In re George Parsons 1907 Trust

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2017 ME 188Docket: Cum-15-272
Argued: March 1, 2016
Decided: September 5, 2017
Revised: December 7, 2017
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
Majority: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, and HUMPHREY, JJ.
Dissent: HJELM and JABAR, JJ.
IN RE GEORGE PARSONS 1907 TRUST
SAUFLEY, C.J.
[¶1] Thomas Maxwell appeals from a summary judgment entered by
the Cumberland County Probate Court (Mazziotti, J.) in favor of David
Gourevitch, a qualified beneficiary of the George Parsons 1907 Trust, on his
complaint for a declaratory judgment that Maxwell is not a beneficiary of the
Trust. Because we agree with Maxwell that the undisputed facts establish that
Gourevitch’s claim was barred by the statute of limitations, we vacate the
judgment.
I. BACKGROUND
[¶2] The summary judgment record contains the following facts, which
are not in dispute. See Harlor v. Amica Mut. Ins. Co., 2016 ME 161, ¶ 7,
150 A.3d 793. On November 1, 1907, George Parsons executed an indenture
creating the George Parsons 1907 Trust. Parsons died on December 4, 1907,
2
without having amended or revoked the Trust. The Trust provides that it will
terminate twenty-one years after the death of the last member of a group of
named individuals. The last person in that group died in 2002. Thus, the
Trust will terminate in 2023.
[¶3] The dispute in this case has its genesis in the death of a descendant
of George Parsons—Philippa Wistrand—in May 1990, raising the question as
to who was to receive her share of the Trust distributions. Philippa was a
beneficiary of the Trust and was the unmarried, biological mother of Thomas
Maxwell, who was born in 1963 and was adopted by Philippa’s sister, Sylvie
Maxwell.1 Sylvie was also a descendant of George Parsons and a beneficiary of
the Trust in the same branch of the family tree. Pursuant to the applicable
portion of paragraph 5 of the Trust, Philippa’s share of the Trust income was
to be paid to her surviving “issue” upon her death, or if there was none, to any
surviving siblings or their issue if a sibling was already deceased, with other
provisions applying if no siblings survived. Therefore, upon Philippa’s death,
a question arose as to whether her share of the income was to be paid to
1 Thomas Maxwell’s name at birth was Christian Wistrand, but he was renamed when he was
adopted by Sylvie Maxwell.
3
Thomas Maxwell as her surviving issue even though he was a nonmarital
child,2 or to Sylvie as her surviving sister.
[¶4] At the recommendation of the Trustees, in September and
November 1990, Sylvie executed documents to release any rights she had in
Philippa’s share of the Trust income and assign those rights to Maxwell. In
1990, the Trustees began distributing income to Maxwell.
[¶5] In 1994, addressing a separate matter, the Trustees petitioned the
Cumberland County Probate Court for instructions on whether adopted
children were included as beneficiaries of the Trust. Although Maxwell had
been adopted by Sylvie and received notice of the petition, the Trustees
agreed that the court’s decision would not “affect” him, and he did not
participate in the proceeding. In the resulting 1995 judgment, the court
(D. Childs, J.) determined that the provisions of the Trust should be
interpreted according to “the rules of construction set by common law during
the lifetime of George Parsons.” Applying the common law rules of
construction in effect in 1907, the court concluded that Parsons did not intend
to include adopted children as beneficiaries, and it instructed the Trustees
2In this opinion, we use the term “nonmarital child” rather than the outdated phrase “child born
out of wedlock.”
4
that the two adopted children who were respondents in that matter were not
beneficiaries.
[¶6] In 1996, after the court had issued that judgment, one of the
Trustees became concerned that no formal decision had been made about
whether Maxwell was a beneficiary entitled in his own right to Philippa’s
share of income or whether he was entitled to receive income only by virtue
of the assignments executed by Sylvie. On July 26, 1996, the Trustees passed a
resolution recognizing Maxwell’s status as Philippa’s biological son and as a
beneficiary of the Trust.3 Maxwell will continue to receive monthly and
annual distributions of Trust income while the Trust continues, and will
receive ten percent of the corpus of the Trust when the Trust terminates in
2023 if he is then living.
[¶7] In April 2014, Gourevitch filed a complaint in the Cumberland
County Probate Court requesting a declaratory judgment that Maxwell, as a
nonmarital child, cannot be a beneficiary of the Trust. Gourevitch is a
descendant of George Parsons under the same branch of the family tree as
Philippa, Sylvie, and Maxwell and served as a Trustee from 1999 to 2002.
3 Gourevitch averred in his affidavit, which he referenced in his statement of material facts, that
after Sylvie died in 2012, the Trustees “voted to go ahead and make distributions” to Maxwell as a
beneficiary. He argues on appeal that this is the date when distributions became wrongful. By that
date, however, Maxwell had already been receiving benefits since 1996 based on the Trustees’
determination of his status as Philippa’s biological son—the status that Gourevitch now challenges.
5
[¶8] Gourevitch also alleged in his complaint that Maxwell is not a
beneficiary of the Trust because he is an adopted child and requested a
declaratory judgment to that effect. As the Probate Court (Mazziotti, J.)
ultimately noted, however, “Maxwell’s status as an adopted child of Sylvie
Maxwell is of no consequence in this proceeding” because, as a result of the
court’s 1995 judgment, adopted children are not beneficiaries. Neither party
challenges that conclusion on appeal.
[¶9] Gourevitch moved for a summary judgment, see M.R. Civ. P. 56(a),4
arguing that the terms of the Trust entitled him to a judgment as a matter of
law because Maxwell was indisputably born to Philippa when she was not
married. Maxwell opposed Gourevitch’s motion and filed a cross-motion for a
summary judgment.5 He argued, among other things, that Gourevitch’s claim
was barred by the statute of limitations.
[¶10] In May 2015, the court denied Gourevitch’s motion and granted
Maxwell’s cross-motion for a summary judgment based on the statute of
limitations. Although the court determined, as a matter of law, that the terms
4 “Rule 56 of the Maine Rules of Civil Procedure governs procedure in all formal probate and
civil proceedings in the Probate Courts.” M.R. Prob. P. 56.
The Trustees also filed an opposition and cross-motion for a summary judgment supporting
5
Maxwell’s position. In its final judgment, the court denied the Trustees’ motion, and they do not
appeal.
6
of the Trust did not include nonmarital children as beneficiaries, the court
concluded that Gourevitch’s cause of action to challenge Maxwell’s status was
barred by the statute of limitations because it accrued, at the latest, in 1996,
when the Trustees formally recognized Maxwell as Philippa’s son and as a
beneficiary of the Trust. In reaching that conclusion, the court rejected
Gourevitch’s argument that each monthly payment to Maxwell constituted a
breach of fiduciary duty giving rise to a new cause of action. The court likened
Gourevitch’s argument to the common law “continuing tort doctrine,”
McLaughlin v. Superintending Sch. Comm. of Lincolnville, 2003 ME 114,
¶ 23 n.6, 832 A.2d 782, and concluded that the doctrine did not apply here
because the 1996 resolution was a discrete action that created the harm of
which Gourevitch complained. The court concluded that Gourevitch’s claim
therefore was outside the six-year limitations period, see 14 M.R.S. § 752
(2016), and that Maxwell was entitled to a judgment as a matter of law on that
basis.
[¶11] On May 19, 2015, Gourevitch filed a timely motion to alter or
amend the judgment, see M.R. Civ. P. 59(e),6 based on a decision that the
Supreme Court of the United States had issued on the previous day holding
6 “Rule 59 of the Maine Rules of Civil Procedure governs procedure in all formal probate and
civil proceedings in the Probate Courts.” M.R. Prob. P. 59.
7
that a new cause of action accrues each time a trustee breaches a continuing
fiduciary duty owed to a beneficiary “to monitor investments and remove
imprudent ones.” See Tibble v. Edison Int’l, 575 U.S. ---, 135 S. Ct. 1823,
1828-29 (2015). Gourevitch contended that his complaint was timely because
the Trustees had a continuing duty to distribute income only to beneficiaries,
and therefore each payment to Maxwell constituted a new injury.
[¶12] While the motion to alter or amend was pending, Gourevitch
appealed based on the statute of limitations issue, and Maxwell
cross-appealed the court’s separate determination that, as a nonmarital child,
he was not a beneficiary. See 18-A M.R.S. § 1-308 (2016); M.R. App. P. 2. The
court then granted Gourevitch’s Rule 59 motion and entered an amended
summary judgment in his favor.7 Accordingly, the court’s final judgment
integrates its earlier determination that, as a matter of law, Maxwell is not a
beneficiary of the Trust, and its later conclusion, based on Tibble, that
Gourevitch’s claim was timely.
[¶13] Although the court’s ultimate judgment was in Gourevitch’s favor
and he is defending it, in most respects, on this appeal, he remains an
7 With respect to the pending appeal, in response to the Trustees’ motion to stay, we enlarged
the time for the Probate Court to transmit its record to twenty-one days after it disposed of all
pending post-judgment motions. See M.R. App. 2(b)(3), (4), 3(b)(4).
8
appellant because he was the first party to file a notice of appeal. See M.R.
App. P. 2(c)(3).
II. DISCUSSION
[¶14] A party is entitled to summary judgment when the statements of
material fact and referenced evidence establish that there is no genuine issue
of material fact and that a party is entitled to a judgment as a matter of law.
M.R. Civ. P. 56(c). We review de novo the grant of a motion for summary
judgment. Fiduciary Tr. Co. v. Wheeler, 2016 ME 26, ¶ 8, 132 A.3d 1178. A
genuine issue of fact exists if “sufficient evidence supports a factual contest to
require a factfinder to choose between competing versions of the truth at
trial.” Baillargeon v. Estate of Daigle, 2010 ME 127, ¶ 12, 8 A.3d 709(quotation marks omitted).
[¶15] Maxwell argues that Gourevitch’s claim for a declaratory
judgment, commenced in 2014, is barred by 14 M.R.S. § 752, which provides
that “civil actions shall be commenced within 6 years after the cause of action
accrues and not afterwards.” A cause of action accrues when a claimant
sustains a “judicially cognizable injury.” Estate of Miller, 2008 ME 176,
¶ 25, 960 A.2d 1140 (quotation marks omitted). When the relevant facts are
not in dispute, determining when a cause of action accrued and whether a
9
claim is time-barred are legal questions subject to de novo review. See Estate
of Weatherbee, 2014 ME 73, ¶ 14, 93 A.3d 248; McLaughlin, 2003 ME 114,
¶ 12, 832 A.2d 782.
[¶16] As courts of other jurisdictions have held, a cause of action based
on the breach of a trust accrues, and the statute of limitations begins to run, at
the time of the breach. See Renz v. Beeman, 589 F.2d 735, 743 (2d Cir. 1978)
(holding that the statute of limitations was measured from the time of the
breach of the trust), cert. denied, 444 U.S. 834 (1979); Harris Tr. Bank of Ariz. v.
Superior Court, 933 P.2d 1227, 1231 (Ariz. Ct. App. 1996) (holding that the
statute of limitations began to run when the trustee “violate[d] one or more of
his obligations to the beneficiary or repudiate[d] the trust”); see also Cecil v.
Cecil, 712 S.W.2d 353, 355 (Ky. Ct. App. 1986) (holding that the statute of
limitations began to run when a beneficiary received written notice of a
termination of trust agreement); cf. Tersavich v. First Nat’l Bank & Tr. Co. of
Rockford, 551 N.E.2d 815, 819-20 (Ill. App. Ct. 1990) (holding that the statute
of limitations on an illegitimate child’s claim seeking construction of a trust
runs from the later of (1) the child’s reaching the age of majority or (2) the
10
time when the child knows, or should know, that the trustee has “repudiated,
disavowed or acted in hostility to the trust” (quotation marks omitted)).8
[¶17] In some circumstances, determining the date of the breach may
be complicated, such as when a beneficiary claims that a trustee has
imprudently retained an investment. See Tibble, 575 U.S. ---, 135 S. Ct. at
1828-29. For good reason, the Supreme Court of the United States has held
that a trustee has an ongoing duty to monitor the ever-changing performance
of investments, which may bring the date of accrual within a statute of
limitations. See id.[¶18] There is no legal basis, however, to support a continuing duty to
monitor a person’s status as a beneficiary of a heritable trust. To the contrary,
as the Court of Appeal of California held, a beneficiary’s challenge to his
proportion of trust income may be barred if proportionate shares have been
paid for the requisite limitation period. See Getty v. Getty, 187 Cal.
App. 3d 1159, 1168-69 (Cal. Ct. App. 1986). In Getty, a beneficiary’s claim was
barred because he did not take legal action until after distributions had been
8 See also George Gleason Bogert & George Taylor Bogert, The Law of Trusts and Trustees § 951,
at 638 (rev. 2d ed. 1995) (“To cause the Statute to begin running during the life of the trust there
must be some unequivocal act in violation of the duties of the trustee . . . .”).
11
made in consistent proportions for about twenty-five years following his
attainment of adulthood. Id.
[¶19] We have also previously held that statutes of limitations begin to
run when discrete events make potential litigants aware of possible claims.
Specifically, we held that a health care trust’s cause of action for unjust
enrichment against its beneficiary accrued upon the beneficiary’s settlement
of an automobile insurance claim and did not continue to accrue each time
monthly annuity payments to the injured beneficiary were made pursuant to
the terms of that settlement. Me. Mun. Emps. Health Tr. v. Maloney,
2004 ME 51, ¶¶ 2-3, 10, 846 A.2d 336.
[¶20] Nor do Maine’s statutes establish any “continuing” duty to
determine who is a beneficiary. A trustee may fulfill the duty to administer a
trust “in accordance with its terms and purposes,” 18-B M.R.S. § 801 (2016),
and “considering . . . distributional requirements,” 18-B M.R.S. § 804 (2016),
by determining, upon the death of a beneficiary, whether there are any new
beneficiaries and who those beneficiaries are. The determination of
beneficiaries is not a decision that requires repeated reconsideration simply
because the trust calls for the periodic distribution of trust income.
12
[¶21] Having a fixed date of accrual is consistent with the purpose of
statutes of limitations “to provide eventual repose for potential defendants
and to avoid the necessity of defending stale claims.” Angell v. Hallee,
2012 ME 10, ¶ 8, 36 A.3d 922 (quotation marks omitted). To hold to the
contrary would allow a trust beneficiary to initiate a court challenge at any
time after another beneficiary is determined, as long as income distributions
are being made. Such a holding would improperly elevate each ordinary
income distribution to a fresh determination of beneficiary status and would
result in a statute of limitations that, for no meaningful reason, may apply
differently to trusts that call for income distribution as compared with trusts
that do not.
[¶22] Turning to the facts at issue here, as the Probate Court held
before reaching a new holding based on Tibble, 575 U.S. ---, 135 S. Ct. at
1828-29, any cause of action arising from the determination that Maxwell was
a beneficiary of the Trust accrued no later than 1996 when a formal resolution
was passed recognizing Maxwell as Philippa’s biological son and determining
that Maxwell was a legally cognizable beneficiary. That is the event that
triggered the running of the six-year statute of limitations. See 14 M.R.S.
§ 752.
13
[¶23] The only way Gourevitch’s complaint could proceed would be if
the statute of limitations were tolled. The common law discovery rule tolls
the statute of limitations only if there is “a fiduciary relationship between the
plaintiff and defendant, the plaintiff must rely upon the defendant’s advice as
a fiduciary, and the cause of action [is] virtually undiscoverable absent an
independent investigation that would be destructive of the fiduciary
relationship.” Nevin v. Union Tr. Co., 1999 ME 47, ¶ 25, 726 A.2d 694.
[¶24] The pertinent facts are these. Maxwell’s biological mother died in
1990. His adoptive mother released her then additional share to Maxwell
voluntarily. In 1994, the trustees sought clarification from the Cumberland
County Probate Court about whether adopted children could be beneficiaries
pursuant to the terms of the trust, and the court determined that they could
not.
[¶25] In 1996, the trustees passed a formal resolution determining that
Maxwell was Philippa’s biological son and was a beneficiary of the Trust.
Thereafter, Maxwell continued to receive regular payments as the child of his
biological mother. These were the circumstances that existed when
Gourevitch became a trustee in 1999.
14
[¶26] Gourevitch was a trustee from 1999 to 2002, during which time
he had the full ability to determine why Maxwell was receiving Trust income
distributions while the woman Gourevitch believed to be Maxwell’s mother
was still living—a circumstance that is fully contrary to the Trust’s provision
that “in no case does issue take till the death of the parent whom it
represents.” Instead, Gourevitch participated as a trustee in continuing to
make distributions to Maxwell. He does not receive the benefit of tolling
because he had both the reason and the ability to discover the claim when he
was serving as a trustee but did not commence legal action until 2014—
twelve years after ending his service as a trustee and eighteen years after the
date of the Trustees’ resolution declaring Maxwell to be a beneficiary as the
child of Philippa. See id.[¶27] Because the statute of limitations has run, we do not reach
Maxwell’s challenge to the Probate Court’s ruling, on the merits of
Gourevitch’s complaint, that Maxwell would not have been a beneficiary of the
Trust had the challenge been made in a timely manner. We vacate the Probate
Court’s amended judgment and remand the matter for the court to deny
Gourevitch’s motion for summary judgment and grant Maxwell’s motion for
summary judgment.
15
The entry is:
Judgment vacated. Remanded for the court to
deny Gourevitch’s motion for summary
judgment and grant Maxwell’s motion for
summary judgment.
HJELM, J., with whom JABAR, J., joins, dissenting.
[¶28] Today, the Court concludes that a trust beneficiary is not entitled
to commence a cause of action arising from allegedly wrongful distributions of
trust income made within the limitations period, so long as the trustees’ initial
decision to begin those ongoing distributions is made outside the limitations
period. Court’s Opinion ¶¶ 22, 27. In my view, this holding is contrary to
established Maine law and the principle that a trustee is bound by the highest
ongoing fiduciary duties of good faith and loyalty to trust beneficiaries. I
therefore conclude, as a matter of law, that this action is not barred by the
statute of limitations. Because I also conclude that the summary judgment
record contains genuine issues of material fact on the merits of this action, I
would vacate the summary judgment entered by the Cumberland County
Probate Court (Mazziotti, J.) and remand for further proceedings. For these
reasons, I respectfully dissent.
16
[¶29] I will first address the reasons why the statute of limitations does
not bar David Gourevitch’s claim for a declaratory judgment. I will then
discuss the factual issues revealed in the record that preclude a
determination, as a matter of law, that Thomas Maxwell, a nonmarital child, is
a beneficiary of the George Parsons Trust—factual disputes that require this
case to be remanded for further proceedings in the Probate Court.
A. Statute of Limitations
[¶30] Title 14 M.R.S. § 752 (2016) provides that “civil actions shall be
commenced within 6 years after the cause of action accrues and not
afterwards.” As the Court states, a cause of action based on a breach of a trust
accrues at the time of the breach, Court’s Opinion ¶ 16, because that is when
the claimant sustains a “judicially cognizable injury,” Estate of Miller, 2008 ME
176, ¶ 25, 960 A.2d 1140 (quotation marks omitted).
[¶31] The Probate Court concluded, as a matter of law, that
Gourevitch’s 2014 complaint was timely because a new breach occurred each
time the Trustees made a monthly distribution of income—allegedly
wrongfully—to Maxwell. The court’s conclusion was predicated on its
determination that trustees in Maine have a continuing duty, accompanying
each distribution to a beneficiary, to ensure that the recipient is entitled to that
17
distribution. In my opinion, that legal assessment of the continuing nature of
the Trustees’ duties is correct because it is supported by Maine law and is
consistent with the essential nature of a trust and a trustee’s fiduciary duties.
[¶32] “A trust . . . is a fiduciary relationship with respect to property . .
. subjecting the person who holds title to the property to duties to deal with it
for the benefit of” another. Restatement (Third) of Trusts § 2 (Am. Law Inst.
2003). Because of “the intimate nature of the [trustee] relationship,” and “the
great control of a trustee over the property of the beneficiary,” the law
demands of a trustee “an unusually high standard of ethical or moral conduct.”
Amy Morris Hess et al., The Law of Trusts and Trustees § 1 at 5 (3d ed. 2007).
Indeed, the fiduciary duties of a trustee are “the highest known to the law.” La
Scala v. Scrufari, 479 F.3d 213, 219 (2d Cir. 2007) (quotation marks omitted);
see also Meinhard v. Salmon, 164 N.E. 545, 546 (N.Y. 1928) (“Not honesty
alone, but the punctilio of an honor the most sensitive, is . . . the standard of
[trustee] behavior.”).
[¶33] Within that “unusually high standard” of conduct and fidelity,
Hess et al., The Law of Trusts and Trustees § 1 at 5, “the extent and limits of [a
trustee’s] authority” are defined by the trust itself, In re Marble, 136 Me. 52,
56, 1 A.2d 355 (1938) (quotation marks omitted). Accordingly, with respect
18
to a trustee’s specific responsibilities, the trustee is “bound, in the first place,
to conform strictly to the directions of the trust. This is in fact the corner-stone
upon which all other duties rest, the source from which all other duties take
their origin. . . . If the trust is express, created by deed or will, then the
provisions of the instrument must be followed and obeyed.” Id. (emphases
added) (quotation marks omitted). Additionally, in fulfilling the primary
obligation to execute the trust’s directions, a trustee is bound to act
consistently with duties defined by statute. Specifically, trustees have a duty
to “administer the trust in good faith, in accordance with its terms and
purposes and the interests of the beneficiaries and in accordance with [the
Maine Uniform Trust Code].” 18-B M.R.S. § 801 (2016) (emphasis added). In
addition, trustees have a duty to “administer the trust as a prudent person
would, by considering the purposes, terms, distributional requirements and
other circumstances of the trust.” 18-B M.R.S. § 804 (2016) (emphasis added).
[¶34] A trustee’s statutory duty to administer a trust “in good faith,” “as
a prudent person would,” necessarily encompasses the duty to ascertain that
each individual whom the trustees designate to receive trust income is
actually entitled to those payments pursuant to the terms of the trust—in
other words, that the settlor intended to include that person as a beneficiary.
19
See Restatement (Third) of Trusts § 76 (Am. Law Inst. 2007) (stating that a
trustee’s duty to administer a trust “in good faith, in accordance with the
terms of the trust” includes the responsibility to “ascertain[] . . . the
beneficiaries and purposes of the trust”); Id. § 77 cmt. c (stating that to fulfill
the duty of prudence, a trustee must “acquire a reasonable understanding of
the terms of the trust” and “the rights and interests of the beneficiaries”);
George Gleason Bogert & George Taylor Bogert, The Law of Trusts and Trustees
§ 583 at 348-49 (rev. 2d ed. 1980) (“After a trustee has accepted the trust . . . it
becomes his duty to carefully examine the terms of the trust and the trust
assets in order to determine exactly what property forms the subject-matter
of the trust, who are the beneficiaries, and what are the trustee’s duties with
respect to the trust property and the beneficiaries.” (emphasis added)
(footnotes omitted)).
[¶35] Contrary to the Court’s analysis, however, a trustee’s initial
determination of who is a “beneficiary” is not the end of the matter. We have
explained that a trustee’s duty of prudence in Maine is “ongoing.” Nevin v.
Union Tr. Co., 1999 ME 47, ¶¶ 26-28, 726 A.2d 694. A trustee is therefore not
discharged from her fiduciary duties when that trustee simply makes an initial
or interim discrete decision. See George Gleason Bogert & George Taylor
20
Bogert, The Law of Trusts and Trustees § 541 at 160 (rev. 2d ed. 1978,
replacement vol. 1993) (“The trustee must continually demonstrate good faith
in administering the trust and in dealing with beneficiaries.” (emphasis
added)). Rather, the fiduciary duties defined by statute attach to each action a
trustee takes in executing the terms of the trust, including each decision—
whether ministerial or otherwise—to distribute trust income to a particular
person.
[¶36] In addition to being a violation of a trustee’s statutory duties, a
trustee’s distribution of trust income to an individual who is not entitled to
receive the payments is a violation of that trustee’s primary obligation “to
conform strictly to the directions of the trust.” In re Marble, 136 Me. at 56,
1 A.2d 355 (quotation marks omitted); see also George Gleason Bogert
& George Taylor Bogert, The Law of Trusts and Trustees § 814 at 315 (rev. 2d
ed. 1981) (stating that a trustee has “an unconditional obligation to follow the
applicable provisions regarding payments and distributions” (emphasis
added)). If a trustee repeatedly makes distributions to an improper recipient,
then with each subsequent payment the trustee acts in derogation of the
terms of the trust not only by allowing an ineligible person to participate, but
also by diminishing the amount of the payments that the true beneficiaries are
21
entitled to receive because of the expanded pool of recipients. In other words,
each time a trustee makes an improper payment, the trustee breaches his or
her fiduciary duty owed to the true beneficiaries, causing a new injury to
them, because the amount of the distribution they receive is less than it
should be. The injury does not end when the trustees first decide to make
those ongoing payments.
[¶37] Accordingly, based on fundamental principles of trust law, I
conclude that even after a trustee makes an initial distributional decision, that
trustee has a fiduciary duty to ensure, on an ongoing basis, that income is
being distributed only to proper beneficiaries consistent with the terms of the
trust. Consequently, the accountability of trustees to the beneficiaries does
not end when they make that initial distributional decision.9 Rather, they
remain liable for the ongoing actions placed in motion by their initial decision.
9 Renz v. Beeman, which the Court cites as support for the proposition that the statute of
limitations begins to run at the time of the initial breach, Court’s Opinion ¶ 16, is inapposite because
that case involves a claim based on a one-time event, rather than ongoing or repeated actions in
derogation of a trust, as is the case here. 589 F.2d 735, 743, 748-49 (2d Cir. 1978) (concluding that
a one-time breach of trust occurred, and the statute of limitations began to run, on the date when a
trustee purchased certain shares of stock). The cases cited by the Court as further support for this
point are not helpful to an analysis of the case at bar. See Harris Tr. Bank of Ariz. v. Superior Court,
933 P.2d 1227, 1231-32 (Ariz. Ct. App. 1996) (addressing the question of whether a particular
statute of limitations applied at all, not when it began to run); Cecil v. Cecil, 712 S.W.2d 353, 355
(Ky. Ct. App. 1986) (applying a unique statute of limitations where the triggering event was not an
alleged breach of trust, but rather the beneficiary’s “receipt of [a] final account or statement”).
Getty v. Getty, 187 Cal. App. 3d 1159 (Cal. Ct. App. 1986), on which the Court also relies,
Court’s Opinion ¶ 18, similarly is inapposite. That case involved a beneficiary’s claim to reform a
trust to increase his share of trust income and principal so that it would be equal to that of his
22
[¶38] In their discussion of the statute of limitations and their analysis
of when Gourevitch’s cause of action accrued, the parties have focused on
Tibble v. Edison International, 575 U.S. --, 135 S. Ct. 1823 (2015). Tibble itself
does not bear directly on this issue but, to the extent that it does provide
guidance here, it supports the conclusion that the Trustees have an ongoing
duty to ensure that the interests of the beneficiaries are protected.
[¶39] The Tibble Court considered “whether a fiduciary’s allegedly
imprudent retention of an investment is an ‘action’ or ‘omission’ that triggers
the running of the 6-year limitations period” applicable to claims brought
pursuant to the Employee Retirement Income Security Act of 1974 (ERISA),
29 U.S.C.S. §§ 1001-1461 (LEXIS through Pub. L. No. 115-45).10 Tibble, 575
brothers, Getty, 187 Cal. App. 3d at 1167-68—it was not a case based on an alleged breach of trust.
An intermediate-level court held that the beneficiary’s action for reformation was time-barred
because the trustees had “distributed income to the beneficiaries in exactly the amounts required
under the declaration of trust” for over forty-two years, and the beneficiary had actual or
constructive knowledge of the settlors’ alleged mistake for thirty-nine years before filing suit. Id. at
1169 (emphasis added). By seeking reformation of the trust, the beneficiary in Getty expressly
acknowledged that there was no continuing violation because, as the court found, the trustees were
distributing income in the amounts required by the trust. See id. Rather, the question was whether
the terms of the trust that mandated those distributions should be altered. See id.
Conversely, here, Gourevitch sued for a declaratory judgment to determine whether the
Trustees’ repeated and ongoing distributions of trust income to Maxwell violate the actual terms of
the Trust. Because Getty did not involve ongoing conduct by the trustees that was in violation of the
trust, it has no bearing on whether Gourevitch’s cause of action accrues anew with each income
distribution.
10 The statute of limitations on ERISA claims provides, in pertinent part, that “[n]o action may be
commenced under this title with respect to a fiduciary’s breach of any responsibility, duty, or
obligation . . . after the earlier of . . . six years after (A) the date of the last action which constituted a
part of the breach or violation, or (B) in the case of an omission, the latest date on which the
23
U.S. --, 135 S. Ct. at 1826. The Court stated “that an ERISA fiduciary’s duty is
derived from the common law of trusts,” id. at 1828 (quotation marks
omitted), and explained that
under trust law, a fiduciary normally has a continuing duty of some
kind to monitor investments and remove imprudent ones. A
plaintiff may allege that a fiduciary breached the duty of prudence
by failing to properly monitor investments and remove imprudent
ones. In such a case, so long as the alleged breach of the
continuing duty occurred within six years of suit, the claim is
timely.
Id. at 1828-29 (emphasis added). Therefore, although Tibble involved the
fiduciary duty to prudently oversee trust investments rather than the duty to
distribute trust income only to proper beneficiaries, the opinion confirms the
ongoing nature of the fiduciary duties that trustees are bound to discharge.
[¶40] Further, despite the Court’s analytical reliance on Maine
Municipal Employees Health Trust v. Maloney, 2004 ME 51, 846 A.2d 336,
Court’s Opinion ¶ 19, that case does not support the Court’s view that the legal
responsibility of a trustee is limited to the trustee’s initial distributional
decision—in fact, it does not involve fiduciary responsibilities at all. Rather, in
Maloney, a health care plan paid medical expenses incurred by a covered
person who had sustained injuries arising from another person’s tortious
fiduciary could have cured the breach or violation.” 29 U.S.C.S. § 1113 (LEXIS through Pub. L. No.
115-45).
24
conduct and who later settled the resulting tort claim. Maloney, 2004 ME 51,
¶ 2, 846 A.2d 336. Seven years after the settlement, the plan brought a claim
against the covered individual alleging unjust enrichment—not breach of
fiduciary duty—and seeking reimbursement of the medical expenses it had
paid. Id. ¶¶ 3-4. We rejected the plan’s argument that its claim was not
time-barred because it “accrue[d] anew with each monthly annuity payment,”
concluding that the injury had in fact occurred when the participant first
settled his claim against the tortfeasor. Id. ¶¶ 9-10. The litigants in Maloney,
however, were merely parties to a health insurance contract, see id. ¶ 6, and
there is no suggestion that the covered individual owed any fiduciary duty to
the plan, let alone a continuing duty. Rather, the alleged wrongdoer, namely,
the insured, was a health care plan participant—not a trustee—who merely
received periodic payments from a third party. See id. ¶ 2.
[¶41] Conversely, here, the Trustees are fiduciaries and are bound by
continuing obligations that run to Gourevitch as a beneficiary of the Trust.
Accordingly, the Trustees’ repeated decisions to pay Trust income to Maxwell,
allegedly in violation of their continuing fiduciary obligations in the
administration of the Trust, represent discrete “judicially cognizable
injur[ies],” Estate of Miller, 2008 ME 176, ¶ 25, 960 A.2d 1140 (quotation
25
marks omitted), each giving rise to a new cause of action. Maloney is therefore
inapplicable.
[¶42] For these reasons, I conclude that a new cause of action accrued
each time the Trustees made a distribution of Trust income to Maxwell,
because he allegedly was not entitled to those payments pursuant to the terms
of the Trust. With each such payment, the true beneficiaries allegedly
sustained a new injury, resetting the clock for purposes of the statute of
limitations. This conclusion is the product of Maine law and the law of trusts
that establish the continuing nature of a trustee’s duty to comply with the
provisions of a trust, including its distributional requirements.11 Accordingly,
because the undisputed facts establish that Gourevitch commenced this action
for a declaratory judgment challenging Maxwell’s beneficiary status within six
years of at least one of the Trustees’ monthly payments to Maxwell, the claim
is timely.12 See McLaughlin v. Superintending Sch. Comm. of Lincolnville,
11 I agree with the Court that, as the Probate Court concluded, Gourevitch is not entitled to the
benefit of the common law discovery rule, which tolls the statute of limitations “until the plaintiff
discovers or reasonably should have discovered the cause of action.” Nevin v. Union Tr. Co.,
1999 ME 47, ¶ 25, 726 A.2d 694; Court’s Opinion ¶¶ 23-26. My conclusion that Gourevitch’s claim
is timely does not rely on the application of the common law tolling rule.
Contrary to the Court’s statement, Court’s Opinion ¶ 21, a holding that Gourevitch’s claim is
12
timely would not detract from the essential purpose of statutes of limitations “to provide eventual
repose for potential defendants and to avoid the necessity of defending stale claims,” Angell v.
Hallee, 2012 ME 10, ¶ 8, 36 A.3d 922 (quotation marks omitted). Rather, a trustee would enjoy that
repose when any other alleged wrongdoer would, namely, six years after the last injury she
26
2003 ME 114, ¶¶ 11-12, 19, 832 A.2d 782 (explaining that summary judgment
on a statute of limitations defense is proper when there is no genuine issue of
material fact as to whether the cause of action accrued within the limitations
period).
B. Status of Nonmarital Children
[¶43] I next address the merits of the parties’ arguments because if—as
I conclude—Gourevtich’s claim is not time-barred but the undisputed facts
nevertheless were to establish that Maxwell is a proper beneficiary of the
Trust, then this matter would have to be remanded for entry of a summary
judgment for Maxwell in any event. For the following reasons, I disagree with
that result. Rather, I conclude that neither party is entitled to a judgment as a
matter of law on the issue of whether Maxwell is a proper beneficiary, and I
would therefore remand this matter to the Probate Court for further
proceedings.
[¶44] The specific issue is whether the court erred by concluding, as a
matter of law, that the terms used to identify Trust beneficiaries—“issue” and
“descendants”—must be construed to omit nonmarital children.
participated in creating, which here consisted of allegedly making a wrongful payment of trust
assets.
27
[¶45] “The cardinal rule is to give effect to the intention of the testator
gathered from the language of the will [creating the trust] . . . .” Me. Nat’l Bank
v. Petrlik, 283 A.2d 660, 664 (1971). The court must determine a settlor’s
intent at the time the trust was created, without regard to sensibilities that
may have evolved later.13 See id.; New England Tr. Co. v. Sanger, 151 Me. 295,
301, 118 A.2d 760 (1955). “The intent of the settlor, as determined by
unambiguous language in the [trust], is a question of law that we review de
novo.” Fiduciary Tr. Co. v. Wheeler, 2016 ME 26, ¶ 9, 132 A.3d 1178 (quotation
marks omitted). Conversely, if the trust contains an ambiguity, a court’s
determination of the settlor’s intent is a question of fact to be adjudicated in
the trial court. See Newick v. Mason, 581 A.2d 1269, 1273-74 (Me. 1990). If “a
showing of all the relevant extraneous circumstances provides no basis for a
fair conclusion as to the meaning” of a particular term, a court may apply the
“presumptive” meaning—namely, a meaning based on common law
principles, Ziehl v. Me. Nat’l Bank, 383 A.2d 1364, 1372 (Me. 1978), superseded
by statute on other grounds, P.L. 1979, ch. 540, § 1 (effective Jan. 1, 1981)
For this reason, the rule of construction in the Maine Probate Code, which states that “persons
13
born out of wedlock are included in class gift terminology and terms of relationship in wills and in
trust instruments,” does not apply to these proceedings because that statute became effective in
1981, long after the Trust was created. P.L. 1979, ch. 540, § 1 (effective Jan. 1, 1981) (codified as
amended at 18-A M.R.S. § 2-611 (2016)); see also Hall v. Cressey, 92 Me. 514, 516, 43 A. 118 (1899)
(stating that “[m]odern sentiment[s] as expressed in modern statutes” have no bearing on the
interpretation of an instrument executed before the statutes were adopted).
28
(codified as amended at 18-A M.R.S. § 2-611 (2016)), so long as the
presumption was applied during the settlor’s lifetime and “may be supposed
to have been in the mind of the testator at the time” the will creating the trust
was made. Petrlik, 283 A.2d at 664.
[¶46] Paragraph 5 of the Trust—which is the source of Maxwell’s
claimed interest—provides that a deceased descendant’s share of Trust
income is payable to his or her “issue.” In the context of a summary judgment
analysis, the question therefore is whether a nonmarital child such as Maxwell
indisputably must be considered “issue” of his biological mother within the
meaning of the Trust.
[¶47] We have previously stated that the term “issue” is ambiguous and
that its meaning varies according to the intention of the settlor who uses it.
Gannett v. Old Colony Tr. Co., 155 Me. 248, 249, 153 A.2d 122 (1959); Fiduciary
Tr. Co. v. Brown, 152 Me. 360, 371-72, 131 A.2d 191 (1957); Union Safe Deposit
& Tr. Co. v. Dudley, 104 Me. 297, 306, 72 A. 166 (1908). Although, here,
Parsons expressly defined “issue” in Paragraph 8 of the Trust to mean “all
descendants,” that provision fails to provide any additional definitional
meaning because, as we have noted in the past, the term “issue” is
synonymous with the term “descendants.” Fiduciary Tr. Co., 152 Me. at29
371-72, 131 A.2d 191; see also Morse v. Hayden, 82 Me. 227, 230, 19 A. 443(1889) (stating that “issue . . . is synonymous with lineal descendant”)
(quotation marks omitted); Union Safe Deposit & Tr. Co., 104 Me. at 307, 72 A.
166 (stating that “the word ‘issue’ is to be interpreted according to its primary
signification as importing descendants”); Newick, 581 A.2d at 1273 (“‘Issue’ is
commonly interpreted as meaning ‘[a]ll persons who have descended from a
common ancestor.’” (quoting Black’s Law Dictionary 746 (5th ed. 1979)). As
the Probate Court noted, the definition of “issue” included in the Trust merely
indicates that the terms “issue” and “descendants” had “like meanings for the
purposes of defining the beneficiaries.” Because the term “issue” is
ambiguous, and because the term “descendants”—which Parsons used to
define “issue”—is merely a synonym that does not provide additional
definitional content, neither term has a fixed meaning that can be discerned as
a matter of law.
[¶48] The Trust further states in Paragraph 8 that “[d]istribution of
income among the issue of a . . . descendant . . . shall mean that such income
shall be paid in equal shares to his or her children.” (Emphases added.) For
reasons similar to those stated above, this provision does not allow any
determination of the meaning of the term “issue” as a matter of law because
30
the term “children,” like the term “issue,” is ambiguous and must be construed
based on Parsons’s intent when the Trust was created. See Ziehl, 383 A.2d at
1369-70 (stating that the word “children” is ambiguous because in general
usage it is “associated with more than one category of external objects”); In re
Woodcock, 103 Me. 214, 216-17, 68 A. 821 (1907) (stating that the meaning of
“children” depends on the language of the testamentary instrument and the
circumstances existing when it was executed); Bolton v. Bolton, 73 Me. 299,
309-10 (1882) (same). Accordingly, regardless of what meaning may be
ascribed to the term “children” today, the plain language of the Trust does not
indisputably establish whether, in 1907, Parsons intended to include
nonmarital children as beneficiaries.
[¶49] The express rule of construction that appears in Paragraph 28 of
the Trust also does not unambiguously resolve the question at issue here.
Paragraph 28 states:
The laws of the State of Maine shall apply to and govern the
validity, construction and operation of this agreement, except as
the construction or legal effect of this instrument is expressly
stated in the provisions of the deed itself, and all matters, things
and proceedings now or hereafter arising or had hereunder.
By using the phrase “laws of the State of Maine,” Parsons did not distinguish
between statutes and common law, and he could reasonably have been
31
referring to either.14 Applying the statutes and common law in effect during
Parsons’s lifetime, however, leads to competing conclusions as to whether he
intended to include nonmarital children in the gift to the “issue” of his
deceased descendants.
[¶50] The statutes in effect in 1907 included a provision that allowed
an “illegitimate child” to inherit property from his or her biological mother
who died intestate. R.S. ch. 77, § 3 (1903).15 Accordingly, if the phrase “laws
of the State of Maine” is construed to mean statutory law, and if the 1907
statutes of descent can reasonably be analogized to trusts, then the language
of the Trust reasonably allows the conclusion that Parsons intended to include
nonmarital children within the meaning of the terms “issue” and
“descendants.”
In other places in the Trust, Parsons referred to statutory law specifically. For example, in
14
Paragraph 8, Parsons expressly rejected the definition of “per stirpes” provided “under the statutes
of distribution in the State of Maine.” The phrase “laws of the State of Maine” could therefore
reasonably be construed to be broader than the reference to the “statutes of distribution” in
Paragraph 8 of the Trust and include the common law.
15 R.S. ch. 77, § 3 (1903) provided in full,
An illegitimate child born after March twenty-four, in the year of our Lord one
thousand eight hundred and sixty-four, is the heir of his parents who intermarry.
And any such child, born at any time, is the heir of his mother. And if the father of an
illegitimate child adopts him or her into his family, or in writing acknowledges
before some justice of the peace or notary public, that he is the father, such child is
also the heir of his or her father. And in each case such child and its issue shall
inherit from its parents respectively, and from their lineal and collateral kindred,
and these from such child and its issue the same as if legitimate.
32
[¶51] Cases decided during Parsons’s lifetime, however, reveal a
general common law principle that although nonmarital children were
entitled to “take under any disposition by deed or will adequately describing
them,” they were not entitled to participate in gifts to “issue” or “children.”
2 Thomas Jarman, A Treatise on Wills 205 (5th ed. 1881); see also Bolton,
73 Me. at 311 (explaining that nonmarital children “are not objects of a gift to
children or issue of any other degree, unless a distinct intention to that effect
be manifest upon the face of the will; and if by possibility, legitimate children
alone would have satisfied the terms of such gift, illegitimate children cannot
take” (quotation marks omitted)); Lyon v. Lyon, 88 Me. 395, 406, 34 A. 180(1896) (“[W]here legacies or devises are given to a ‘child,’ or ‘children’ of
some person named . . . these words mean, prima facie, legitimate children
. . . .”); Hall v. Cressey, 92 Me. 514, 516, 43 A. 118 (1899) (“The authorities are
to the effect that the word ‘child’ in a will or deed means a legitimate child.”)
The presumptive, common law meaning of “issue” therefore did not comport
with 1907 statutory law, and leads to a different conclusion as to Parsons’s
intent.
[¶52] Because the rule of construction prescribed in Paragraph 28 of
the Trust can lead to opposite results depending on whether it is read to
33
invoke statutes or common law presumptions, I conclude that the record
supports competing inferences as to whether Parsons intended to include
nonmarital children as beneficiaries of the Trust. The summary judgment
process therefore is not the appropriate means to resolve this dispute. This is
true even if there is no additional evidence beyond what is contained in the
summary judgment record that could be presented at a trial on remand. See
Rose v. Parsons, 2015 ME 73, ¶ 4, 118 A.3d 220 (“Summary judgment process
is not a substitute for trial . . . . When facts or reasonable inferences to be drawn
from the facts are in dispute, the court must engage in fact-finding, and
summary judgment is not available.”) (emphasis added). Accordingly, I would
vacate the summary judgment entered in favor of Gourevitch and remand for
a trial so that the court can determine the most persuasive among the parties’
competing views of historical facts and conclusions to be drawn from those
factual disputes.
Deborah M. Mann, Esq. (orally), and Brendan P. Rielly, Esq., Jensen Baird
Gardner & Henry, Portland, for appellant David Gourevitch
Dennis J. O’Donovan, Esq. (orally), and Jennifer L. Kruszewski, Esq., Epstein &
O’Donovan, LLP, Portland, for appellee Thomas Maxwell
Cumberland County Probate Court docket number 1994-1486
FOR CLERK REFERENCE ONLY