Elaine Jaffe v. William C. Pournaras, Trustee of the Irrevocable Living Trust of Constantine W. Pournaras, Trustee of the Constantine Living Trust, and Personal Representative of the Estate of Constantine W. Pournaras

February 23, 2018
Supreme Court
Elaine Jaffe : No. 2016-298-Appeal.
(PB 14-2228)
v. :
William C. Pournaras, Trustee of the :
Irrevocable Living Trust of Constantine W.
Pournaras, Trustee of the Constantine Living
Trust, and Personal Representative of the
Estate of Constantine W. Pournaras.
NOTICE: This opinion is subject to formal revision before
publication in the Rhode Island Reporter. Readers are requested to
notify the Opinion Analyst, Supreme Court of Rhode Island, 250
Benefit Street, Providence, Rhode Island 02903, at Telephone 222-
3258 of any typographical or other formal errors in order that
corrections may be made before the opinion is published.
Supreme Court
Elaine Jaffe : No. 2016-298-Appeal.
(PB 14-2228)
v. :
William C. Pournaras, Trustee of the :
Irrevocable Living Trust of Constantine W.
Pournaras, Trustee of the Constantine Living
Trust, and Personal Representative of the
Estate of Constantine W. Pournaras.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
OPINION
Chief Justice Suttell, for the Court. The plaintiff, Elaine Jaffe (Jaffe), and the
defendant, William C. Pournaras (Pournaras), are the two surviving children of Constantine W.
Pournaras (Constantine or decedent).1 The matter presently before us is the defendant’s appeal
from a Superior Court judgment granting the plaintiff’s request for declaratory relief and
prohibiting the defendant from transferring assets of the decedent’s irrevocable living trust into
the decedent’s estate. This case came before the Supreme Court pursuant to an order directing
the parties to appear and show cause why the issues raised in this appeal should not be
summarily decided. After considering the parties’ written and oral submissions and reviewing
the record, we conclude that cause has not been shown and that this case may be decided without
further briefing or argument. For the reasons set forth herein, we affirm the judgment of the
Superior Court.
1
We refer to the decedent by his first name to avoid confusion. No disrespect is intended.
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I
Facts and Procedural History
Constantine, who passed away on November 10, 2012, executed three documents during
his lifetime that are pertinent to this appeal: a revocable living trust (the living trust), an
irrevocable living trust (the irrevocable trust), and a last will and testament (the will).
The living trust was executed on December 2, 1993, amended on August 22, 2003, and
amended a second time on October 17, 2008. In the living trust’s most recent restatement,
Constantine is named as trustor and sole trustee, and Pournaras is named as the sole successor
trustee. According to Jaffee, the living trust was “funded with approximately $500,000.” The
living trust provides that, upon Constantine’s death, the trustee (Pournaras) “shall pay the
property located at 43 Knollwood Avenue, Cranston * * * to * * * POURNARAS * * *”; the
living trust also provides that, if the trust owned liquid resources, the trustee shall pay $50,000
from those liquid resources to Jaffe, not including the aforementioned real property.
The irrevocable trust was executed on August 22, 2003, and names Pournaras as trustee.
Jaffe maintains that Pournaras advised her that the irrevocable trust contained assets worth
approximately $694,000. Article 4, section 2 of the irrevocable trust reserves to Constantine the
power “to appoint any part or all of the [t]rust [e]state to or for the benefit of any of [his]
descendants, in equal or unequal amounts, either directly or in [t]rust, as [he] may direct.” The
irrevocable trust specifies that this power of appointment is “exercisable by written instrument
during [his] lifetime or by [w]ill or any [c]odicil thereto[.]” The power of appointment, however,
is limited and cannot “be exercised in favor of [Constantine’s] estate, the creditors of [his] estate
or in any way that would result in any economic benefit to [him].” Also, article 8, section 1
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directs Pournaras, as trustee, to divide the trust assets into “separate and equal shares” between
Jaffe and Pournaras, as his surviving children, upon Constantine’s death.
The will was executed on October 17, 2008. It names Pournaras as personal
representative and provides that he “shall distribute [Constantine’s] residuary estate to the then
acting [t]rustee” of the living trust (Pournaras). Section 5.01 of the will defines “residuary
estate” as, in relevant part, “any property over which [Constantine] may have a power of
appointment * * * less all valid claims asserted against [his] estate * * *.”
In January 2014, the will was admitted to probate and Pournaras was appointed as the
personal representative of Constantine’s estate. Jaffe filed a complaint in May 2014 seeking
declaratory and injunctive relief to prevent Pournaras from transferring the assets of the
irrevocable trust into Constantine’s estate, and also to have Pournaras removed as trustee. In her
complaint, Jaffe alleged that Pournaras intended to transfer assets from the irrevocable trust to
Constantine’s estate by exercising the limited power of appointment under article 4, section 2 of
the irrevocable trust. In his counterclaim, Pournaras maintained that section 5.01 of the will was
intended to be an exercise of the limited power of appointment contained within article 4, section
2 of the irrevocable trust.
Jaffe and Pournaras filed cross-motions for summary judgment. Following a hearing, the
Superior Court issued a decision on June 23, 2016, in favor of Jaffe; the court concluded that
Pournaras’s intended exercise of the limited power of appointment reserved by Constantine
would be in contravention of Constantine’s intentions as expressed in article 4, section 2 of the
irrevocable trust by exposing the trust assets to the potential claims of creditors. The decision
pronounced that Constantine’s “clear intent, as expressed in [a]rticle [4], [s]ection 2 of the
[i]rrevocable [t]rust, was that the limited power of appointment be exercised for the benefit of his
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descendants, rather than his creditors[,]” and that, if the court “were to adopt Pournaras’[s]
reading of [s]ection 5 of the [w]ill as a valid exercise of the decedent’s limited power of
appointment, the [i]rrevocable [t]rust assets would become part of the decedent’s residuary estate
and would then be subject to the claims of the decedent’s creditors.” The Superior Court
prohibited Pournaras “from transferring the assets of the [i]rrevocable [t]rust into [Constantine’s]
estate[,]” and directed him to divide the trust into two equal shares “to be distributed as
otherwise provided in the trust instrument * * *.”
II
Standard of Review
“This Court will review the grant of a motion for summary judgment de novo, employing
the same standards and rules used by the hearing justice.” Newstone Development, LLC v. East
Pacific, LLC, 140 A.3d 100, 103 (R.I. 2016) (quoting Daniels v. Fluette, 64 A.3d 302, 304 (R.I.
2013)). “We will affirm a [trial] court’s decision only if, after reviewing the admissible evidence
in the light most favorable to the nonmoving party, we conclude that no genuine issue of material
fact exists and that the moving party is entitled to judgment as a matter of law.” Id. (quoting
Daniels, 64 A.3d at 304). “Furthermore, ‘the nonmoving party bears the burden of proving by
competent evidence the existence of a disputed issue of material fact and cannot rest upon mere
allegations or denials in the pleadings, mere conclusions or mere legal opinions.’” Id. (quoting
Daniels, 64 A.3d at 304). “[S]ummary judgment should enter against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s case * * *.”
Id. (quoting Lavoie v. North East Knitting, Inc., 918 A.2d 225, 228 (R.I. 2007)).
“We similarly employ a de novo standard ‘[w]hen reviewing an appeal based on an
alleged error of law.’” Warwick Sewer Authority v. Carlone, 45 A.3d 493, 498 (R.I. 2012)
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(quoting N & M Properties, LLC v. Town of West Warwick, 964 A.2d 1141, 1144 (R.I. 2009)).
“Our review is de novo because this Court is in the best position to decide the merits of a given
question of law.” Id. (quoting N & M Properties, LLC, 964 A.2d at 1144).
III
Discussion
“This Court’s ‘primary objective when construing language in a will or trust is to
ascertain and effectuate the intent of the testator or settlor as long as that intent is not contrary to
law.’” Steinhof v. Murphy, 991 A.2d 1028, 1033 (R.I. 2010) (quoting Fleet National Bank v.
Hunt, 944 A.2d 846, 851 (R.I. 2008)). We first consider the plain language of the will or trust.
Fleet National Bank, 944 A.2d at 851. We will not resort to considering extrinsic evidence
where the intent is clear “from within the four corners of the will[.]” Hayden v. Hayden, 925
A.2d 947, 951 (R.I. 2007) (quoting Greater Providence Chapter, R.I. Association of Retarded
Citizens v. John E. Fogarty Foundation for the Mentally Retarded, 488 A.2d 1228, 1229 (R.I.
1985)).
Jaffe argues that the plain language of article 4, section 2 of the irrevocable trust is clear
and expresses Constantine’s intention to prohibit the limited power of appointment from being
exercised in favor of Constantine’s estate or creditors of his estate. Jaffe argues that
“Constantine could have, but did not exercise [his limited power of appointment] by his will to
appoint the property to a third party, such as directly to his living trust or to [Pournaras].” Jaffe
contends that the language of section 5 of the will does not constitute a valid exercise of the
power of appointment because it would contravene the plain language of the irrevocable trust,
which expressly prohibits the exercise of the power of appointment for the benefit of
Constantine’s estate. We agree.
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Section 5.01 of the will clearly defines Constantine’s residuary estate as “any property
over which [Constantine] may have a power of appointment * * * less all valid claims asserted
against [his] estate[.]” To read this clause as a valid exercise of Constantine’s power of
appointment would allow trust assets to be placed in the residuary estate, and thereby subject to
the claims of creditors. This would be inconsistent with the terms of the irrevocable trust and,
therefore, impermissible without specific language in the irrevocable trust that reserved such a
right. See Garneau v. Garneau, 63 R.I. 416, 424, 9 A.2d 15, 18 (1939) (a settlor of a trust may
not revoke or modify a trust he created unless he has reserved for himself the power to do so).
We are also of the opinion that Pournaras’s reliance on Hooker v. Drayton, 69 R.I. 290,
33 A.2d 206 (1943), for the proposition that “property which is transmitted by a testator in the
exercise of a power granted to him by another to appoint by will is neither in law nor in fact a
part of the testator’s estate[,]” is misplaced. Hooker, 69 R.I. at 295, 33 A.2d at 209. The question
confronting this Court in Hooker was whether the testator intended to charge to his residuary
estate the obligation for the payment of taxes on the testator’s exercise of a testamentary power
of appointment. Id. at 292, 33 A.2d at 208. This Court held: “In the absence of a clearly
expressed intent to the contrary in the decedent donee’s will such tax is ultimately to be borne by
the appointed property, and not by his residuary estate.” Id. at 296, 33 A.2d at 210.
In the case before us, however, if the exercise of the power of appointment were deemed
valid, the very terms of Constantine’s will would place the assets of the irrevocable trust in his
residuary estate, thereby subjecting them to the demands of creditors. As the trial justice
cogently remarked, “[a]lthough the exercise of the limited power of appointment would not, ipso
facto, result in the assets of the [i]rrevocable [t]rust becoming part of the decedent’s estate,
Pournaras’[s] reading of [s]ection 5 of the [w]ill would have the effect of placing [i]rrevocable
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[t]rust assets in the residuary estate where they would be subject to the claims of the decedent’s
creditors[,]” contrary to Constantine’s intent as expressed in the irrevocable trust.
Pournaras also argues that we should consider extrinsic evidence to ascertain
Constantine’s intent in creating the irrevocable trust. Specifically, he contends that the terms of
the will and the 2008 restatement of the living trust “altered” the testamentary directives
contained in the irrevocable trust. Pournaras argues that “[Constantine], by including property
over which he had reserved a power of appointment in his residuary estate, could not have
consciously intended to defeat or frustrate his clearly stated objective of limiting [Jaffe’s]
inheritance to $50,000.00 of available liquid assets.”
Because we find the language of the irrevocable trust to be clear and unambiguous,
however, we need not resort to extrinsic evidence to determine Constantine’s intent. The power
of appointment was to be executed “for the benefit of any of [his] descendants, in equal or
unequal amounts,” and “not * * * in favor of [his] estate[.]”
It is our opinion that a reading of section 5.01 of the will as a valid exercise of
Constantine’s power of appointment would be inconsistent with the clear language contained in
article 4, section 2 of the irrevocable trust. Therefore, we conclude that the Superior Court did
not err in holding that the defendant’s intended exercise of the limited power of appointment
contained in article 4, section 2 of Constantine’s irrevocable living trust was invalid.
IV
Conclusion
For the reasons stated herein, we affirm the judgment of the Superior Court. The record
shall be returned to the Superior Court.
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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
SUPREME COURT – CLERK’S OFFICE
OPINION COVER SHEET
Elaine Jaffe v. William C. Pournaras, Trustee of the
Irrevocable Living Trust of Constantine W. Pournaras,
Title of Case Trustee of the Constantine Living Trust, and Personal
Representative of the Estate of Constantine W.
Pournaras.
No. 2016-298-Appeal.
Case Number
(PB 14-2228)
Date Opinion Filed February 23, 2018
Suttell, C.J., Goldberg, Flaherty, Robinson, and
Justices
Indeglia, JJ.
Written By Chief Justice Paul A. Suttell
Source of Appeal Providence County Superior Court
Judicial Officer From Lower Court Associate Justice Michael A. Silverstein
For Plaintiff:
Bernard A. Jackvony, Esq.
Matthew C. Reeber, Esq.
Rebecca M. Murphy, Esq.
Attorney(s) on Appeal
For Defendant:
James A. Bigos, Esq.
Scott Partington, Esq.
SU-CMS-02A (revised June 2016)