Ambeliotis v. Brown

33 Mass. L. Rptr. 138
CourtMassachusetts Superior Court
DecidedSeptember 30, 2015
DocketCV1400855BLS1
StatusPublished

This text of 33 Mass. L. Rptr. 138 (Ambeliotis v. Brown) 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
Ambeliotis v. Brown, 33 Mass. L. Rptr. 138 (Mass. Ct. App. 2015).

Opinion

Leibensperger, Edward P., J.

The plaintiff, Elizabeth Ambeliotis (Elizabeth), filed this action for breach of fiduciary duly and other claims against the defendants, Austin Brown (Austin), Elizabeth Williams Brown, as Executrix of the Estate of Albert Brown (Albert), Metropolitan Pipe and Supply Company (MPSC), Mark H. Holly, Esq., Charles Adams, Esq., and Weston Patrick, P.A.2 Defendants Austin, Albert, and MPSC (collectively the “Brown Defendants”) move to dismiss under Mass.R.Civ.P. 12(b)(6) and/or to compel arbitration. Defendants Holly, Adams, and [139]*139Weston Patrick, P.A. (collectively the “Attorney Defendants”) also move to dismiss under Mass.RCiv.P. 12(b)(6). On August 26, 2015, this courtheld ahearing on the motions. For the reasons stated below, the motions are allowed in part and denied in part.

BACKGROUND

The facts as revealed by the First Amended Complaint (complaint) are as follows.

Elizabeth, the plaintiff, is one of three children of Wesley E. Brown (Wesley), who died on September 18, 1998. Wesley owned MPSC, a Massachusetts corporation, located at 303 Binney Street, Cambridge, Massachusetts (Property), which is in the Kendall Square area of Cambridge. Wesley’s two other children are Austin and Albert. Albert died on February 2, 2011. Elizabeth Williams Brown is the executrix of Albert’s estate.

Wesley engaged Adams and Weston Patrick, P.A. to provide legal services to himself and to MPSC. Adams is now a retired Massachusetts lawyer and a former member of Weston Patrick. Holly is a current member of Weston Patrick and currently provides legal services to the defendants.

Wesley owned MPSC until his death in 1998. Wesley purchased the Property through his company, Canal Really Corporation, over the course of several transactions in the early 1960s and through another transaction in 1982. The Property consists of three parcels of land in two separately zoned portions, one industrial and one residential. Presently, six low rise industrial buildings are located on the Property. MPSC leases the Property.

Canal Realty Corporation owned the Property until December 19, 1988, when the Canal Realty Trust (CRT) was created. Austin, Albert, and Adams executed a Declaration of Trust creating CRT. They were the original named trustees of CRT. The Property was placed into the trust. When CRT was created, its beneficiaries were Austin, Albert, and the Elizabeth Brown Realty Trust (EBRT).

Wesley and Adams had previously established EBRT on September 12, 1985, for Elizabeth’s benefit. See Complaint at Exhibit B (copy of irrevocable trust agreement establishing EBRT). Adams was the trustee of EBRT. Elizabeth was never provided with a copy of the EBRT, but Wesley and Adams advised her that Adams was her trustee and would manage her interest in CRT on her behalf.

On the same date that CRT was created, the beneficiaries of CRT formed a Voting Trust Agreement (VTA) with respect to CRT. Austin and Albert signed the VTA on behalf of themselves as beneficiaries of CRT and Adams signed the VTA on behalf of EBRT as beneficiary. Elizabeth claims that the VTA changed CRT from a nominee trust into a typical trust. The VTA eliminated essential characteristics of CRT as a nominee trust. The trustees of CRT became decision makers for CRT by virtue of the VTA. The beneficiaries of CRT, in their capacity as beneficiaries, lost authority to control CRT.

The VTA references that Albert and Austin each hold a forty percent beneficia1 interest in CRT, and that EBRT holds a twenty percent interest. According to the VTA, the parties wish to “insure the continuity and stability of management” of CRT, “avoid a conflict between them with regard to the management” of CRT “and with regard to voting the beneficial shares of’ CRT, unite the voting powers held by them. Albert, Austin, and Adams, individually and not as trustee of EBRT, became the voting trustees. Albert and Austin could name successor trustees. The voting trustees possessed legal title to the beneficial interests in CRT and were entitled to exercise all rights and powers as absolute owners of such beneficial interests, including the full and unqualified right and power to vote. Adams could be removed as a voting trustee at any time by a written instrument signed by all parties or their successors. Moreover, all actions taken by the voting trustees and all questions arising among the voting trustees were to be determined by a majority vote of the voting trustees. See Complaint at Exhibit C (copy of VTA). In addition, the VTA states that: “Any dispute that may arise hereunder as to any provision of this Voting Trust Agreement, or as to the enforceability of this Voting Trust Agreement shall be submitted to binding arbitration before the American Arbitration Association.” Id. at para. 10.

Elizabeth alleges that she was not informed of the VTA and that Adams entered into the VTA in his capacity as trustee of EBRT without her knowledge or consent. She contends that the “VTA created a traditional trust of CRT in which Elizabeth was a beneficiary with no management rights.” Austin, Albert, and Adams, who were not only trustees of CRT, but also voting trustees under the VTA, made all of the decisions. According to Elizabeth, the VTA granted power of attorney to Albert, Austin, and Adams to decide issues involving Elizabeth’s beneficial interest in CRT, and in that capacity and in the capacity as trustees, they owed Elizabeth fiduciary duties.

In 1995, when Elizabeth turned thirty, Adams resigned as trustee of EBRT. Since then, Elizabeth, in her individual capacity, became a beneficiary of CRT in the place of EBRT. In June 2009, Adams resigned as trustee of CRT. Albert and Austin proposed to Elizabeth that Holly succeed Adams as a trustee of CRT. Elizabeth objected to Holly being named as successor trustee, and requested to be appointed as successor trustee. Albert and Austin refused to appoint her as a trustee of CRT. Holly became counsel for Albert, Austin, and MPSC when Adams retired in June 2009.

In June 2009, Adams also resigned as a voting trustee of the VTA. Because at the time Elizabeth was not aware of the VTA, she did not request to be [140]*140appointed as Adams’s successor as voting trustee. Elizabeth believes that no successor to Adams as trustee of the VTA was ever appointed, even though the VTA requires that a successor be named for Adams. Since June 2009, only Austin and Albert, and more recently, Elizabeth Williams Brown, as executrix, have exercised control of CRT as the only voting trustees under the VTA.

Adams and members of his firm have acted as counsel for MPSC, Austin, Albert, and CRT. Adams served as a corporate officer of MPSC until 2009. Holly has served as a corporate officer of MPSC since Adams retired.

Elizabeth alleges that when CRT and MPSC entered into leases for the Property, it was MPSC’s interest that was advanced and not CRT’s interest. She contends that the defendants did not determine a fair rental value of the Property and did not take into consideration the location and market value of the Property. In addition to renting the Property to MPSC for amounts substantially below fair market rates, the defendants have allegedly provided other benefits to MPSC to the prejudice of CRT. For instance, in October 1997, Adams, Austin, and Albert, mortgaged the Properly for $1.5 million in order to build a storage facility for MPSC.

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Bluebook (online)
33 Mass. L. Rptr. 138, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ambeliotis-v-brown-masssuperct-2015.