Court Opinion

ID: 4247891
Source: CourtListenerOpinion
Date Created: 2018-02-23 16:26:52.666725+00
Date Added: 2024-06-11T07:48:09.607345
License: Public Domain

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.
                                                 -1-
                                                   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

                                                 -2-
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

                                                -3-
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)

                                               -4-
(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.

                                                  -5-
       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

                                               -6-
[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.

                                                -7-
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)