claims that Jay breached
his fiduciary duties to inform, of loyalty, and of care; and that Jay was unjustly
enriched as a result of these breaches. I agree. But Jay contends that even if Paul
prevails on his claims, Paul slumbered on his rights, and as a result, his claims are
barred by the doctrine of laches. While Paul delayed in asserting his claims, I
nonetheless find that Jay has failed to prove his laches defense because Jay has not
been prejudiced. Accordingly, Paul must prevail in this action.
A. Jay Breached His Fiduciary Duties To Paul.
The preponderance of the evidence demonstrates that Jay breached his
fiduciary duties to Paul, who is and always has been a beneficiary of both the One
Flintlock Trust and the Deputy Trust.
1. Jay Breached His Duty To Inform.
Jay breached his duty to inform by failing to keep Paul abreast of his
beneficiary status in both Trusts and by failing to furnish Trust information when
requested. A trustee has a duty to furnish information to beneficiaries, 672 including
670
Paul Tr. 32:7–8.
671
PTO ¶ 82.
672
See, e.g., McNeil v. McNeil, 798 A.2d 503, 509 (Del. 2002).
107
the existence of the trust, their status as beneficiaries, and any significant change in
their beneficiary status; and must keep beneficiaries reasonably informed, especially
regarding material information needed to protect their interests.673 The trustee must
furnish such information “upon reasonable request” by the beneficiary. 674 Even if
the beneficiary does not request information, “a trustee must communicate essential
facts, such as the existence of basic terms of the trust.” 675 This Court considers
whether an individual is a current beneficiary to be an “essential fact.”676
Jay breached his duty to inform by failing to communicate essential facts, such
as the basic terms of the Trusts and updates on Paul’s beneficiary status. Jay admits
that Jay’s OFT Amendment and Jay’s Deputy Trust Amendment, if effective, would
have materially changed the parties’ rights and obligations because they supposedly
authorized revocation. 677 By not informing Paul of those Amendments, which
supposedly gave Jay authority to revoke Paul’s beneficiary status, Jay deprived Paul
of the opportunity to protect his interests. If Paul had known of Jay’s Amendments,
he would have been able to challenge them sooner.
673
Restatement (Third) of Trusts § 82 (2007).
674
In re Tr. FBO DuPont Under Tr. Agreement Dated Aug. 4, 1936, 2018 WL 4610766, at
*14 (Del. Ch. Sept. 25, 2018).
675
Id.
676
McNeil, 798 A.2d at 510.
677
Jay Tr. 450:10–12; see also McNeil, 798 A.2d at 510; In re Tr. FBO DuPont, 2018 WL
4610766 at *14.
108
Further, Jay had a duty to keep Paul informed of his beneficiary status. If Jay
had revoked Paul’s beneficiary interest in the Trusts, then Jay had a duty to inform
Paul of that revocation when it happened. In letters after the fact, Jay stated that
Paul’s interests had been revoked (whether formally or informally) at specific times,
but Jay failed to contemporaneously inform Paul of that revocation, and he waited
to do so until provoked at a much later time. Jay fell short of his duty to inform Paul
of Jay’s Amendments, notwithstanding my conclusion today that Jay’s Amendments
are invalid. Jay failed to provide Paul with information necessary to protect his
interests and to evaluate whether and how his interest in the Trusts had been
terminated.
Finally, on numerous occasions, Paul requested information from Jay about
both Trusts, and Jay provided half-hearted, incomplete, and sometimes untruthful
answers. With respect to the One Flintlock Trust, Jay breached his duty to inform
by withholding statements after December 2009, likely in an effort to keep Paul in
the dark about the lopsided distributions. When Paul specifically asked about One
Flintlock Trust statements, Jay merely responded that he “ha[d] it under control.”678
Similarly, Jay failed to provide Paul with statements from the Deputy Trust. In fact,
Jay failed so miserably to keep Paul informed that Paul resorted to contacting Wells
Fargo and Ameriprise for information. In Paul’s words, “I need to know what’s
678
Paul Tr. 96:7; accord D.I. 133 at 29.
109
going on with my mom’s trust because I have no idea what is going on.”679 Financial
information about the Trusts was material and needed for Paul to protect his
interests.
2. Jay Breached His Duty Of Loyalty.
Over his years of service as trustee, Jay breached his duty of loyalty on
multiple occasions. For the sake of brevity, I address only those breaches Paul
raised: a) adopting Jay’s Amendments and revoking Paul’s interests through those
impermissible and invalid Amendments; b) failing to make distributions to Paul
from both Trusts; c) using the North Circle House for himself without paying rent
and granting himself an option at below-market value; d) paying himself a
commission for handling Lillian’s estate out of the Deputy Trust; and e) forging
documents to transfer the AT&T stock out of the Deputy Trust.
A trustee has a duty to administer the trust “solely in the interest of the
beneficiar[ies]”.680 “As a part of the duty of loyalty, a trustee must exclude all selfish
interest and all consideration of the interests of third persons.” 681 The duty of loyalty
679
Paul Tr. 25:6–10.
680
Paradee v. Paradee, 2010 WL 3959604, at *10 (Del. Ch. Oct. 5, 2010) (“A trustee is
‘under a duty to [the] trust beneficiary to administer trust property solely in the interests of
the beneficiary.’” (alternation in original) (quoting Walls v. Peck, 1979 WL 26236, at *4
(Del. Ch. Oct. 24, 1979)); accord Restatement (Third) of Trusts § 78.
681
Paradee, 2010 WL 3959604, at *10 (internal quotation marks omitted) (quoting George
Gleason Bogert & George Taylor Bogert, The Law of Trusts and Trustees § 543 (2d ed.
1993)).
110
is implicated where the trustee has a substantial self-interest that is not consistent
with the interests of the trust. 682 Under trust law, “self-dealing occurs when the
fiduciary has a personal interest in the subject transaction of such a substantial nature
that it might have affected his judgment in material connection.” 683
Unlike corporate law, “[u]nder trust law, self-dealing on the part of a
trustee is virtually prohibited.” Originally under Delaware law “a
trustee [was] prohibited absolutely from purchasing the property
entrusted to his care.” Under current Delaware law: “[a]n interested
transaction is not void but is voidable, and a court will uphold such a
transaction against a beneficiary challenge only if the trustee can show
that the transaction was fair and that the beneficiaries consented to the
transaction after receiving full disclosure of its terms.”684
682
See Restatement (Third) of Trusts § 78.
683
Stegemeier v. Magness, 728 A.2d 557, 564 (Del. 1999) (emphasis in original) (internal
quotation marks omitted) (quoting Vredenburgh v. Jones, 349 A.2d 22, 39 (Del. Ch.
1975)).
684
Id. at 563 (alterations in original) (quoting Oberly v. Kirby, 592 A.2d 445, 466 (Del.
1991), and also quoting Wilm. Tr. Co. v. Carrow, 125 A. 350, 352 (Del. Ch. 1924)); see
also Hardy, 2014 WL 3736331, at *8 (“Inherent in the trust relationship is the duty of
loyalty, which requires a trustee to administer the trust solely for the interest of the
beneficiary and exclude all selfish interests and all consideration of the interests of third
persons. Self-interested transactions by fiduciaries are not prohibited altogether, but
require the beneficiary’s voluntary consent to the transaction after full disclosure. Under
Delaware law, when a fiduciary has a close confidential relationship with the beneficiary,
such consent requires impartial advice from a competent and disinterested third person,
sufficient to allow the beneficiary to make an informed decision. Self-interested
transactions involving a fiduciary or one in a confidential relationship with another are
presumptively fraudulent and voidable in equity. If the transaction is challenged, the
burden of persuasion to justify upholding the transaction is on the fiduciary. That burden
is even greater where the transfer of property is made without consideration.” (alteration,
footnotes, and quotations omitted)).
111
“In any case, the burden of persuasion to justify the upholding of a transaction by an
interested trustee rests on the fiduciary, not the beneficiary.” 685
Jay breached his duty of loyalty to Paul as beneficiary of both Trusts by
wrongfully and fraudulently attempting to revoke Paul’s beneficiary interests in an
effort to take the whole of the Trusts for himself.686 According to Jay, he executed
Jay’s OFT Amendment in September 2004 in his role as co-trustee of the One
Flintlock Trust.687 Jay did not have amendment authority in that role: as discussed,
Jay’s OFT Amendment is invalid because Jay did not have the authority to amend
the One Flintlock Trust under Georgene’s POA. Accordingly, he breached his duty
of loyalty by wrongfully attempting to change his own powers under the One
Flintlock Trust to Paul’s detriment, using an invalid and likely fraudulent document.
Likewise, Jay’s Deputy Trust Amendment is a fraudulent attempt to increase his
own powers as trustee to Paul’s detriment.
Even assuming that Jay’s Amendments are valid, Jay breached his fiduciary
duty of loyalty when he revoked Paul’s interests because Paul never mounted a
“legal challenge” to the Trusts or related documents, as required to revoke under
685
Stegemeier, 728 A.2d 557 at 563.
686
See id.
687
For example, Jay curiously did not exercise his supposed revocation powers when
Lillian sued him in 2005. If Jay genuinely believed he had revocation powers at that time,
he would have revoked Lillian’s interest in the One Flintlock Trust. It is likely that Jay
drafted Jay’s OFT Amendment sometime thereafter so that he could take Paul’s interest.
112
Jay’s Amendments. Jay claims that Paul’s call to Brady in early 2013 constituted a
legal challenge to the One Flintlock Trust. Setting aside that the phone call did not
constitute a “legal challenge” to anything, that call did not challenge the One
Flintlock Trust documents because Paul contacted Brady to discuss Lillian’s estate,
not the One Flintlock Trust.
Jay also argues that Deakyne’s March 2008 Letter to Ameriprise constitutes a
legal challenge to Lillian’s estate. It was not. The March 2008 Letter was in
response to Ameriprise’s communication informing Paul that Lillian’s signature
may have been forged on beneficiary change forms. These forms changed the owner
of the AT&T stock, and did not pertain to the terms or validity of the Deputy Trust
itself. The March 2008 Letter does not challenge the Deputy Trust documents. To
the contrary, while expressing some concerns about the circumstances of the 2008
Deputy DPA’s execution, the letter assumes the 2008 Deputy DPA is valid. Thus,
even assuming Jay’s Amendments are valid, Jay impermissibly revoked Paul’s
beneficiary status in an effort to claim the Trusts’ assets for himself. In purportedly
and unjustifiably revoking Paul’s interests, Jay placed his own interests above
Paul’s, and therefore breached his duty of loyalty.
Jay executed his Amendments secretly, without the knowledge of Georgene,
Lillian, or Paul, and with the sole intent of disinheriting Paul. Jay waited for the
opportune time to invoke his nonexistent revocation powers and chose to proceed as
113
though he was the sole beneficiary of the Trusts. But Paul is and always has been a
beneficiary of the Trusts.
As trustee of the One Flintlock Trust, Jay is required to distribute 24% of all
net trust income to Paul at least annually.688 But Jay proceeded as though he was the
sole beneficiary, appropriating nearly all the funds from the Trusts without
considering Paul’s interest and failing to pay Paul distributions. Beginning in 2010,
Jay began transferring funds out of the One Flintlock Trust, despite telling Paul that
distributions must stop due to the market crash. Jay used the market as an excuse to
mislead Paul. Unbeknownst to Paul, Jay continued to make distributions to himself
even after the brothers agreed to cease distributions until the market bounced back.
Then, from 2013 on, Jay siphoned off over $133,000 from Paul’s OFT Account,
transferring those funds into various accounts Jay controlled. 689 By taking
distributions for himself and slowly draining Paul’s OFT Account for his own
personal benefit, Jay breached his duty of loyalty.
Jay pursued a similar course of conduct with respect to the Deputy Trust.
Before Paul’s interest was allegedly revoked in December 2008, Jay disbursed
roughly $12,000 from the Deputy Trust.690 After the purported revocation, Jay
688
JX 7, § 7(A).
689
See D.I. 130, Ex. A (collecting JXs).
690
JX 158; D.I. 130, Ex. B (collecting JXs). Jay states that Paul has offered no evidence
regarding what those funds were for, and suggests that those funds were allocated for
repairs and updates to the North Circle House after Lillian’s death, as well as
114
withdrew nearly $224,023.69 from the Deputy Trust for his own use. 691 Throughout
2008 and 2009, Jay reassured Paul that he was working on Lillian’s estate and could
not yet make distributions. Likewise, in view of Jay’s representations about market
conditions, Paul consented to Jay’s suggestion that they defer distributions from the
Deputy Trust. But Jay was transferring Deputy Trust funds to himself.692 He failed
to inform Paul of this fact, but instead repeatedly indicated to Paul that Paul remained
a beneficiary of the Deputy Trust who would receive distributions when Jay
determined it was prudent to do so. Jay retained all trust income for his own
reimbursements for Jay’s expenses related to those repairs or other estate expenses. D.I.
133 at 57. Jay states that “most checks written on the trust account were for estate expenses
or for Ms. Deputy’s home.” Id. (citing JX 158). As discussed at length below, Jay used
and repaired the North Circle House for his own benefit. The accounting Jay must perform
as a result of this action will resolve this issue.
691
D.I. 130, Ex. B (collecting JXs). Jay argues that the total reflected by Exhibit B has
been inflated by $2,633. D.I. 133 at 57 n.67. That payment was directed to Casey’s Fund,
Jay’s non-profit charitable organization. Jay contends that Paul has offered no evidence
that Casey’s Fund is a “sham,” impliedly arguing that the $2,633 should not be considered
for purposes of the duty of loyalty analysis. Id. This small dispute does not disturb the
larger conclusion that Jay breached his duty of loyalty. Further, Jay transferred the funds
to his own charity and has failed to demonstrate that transfer accords with this duty of
loyalty. He asserts no explanation as to why this transfer was for the benefit of the trusts
and its beneficiaries. See Stegemeier, 728 A.2d at 563. Accordingly, the transfer breached
Jay’s duty of loyalty, and without any justification for the transfer, his duty of care. See
Section II(A)(3), infra.
692
See generally JX 158, JX 159, 160, JX 161, JX 162, JX 163, JX 164.
115
benefit.693 And during this litigation, Jay continued to siphon off Deputy Trust
funds.694 All the while, Paul received nothing.
In addition to simply taking funds, Jay also executed a number of self-
interested transactions as Trustee of the Deputy Trust, which Jay has not shown to
be fair or approved by Paul. First, in 2010, Jay gave himself the option to purchase
the North Circle House, a Deputy Trust asset, for half of its alleged 2008 value. 695
“A trustee with power to sell trust property is under a duty not to sell to himself
either by private sale or at auction, whether the property has a market price or not,
and whether or not the trustee makes a profit thereby.” 696 “This principle was
established not only to prevent fraud in the management of the sale, but to the
broader object of relieving trustees from any possible conflict between duty and self-
interest.”697 Aside from the unfairness of the sale, the Court may consider that “the
trustee may have obtained important information regarding the value of the property
that he has kept to himself.”698
693
Jay even impermissibly transferred funds between the Trusts. See Jay Tr. 525:23–
526:23.
694
See generally JX 165, JX 166, JX 167, JX 168.
695
JX 99.
696
Stegemeier, 728 A.2d at 564 (quoting Restatement (Second) of Trusts § 170 cmt. b
(1959)).
697
Id. (internal quotation marks omitted) (Downs v. Rickards, 1872 WL 2123, at *8 (Del.
Ch. Jan. 1, 1872)).
698
Id.
116
Although Jay framed this transaction as an option, the same principles apply.
Jay knew that the option was a steal, having previously valued the home far above
the option price and knowing that its value would increase once the market bounced
back. He had an intimate knowledge of the property and its completed and
forthcoming improvements, but he failed to accurately reflect that in the option price.
And the terms of the option agreement are plainly self-interested. Under the
agreement, Jay gave himself the right to use the North Circle House as if he owned
it, as well as the right to be fully reimbursed by the Deputy Trust for renovations.
There is no evidence that Jay informed Paul of the option or extended the same terms
to Paul, or that Paul approved this transaction or Jay’s free use of the North Circle
House. As trustee, Jay breached his duty of loyalty by granting himself the 2010
option.
While Jay never exercised the option, he has used the home without paying
meaningful rent to the Deputy Trust. Since Lillian’s death, he used the property as
his “residence,” touting it as such as recently as 2017. But he only paid “rent” to the
Deputy Trust for one year.699 Paul has never used the North Circle House.
Further, Jay has enhanced the home for his own comfort using Deputy Trust
funds. While Paul was aware that Jay was dealing with the North Circle House while
“administering” the Deputy estate, there is no evidence that he consented to the use
699
See Jay Tr. 480:9–18.
117
of Deputy Trust funds to tailor the home to Jay’s taste, with the knowledge that his
brother would solely occupy and benefit from the property. Thus, to the extent the
funds were used for ordinary maintenance for the home, I find Jay did not breach his
duties. But to the extent Jay used Deputy Trust funds to renovate or otherwise
maintain the North Circle House for his own benefit, rather than to maintain it as a
Deputy Trust asset, those allocations were self-interested and a breach of Jay’s duty
of loyalty. To determine the approximate value of the self-interested improvements
to the Deputy home, I order an accounting.
Jay also breached his duty of loyalty when he used Deputy Trust funds to pay
himself a large commission for his efforts as executor of Lillian’s estate. Jay
calculated a commission of $18,126 in 2008, based on his estimated combined value
of Lillian’s estate and the Deputy Trust of $644,000. 700 He testified that, of that
calculated amount, he paid himself approximately $14,000 or $15,000. 701 The
Deputy Trust mandates that the trustee serve without compensation. 702 And Jay
swore in the Small Estate Affidavit that Lillian’s estate was worth less than
$30,000.703 Accordingly, no estate was actually opened. The commission, at
700
Jay Tr. at 477:2–479:2.
701
Jay Tr. at 477:2–479:2.
702
JX 39, Art. VII(2).
703
JX 72.
118
approximately half the upper limit of a qualifying small estate, was not reasonable.704
Even accepting Jay’s dubious explanation for the payment as true, Jay breached his
duty of loyalty by paying himself such a disproportionate commission for non-Trust
related tasks.
Finally, Jay breached his duty of loyalty when he forged forms to transfer the
AT&T stock out of the Deputy Trust and into his name individually. The fact that
those shares were “ear marked” for Jay does not bear on this analysis, aside from
evidencing that Jay would have held a motive to proceed with the forgery. At the
time of Lillian’s death, she had not executed the change forms necessary to transfer
the shares to Jay. Jay executed and forged the forms himself. Although Ameriprise
did not investigate the forgery and ultimately transferred the shares, the
preponderance of the evidence presented at trial demonstrates that Jay, in fact, forged
the documents. Thus, the AT&T shares would have remained Deputy Trust property
but for Jay’s forgery. Jay’s transfer of those shares from the Deputy Trust to himself
personally was an entirely self-interested manipulation of the Deputy Trust corpus,
to Paul’s detriment.
704
In re Estate of Link, 2011 WL 2084161, at *1 (Del. Ch. May 5, 2011) (“The
administrator of an estate is entitled to compensation for his services. 12 Del. C. § 2305
provides that commissions shall be allowed as provided by Rule of this Court. Rule 192
directs this Court in its review of the commission sought by a personal representative. That
Rule provides that the amount of any commission must be reasonable, and that this Court
may reduce a commission that it finds unreasonable.”)
119
In light of these transactions, Jay failed to administer the Trusts “solely in the
interest of the beneficia[ries].”705 Rather than “exclud[ing] all selfish interest and all
consideration of the interests of third persons,”706 Jay consciously, consistently, and
systematically administered the Trusts for his own personal gain. Jay’s behaviors
exemplify the reasons that, under our law, “self-dealing on the part of a trustee is
virtually prohibited.”707 And he has failed to justify his actions in the face of Paul’s
allegations. Accordingly, Paul is entitled to relief.
3. Jay Breached His Duty Of Care.
A trustee “must act as the reasonable and prudent person in managing the
trust.”708 Trustees must manage the assets under their care “with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use to attain
the purposes of the account.”709 “Not only must the trustee deal with trust property
with ordinary prudence but he is held to two additional standards: (1) since he is
dealing with the property of another for whom he is morally bound to provide, he
705
Paradee, 2010 WL 3959604, at *10 (quoting Walls, 1979 WL 26236, at *4; accord
Restatement (Third) of Trusts § 78.
706
Id. (quotation omitted).
707
Stegemeier, 728 A.2d at 563 (quotation omitted).
708
McNeil, 798 A.2d at 509.
709
12 Del. C. § 3302(a).
120
must avoid even those risks which he might take with his own property and (2) he
must take no risk which endangers the integrity of the trust corpus.” 710
Jay managed the One Flintlock and Deputy Trust assets with the primary
disloyal goal of appropriating them for himself. Jay committed a host of disloyal
acts that Paul also asserts breached Jay’s duty of care: a) adopting Jay’s
Amendments and revoking Paul’s interests through those impermissible and invalid
Amendments; b) failing to make distributions to Paul from both Trusts; c) paying
himself a commission for handling Lillian’s estate out of the Deputy Trust; d)
forging documents to transfer the AT&T stock out of the Deputy Trust; and e) using
the North Circle House for himself without paying rent, and granting himself an
option at below-market value.711
As explained, Jay’s OFT Amendment is invalid and Jay’s Deputy Trusts
Amendments are inauthentic and inadmissible. And as explained, these efforts to
change the terms of the trust for his own benefit constitute breaches of the duty of
loyalty. I need not reach whether these actions also breached the duty of care. It
seems to me that actions taken in frustration of the Trusts’ dispositive scheme are
710
DuPont v. Del. Tr. Co., 320 A.2d 694, 697 (Del. 1974).
711
Paul also contends that Jay breached his duty of care by allowing an annuity, which was
to pass to both brothers outright via a beneficiary designation, to escheat to the State of
Delaware. This annuity was never the property of either Trust, and so its management is
not governed by Jay’s fiduciary duties as a trustee. Paul eventually retrieved his share. I
do not reach Jay’s handling of this annuity.
121
not prudent. But the parties did not tackle this doctrinal issue, and I need not reach
it: I stop with my conclusions that Jay’s Amendments are ineffective and breached
his duty of loyalty.
The other misdeeds Paul identifies are breaches of the duty of care. The
commission was improper under the terms of the Deputy Trust and in view of the
size of Lillian’s estate that otherwise would have been subject to probate. The
administration of Lillian’s small estate was, by design, outside of the purpose of the
Deputy Trust. The commission was not based on any action taken to further the
administration of the Deputy Trust, which on its terms precluded a commission to
its trustee. And the $18,126 commission was wildly disproportionate to the work
involved in administering Lillian’s estate, which amounted to filing a small estate
affidavit. A prudent, objective trustee would not have paid that commission.
Second, in 2008 and 2009, Jay explained to Paul that it was prudent to
withhold distributions from both Trusts due to market conditions. But Jay made
distributions to himself during that time. If Jay’s reading of the market was accurate,
those distributions were not prudent in light of the circumstances.
Third, Jay’s handling of the North Circle House fell short of the care, skill,
prudence and diligence that a prudent person acting in a like capacity and familiar
with such matters would use to attain the purposes of the account. Jay as trustee
gave away an option to purchase the North Circle House for far below the market
122
price. Jay as trustee allowed the North Circle House to be used as a residence
without collecting meaningful rent,712 and he allowed the resident to decorate the
North Circle House to his liking at the Deputy Trust’s expense. Jay as trustee has
not taken meaningful measures to sell the North Circle House, having merely told
one local realtor he would sell it but to stop short of listing it. A prudent trustee
would have utilized or monetized the North Circle House for the benefit of both
Deputy Trust beneficiaries.713
As for the AT&T stock, the evidence shows that Lillian intended for that stock
to pass to Jay outright at the time of her death. But in order to effectuate that intent,
Jay engaged in forgery. That is not how a prudent trustee would have handled the
issue. Paul has proven that Jay has breached his duty of care.
B. Jay Has Been Unjustly Enriched By His Misconduct.
To prevail on an unjust enrichment claim, Paul must demonstrate by a
preponderance of the evidence (1) an enrichment, (2) an impoverishment, (3) a
relation between the enrichment and impoverishment, (4) the absence of
712
As stated, Jay paid “rent” of $500 per month during 2010 to use the North Circle House,
but otherwise used the property for many years without paying rent to the Deputy Trust.
713
Jay had experience renting properties for the benefit of the Deputy Trust. Shortly after
the market crash, Jay purchased three Florida properties at low prices: two in the name of
the Deputy Trust and one the name of the One Flintlock Trust. Despite the ravaged market,
he rented those properties and generated income for the Trusts, knowing that the properties
would be worth more once the market rebounded. Jay sold the properties and turned a
handsome profit for both Trusts.
123
justification, and (5) the absence of a remedy provided by law. 714 Paul has prevailed.
Jay used his position as trustee of both the One Flintlock and Deputy Trusts to
impermissibly oust Paul and take the lion’s share for himself. To effectuate this
scheme, Jay not only breached his duties to Paul, but also created a fraudulent paper
trail in an effort to support his version of the facts. A remedy at law is insufficient:
Paul is entitled to the equitable remedies of an inventory and accounting for both
Trusts, and to Jay’s removal as trustee.
Jay attacks the justification prong, claiming his actions properly flowed from
his revocation of Paul’s interest, which in turn was justified because Paul violated
the Amendments’ no-contest clauses. This argument fails because, as discussed at
length, Jay did not have the power to effect Jay’s September 2004 OFT Amendment,
and the differing copies of Jay’s Deputy Trust Amendment are unauthenticated and
inadmissible. Paul has shown that Jay lacked the power to revoke Paul’s interest in
the Trusts, and any benefit Jay received as a result of the purported revocations is
not justified. Further, Jay has failed to show his self-interested transactions
preceding the purported revocations were justified. Thus, Jay’s use of his trustee
powers of both trusts to his benefit and to the exclusion of his brother constitutes
unjust enrichment.
714
Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010).
124
Jay further argues that Paul’s unjust enrichment claim is duplicative of his
breach of fiduciary duty claim.715 But Delaware law does not preclude a plaintiff
from bringing two equitable claims involving overlapping facts. 716 And if a plaintiff
is able to prove the defendant breached his duty of loyalty, then the plaintiff will also
be successful in proving unjust enrichment.717 Paul has demonstrated that Jay
breached his fiduciary duty of loyalty in numerous ways. Accordingly, Paul prevails
on his unjust enrichment claim. Where the claims seek identical recovery, such as
disgorgement of distributions that Jay received from the Trusts, Paul will only be
entitled to one recovery. 718
C. The Doctrine of Laches Does Not Bar Paul’s Claims.
Jay contends that laches bars Paul’s claims. “The equitable doctrine of laches
prevents a plaintiff from exercising unreasonable delay in bringing an action when
that delay prejudices a defendant’s rights.”719 “[T]he laches inquiry is principally
whether it is inequitable to permit a claim to be enforced, the touchstone of which is
inexcusable delay leading to an adverse change in the condition or relations of the
715
D.I. 133 at 60.
716
See Dubroff v. Wren Hldgs., LLC, 2011 WL 5137175, at *11 & n.58 (Del. Ch. Oct.28,
2011); MCG Cap. Corp. v. Maginn, 2010 WL 1782271, at *25 n.147 (Del. Ch. May 5,
2010).
717
MCG Cap. Corp. v. Maginn, 2010 WL 1782271, at *25 n.147 (Del. Ch. May 5, 2010).
718
See Dubroff , 2011 WL 5137175, at *11 & n.58; MCG Cap. Corp., 2010 WL 1782271,
at *25 n.147.
719
Nationwide Mut. Ins. Co. v. Starr, 575 A.2d 1083, 1088 (Del. 1990).
125
property or the parties.”720 “A finding of laches generally requires the presence of
three factors: the claimant’s knowledge of the claim, unreasonable delay in bringing
the claim, and resulting prejudice to the defendant.” 721 “Laches bars an action in
equity” where these elements are met. 722 The party asserting the laches defense bears
the burden of proving each element.723 “[T]here are no hard and fast rules regarding
laches . . . .”724 “In determining whether an action is barred by laches, a court may
consider numerous factors including the plaintiff’s knowledge of his rights, the
reasons for the delay, and any change of position by the defendant.” 725
I denied the parties’ cross-motions for summary judgment so that the record
could be developed as to Jay’s laches defense.726 The parties’ legal positions remain
the same, with the added benefit of a developed record. The parties primarily dispute
720
Reid v. Spazio, 970 A.2d 176, 183. (Del. 2009).
721
Kraft v. WisdomTree Invs., Inc., 145 A.3d 969, 974 (Del. Ch. 2016).
722
Whittington v. Dragon Grp., L.L.C., 991 A.2d 1, 8 (Del. 2009).
723
Hudak v. Procek, 806 A.2d 140, 153 (Del. 2002) (“The doctrine of laches acts as a bar
to an action in equity if the defendant carries the burden of persuasion that two conditions
have been satisfied: (1) the plaintiff waited an unreasonable length of time before bringing
the suit and (2) the delay unfairly prejudices the defendant. What constitutes unreasonable
delay and prejudice are questions of fact that depend upon the totality of the
circumstances.”); see also James Julian, Inc. v. Dep’t of Transp. of State of Delaware, 1991
WL 224575, at *14 (Del. Ch. Oct. 29, 1991) (“To prevail on the defense of laches, the
defendants have the burden of proving that the plaintiffs delayed unreasonably in bringing
the action and that the unreasonable delay resulted in prejudice to the defendants.”).
724
Vichi v. Koninklijke Philips Elecs., N.V., 85 A.3d 725, 787–88 (Del. Ch. 2014).
725
Nationwide Mut. Ins. Co., 575 A.2d at 1088–89.
726
Deputy, 2019 WL 2452550, at *4.
126
the moment Paul had knowledge of his claims, balancing the red flags evident from
Jay’s service as trustee against Paul’s faith in Jay and Jay’s occasional pacifying
statements.
“[A]ctual or constructive knowledge of the claim” can trigger laches’
knowledge requirement. 727
Actual knowledge is defined as direct and clear knowledge.
Constructive knowledge is defined as knowledge that one using
reasonable care or diligence should have, and therefore that is attributed
by law to a given person. A party is also chargeable with such
knowledge of a claim as he or she might have obtained upon inquiry
. . . . Inquiry notice does not require full knowledge of the material facts;
rather, plaintiffs are on inquiry notice when they have sufficient
knowledge to raise their suspicions to the point where persons of
ordinary intelligence and prudence would commence an investigation
that, if pursued would lead to the discovery of the injury.728
As a result, “laches will foreclose recovery if a plaintiff failed to act when it would
have been reasonable for [him] to inquire into the situation, and further inquiry
would have uncovered the claim,”729 assuming the other elements of the defense are
met.
727
All Pro Maids, Inc. v. Layton, 2004 WL 1878784, at *8 (Del. Ch. Aug. 9, 2004), aff’d,
880 A.2d 1047 (Del. 2005).
728
In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *49 (Del. Ch. Feb.
12, 2018) (quotations omitted), aff’d in part, rev’d in part on other grounds sub nom.
Oxbow Carbon & Minerals Hldgs., Inc. v. Crestview-Oxbow Acq., LLC, 202 A.3d 482
(Del. 2019).
729
In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *49 (quoting
Whittington, 991 A.2d at 9); accord Deutsche Bank Nat. Tr. Co. v. Goldfeder, 2014 WL
644442, at *2 (Del. 2014) (TABLE).
127
1. Paul Had Knowledge Of His Deputy Trust
Claims In 2008 And His One Flintlock Trust
Claims in 2011.
Jay’s handling of Agnes’ estate gives important context to the information
Paul received about the Deputy Trust and One Flintlock Trust. Paul stood by Lillian
as she confronted and eventually sued Jay for taking Lillian’s share of Agnes’ estate.
Even after Jay and Lillian arrived at a détente in July 2005, Paul remained skeptical
about both Agnes’ estate and the One Flintlock Trust.730
Paul’s skepticism carried over to Jay’s handling of the Deputy Trust in the
days after it was executed, when Jay first wielded his power as Lillian’s newly
appointed attorney-in-fact in March 2008. Jay’s new role was a surprise to Paul, as
Lillian had told him she did not have a power of attorney. Paul arrived at the
reasonable conclusion that Lillian had appointed him for short-term service
surrounding her hospitalization.
Paul suspected Jay’s wrongdoing with regard to the Deputy Trust in the days
after Lillian’s death. When Fairchild told Paul of the changes to Lillian’s estate plan,
Paul (like Fairchild) immediately concluded they were against her longstanding wish
to distribute everything to Jay and Paul equally and outright. Paul said he would
730
See JX 58 at 4 (entry dated 7/28/2005 at 9:04 AM) (“Ralph not convinced yet that Jay
is genuine.”).
128
consider contesting the estate, but ultimately decided to hold off on making a
decision until after the funeral.
After the funeral, Paul began to inquire about Jay’s behavior with respect to
the Deputy Trust. He had “sufficient knowledge to raise [his] suspicions to the point
where [he] commence[d] an investigation.” 731 Paul was concerned enough that, on
March 7, 2008, he hired Deakyne to review the available Deputy Trust documents.
Deakyne also investigated the forged AT&T documents, resulting in the March 2008
Letter. That letter explicitly questions the validity of the Deputy DPA. Even though
Paul did not have “direct and clear” knowledge of his claims at that time, he knew
enough to consider the possibility that Jay was breaching his duties.732
Paul’s suspicions solidified upon receipt of the November 2008 Letter, and
Paul retained counsel yet again. Paul’s counsel sent the December 8, 2008 Letter,
telling Jay that “it is clear from your letter that you do not have a firm grasp of your
responsibilities as Executor and Trustee,” and informed Jay that if he continued that
course of action, Paul would be compelled to file suit. In response, by the December
12, 2008 Letter, Jay informed Paul his beneficiary status in the Deputy Trust would
be revoked if he failed to respond within five days.
731
In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *49.
732
See id.
129
Thus, in December 2008, Paul had direct knowledge of Jay’s intention to
revoke him as a beneficiary of the Deputy Trust. Paul did not respond to the
December 12, 2008 Letter because he believed it was an empty threat. Even
believing Jay did not have revocation power, a reasonable person still would have
investigated. And Paul still believed a lawsuit was necessary: Paul waited not
because he thought Jay was fulfilling his fiduciary duties, but because Paul “ha[d] a
restaurant . . . so [he] couldn’t give [his] time to [this dispute] until [he] finally got
[himself] together with the restaurant.”733 On these facts, I find that Paul had inquiry
notice of his Deputy Trust claims as early as March 2008 and likely had actual
knowledge of his claims as early as December 2008.
The parties dispute what effect, if any, Jay’s treatment of Paul as a beneficiary
from 2009 through at least 2011 has on this analysis. During that period, Jay
continued to give Paul only partial updates about the Deputy Trust. Paul received
no distributions or statements. Thus, though Jay was calling Paul a beneficiary in
an effort to dodge Paul’s questions and concerns, he was not treating Paul as a
beneficiary. While Jay’s half-measures may have reinforced Paul’s belief that Jay
did not have revocation powers, they were in fact further evidence of Jay’s failure
733
Paul Dep. 25:12–18; see also Paul Tr. 5:1–2; JX 97 at RDEPUTY_000007 (“[T]he
restaurant is taking a lot of time these days.”).
130
as a fiduciary. And the fact remains that Paul began inquiring about Jay’s suspicious
behavior, and even threatened to take action, before this period.
Jay’s lip service did not eliminate Paul’s concerns. In 2013, Paul explained,
“I need to know what’s going on with my mom’s trust because I have no idea what
is going on.”734 Paul sought the assistance of counsel, yet again, to collect and
review the Deputy Trust documents and send the August 2014 Letter, threatening
suit if Jay did not cooperate. Even accepting Paul’s argument that the accumulation
of these red flags did not give him “direct and clear knowledge” of his claims until
2014, Paul possessed “sufficient knowledge to raise [his] suspicions to the point
where persons of ordinary intelligence and prudence would commence an
investigation”735 starting in the days after Lillian’s death in March 2008.
Paul’s growing understanding of Jay’s misdeeds regarding the Deputy Trust
should have colored his evaluation of Jay’s handling of the One Flintlock Trust. In
2008, when Paul first suspected wrongdoing in connection with the Deputy Trust,
Paul was receiving regular One Flintlock Trust distributions and statements. In the
November 2008 Letter, Jay informed Paul that he had “already compromised and
jeopardized potentially [his] beneficiary status in the One Flintlock Trust.” Paul
734
Paul Tr. 25:6–10.
735
In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *49.
131
testified that he did not inquire about Jay’s statement because Paul was receiving the
distributions and statements he expected as a beneficiary.
But on December 8, 2008, Paul’s counsel threatened Jay with suit regarding
the Deputy Trust due to his failures as executor and trustee. Jay responded by setting
a deadline for revocation of Paul’s interest in the Deputy Trust. In this context, it
was not reasonable for Paul to overlook Jay’s posturing with regard to the One
Flintlock Trust and conclude Jay was fulfilling his fiduciary duties.
Throughout 2009, Paul inquired about K-1 statements for the One Flintlock
Trust. He continued receiving monthly One Flintlock Trust distributions and
statements until December 2009, when Jay convinced Paul that it was best to stop
distributions until the market rebounded. Paul also stopped receiving One Flintlock
Trust statements. “[Paul] figured the stock market’s going to be crashing for a long
time,” so he did not inquire as to whether and when distributions would resume. 736
He did not press Jay for information despite the fact that he stopped receiving trust
statements: “we didn’t have distributions, I didn’t get a statement.” 737
Paul waited until 2011 to ask Jay again about the One Flintlock Trust. Jay
advised that the market still had not recovered and so distributions and statements
could not resume. Paul did not question this, despite his constant reservations about
736
Paul Tr. 20:18–19.
737
Paul Tr. 21:2–3.
132
his brother’s behavior. And although Paul casually tracked the market on his own,
he did not try to verify Jay’s claims.
I conclude Paul had inquiry notice of his One Flintlock Trust claims in 2011.
“Inquiry notice does not require full knowledge of the material facts.”738 At that
juncture, a reasonable person would have inquired further into why Jay had been
withholding both distributions and statements for years. If Paul had inquired further,
he would have discovered that Jay had been transferring money out of the One
Flintlock Trust, but not to Paul,739 and that Jay had “informally” revoked Paul’s
beneficiary status in 2009, therefore discovering his claim. Further, by this time,
Paul had knowledge of both how Jay had handled Agnes’s estate and Paul’s Deputy
Trust claims, which should have informed his view of how Jay was handling the One
Flintlock Trust.
Even after Paul had inquiry notice of his One Flintlock Trust claims in 2011,
nearly two more years passed without receiving One Flintlock Trust distributions or
statements. Paul continued to ignore these warning signs, stating in early 2013 that
he had “no problem with Aunt Gene’s trust because I know what’s going on.”740 But
shortly thereafter, on April 21, 2013, Paul obtained actual notice of his One Flintlock
738
In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *49.
739
See, e.g., JX 107 at WF_007149.
740
Paul Tr. 25:6–10.
133
Trust claims when Jay unequivocally informed Paul that his beneficiary status in the
One Flintlock Trust had been revoked “effective immediately.” 741 Then, on October
3, 2014, in response to yet another threat from Paul’s counsel, Jay issued the October
2014 Letter that addressed revocation from both the One Flintlock and Deputy
Trusts. Even if Paul believed this to be an empty threat, he had direct and clear
knowledge, or actual notice, of his claims for both Trusts at that time.
2. Paul Unreasonably Delayed In Bringing His
Claims.
Paul unreasonably delayed in bringing this action. “An ‘unreasonable delay’
for purposes of laches can range from one month to many years. The length of the
delay is less important than the reasons for it.” 742 “While this Court will consider
the analogous statute of limitations, such limitations applicable in a court of law do
not control a court sitting in equity; a court of equity may also consider concerns of
conscience, good faith, and reasonable diligence.” 743 Thus, “the element of
741
JX 118 at RDEPUTY_000099. According to Jay, “[b]eneficiary revocation for the One
Flintlock Trust occurred formally on 21 April 2013 (and informally occurred on 9 April
2009 after a challenge to an agreed upon investment policy change).” JX 123 at
JDEPUTY_00347.
742
Stew. v. Wilm. Tr. SP Servs., Inc., 112 A.3d 271, 295 (Del. Ch.), aff’d, 126 A.3d 1115
(Del. 2015) (internal quotation marks omitted) (quoting IAC/InterActiveCorp v. O’Brien,
26 A.3d 174, 177 (Del. 2011)).
743
Houseman v. Sagerman, 2015 WL 7307323, at *8 (Del. Ch. Nov. 19, 2015).
134
unreasonable delay involves consideration of whether the plaintiff acted with the
degree of diligence that fairness and justice require.”744
Nonetheless, where parties bring equitable claims seeking equitable relief, this
Court is not strictly bound by statutes of limitation, but will “give the analogous
limitations period great weight in deciding whether the claims are barred by
laches.”745 The parties agree that Paul’s claims are entirely equitable in nature. As
a result, laches applies and the Court looks to the relevant statutes of limitation with
great, but not presumptive, weight.746 The parties do not dispute that 10 Del. C. §
8106’s three-year statute of limitations applies to the breach of fiduciary duty claims
at issue here.747 Likewise, the three-year statute of limitations applies to Paul’s
unjust enrichment claim. 748 Accordingly, I look to the three-year statute of
744
Id.
745
Kraft, 145 A.3d at 978 (quoting Whittington, 991 A.2d at 9 (“Where the plaintiff seeks
equitable relief, however, the Court of Chancery applies the statute of limitations by
analogy. Absent a tolling of the limitations period, a party’s failure to file within the
analogous period of limitations will be given great weight in deciding whether the claims
are barred by laches.”)).
746
Id.; Whittington, 991 A.2d at 9.
747
D.I. 130 at 48; D.I. 133 at 12. See Tilden v. Cunningham, 2018 WL 5307706, at *14
(Del. Ch. Oct. 26, 2018) (“Under 10 Del. C. § 8106, a three-year limitations period applies
to claims sounding in breach of fiduciary duty.” (citing In re Tyson Foods, Inc. Consol.
S’holder Litig., 919 A.2d 563, 584 (Del. Ch. 2007)).
748
See, e.g., Vichi, 62 A.3d at 42. The parties briefly dispute what analogous statute of
limitations I should consider for Paul’s unjust enrichment claim. Jay contends that Paul’s
unjust enrichment claim is also subject to the three-year statute of limitations. While Paul
concedes that the three-year statute of limitations generally applies to an unjust enrichment
claim, Paul pushes further, arguing two alternative positions. First, Paul contends that 12
Del. C. § 3585 grants a beneficiary five years to sue for breach of trust, and that because
135
limitations when determining whether Paul unreasonably delayed in bringing his
claims against Jay.749
The statute of limitations “begins to run upon accrual of the claim,” 750 or “as
soon as the wrongful act occurs.”751 The analogous limitations period for the claims
in this case began when Paul had at least inquiry notice of his claims. 752 For the
Deputy Trust claims, the analogous period began in 2008, and for the One Flintlock
Trust claims, the analogous period began in 2011. Paul initiated this action in 2015,
his “claims involve a breach of trust . . . a five-year statute of limitations is more analogous
to [his] unjust enrichment claim.” D.I. 130 at 53. Paul cites no authority for this position,
and I do not adopt it here. Second, Paul argues that Jay executed the Deputy Trust and
September 2004 OFT Amendments under seal, and, therefore, his unjust enrichment claim
is subject to the twenty-year statute of limitations under Whittington v. Dragon Group
L.L.C., 991 A.2d at 11. See D.I. 130 at 53. Because Jay’s Amendments are inadmissible,
that argument bears no weight here.
749
The parties also quarrel over whether the limitations period for any of Paul’s claims
were tolled under the doctrines of fraudulent concealment and equitable tolling. The record
supports that Jay acted in secret, as explained in analyzing his breaches of the duty to
inform. And while Paul may have genuinely relied on Jay’s explanations and half-truths,
Paul also selectively ignored a litany of warning signs. See Tilden, 2018 WL 5307706, at
*14 (“While our courts will toll the limitation period under certain circumstances, “[m]ere
ignorance of the facts by a plaintiff, where there has been no ... concealment, is no obstacle
to operation of the statute [of limitations.]” (alternation in original) (footnotes omitted)
(quoting In re Dean Witter P’ship Litig., 1998 WL 442456, at *5 (Del. Ch. July 17, 1998)).
At bottom, I need not reach those doctrines because, as discussed below, Jay’s laches
defense fails because he failed to demonstrate prejudice.
750
Tilden, 2018 WL 5307706, at *14.
751
Id. (quoting Albert v. Alex. Brown Mgmt. Servs., Inc., 2005 WL 1594085, at *18 (Del.
Ch. July 29, 2005)).
752
See, e.g., Whittington, 2008 WL 4419075, at *6 (“[T]he statute of limitations will not
run until the plaintiff is on inquiry notice of her claims.”); In re Tyson Foods, Inc., 919
A.2d at 594 (finding that analogous statute of limitations period began to run when
plaintiffs were on inquiry notice of their claims).
136
after the analogous limitations period had run for both the One Flintlock Trust and
Deputy Trust claims. While Paul’s claims are not presumptively barred by the
limitations period, I give the three-year statute of limitations great weight in my
analysis. Paul’s failure to bring his claims within the analogous limitations period
supports a finding of unreasonable delay.
In addition to the analogous statute of limitations, I also consider concerns of
conscience, good faith, and reasonable diligence.753 While Jay’s indiscretions are
extraordinary, they afford Paul little latitude, as Paul was aware of Jay’s character
and his specific misdeeds.754 Jay’s occasional reassurances did not sufficiently
precipitate Paul’s delay to excuse it. On more than one occasion, Paul failed to act
with reasonable diligence in pursuing his claims; the egregiousness and obviousness
of Jay’s deception reinforce this conclusion. Paul repeatedly testified that the he
relied on Jay’s representations.
Paul considered pursuing his claims multiple times, but consciously
abandoned that course of action, deciding to focus on his restaurant instead. As early
753
Houseman, 2015 WL 7307323, at *8.
754
Reid, 970 A.2d at 183 (“Under ordinary circumstances, a suit in equity will not be stayed
for laches before, and will be stayed after, the time fixed by the analogous statute of
limitations at law; but, if unusual conditions or extraordinary circumstances make it
inequitable to allow the prosecution of a suit after a briefer, or to forbid its maintenance
after a longer period than that fixed by the statute, the [court] will not be bound by the
statute, but will determine the extraordinary case in accordance with the equities which
condition it.” (alteration in original) (quotation omitted)).
137
as 2005, Paul was skeptical of Jay’s motives, and by 2008, Paul knew that he needed
to begin protecting his interests. By 2011, Paul had sufficient knowledge of Jay’s
indiscretions to justify mounting a claim. But he chose not to do so. Considering
the reasons for his delay and the analogous limitations period, I find that Paul
unreasonably delayed in bringing his claims.
3. Jay Has Failed To Demonstrate That He Has
Been Prejudiced By Paul’s Delay.
Jay has not demonstrated that that he has been prejudiced by Paul’s
unreasonable delay. “[L]aches may not bar an action that would be untimely in terms
of the analogous statute of limitations if, in terms of equity, the plaintiff’s delay has
caused no prejudice to the defendant . . . .”755 The party asserting the laches defense
bears the burden of demonstrating he has been prejudiced by petitioner’s delay. 756
“Prejudice can be either procedural, such as when a party is unable to call a crucial
witness due to the delay and the witness has since become unavailable, or
substantive, such as when a party relies to his detriment on the plaintiff’s failure to
file a claim in a timely manner.” 757 Substantive prejudice may occur where the delay
caused another to incur expense, to enter into obligations, or suffer some other
755
O’Brien, 2009 WL 2490845, at *8.
756
See, e.g., Sussex Cty. v. Berzins Enters., Inc., 2017 WL 4083131, at *4 (Del. Ch. Sept.
15, 2017), aff’d, 197 A.3d 1050 (Del. 2018).
757
In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *50 (quoting Meer v.
Aharoni, 2010 WL 2573767, at *8 (Del. Ch. June 28, 2010)).
138
detrimental change of position.758 “Some change in position to the disadvantage of
another is essential.”759 Where the respondent is “able to point to nothing else in the
way of prejudice,” the laches defense must fail. 760 This is true even if the petitioner
has delayed nearly twenty years in bringing the action. 761
Jay contends Paul’s failure to diligently pursue his claims resulted in both
procedural and substantive prejudice. First, Jay contends that Mary Swanson was
unavailable to testify because she passed away before Paul sued. Swanson was
Lillian’s close friend for many years, and Jay contends she witnessed his signature
on JX 46, a purported copy of Jay’s Deputy Trust Amendment, as well as JX 112,
the “transcripts” of Lillian’s purported conversations with Jay. Unable to point to
any other specific sources of procedural prejudice, Jay generally contends that “[t]he
758
See also In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *50 (“A
defendant may be substantively prejudiced where the plaintiff ‘sit[s] by inactive and in
what amounts to silence . . .until affairs had become so complicated that a restoration of
former status was difficult, if not impossible.’” (quoting Fed. United Corp. v. Havender,
11 A.2d 331, 344 (1940)).
759
Bovay v. H.M. Byllesby & Co., 22 A.2d 138, 142 (1941). The respondent must prove
that petitioner’s delay lead to “an adverse change in the condition or relations of the
property or the parties.” Houseman, 2015 WL 7307323, at *9 (quoting Reid, 970 A.2d at
183).
760
Berzins Enters., Inc., 2017 WL 4083131, at *4.
761
See Prudential Ins. Co. of Am. v. Deane, 27 A.2d 365, 368 (1942) (“No prejudice to
respondents from the delay of twenty years, nor change of situation during neglectful
repose have been demonstrated. Complainant is willing that the insured should have all for
which he bargained and paid. In consequence, the defense of laches must fail.” (quotation
omitted)).
139
availability of witnesses and evidence does not necessarily alleviate prejudice since
‘such evidence may now be stale’ and memories fade.”762 Jay has failed to suggest
any procedural prejudice.
The Delaware Supreme Court has stated that the doctrine of laches is founded
on “the difficulty of doing entire justice, when the original transactions have become
obscure by time, and the evidence may be lost, or depends on the precarious memory
of witnesses.”763 No such difficulty is present here. As explained above, the
documents Mary Swanson purportedly witnessed have been excluded as
inadmissible because Jay has failed to show they are authentic. Her name is
misspelled on JX 46, and Jay’s testimony about the circumstances under which she
purportedly witnessed JX 46 and JX 112 is suspicious and contradicted by more
credible testimony. Jay produced two other copies of the Deputy Trust Amendment
that were not witnessed by “M. Swason”; both of those are also unauthenticated and
inadmissible. Mary Swanson’s absence is not the reason Jay has failed to introduce
an authentic copy of the Deputy Trust Amendment. And the circumstances
surrounding JX 112 are so far-fetched that I cannot conceive of Mary testifying that
she actually witnessed those “transcripts.”
762
D.I. 133 at 30 (quoting Houseman, 2015 WL 7307323, at *10, and then citing Chaplake
Hldgs., LTD. v. Chrysler Corp., 766 A.2d 1, 6 (Del. 2001)).
763
Hudak, 806 A.2d at 159.
140
Mary Swanson is not a “crucial” trial witness: she never witnessed those
documents. Furthermore, in light of my belief that Jay created JX 46 and JX 112,
among other documents, recently in view of this litigation, it is possible that Jay
chose Mary Swanson as his fictional witness for his paper trail because she died in
2013 or 2014.764 This matter does not depend on Mary Swanson’s memory, and
even it had, the length of Paul’s delay was not so extensive as to be the sole cause of
Mary Swanson’s unavailability. 765 Jay’s more general concerns about faded
memories and stale evidence are also unpersuasive, as Jay’s testimony and
documents are foundationally incredible. If anything, the passage of time has
allowed Jay to create more documents and fine-tune his story.
Jay has also failed to demonstrate that he has been substantively prejudiced
by Paul’s delay. Jay contends that after he revoked Paul’s interests in the Trusts,
“he administered the trust accordingly,”766 and that, if both Paul and he were
beneficiaries, he would have proceeded differently. Jay argues that Paul “sat silent
from 2008-2015, which makes it difficult if not impossible to return to the trust and
[Paul] to their 2008 positions because he has not been a beneficiary since 2008.”767
764
See Jay Tr. 401:2–6.
765
Hudak, 806 A.2d at 159–61 (collecting cases in which the delaying party waited far
more than three to five years to bring his claim, therefore supporting a finding that
unavailability was “attributable exclusively” to the plaintiff’s delay).
766
D.I. 133 at 30.
767
Id. at 31.
141
He therefore believes he will be substantively prejudiced “if required to provide
[Paul] with what he would have received if he remained a beneficiary after he
slumbered on his rights for over 5 years.”768
“A defendant may be substantively prejudiced where the plaintiff ‘sit[s] by
inactive and in what amounts to silence . . . until affairs had become so complicated
that a restoration of former status was difficult, if not impossible.’”769 But prejudice
does not exist where the respondent “could not reasonably have been unaware of the
possibility of future claims against them arising out of their dealings” with the
petitioner.770 Jay was well aware of his wrongdoing, and Paul made it clear as early
as 2008 that he might bring claims against Jay.771 The fact that Paul waited to follow
through satisfies the first two prongs of the laches analysis, but it did not prejudice
Jay.772
At bottom, Jay asks the Court to excuse his years of wrongdoing because it
went on for so long. Jay contends that if Paul filed this action sooner, Jay would
have taken less money. As an initial matter, even after Paul filed this action, Jay
768
Id.
769
In re Oxbow Carbon LLC Unitholder Litig., 2018 WL 818760, at *50 (quoting
Havender, 11 A.2d 331 at 344).
770
Stewart, 112 A.3d at 296.
771
See id.
772
Deane, 27 A.2d at 368.
142
misappropriated enormous sums from the One Flintlock and Deputy Trusts; he
presumably would have done the same if Paul had filed sooner.773 And, more
fundamentally, Jay complains it will be harder to right his wrongs because he
committed more wrongs as time went on. That is justice, not prejudice.
Because Jay has failed to show that he has suffered an “essential” 774
disadvantage from Paul’s delay and is “able to point to nothing else in the way of
prejudice,” his laches defense must fail.775
D. Jay Is Removed As Trustee And Paul Is Appointed Trustee;
Jay’s Self-Interested Transactions Are Voidable; And Jay Shall
Provide Inventories, Accountings, And Other Information.
Jay has breached his duties of care, of loyalty, and to inform. He has done so
through fifteen years of obfuscation, deceit, and forgery. He obtained control over
the assets that his aunt and mother desired to leave to others in his family, and he
systematically created extensive schemes to justify appropriating those assets for
773
See D.I. 130, Ex. A; D.I. 130, Ex. B (quantifying from the various JXs the total amount
Jay withdrew from the Trusts from 2013 through 2018). Between 2013 and 2018, Jay
siphoned off roughly $133,613.95 from the One Flintlock Trust, with his largest
withdrawal of $87,392.13 occurring in 2018. See D.I. 130, Ex. A (citing JX 169, JX 170,
JX 171, JX 172, JX 173, JX 174). Between 2008 and 2018, Jay siphoned off roughly
$224,023.69 from the Deputy Trust, with his largest withdrawal of $77,568.24 occurring
in 2013, and his withdrawals ranging from roughly $8,000 to over $12,000 occurring
between 2015 and 2018. See D.I. 130, Ex. B (citing JX 158, JX 159, JX 160, JX 161, JX
162, JX 162, JX 164, JX 165, JX 166, JX 167, JX 168). The ultimate amount of Jay’s
wrongful distributions and withdrawals will later be determined through a Court-ordered
accounting.
774
Bovay, 22 A.2d at 142 (1941).
775
Berzins Enters., Inc., 2017 WL 4083131, at *4.
143
himself. He did so as his brother relied on him as fiduciary and as the more
knowledgeable of the two. Paul is entitled to relief.
“The Court of Chancery has exercised its power for the removal of trustees
appointed by will or deed very sparingly. The principle maintained is, that there must
be a clear necessity for its interference, in order to secure the trust fund against loss
or misapplication.”776 Such interference is necessary here. Even while this litigation
has been pending, Jay has continued to loot the Trusts. At trial, Jay showed no
potential for remorse or reflection; my impression was that he anticipated that he
would also deceive the Court. Jay is removed as trustee effective immediately, and
he is replaced with Paul.
Paul is also entitled to an inventory and an accounting of both Trusts under
Jay’s tenure as trustee.
As fiduciaries, trustees have a duty to account to beneficiaries for their
disposition of trust assets and bear the burden of proving that a
disposition was proper. Included within the duty to account is a duty to
maintain records that will discharge the fiduciaries’ burden, and that if
that duty is not observed, every presumption will be made against the
fiduciaries.777
Jay shall file the inventories and accountings within ninety days and shall provide
Paul with copies of all supporting documentation.
776
Massey v. Stout, 1871 WL 2090, at *4 (Del. Ch. Sept. 1, 1871).
777
Hardy, 2014 WL 3736331, at *12 (internal quotations and alterations omitted).
144
Jay’s numerous self-interested transactions are voidable at Paul’s behest.778
“[A] court will uphold such a transaction against a beneficiary challenge only if the
trustee can show that the transaction was fair and that the beneficiaries consented to
the transaction after receiving full disclosure of its terms.”779 In particular, the rights
Jay granted himself with regard to the North Circle House, namely the option, right
of residence, and right to use Deputy Trust funds to furnish it to his liking, are self-
interested, and Jay has not shown they are fair or that Paul knowingly consented.
This transaction may be readily unwound, and so it is voidable. 780 I conclude this
transaction cannot be upheld.
Paul, as trustee of the Deputy Trust, may grant Jay such rights of residence in
the North Circle House as may be appropriate and equitable. He may take measures
to secure the North Circle House, including by changing the locks. Its furnishings
are presumed to be trust property subject to an accounting; Jay shall not remove them
from the premises until that presumption is addressed.
Jay’s self-interested payment of his commission, and all self-interested
payments from Paul’s interest that he made under the guise of having revoked Paul’s
interest, are also voidable. After reviewing the inventories and accountings, Paul is
778
Stegemeier, 728 A.2d at 563.
779
Id.
780
See id. at 565.
145
invited to quantify his requested relief for unjust enrichment, income payments
under the Trusts, and disgorgement or voiding of Jay’s self-interested payments.781
Jay is invited to respond.
Finally, Jay’s transfer of the AT&T stock from the Deputy Trust to Jay is
voidable. Paul shall also submit the specific relief he seeks with regard to this stock,
and Jay is invited to respond.
As a consequence of Jay’s extensive and meaningful breaches of his duty to
inform, Paul has requested and shall receive additional equitable relief. Within thirty
days, Jay shall identify any other trust that, to Jay’s knowledge, ever existed or
purported to exist relating to Lillian K. Deputy or Georgene E. Castor and for which
Jay was ever trustee or co-trustee, and for which Paul was ever a beneficiary. He
shall also provide copies of all such trust agreements. Within ninety days, Jay shall
provide an inventory and accounting of all such trusts.
E. Paul Is Entitled To Reasonable Attorneys’ Fees; Jay Is Not.
Delaware courts generally follow the American Rule, which holds litigants
responsible for their own costs and fees.782 “Under the American Rule and Delaware
781
E.g., PTO ¶¶ 150, 151 (seeking income payments owed under the One Flintlock and
Deputy Trusts); id. ¶ 153 (seeking an order requiring Jay to “bear all attendant losses
incurred by the Trusts); id. ¶ 155 (requesting disgorgement of all improper Trust
distributions).
782
See, e.g., Tandycrafts, Inc. v. Initio P’rs, 562 A.2d 1162, 1164 (Del. 1989).
146
law, litigants are normally responsible for paying their own litigation costs.” 783 The
Court recognizes an exception to this rule where a party has acted in bad faith.
The party invoking the bad faith exception bears the stringent
evidentiary burden of producing clear evidence of bad-faith conduct by
the opposing party. The standard is arduous: situations in which a party
acted vexatiously, wantonly, or for oppressive reasons.784
“Delaware courts have previously awarded attorneys’ fees where (for example)
parties have unnecessarily prolonged or delayed litigation, falsified records or
knowingly asserted frivolous claims.”785 “Ultimately, the bad faith exception is
applied in extraordinary circumstances primarily to deter abusive litigation and
protect the integrity of the judicial process.”786 A lesser breach of fiduciary duty
alone will not merit departing from the American Rule. 787
Further, in a judicial proceeding involving a trust, “the court, as justice and
equity may require, may award costs and expenses, including reasonable attorney’s
fees, to any party, to be paid by another party or from the trust that is the subject of
783
Mahani v. Edix Media Gp., Inc., 935 A.2d 242, 245 (Del. 2007).
784
Marra v. Brandywine Sch. Dist., 2012 WL 4847083, at *4 (Del. Ch. Sept. 28, 2012)
(quotations omitted); see also Estate of Carpenter v. Dinneen, 2008 WL 859309, at *17
(Del.Ch. Mar.6, 2008) (“The American Rule recognizes an exception ‘where the pre-
litigation conduct of the losing party was so egregious as to justify an award of attorneys’
fees as an element of damages.’”); see Arbitrium (Cayman Is.) Handels AG v. Johnston,
705 A.2d 225, 231 (Del.Ch.1997), aff’d, 720 A.2d 542 (Del.1998).
785
Montgomery Cellular Hldg. Co. v. Dobler, 880 A.2d 206, 227 (Del. 2005) (internal
quotation marks omitted) (quoting Johnston, 720 A.2d at 546).
786
Nichols v. Chrysler Gp., LLC, 2010 WL 5549048, at * 3 (Del. Ch. Dec. 29, 2010).
787
See HMG/Courtland Props., Inc. v. Gray, 749 A.2d 94, 124-25 (Del. Ch. 1999).
147
the controversy.”788 “Whether to award attorneys’ fees falls within the discretion of
this Court.”789
Justice and equity require that Jay personally pay Paul’s fees in this case.
Jay’s behavior falls well within the ambit of the bad faith exception to the American
Rule. Jay has falsified a number of records to use for his advantage in this litigation,
and has continued to siphon off Trust funds while this matter remained pending. As
a result, Jay has almost entirely depleted the One Flintlock and Deputy Trusts. In
this case, a fee award is necessary to deter Jay’s abusive litigation tactics and protect
the integrity of the judicial process.790 And because of the extent of Jay’s abuse and
of Paul’s financial detriment, Jay is required to bear Paul’s costs personally.
Based on the foregoing, Jay is not entitled to fees.
III. CONCLUSION
For the foregoing reasons, judgment is entered in Paul’s favor on all counts.
Jay is removed as trustee of the One Flintlock Trust and the Deputy Trust, and Paul
is appointed trustee effective immediately; Jay shall provide an inventory and
accounting of both trusts, and supporting documentation, within ninety days; and
Paul and Jay shall work towards quantifying what Jay has taken from Paul. Jay shall
788
12 Del. C. § 3584.
789
Paradee, 2010 WL 3959604, at *15 (citing McNeil, 798 A.2d at 514).
790
Nichols, 2010 WL 5549048, at * 3.
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pay Paul’s attorneys’ fees and bear his own. The parties shall submit a stipulated
implementing order within twenty days.
149