Adelson v. Adelson

13 Mass. L. Rptr. 171
CourtMassachusetts Superior Court
DecidedApril 18, 2001
DocketNo. CA975010
StatusPublished

This text of 13 Mass. L. Rptr. 171 (Adelson v. Adelson) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Adelson v. Adelson, 13 Mass. L. Rptr. 171 (Mass. Ct. App. 2001).

Opinion

Zobel, J.

Having heard the testimony and viewed the exhibits while presiding over the jury-tried portions of these proceedings; having heard oral argument by the parties’ respective attorneys; and having examined their written submissions, I make the following findings pertinent to Plaintiffs’ claims for (a) imposition of a constructive trust (Count XI) and (b) rescission (Count XII), based on a preponderance of the credible evidence and such reasonable inferences as I chose to draw therefrom. Although the record may contain evidence contrary to one or another finding, I have considered such evidence, but given it no credit.

It is not inappropriate for me to preface my formal Findings of Fact by noting that this litigation, like so many family disputes, has tended to encourage all the Adelson parties to display deplorable rancor, bad feelings, and loutish behavior. The evidence during the 14-day trial depicted, like something from the playwright Arthur Miller, a harsh, demanding, unfeeling, successful businessman frustrated in his inability to actuate his self-indulgent, substance-abusing, over-pampered, and (as he believes) ungrateful sons.

In reaching this conclusion, I have clearly in mind the testimony and demeanor of the sons. I found them, as witnesses, not credible. The father did not testily “live”; Plaintiffs did not call him, Mass.R.Civ.P. 43(b); nor did any other party put him on the stand. Nonetheless, the evidence as a whole, as well as his demeanor while in my direct observation, communicated the flavor of his paternal — one might accurately say, patriarchal — attitude. The evidence did not, however, persuade me that he violated any legal, equitable, or ethical duty to Plaintiffs.

1. Defendant Sheldon Adelson (“Sheldon”) adopted Plaintiffs Gary Irwin Adelson (“Gary") and Mitchell Evan Adelson (“Mitchell”) and their sister Shelley Adelson (“Shelley”) when they were young, after he married their mother. Shelly participated in the transaction at issue but did not join in this lawsuit.

2. Mitchell, born August 28, 1957, attended Northeastern University for three years, taking various business courses, including accounting and economics; was graduated from Curry College cum laude in 1990; and received a Master’s Degree in clinical social work from Boston College in 1993. Sheldon bore the entire cost of Mitchell’s education.

3. Gary, born September 11, 1954, was graduated from Lesley College in 1994, after taking business courses at Boston College, Northeastern University, and Suffolk University. Sheldon bore the entire cost of Gary’s education.

4. The law firm of Hill & Barlow (his present counsel) represented him in various domestic and real estate matters during the 1990s. It was his practice to have [172]*172a lawyer review agreements and contracts before signing them.

5. At all times pertinent to the issues in this action, Sheldon either directly supported Mitchell and Gary or furnished them assets which provided their financial support.

6. In 1988, Sheldon sponsored a trust arrangement which conferred on Mitchell, Gary, and Shelly an ownership interest in an office building in Needham, Massachusetts. The rental income which the building generates provides each of the children with an annual income of $100,000 to $125,000. Upon eventual sale of the building, Mitchell and Gary can each reasonably expect to net $6,000,000.

7. Until 1994, Mitchell and Gary each received $20,000 (the maximum tax free gift) from Sheldon and his first wife or Sheldon and his second wife.

8. Mitchell purchased a house for $549,000, using $499,999 in gifts which Sheldon orchestrated and $50,000 from a loan which Sheldon either made directly or arranged.

9. Sheldon also paid the balance of the mortgage on Gary’s condominium and gave Gary (as a gift) funds to buy his first residence.

10. Throughout the events at issue here, Sheldon owned a 50.001% interest in The Interface Group, Inc. (“Interface"), which was primarily concerned with trade shows and travel.

11. In 1988, Interface purchased 15% of its own stock from a retiring shareholder, Richard Katzeff (“Katzeff’).

12. On or about June 1, 1989, Interface transferred the 15,000 shares of its stock formerly owned by Katzeff to the children (“younger stockholders”) of its then-existing stockholders, Sheldon Adelson, Theodore (“Ted”) Cutler, Irwin Chafetz and Jordan Shapiro (“older stockholders”), at $265 per share, in percentages reflecting the ownership of their respective fathers.

13. The younger stockholders signed 10-day demand notes payable to Interface for amounts equal to $264.99 per share (“the Purchase Notes”), identical in terms (except for the amount payable, which varied proportionally with the amount of stock purchased), interest at an adjustable rate.

14. Each of the three Adelson children received 2,941.24 shares of stock. The evidence permits the inference, which I draw, and the finding, which I make, that none of them expected ever to have to make any payment on the promissory notes (unless or until an event like the sale of their stock).

15. From the date of acquisition through November 10, 1994, when they sold the stock back to Sheldon in the transaction which underlies this litigation, neither Gary nor Mitchell ever received any demand for either interest or principal; nor did either of them make any such.

16. The evidence permits the inference, which I draw, and the finding, which I make, that Mitchell and Gary regarded their respective shares as gifts. Although the evidence permits a contrary inference, I decline to draw it; and I do not credit such evidence.

17. Before the Adelson children received the stock, Sheldon desired to divide his allocation of the Katzeff stock between his children and his three siblings, a desire which, as majority stockholder, he could have enforced.

18. However, after consulting the other older shareholders, Sheldon conditioned this distribution on his children’s agreeing to share with Sheldon’s siblings half of any proceeds resulting from any future sale, a condition to which Gary and Mitchell agreed, and as to which they signed a Memorandum of Understanding to reflect and memorialize their agreement. (All the Adelson children participated on identical terms. Because Shelly is not party to the present litigation, we need not refer to her hereafter.)

19. On November 1, 1989, the younger stockholders executed a Voting Trust Agreement (Charles For-man, Voting Trustee) and deposited their shares of Interface stock into the voting trust, receiving in return certificates of beneficial interest (“Voting Trust Certificates”) in the Voting Trust. Mitchell and Gary knew that Forman was Interface’s counsel and that he worked for Sheldon.

20. On November 1, 1989, Mitchell and Gary created, respectively, the Mitchell Adelson Trust and the Gary Adelson Trust, to hold Mitchell’s and Gary’s respective Voting Trust Certificates. Mitchell and For-man were named co-trustees of the Mitchell Adelson Trust; Gary and Charles were named co-trustees of the Gary Adelson Trust. Mitchell and Gary were also beneficiaries of their respective trusts. Other beneficiaries were Mitchell and Gary’s respective issue (born and unborn).

21. Mitchell and Gary did not object to Forman’s serving as their respective co-trustee.

22. In December 1989, the Interface Group, Inc.

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Bluebook (online)
13 Mass. L. Rptr. 171, Counsel Stack Legal Research, https://law.counselstack.com/opinion/adelson-v-adelson-masssuperct-2001.