Court Opinion

ID: 2781288
Source: CourtListenerOpinion
Date Created: 2015-02-23 21:03:00.309891+00
Date Added: 2024-06-11T11:26:49.249930
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

Robert E. Taglialatela, Jr.                          )
                              Plaintiff,             )    C.A. No. 5841-MA
                                                     )
             v.                                      )
                                                     )
Phyllis T. Galvin, Trustee Irrevocable               )
Trust of Robert E. Taglialatela, Sr.                 )
                          Defendant                  )

                                  MASTER’S REPORT

                              Date Submitted: October 27, 2014
                              Draft Report: August 14, 2014
                              Final Report: February 23, 2015

      Pending before me are exceptions to the Accounting of the Robert E.

Taglialatela Irrevocable Trust (the “Trust”) filed by its former trustee, Phyllis

Galvin-Moore. The Trust was created by Robert E. Taglialatela, Sr. in 1998 for

the benefit of his six children: Beatrice Juliano, Robert E. Taglialatela, Jr., Phyllis

Galvin-Moore, Diane Green, Francine Schmitt, and Elizabeth (“Beth”) Gorman.

Robert, Beatrice, and Beth are the three beneficiaries who have taken exceptions to

the accounting.1

                                    Factual Background

1
 I will refer to the six beneficiaries by their first names to avoid confusion, and
mean no disrespect by this practice.
                                           Page 1 of 30
      The Trust originally held one asset, real property located at 100 High Street,

Oxford, Maryland (the “Oxford Property”), that had been purchased in 1976 as a

future retirement home for Mr. and Mrs. Taglialatela, Sr., who resided in Lansdale,

Pennsylvania.2 In 1988, Beatrice moved into the Oxford Property with her family

after her husband lost his job, and Beatrice remained there with her two children

for 22 years without paying rent; her parents paid the expenses related to the

property.3 In 1998, Mrs. Taglialatela suffered a stroke and the couple became

concerned about their future health care costs.4 A trust agreement was drafted by a

Delaware lawyer who, at the time, was in a relationship with their daughter

Phyllis,5 and the couple transferred the Oxford Property into the Trust. Mrs.

Taglialatela passed away in 2002, and as Mr. Taglialatela, Sr. began to suffer his

own health problems, tensions developed among his children in part due to

Phyllis’s unilateral actions.

      In 2008, Phyllis, in her capacity as Trustee, conveyed the Oxford Property

back into her father’s name because she doubted that the Trust was still in

existence.6 Approximately six months later, Phyllis, in her capacity as power of

2
  Trial Transcript (“TT”) 1/1/13 at 65.
3
  Id. at 20-22, 54-56, 99, 102
4
  Id. at 40
5
  Id. at 30-32, 51
6
  Id. at 29-31.
                                      Page 2 of 30
attorney for Mr. Taglialatela, Sr., conveyed the Oxford Property to herself in her

capacity as Trustee, after she obtained a copy of the trust agreement.7

      In 2009, Phyllis sought to have her father, who was suffering from dementia,

declared incompetent by a Pennsylvania court.8 After a hearing in November

2009, the court appointed a neutral professional guardian, Supportive Care

Services, as guardian of Mr. Taglialatela, Sr., who was then removed from his

home and placed in an assisted living facility in Pennsylvania. 9 Around this same

time, Phyllis sued Beth in Maryland for non-payment of a loan Phyllis had made to

Beth in 1993.10 They eventually settled the dispute for $3,000.00, but Beth had no

money so Phyllis put a lien on Beth’s share of the Trust.11

      In November 2009, Francine drove her father to Oxford to spend

Thanksgiving with Beth’s family.12       Phyllis called several police agencies in

Maryland and Pennsylvania, and the Maryland Department of Social Services to

report a kidnapping and possible neglect case.13     In early December 2009, Phyllis

sent Beatrice an eviction notice.14     Shortly thereafter, Phyllis sent Beatrice a

7
  Id. at 36, 40.
8
  Id. at 115.
9
  Id. at 115, 118.
10
   Id. at 93-97.
11
   Id.
12
   Id. at 74-75.
13
   Id.; TT 12/5/13 at 33.
14
   TT 1/10/13 at 115-116.
                                      Page 3 of 30
proposed rental agreement for the Oxford Property for $1000.00 per month.15

Beatrice refused to pay rent, but voluntarily vacated the Oxford Property on June

19, 2010.16

      On June 24, 2010, Francine took her father to a hospital emergency room; he

was diagnosed a week later with advanced cancer.17           When Beatrice’s two

daughters tried to visit their grandfather in the hospital, they and other family

members were ordered to leave by hospital staff at Phyllis’s direction.18 Mr.

Taglialatela, Sr. died in July 2010. According to the terms of the Trust, upon the

death of Mr. Taglialatela, Sr., the undistributed net income and principal were to be

distributed to his six children.19

      Phyllis, who was named as executrix in her father’s will, hired a

Pennsylvania estate attorney,20 but another Pennsylvania attorney, Stacy

Greenberg, was appointed as administrator of Mr. Taglialatela, Sr.’s estate.21 The

estate was insolvent so Mr. Taglialatela, Sr.’s home and tangible personal property

in Pennsylvania were sold at auction to pay creditors, with family members having

15
   Id. at 117.
16
   Id. at 125.
17
   Id. at 122.
18
   Id. at 73-74, 123-24.
19
   Id. at 137.
20
   TT 5/22/14 at 14.
21
   TT 1/10/13 at 59.
                                     Page 4 of 30
to bid on any sentimental items they wished to retain.22 Phyllis was one of the

creditors since she had paid the costs associated with Mr. Taglialatela, Sr.’s

assisted living facility.23

       The same Maryland law firm that assisted Phyllis in her suit against Beth

had been providing Phyllis with trust-related advice since October 23, 2009.24

After Beatrice vacated the Oxford Property, Phyllis, in her capacity as Trustee,

sold the Oxford Property for $187,000.00 on November 17, 2010, and the net sale

proceeds of $158, 895.85 were placed in the Trust.25

       Shortly before the sale of the Oxford Property, Robert had filed a pro se

petition in this Court on September 22, 2010, seeking to remove Phyllis as trustee

for threat of self-dealing and breach of fiduciary duty.26 Robert unsuccessfully

attempted to serve Phyllis with a summons and a copy of the petition at her home

on multiple occasions, and at her workplace in Wilmington, Delaware.27

Nevertheless, Phyllis was aware of her brother’s petition. On September 27, 2010,

Phyllis’s Maryland attorney reviewed Robert’s petition,28 and on November 23,

2010, Phyllis consulted with a Delaware attorney at Woloshin, Lynch, Natalie and

22
   Id. at 90-91.
23
   Id. at 91-92.
24
   Affidavit of Demetrios G. Kaouris, Esquire, Ex. 8 of the Trust Accounting.
25
   HUD Settlement Sheet, Ex. 1 of the Trust Accounting.
26
   Docket Item (“DI”) 1.
27
   DI 6 & 7.
28
   Accounting of time and Expenses at 3, Ex. 8 of the Trust Accounting.
                                     Page 5 of 30
Gagne, P.C. (the “Woloshin firm”), about Robert’s trust petition.29 In a letter to

the beneficiaries dated November 24, 2010,30 Phyllis’s Maryland attorney

informed them that Phyllis had deducted a total of $18,933.55 for legal fees,

expenses associated with the Oxford Property, and a trustee commission in the

amount of $8,120.28. He further wrote:

             “Because of the threatened and pending litigation by Robert
      Taglialatela, Jr. (“Mr. Taglialatela), the Trustee must hire attorneys in
      order to defend her actions. As a consequence, the Trustee, in her
      discretion, has decided to retain Miles & Stockbridge, P.C. as well as
      Woloshin, Lynch, Natalie and Gagne, P.C. in connection with this
      pending and threatened litigation. She will be paying to Miles &
      Stockbridge, P.C. and Woloshin retainers in the amount of $5,000 and
      $10,000, respectively. Again, the purpose of these retainers is to
      defend against the pending and threatened litigation initiated by Mr.
      Taglialatela. If the litigation is resolved without the expenditure of
      these fees, then, of course, they will be refunded to the Trustee, added
      to the corpus and disbursed in accordance with each beneficiary’s
      interest.

             Please be advised that the Trustee is authorized to spend Trust
      corpus on legal fees associated with administration of the Trust and
      defend her actions as Trustee. See e.g. In re Nancy Couch Trust, Del.
      Ch., 723 A.2d 376 (1998); Restatement (Third) Trusts § 88 (2007).
      We hope that the litigation can be resolved without the expenditure of
      significant Trust assets to the detriment of the Trustee and the
      beneficiaries of the Trust.

             Given the pending litigation, Ms. Galvin does not intend to
      distribute the corpus of the Trust at this time. We believe that

29
  Detail Fee Transaction File List at 1, Ex. 6 of the Trust Accounting.
30
  Respondent’s Trial Ex. 3. Only four of the five other beneficiaries were sent
copies of this letter. It appears that Francine’s omission was inadvertent since she
was copied on all subsequent letters from Phyllis’s attorneys. See Respondent’s
Trial Exs. 4-10.
                                      Page 6 of 30
      distributions may be made more promptly if all of the Trust
      beneficiaries execute an agreement that releases the Trustee from any
      and all liability associated with the administration of the Trust. We
      believe that the execution of an appropriate release, followed by
      disbursement, without the expenditure of significant legal fees, will
      allow each of you to realize the benefit of the Trust. Please let me
      know your willingness to execute a release associated with the
      Trustee’s conduct in connection with the administration of the above-
      captioned Trust.”31

      A second letter from the Maryland attorney, dated December 23, 2010, was

sent to the beneficiaries, encouraging them to sign a proposed settlement

agreement that was enclosed with the letter, and warning them that if the

agreement was not signed by all of the beneficiaries, the trustee would be forced to

defend the pending litigation in Delaware.32 Meanwhile, in December 2010, an

attorney in the Woloshin firm filed on Phyllis’s behalf a petition for a protection

from abuse order against Robert in the Family Court in New Castle County

because Robert had been sending emails to Phyllis’s employer accusing her of

money laundering.33 Phyllis was awarded an Order for Protection for Abuse on

January 14, 2011.34

      A third letter from the Maryland attorney, dated January 5, 2011, was sent to

the beneficiaries stating:

31
   Respondent’s Trial Ex. 3 at 2.
32
   Respondent’s Trial Ex. 4.
33
   Affidavit of William L. O’Day, Jr., Esq., Ex. 7 of Trust Accounting
34
   Id. at Ex. E.
                                     Page 7 of 30
             “Although we have not received responses from all of you
      regarding the proposed settlement agreement and release (“Settlement
      Agreement”), at least two of you have responded and indicated an
      unwillingness to enter into the Settlement Agreement. For that
      reason, Phyllis Galvin (“Ms. Galvin”) will be accepting service of the
      Complaint in the Delaware litigation and will defend the action that
      has been filed by Robert E. Taglialatela, Jr. You should be advised
      that no disbursements from the Trust shall be made while the issues
      are being litigated in the Delaware court.”35

      Coincidentally, on January 5, 2011, Robert filed a motion for default

judgment in this action.36 On January 6, 2011, Phyllis’s Delaware trust litigation

attorney entered her appearance in this Court for the limited purpose of opposing

the motion.37 When Phyllis finally filed an answer to Robert’s trust petition nearly

a year later, on December 22, 2011,38 she counterclaimed that Robert’s harassing

emails, his frivolous appeals from the Protection from Abuse Order, and his other

frivolous lawsuits – Robert’s petition for an estate accounting filed in Pennsylvania

on January 2011, Robert’s petition for a protection from abuse order against

Phyllis filed in Pennsylvania on February 9, 2011, and Robert’s tort action against

Phyllis filed in Maryland on February 16, 2011 - had resulted in the dissipation of

Trust assets. Shortly before trial took place, however, Phyllis voluntarily withdrew

her counterclaim.39

35
   Respondent’s Trial Ex. 5.
36
   DI 8.
37
   DI 9.
38
   DI 40.
39
   DI 69.
                                     Page 8 of 30
      A one-day trial in this action took place on January 10, 2013. Phyllis,

Beatrice, Beth, and Robert were the only witnesses. I reserved decision for 30

days in order to give the parties time to settle their dispute and distribute the Trust

assets to the beneficiaries. When no agreement was forthcoming, I issued a draft

report on February 11, 2013, recommending that the Court: (1) remove Phyllis as

trustee because of the intractable hostility between her and the other beneficiaries;

and (2) order an accounting of Phyllis’s administration of the Trust from the date

of the sale of the Oxford property through the date of the issuance of the Final

Order. Phyllis took exception to my draft report, but later withdrew her exception

on April 17, 2013.40 The draft report was approved as a Final Order of the Court

on May 16, 2013.41 After the successor trustee named in the trust document

declined to serve, I appointed Daniel T. Crossland, Esq. as Successor Trustee of

the Trust on October 11, 2013.42

                                The Trust Accounting

      On August 8, 2013, Phyllis filed an accounting of the Trust covering the

period from November 17, 2010 to May 16, 2013.43 The accounting showed that

40
   DI 92.
41
   DI 96.
42
   DI 117.
43
   DI 103.
                                      Page 9 of 30
the starting principal following the sale of the Oxford Property was $158,895.85.44

The remaining principal at the end of the accounting period was $74,901.45. The

deductions totaled $89,598.63, most of which reflected attorney fees and costs –

approximately $70,000.00 in total fees and costs. The remaining deductions were

for trustee’s commission, fiduciary taxes, accounting fees, homeowners insurance,

and miscellaneous small expenses. Beatrice and Beth took exceptions to Phyllis’s

accounting, claiming that the accounting documentation was incomplete and that

Phyllis had improperly used trust funds for her litigation against the beneficiaries.

Robert took 12 separate exceptions to the accounting, which can be grouped into

four categories: (1) failure to provide complete supporting documentation; (2)

failure to account for $10,000.00; (3) use of trust assets to pay Phyllis’s personal

legal expenses; and (4) use of trust assets to reimburse Phyllis’s expenses and to

pay her trustee commission. A hearing on the exceptions took place over two days

on December 5, 2013, and May 22, 2014. I reserved decision in order to go

through the attorney fees with a fine tooth comb.

      After the accounting was filed, it was audited by Court staff who observed

some deficiencies in the supporting documentation and some discrepancies

44
  Although Robert complained that the price was too low and the former trustee
should have waited until the housing market improved before selling the Oxford
Property, there was no evidence that the sale price did not reflect the fair market
value of this asset. Additions to this initial principal amount, consisting of interest
                                      Page 10 of 30
between the amounts listed on the schedules and the exhibits attached to the

accounting. At the Court’s request, Phyllis supplied copies of cancelled checks

from two bank accounts and provided explanations for the various discrepancies

that had been observed. An amended accounting was filed. Having reviewed the

additional materials, I am now satisfied that sufficient documentation was provided

to audit the accounting and that all of the funds in the Trust have been accounted

for.45 Therefore, I am dismissing these two exceptions. There remains the issue of

the appropriateness of the deductions during the accounting period.

      Beth claims that Phyllis used trust funds to file a personal suit against her for

non-payment of the 1993 loan. I have carefully reviewed the affidavit of fees and

accounting of time and expenses of Demetrios G. Kaouris, Esq., of Miles &

Stockbridge, P.A., the Maryland firm retained by the former trustee. From 2009 to

2012, this firm invoiced $22,126.10 in attorney’s fees and $353.95 in costs to the

Trust. These fees and costs pertain to trust matters with a few exceptions. The

following fee entries pertain to non-trust matters: (1) Mr. Taglialatela, Sr.

(“communicate w/ Phyllis re: Father’s removal to Oxford” on 11/30/2009 for

$170.00); (2) the guardianship (“review emails re: guardianship” on 12/04/2009

earned on the funds and a Maryland tax refund, increased the total trust assets to
$168,072.96.
45
   According to the supplemental submission of Phyllis’s attorney dated September
17, 2013, the difference between the Accounting Deduction and the Affidavit of
                                     Page 11 of 30
and 12/08/2009 for $32.50 each, “conference with DGK; trust, guardianship

issues” on 1/25/2010 for $105.00, and “multiple emails re: Oxford, the

guardianship and the estate” on 7/11/ 2010 for $175.00); and (3) Beth’s judgment

(“confer w/ B. Gorman re: judgment” on 11/23/2010 for $33.50). In addition,

there are two entries, the first on June 1, 2011 ($34.50) and the second on October

31, 2011 ($69.00), reflecting communications on the garnishment of trust

proceeds. I do not need to determine whether the former trustee is entitled to

garnish Beth’s share of the trust proceeds to obtain the amount that Beth agreed to

pay Phyllis in settlement of Phyllis’s personal debt action against her. However,

Phyllis’s use of trust funds to pay for legal advice to garnish a portion of a

beneficiary’s share of those funds for a personal debt amounts to self-dealing and,

therefore, was a breach of her duty of loyalty as trustee. Therefore, I recommend

that the Court disallow the above expenses46 and surcharge the former trustee the

amount of $448.03 in fees that were improperly paid to Miles & Stockbridge.

      Robert also claims that trust funds were used improperly by the former

trustee to pursue personal litigation against him. Phyllis testified that everything

Attorney’s fees for Woloshin, Lynch, Natalie & Gagne, P.A., $1,946.85, was the
balance of a retainer that remained in Woloshin’s escrow account. DI 115.
46
   To the extent that certain fee entries covered both trust and non-trust matters, I
reduced the fee amount by the applicable fraction, i.e., if there were two matters in
one entry, the fee was divided in half. So for the entry on 1/25/2010, the proper
fee should have been $52.50 and for the entry on 7/11/10, the proper fee should
have been $116.66.
                                     Page 12 of 30
she did was on the advice of counsel. Nevertheless, her own testimony indicates

that her Family Court litigation was not initiated to benefit the Trust or to defend

her administration of the Trust, but rather to protect herself and her employment

against what she characterized as harassment by Robert, i.e., Robert’s emails to

Phyllis’s employer, Bank of America, accusing Phyllis of laundering money. 47

The Family Court Commissioner’s Order dated May 15, 2011, which denied

Robert’s Motion to Vacate the Protection from Abuse (“PFA”) Order dated

January 14, 2011, stated that the original abuse finding “was based on an incident

that happened in a court proceeding in Pennsylvania and the repeated emails that

were threatening Ms. Galvin-Moore’s job.”48 Thus, the PFA litigation undertaken

by Phyllis on the advice of counsel pertained to her position as a Bank of America

employee, not her position as a trustee of this Trust. William L. O’Day, Esq. of the

Woloshin firm represented Phyllis in connection with the PFA matter in the Family

Court of Delaware (Case No. 10-41953). The Trust was invoiced fees and costs

totaling $18,914.98 for this representation. The Family Court also ordered Robert

to pay attorney’s fees in the amount of $4,829.00, and the order was reduced to a

judgment that was filed in Superior Court, which O’Day has stated in his affidavit

will be paid back to the Trust when collected.       I recommend that the Court

disallow the entire amount of O’Day’s fees and costs and surcharge the former

47
     TT 5/22/14 at 10-13.
                                     Page 13 of 30
trustee the amount of $18,914.98 that was paid to the Woloshin firm for its

representation of the former trustee in Family Court since it was undertaken to

benefit Phyllis personally, and not in her capacity as trustee of the Trust.

Similarly, I recommend disallowing the transcript cost of the Family Court

proceedings on April 27, 2011,49 which should not have been charged as an

expense of the Trust, and surcharging Phyllis an additional $114.75 for the

transcript.

       Trust assets in the amount of $3500.00 were paid to Charles Peruto, Jr., Esq.,

as his fee for defending Phyllis when Robert filed a PFA petition against her in the

Court of Common Pleas of Montgomery County, Pennsylvania in February 2011,

according to Peruto’s affidavit attached to the Trust accounting.50 According to

this affidavit, after Robert voluntarily dismissed his petition the day after he filed

it, the Court awarded attorney fees in the amount of $3,500.00 plus costs for a total

of $3,602.00.51   However, the record also contains Pennsylvania court orders

showing that on May 12, 2011, the court awarded Phyllis a judgment of $3,500.00

plus $102.00 in costs after Phyllis filed a complaint against Robert for abuse of

process and malicious prosecution on April 1, 2011.52         Not only is there no

48
   Affidavit of William L. O’Day, Ex. F.
49
   Ex. 15 of the Trust Accounting.
50
   Ex. 9 of the Trust Accounting.
51
   Id.
52
   Exhibit H to Phyllis’s Verified Answer and Counterclaim. DI 40.
                                     Page 14 of 30
evidence that Robert’s PFA petition was directed at Phyllis in her capacity as

trustee, there is also no evidence that Phyllis’s complaint against Robert for abuse

of process and malicious prosecution was brought on behalf of the Trust.

Therefore, I recommend that these expenditures be disallowed and the Court

surcharge Phyllis for $3500.00 in attorney’s fees and $102.00 in costs that were

paid by the Trust.

      A review of the affidavit of fees and bills submitted by Thomas A. Boulden,

Esq. of Timoney Knox, LLP, reveals that the Trust was properly invoiced a total of

$1,575.00 from March 2012 until May 2012, for work performed for the Trust.

This work arose because of Robert’s involvement in litigation surrounding the

Estate of Robert E. Taglialatela, Sr. in Pennsylvania. Specifically, Robert had

taken the position that the Trust was void because Phyllis had transferred the

Oxford Property out of the Trust and into the name of her father in 2008. Boulden

addressed this issue in the Orphans’ Court, and apparently was successful in

keeping the Trust separate from the estate.53 Boulden also spent time reviewing

the numerous emails that Robert sent to numerous attorneys, including Boulden,

regarding the trust litigation in Delaware.

       A review of the Affidavit in Support of Attorney’s Fees and Detail Fee

Transaction File List submitted by Natalie Woloshin, Esq., reveals a few entries

                                      Page 15 of 30
that should not have been charged to the Trust. On January 18, 2011, Woloshin

made a telephone call to a probation officer in Maryland.54 On April 25, 2011,

Woloshin reviewed bankruptcy documents, and emailed her client and the Family

Court. On April 27, 2011, and again on September 21, 2011, Woloshin held a

conference with O’Day. On October 12, 2011, Woloshin reviewed emails from

Family Court, and on December 12, 2011, she sent to and reviewed an email from

her client regarding the garnishment of Robert’s share of the Trust. I have already

determined that the Family Court proceeding was not initiated for the benefit of the

Trust, and that the former trustee should not have used trust funds to obtain legal

advice on how to garnish another beneficiary’s share of the Trust. There does not

appear to have been any benefit to the Trust in having this attorney review what

were, presumably, documents relating to Robert’s personal bankruptcy or call

Beth’s probation officer in Maryland.      Therefore, the Court should disallow the

fees relating to these specific transactions and surcharge Phyllis the amount of

$355.00 for improper fees paid to the Woloshin firm.

      Phyllis received trustee commissions in the total amount of $9,217.43. The

accounting contains an email from Woloshin to Phyllis dated November 26, 2010,

indicating that, based upon the sales price of the Oxford Property, Phyllis was

53
   In this Court, Robert also expressed his opinion that the Trust was not a valid
trust after the conveyance in 2008. TT 1/10/2013 at 120.
                                     Page 16 of 30
entitled to a principal commission of $676.69. Since Phyllis had been a trustee for

12 years and had performed services for her father and the Oxford Property during

that time, Woloshin multiplied this number by 12 and calculated a total

commission of $8,120.20 from 1998 through 2010. Phyllis’s subsequent income

and principal commissions for 2011 were calculated at $23.64 and $535.62,

respectively, and for 2012, $9.46 and $528.43, respectively, 55 for a total of

$9,217.43 in commissions received.

      Under Court of Chancery Rule 132, a trustee is entitled to a fiduciary

commission for the care and management of property. The commission can be for

a period covering one month, three months, six months or a year. If a principal

commission is taken on an annual basis, it must be computed on the basis of the

fair value of the trust estate “determined as part of a periodic review of trusts by

the trustee, such review to be of a date not more than 12 months prior to the date of

making such annual charge.”56 There is no evidence of any periodic review of the

Trust during the period 1998 to 2010. The only evidence of fair value is the

November 17, 2010 sales price of the Oxford Property. Since there is no evidence

that the trustee or her attorneys knew the fair value of the trust estate in 1998 and

each year thereafter until 2010, it was a breach of the trustee’s duty of care and

54
   Beth testified that her probation officer had been informed by Phyllis that Beth
had drugs in her home, resulting in a raid on Beth’s home. TT 12/05/2013 at 32.
55
   Respondent’s Trial Exs. 11-12.
                                     Page 17 of 30
loyalty simply to multiply the 2010 principal commission by 12.          The Court

should, therefore, disallow all but $1,773.84, which represents the principal

commission for 2010, and the principal and income commissions for 2011 and

2012, and surcharge Phyllis for the balance, i.e., $7,443.49.

        I recommend, therefore, that the Court disallow a total of $30,878.25 in

attorney fees and costs associated with litigation that was initiated or defended by

the former trustee for her personal benefit, to the detriment of the Trust, and

surcharge the former trustee this amount. This amount, however, is less than half

of the legal fees incurred by the Trust after the former trustee launched a large-

scale defense against Robert’s efforts to remove her for breach of fiduciary duty

and threatened self-dealing. Ironically, as it turns out, there is no evidence that

Phyllis breached her fiduciary duty prior to the initiation of this action. However,

Phyllis’s avoidance of legal process while she tried to convince her siblings to sign

releases and Phyllis’s filing of a counterclaim against Robert only appeared to

exacerbate the conflict between the parties.

        The unfortunate fact of this case is that several of Phyllis’s siblings

mistrusted Phyllis, and suspected the worst of her. The guardianship and estate

litigation in Pennsylvania, mentioned by witnesses many times during this action,

formed the backdrop for Robert’s trust petition, which, in turn, appeared to spawn

56
     Rule 132(b).
                                     Page 18 of 30
PFA actions in Delaware and Pennsylvania. While at one level, these proceedings

all pertained to members of the same family, at another level the proceedings

involved different legal constructs, i.e., a guardianship, a decedent’s estate, an

irrevocable trust, and individuals involved in domestic disputes. Some of the legal

nuances appear to have eluded and frustrated Robert, who represented himself

throughout these proceedings. In an effort to obtain information about the different

proceedings, Robert repeatedly sent emails to four or more attorneys at any given

time, thereby increasing the costs to the Trust. Robert’s actions, in this respect,

harmed not only the Trust, but all of it beneficiaries, including himself.

                                     Conclusion

      For the reasons stated above, I recommend that the Court sustain the

exceptions to the former trustee’s accounting insofar as certain legal fees and costs

paid by the Trust did not benefit the Trust, and surcharge the former trustee in the

amount of $30,787.25, representing the total of fees and costs paid by the Trust

because of the former trustee’s breach of fiduciary duty. The remaining exceptions

should be dismissed.

                             Exceptions to Draft Report

      In my draft report, I recommended that the Court dismiss the exceptions

filed by Robert, Beth and Beatrice to the final trust accounting filed by Phyllis, the

former trustee, except for certain legal fees and costs totaling $30,787.25 that were

                                      Page 19 of 30
paid out of Trust funds as a result of self-dealing on the part of the former trustee.

As a result, I recommended that the Court surcharge Phyllis in the amount of

$30,787.25 for her breach of fiduciary duty. Robert and Beatrice have now filed

numerous exceptions to my draft report. I have reviewed their exceptions, the

legal memoranda in support of and in opposition to the exceptions, and now

recommend that all of Beatrice’s exceptions be dismissed and that Robert’s

exceptions be dismissed in part and upheld in part for the following reasons.

      Beatrice’s exceptions include her concerns about the value of the Trust asset,

i.e., the Oxford house, that was sold and the manner in which it was sold. In

addition, Beatrice complains about the number of attorneys that were hired by

Phyllis when she was trustee. The bulk of her exceptions, however, pertain to

events that allegedly took place before Mr. Taglialatela, Sr. passed away in

Pennsylvania, none of which are relevant to the trust accounting and, therefore,

should be dismissed. Regarding her other exceptions, the record shows that the

hearing on the parties’ exceptions to the trust accounting took place over two days.

During the course of the first day, December 5, 2013, only the three exceptants had

an opportunity to testify, and no one testified about the method of sale or the value

of the Oxford house in 2010. At the conclusion of the first day, I gave the parties

several weeks to see if they could reach a settlement before rescheduling the

hearing. Settlement efforts were to no avail, and the hearing was rescheduled for

                                     Page 20 of 30
May 22, 2014. On May 22, 2014, Beatrice failed to appear and thus waived her

opportunity to question the former trustee regarding the method of sale of the

Oxford house and its value. I recommend, therefore, that Beatrice’s exceptions to

my draft report be dismissed as waived or irrelevant.

      Robert’s exceptions are numerous. In his first exception, Robert contends

that none of the former trustee’s expenses related to the defense of this action

should be borne by the Trust because Phyllis should have known when she

transferred the deed to the Oxford house back into their father’s name that the

Oxford house was an asset of the Trust. Second, Robert complains that the former

trustee has not been sanctioned in any way for her behavior, and that all legal fees

related to the counterclaim she filed against him should be returned to the Trust

because the former trustee used the counterclaim to harass him. Third, Robert

takes exception to the use of the term “money laundering” in my draft report, and

also contends that legal fees used to block discovery of Bank of America accounts

should be reimbursed to the Trust, in addition to requesting that the Court order

Bank of America to provide those account records to Robert. Fourth, Robert takes

exception to the cost of the former trustee filing and then withdrawing her

exceptions to my draft report dated February 11, 2013, in which I recommended

that she be removed as trustee. Robert’s fifth exception is slightly rambling. He

appears to take exception to the draft report’s conclusion that his trust petition

                                     Page 21 of 30
appeared to have spawned PFA actions in Delaware and Pennsylvania. Robert

contends that it was the action of Miles and Stockbridge and the former trustee,

who reneged on an agreement to provide Robert with the escrow account number

and banking information related to the sale of the Oxford house, which spawned

this litigation. According to Robert, he would have blocked the sale of the Oxford

house had it not been for this agreement, which in turn would have prevented the

current litigation. As a result, Robert wants all of the legal fees and costs that were

paid to Stockbridge and Miles, other than settlement expenses, returned to the

Trust. Robert also contends that the former trustee was not avoiding service of

process merely because she was waiting for the other beneficiaries to accept the

proposed settlement agreement; she already knew that the majority of the

beneficiaries would not sign the agreement. Therefore, in his sixth exception,

Robert contends that all fees and costs paid to Woloshin, Lynch, Natalie & Gagne

from October 20, 2011 onward should be returned to the Trust because the law

firm assisted the former trustee in avoiding service of process. Seventh, Robert

takes exception to the draft report’s description of his own actions as harmful to

the Trust and its beneficiaries, and the draft report’s conclusion that the former

trustee had not breached her fiduciary duty prior to the initiation of this action.

According to Robert, the former trustee had breached Court of Chancery Rule 132

multiple times concerning her trustee commissions from 1998 to 2010.

                                      Page 22 of 30
      I reject Robert’s first exception claiming that none of the former trustee’s

legal expenses in defending against Robert’s petition to remove her as trustee

would have been incurred had Phyllis exercised reasonable due diligence before

she attempted to transfer the Oxford house out of the Trust and back into Mr.

Taglialatela, Sr.’s name in late 2007 or early 2008. This was an irrevocable trust;

the property could not be transferred out of the Trust without risking a

determination that this was a sham trust, with the resulting loss of the property to

the creditors of the Estate of Robert E. Taglialatela, Sr. Even if this purported

transfer had been a breach of trust by Phyllis, it had no ultimate legal consequence

to the Trust or its beneficiaries since Phyllis executed another deed transferring the

property back into the Trust. The Oxford house remained an asset of the Trust

until it was sold in November 2010, whereupon the net sales proceeds continued to

be held in trust for the beneficiaries.

      I reject Robert’s second exception, in part, as to his claim that the former

trustee has not been sanctioned for her behavior. My recommendation that Phyllis

be surcharged over $30,000.00 is a form of sanction. However, I uphold Robert’s

second exception in part as to his claim that the former trustee’s legal expenses

related to the counterclaim that she filed in this action should be returned to the

Trust. The basis for the counterclaim, which the former trustee later withdrew,

was that Robert’s frivolous lawsuits against Phyllis in Pennsylvania, Delaware, and

                                          Page 23 of 30
Maryland had dissipated Trust proceeds to the detriment of its beneficiaries. In my

draft report, I disallowed the legal fees directly associated with these lawsuits after

finding that the lawsuits had not been initiated to benefit the Trust or to defend the

former trustee’s administration of the Trust, but rather to protect Phyllis herself and

her employment against harassment by Robert. Accordingly, I am recommending

an additional $1110.00 of Woloshin’s fees57 related to the counterclaim be

disallowed and that the former trustee be surcharged this additional amount.

      I reject Robert’s third exception in part because the phrase “money-

laundering” was used by the former trustee during her direct examination to

describe the accusations made by Robert in e-mails sent to her employer, the Bank

of America.58 Although Robert objected at trial to the former trustee’s use of that

term, claiming that the former trustee had instead commingled funds,59 the actual

term itself was and is irrelevant to the matter before me. Robert was and is

pursuing records from Bank of America regarding accounts that appear to pertain

to a different trust agreement that Mr. Taglialatela, Sr. executed on February 4,

1998, which is irrelevant to this trust accounting. However, to the extent that funds

from the Trust were used to communicate with Bank of America in order to protect

bank records of another trust account from Robert’s discovery, then I uphold

57
   See Affidavit of Natalie S. Woloshin, Esq. Ex. 6 of Trust Accounting (Detail Fee
Transactions 12/20/11, 12/21/11, & 4/5/12).
58
   Trial Transcript on May 22, 2014 at 10-13.
                                      Page 24 of 30
Robert’s third exception in part, and recommend that an additional $90.00 of

Woloshin’s fees60 be disallowed, and that the former trustee be surcharged this

additional amount as well.

      I reject Robert’s fourth exception because there is no basis in the record to

attribute an intent “to delay and drag out the process” to the former trustee after

she decided to file and then withdraw her exceptions to my draft report dated

February 11, 2013, which recommended her removal as trustee. Had Phyllis that

intent, she would have fully litigated her exceptions.       Instead, Phyllis merely

exercised her right to take exception to a Master’s Draft Report, and then later

reconsidered and withdrew them.

      I reject Robert’s fifth exception regarding the apparent cause of this

litigation as illogical and irrelevant. In the draft report, I described Robert’s trust

petition as having apparently spawned the PFA actions in Delaware and

Pennsylvania. Now Robert argues that the draft report should have concluded that

it was the direct action of the former trustee and Miles and Stockbridge, breaching

an agreement they had with Robert to turn over information in anticipation of the

sale of the Oxford house, which spawned this litigation. The only evidence of this

agreement was an email dated October 25, 2010, from an attorney at Miles and

59
  Id. at 11-12.
60
  See Affidavit of Natalie S. Woloshin, Esq., Ex. 6 of Trust Accounting (Detail
Fee Transaction 6/13/2012).
                                      Page 25 of 30
Stockbridge to Robert, agreeing to provide Robert:          “(1) a list of expenses

chargeable to the Trust that will be paid at settlement from the proceeds of the sale;

and (2) the name of the bank where the Trust proceeds will be deposited and held

following the sale[,]” in exchange for Robert agreeing not to seek any injunctive or

other similar relief that might upset the sale.61 However, Robert had filed his

petition to remove the trustee in this Court on September 22, 2010, a month before

this agreement allegedly was reached and nearly two months before the Oxford

house was sold. Miles and Stockbridge reviewed Robert’s petition as early as

September 27, 2010. Once Robert filed his petition to remove her as trustee,

Phyllis was placed in a no-win situation. She could choose to fight the petition,

and incur additional legal fees and costs for the Trust; she could resign and have a

successor trustee take over the administration of the Trust while the sale of the

Oxford house was still pending, which would incur additional legal fees and costs,

or she could attempt to get the beneficiaries to agree to an immediate distribution

of the net sale proceeds and dissolution of the Trust after the Oxford house was

sold and the beneficiaries signed appropriate releases, which was not likely given

the animosity of some of her siblings. Phyllis chose the last option, to no avail.

Blocking the sale of the Oxford house would not have prevented this litigation

once it was in progress; such a move would have only made this litigation more

61
     Petitioner’s List of Exhibits, Ex. B. DI 74.
                                        Page 26 of 30
contentious. Furthermore, the information that Robert had requested from Miles

and Stockbridge ultimately was revealed to him in the HUD settlement sheet and

bank statements attached to the trust accounting.

         In his sixth exception, Robert fails to adequately explain why all of the legal

fees and costs of Natalie Woloshin, Esq. from October 20, 2011 onward should be

returned to the Trust. Robert seeks to punish the former trustee for relying upon

her attorney’s advice and assistance in “evading service” while at the same time

complaining that if Phyllis had been sincere about defending herself, she should

have accepted service and proceeded.           After several unsuccessful attempts to

resolve the dispute privately, Phyllis did accept service of process and proceeded to

defend her administration of the Trust. As discussed above, the former trustee had

been attempting to resolve the dispute without having to resort to the litigation.

Therefore, I see no reason why, as trustee, her legal fees should be disallowed to

the extent that they were incurred in defense of her administration of the Trust.

This exception is rejected.

         Robert takes exception to the draft report’s conclusion that Phyllis had not

breached her fiduciary duty prior to Robert’s filing of his trust petition in this

Court.     According to Robert, the former trustee breached her fiduciary duty

multiple times from 1998 to 2010 by failing to follow Court of Chancery Rule 132

and, therefore, all commissions she received should be returned to the Trust

                                        Page 27 of 30
because she was incompetent to manage a trust and failed to protect trust property.

The record shows that from 1998 until 2010, the Oxford house generated no

income and the expenses of maintaining the property were paid out of the personal

funds of Mr. Taglialatela, Sr. while his daughter Beatrice was living there. It was

not until the Oxford house was sold in November 2010 that there were any trust

funds available for a fiduciary commission. In the draft report, I found that the

former trustee violated Rule 132 pertaining to fiduciary commissions when she

awarded herself a retroactive commission for the services she had rendered to her

father and the trust property over the previous 12 years. This breach did not occur

until November 2010, after Robert filed his petition.62 I disallowed $7,443.49 in

retroactive commissions, but allowed a total of $1,773.84 in commissions for 2010,

2011, and 2012. I removed the former trustee because the implacable hostility

between her and some of the other beneficiaries hindered the proper administration

of the Trust, not because she was incompetent per se. After the trust accounting

was filed, I found instances of self-dealing and have addressed those occurrences

by surcharging the former trustee. Under Rule 132(l), a trustee is entitled to a

minimum commission of $400.00 per accounting year. I see no reason to force the

former trustee to disgorge her remaining commission. As a result, I am rejecting

Robert’s seventh exception.

62
     Trust Accounting, Ex. 16.
                                    Page 28 of 30
        Finally, Robert contends that he is entitled to judgment in the amount of

$50,000.00 against Phyllis as compensatory damages. According to Robert, a

claim for compensatory and punitive damages was part of his original complaint.

According to the record, however, Robert’s trust petition sought only the removal

of Phyllis as trustee, an accounting of her tenure as trustee, and an injunction to

delay the trustee’s efforts to “liquidate the assets of the trust” until a successor

trustee could be appointed.       It was in his answer to the former trustee’s

counterclaim that Robert first requested monetary damages for the breach of his

agreement with the former trustee and Miles and Stockbridge regarding the

disclosure of bank information.63 The counterclaim was later withdrawn by the

former trustee; thus, the issue of Robert’s compensatory damages is now moot.

                                     Conclusion

        For the reasons stated above, I recommend that the Court surcharge Phyllis

an additional $1,200.00 in legal fees and costs paid by the Trust that did not benefit

the Trust. This makes a total of $31,987.25 in legal fees, costs, and commissions

that were inappropriately paid to law firms or the former trustee in breach of her

fiduciary duties. These funds must be returned to the Trust for distribution to the

beneficiaries. The remaining exceptions should be dismissed. I am adopting the

63
     DI 54.
                                     Page 29 of 30
draft report, as modified above, as my final report. The parties are referred to Rule

144 for the process of taking exception to a Master’s Final Report.

                                               Respectfully,

                                               /s/ Kim E. Ayvazian

                                               Kim E. Ayvazian
                                               Master in Chancery

KEA/kekz
cc: Daniel Crossland, Esquire
    Beatrice Juliano
    Diane Green
    Elizabeth T. Gorman
    Francine Schmitt

                                     Page 30 of 30