NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
23-P-296
CHRISTOPHER J. DIGIOVANNI
vs.
STEPHEN M. DIGIOVANNI1 & another.2
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
After years without an accounting or any distributions to
him, Christopher DiGiovanni, one of the beneficiaries of the
DiGiovanni Family Irrevocable Trust (DFIT or trust), commenced
this action, claiming that the defendant trustees had breached
their fiduciary duties to him and seeking their removal and
other relief due to mismanagement, waste of trust property,
commingling of trust funds, and self-dealing. Following an
eight-day trial, a judge of the Superior Court issued an amended
decision concluding that some of the trustees' actions or
omissions had breached their fiduciary duties to the
1Individually and as trustee of the DiGiovanni Family Irrevocable Trust.
2Maureen Clark, as trustee of the DiGiovanni Family Irrevocable Trust, and Richard B. Aronson. beneficiaries and that their breaches were willful or reckless.
The judge removed trustee Stephen DiGiovanni and ordered him and
trustee Richard Aronson to compensate the trust for its losses
and pay certain of the plaintiff's attorney's fees and costs.3
Those trustees now appeal; we affirm.
Background. We draw the facts from the stipulated facts
and the judge's findings.
1. The DFIT. The DFIT was created in 2004 by the settlor,
Mary DiGiovanni, the mother of the plaintiff, Christopher
DiGiovanni, and defendant Stephen DiGiovanni.4 Christopher and
Stephen were both beneficiaries and original trustees of the
DFIT; Mary was never a beneficiary or a trustee of the DFIT.5
The trust instrument provided that only "disinterested
trustee(s)" had authority to make discretionary distributions of
3 Judgment entered against Stephen DiGiovanni in the amount of $2,212,091 and against Richard Aronson in the amount of $889,612, "which represents a joint and several liability with Stephen DiGiovanni." The judgment also ordered Stephen DiGiovanni to pay Christopher DiGiovanni attorney's fees in the amount of $728,849.50, plus costs of $11,923.78, and held Richard Aronson jointly and severally liable for $110,000 of those amounts.
4 We use the first names of the DiGiovanni family members because of the common surname.
5 Some of Mary's other children were beneficiaries from 2004 through 2008, but they are no longer beneficiaries and are not parties to this appeal.
2 income or principal to the beneficiaries.6 From December 21,
2007, until he resigned on July 29, 2016, defendant Aronson
served as the disinterested trustee of the DFIT. Aronson was an
attorney whose practice concentrated in estate planning and
estate and trust administration and he had been a trustee for
approximately 200 trusts over his career. The judge found that
Aronson was an experienced attorney, having drafted thousands of
trusts in his career and having acted as the trustee of numerous
trusts holding real property, including rental property. From
December 2007 through July 2016, Stephen and Aronson were the
only trustees.7
The trust grants broad powers to the trustees over the
trust's property. Importantly, the trust contains an
"exculpatory clause":
"No Trustee or successor or additional Trustee hereunder shall be personally liable for any loss to the trust estate, any act or omission, or any error or mistake of judgment or law, unless it results from his or her willful or intentional misconduct or bad faith."
6 From 2004 through December 12, 2007, Morris Boladian, a family friend, served as the disinterested trustee. He is not a party to this action. Maureen Clark became the disinterested trustee on December 30, 2016. The judge ruled that her appointment was valid and denied Christopher's request to remove her. She did not appeal.
7 Christopher was removed as a trustee in 2007 due to his deteriorating mental health. He was not replaced with a successor trustee. He has always remained, however, a beneficiary of the trust.
3 2. The Truro property. The settlor, Mary, had acquired
property in Truro from Louis DiGiovanni as part of their divorce
settlement and subsequent modification. She obtained
subdivision approval for a five-lot subdivision of that property
on February 23, 2000. One of the subdivision lots, known as 6
Mary's Way, became the family's vacation home and was never
owned by the DFIT. The other four lots, known as 1-4 Mary's
Way, were undeveloped, but Mary's plan was to construct a home
on each lot, with access to the beach, and use them as rental
properties until they were sold. In 2004, Mary directed that
the beneficial interest in lots 1 and 3 be transferred to the
DFIT. The beneficial interests in 2 and 4 Mary's Way were
transferred to the DFIT on December 12, 2008. At that time, 4
Mary's Way had a five thousand square-foot house on it; 2 Mary's
Way was undeveloped. Each of the four lots was subject to
mortgages when they were transferred into the trust.
The DFIT was unfunded other than the real estate holdings,
and development of the properties required loans because the
DFIT had no funds to pay real estate taxes or other expenses.
With a variety of different forms of financing, including loans
from Mary and from Stephen's wife, Donna, development of the
lots progressed as follows. Between 2005 and 2007, five
thousand square-foot homes were constructed on 1, 3, and 4
4 Mary's Way.8 As each home was completed, they were operated as
vacation rentals until their sale. Construction of a ten
thousand square-foot home on 2 Mary's Way concluded in July
2015.
From 2004 through 2008, expenses for 1, 3, 4, and 6 Mary's
Way were paid from one account at Wainwright Bank even though a
different trust held 6 Mary's Way. From 2008 through 2015,
rental income from the four trust properties and the rental
income for 6 Mary's Way was deposited and expenses were paid
from one account at Bank of Canton. And, from 2015 through
2019, income from all of the properties, including 6 Mary's Way,
was deposited and expenses were paid from a single Rockland
Trust account.9
The judge found that "Christopher was aware of the
construction projects as they were underway" and "never
8 In 2006, although the properties were operating at a deficit, Stephen installed an outdoor recreation area during the construction of 4 Mary's Way, including a tennis court, basketball court, bocce court, shuffleboard, putting green, horseshoe pit, and swing set, at a cost of $400,000. While the judge characterized this expenditure as "unwise," he concluded that Stephen had not acted in bad faith or engaged in willful or intentional misconduct in expending DFIT funds to construct the recreation area.
9 The judge found that this commingling was not, as Stephen testified, required by Bank of Canton; rather, the judge found that it was "consistent with Stephen's lax financial approach to trust matters and failure to distinguish between his own desires and the interests [of], and fiduciary obligations to, the DFIT."
5 complained to the other trustees or to Mary that the
construction projects were ill-advised." The judge further
found that "Stephen did not act in bad faith in connection with
the planning, design, financing, and construction of 1, 3 and 4
Mary's Way and acted without willful or intentional misconduct
or reckless indifference to the purpose of the trust or to the
interests of the beneficiaries." However, the judge enumerated
many imprudent expenditures by Stephen that the judge held did
not rise to the level of intentional or reckless conduct but
were "strong evidence of Stephen's state of mind, which included
a continual extravagance, imprudence and lack of concern for his
fiduciary duties." The judge explained that Stephen's
"underlying state of mind was never far from willful and
reckless disregard of those duties. This pattern [played] a
significant role in the court's determination that, on some
occasions, Stephen went even farther and did engage in
intentional or reckless conduct or bad faith."
3. BSC-Truro Ventures, LLC. At the end of 2007, various
high-interest loans were coming due, but the trust did not have
the money to pay them. Stephen and Aronson engaged Richard
Scimone, a long-time friend, to assist them in obtaining new
financing. They worked with Bank of Canton.10 They created BSC-
10 Stephen paid Scimone $4,500 per month for three years either as a "broker's fee" or for providing a guaranty of the
6 Truro Ventures, LLC ("BSC" or "the LLC"), a limited liability
company, and made Scimone the sole "manager."11 Section 3.03 of
the LLC agreement provided:
"Powers and Duties of the Managers. The business and affairs of the LLC shall be conducted by or under the direction of the [m]anagers, who shall have and may exercise on behalf of the LLC all of its rights, powers, duties and responsibilities."
The powers of the manager also included the power to sell,
convey, mortgage, pledge, or encumber any of BSC's real
property. The DFIT held a ninety-nine percent membership
interest in BSC and Scimone held a one percent membership
interest. Stephen transferred 1 and 3 Mary's Way to BSC.
In the end, BSC and Stephen, as trustee of another trust,
obtained a $3.2 million loan from Bank of Canton, secured by a
mortgage on all four Truro lots and the personal guarantee of
Scimone, among other security. The loan was used to discharge
several preexisting mortgages on the properties and generated
$1.1 million in cash. In addition, the influx of cash allowed
the trust to pay legal fees and other debts in related family
loan described infra. In addition, the trust paid over $200,000 to Scimone for purported legal or consulting services.
11Managers were not required to be members, but if a member was a manager, the member-manager was required to have an aggregate interest of at least one percent in income, gain, loss, deduction or credit of the LLC, and maintain an aggregate capital account balance of not less than one percent of the total positive capital account balances of all members, or $500,000, whichever was less.
7 litigation, leading to the transfer of the beneficial interest
in 2 and 4 Mary's Way to the DFIT.
While the benefits of the Bank of Canton loan were many and
the judge found that the trustees had "few, if any, other
options," the judge also found that "giving control over trust
assets to a non-trustee" -- Scimone -- created "serious and
obvious risks" that Stephen and Aronson intentionally or
recklessly disregarded. Indeed, Scimone, as sole manager,
subsequently used his power to finance three real estate
purchases that were unrelated to the business of BSC, using his
status as manager or using the BSC properties as security. In
addition, Scimone borrowed money from the trust. As a result of
these transactions, the trust was damaged. The judge concluded
that although Stephen believed in good faith that the Bank of
Canton loan was in the best interest of the DFIT, "[t]he same is
not true of the gratuitous benefits given to Scimone or the
relinquishment of Stephen's responsibilities to manage the
[t]rust's assets in the interest of the DFIT's beneficiaries."
Eventually, in 2011, Scimone transferred his one percent
membership interest in BSC to Stephen's wife, Donna. It is
unclear whether Scimone technically was removed as a manager of
BSC, but other than signing tax returns for BSC in 2022, the
record does not reflect that he played a role in BSC or
8 exercised control over the BSC properties after the 2011
transfer.
The properties at 1-4 Mary's Way have been sold; the net
proceeds are being held in escrow.
Discussion. The rule is general and fundamental,
"that no person holding trust funds can be allowed to derive any personal gain or advantage, either directly or indirectly, from the use thereof, but he must manage them with a single eye to the advantage of the trust estate; and, if he assumes to use them in any manner for his own benefit or in his own business, he must account for all the profits arising from such use, if profits are made, or for the principal and interest, in case of loss." (Citation omitted.)
Ball v. Hopkins, 268 Mass. 260, 269 (1929). "The rule that a
fiduciary may not derive personal advantage at the expense of
the trust, nor put himself in a position antagonistic to the
beneficiaries of the trust, will be strictly enforced." Johnson
v. Witkowski, 30 Mass. App. Ct. 697, 706 (1991). "The burden of
proving good faith and fairness is on the trustee, as is the
burden to show that any questioned transaction was advantageous
to the beneficiaries." Id.
With these general standards in mind, we review Stephen's
and Aronson's arguments, understanding that "the judge's
assessment of the quality of the testimony is entitled to our
considerable respect because 'it is the trial judge who, by
virtue of his firsthand view of the presentation of evidence, is
in the best position to judge the weight and credibility of the
9 evidence.'" Edinburg v. Edinburg, 22 Mass. App. Ct. 199, 203
(1986), quoting New England Canteen Serv., Inc. v. Ashley, 372
Mass. 671, 675 (1977).
1. Abdication of control over trust properties. Although
the judge found that the decision to take out the loan from Bank
of Canton benefitted the trust and did not constitute a breach
of the trustees' fiduciary duties, the judge found that Stephen
and Aronson abdicated control over trust properties when they
signed the LLC agreement, transferred the properties to BSC, and
designated Scimone, who owed no fiduciary duties to the
beneficiaries of the trust, as the sole manager of BSC. The
judge further concluded that this abdication resulted in
$889,000 in damages to the trust. On appeal, Stephen and
Aronson do not quibble about the amount of the damages; they
argue that they are not liable, because Bank of Canton required,
as a condition of the loan, that Scimone hold a one percent
interest in BSC and be the sole manager of it. They contend
that there was no basis for the judge to conclude otherwise and
that the judge's finding that the bank did not require Scimone's
interest in BSC or sole control of the management of BSC is
clearly erroneous.
We are not persuaded; the evidence does not support the
trustees' assertions. The bank's commitment letter spelled out
the conditions of the loan in detail; although the conditions
10 were many, other than requiring Scimone to guarantee the loan,
the commitment letter did not mention him. Even if we were to
agree that the very formation of BSC was "required" by the bank,
the bank's failure to take any action that would ensure that
Scimone remain the manager is telling. The bank reserved in the
commitment letter the right to review and approve the management
agreement. Thus, the bank was aware that although the LLC
agreement identified Scimone as the "initial Manager[] of
[BSC]," it also provided that a manager "may be removed at any
time with or without cause by the other Managers or the
Members." The LLC agreement further provided that "[a]ny
vacancy in the office of Manager shall be filled by the
Members." In other words, even though Scimone was designated as
the manager, he could be removed at any time, without notice to
the bank, which undermines the suggestion that the bank required
the trustees to abdicate their duties in favor of Scimone.
Further, as the judge noted, when Scimone ultimately transferred
his one percent interest to Stephen's wife, permission of the
bank was not requested or given, and there has been no showing
that the bank sought information about Scimone's interest. We
discern no error in the judge's conclusion that the bank did not
11 require that Scimone own one percent of BSC or be its sole
manager.12
2. Exculpatory clause. The trustees argue that pursuant
to the exculpatory clause in the trust instrument, they are
liable only for "willful or intentional misconduct or bad
faith." "[T]he case law has long defined the phrase 'wilful
default' to include acts committed 'with reckless indifference
to the interest of the beneficiary.'" Passero v. Fitzsimmons,
92 Mass. App. Ct. 76, 81 (2017), quoting New England Trust Co.
v. Paine, 317 Mass. 542, 548, 550 (1945). The trustees contend
that they did not knowingly or intentionally disregard an
unreasonable risk or take risks that "entail[ed] a high degree
of probability that substantial harm would result" (quotation
and citation omitted). Manning v. Nobile, 411 Mass. 382, 387-
388 (1991).
This is true, Stephen contends, because he relied on
Aronson, who is a lawyer, to review the "structure of the deal"
"from a legal perspective," and, citing Dill v. Boston Safe
Deposit & Trust Co., 343 Mass. 97, 99-102 (1961), contends that
12Stephen testified that he did not see any reason to become a manager because he would still be running the day-to- day operations. This is despite the LLC agreement, which provided that "[u]nless specifically authorized by the Managers, no Member that is not a Manager shall be an agent of the LLC or have any right, power or authority to act for or to bind the LLC or to undertake or assume any obligation or responsibility of the LLC or of any other Member."
12 such reliance "immunizes him from liability." Again, we are not
persuaded. The judge made no finding that he credited Stephen's
testimony that he relied on Aronson to review the transaction
"[t]o protect the trust from a legal perspective." Rather, the
judge credited evidence that "the delegation to Scimone was
intentional misconduct, reflected reckless indifference to the
interests of the [DFIT] and resulted from, at least, willful
blindness to the limiting language" of the trustee's powers
contained in the trust instrument.
Aronson, on the other hand, argues that he had "delegated
operational control to Stephen," and reasonably relied on
Stephen's assessment of Scimone's trustworthiness and on the
fact that Scimone was an attorney subject to rules of
professional responsibility. However, "[t]o fulfil his duty, a
cotrustee must 'participate in the administration of the trust
and [] use reasonable care to prevent a co-trustee from
committing a breach of trust or [] compel a co-trustee to
redress a breach of trust.'" Rutanen v. Ballard, 424 Mass. 723,
731 (1997), quoting Restatement (Second) of Trusts § 184 (1959).
See Restatement (Third) of Trusts § 81 (2007). Aronson did not
merely agree to delegate certain duties to Stephen and Scimone,
he "largely abandoned his duties of administering the trust" to
Stephen and Scimone, and thereby violated these principles.
Rutanen, supra. Aronson asked for accountings over the years,
13 but took no action when Stephen consistently failed to ever
provide Aronson with any financial documents or an accounting.
Aronson did not hire an accountant, or monitor any of Stephen's
or Scimone's activities to ensure that decisions were made in
the best interest of the beneficiaries. He "first expressed
concern about Scimone" in March 2015, and only later recommended
that he be removed as manager of BSC. Aronson did not seek
instruction from the court. See id. He approved the LLC
agreement with knowledge that the trust properties were being
conveyed to an entity that did not owe fiduciary duties as a
trustee to the DFIT. As the judge found, his acts of omission
included "the failure to do anything to limit Scimone's legal
authority, supervise him, monitor his activity, require
documentation or proof, or otherwise attempt to secure fidelity
to the trust's interest."13 Further, the judge found that "there
were . . . serious and obvious risks in giving control over
trust assets to a non-trustee, as Stephen and Aronson either
understood, or recklessly or with willful blindness disregarded.
13Aronson asserts that he took only one "intentional act[ion]" -- signing the LLC agreement -- suggesting one act is insufficient to overcome the protections of the exculpatory clause. He ignores, however, that his acts of omission may also constitute intentional disregard of an unreasonable risk, and on these facts, his utter abdication of his duties can only be viewed as such intentional disregard, given his vast knowledge of trusts and trustees' duties. The judge did not err in concluding that Aronson's utter failure to exercise his duties as a trustee amounted to intentional misconduct in that sense.
14 Some of those risks later materialized . . . [and] the resulting
damage to the DFIT was precisely the type of harm that fell
within the scope of the risks that Stephen and Aronson created
by signing the LLC agreement, transferring the trust assets to
[BSC] and appointing Scimone as sole manager."
It is true that "[a] trustee may avail himself of the
services of others for the performance of administrative
details," but a trustee cannot "delegate his authority as
trustee to [another] nor commit the entire administration of the
trust to him." Milbank v. J. C. Littlefield, Inc., 310 Mass.
55, 62 (1941). In the absence of any safeguards, Aronson cannot
avoid liability for his acts and omissions by claiming he relied
on Stephen or trusted Scimone.
Stephen, too, argues that he merely delegated authority to
Scimone, and Scimone's misbehavior was unforeseeable. But, for
the same reasons, the argument is unavailing. The sheer amount
of power given to Scimone should have put Stephen on notice of
the potential dangers. More importantly, Stephen not only
turned a blind eye to those dangers, but the judge found that he
was aware of Scimone's misdeeds even before they happened and,
in some instances, approved of them. As the judge noted, the
trustees' conduct went much further than delegating ministerial
tasks.
15 3. Damages. Next, citing to page seventy-eight of the
judge's decision, Stephen argues that the damages award must be
reversed because it is premised on the judge's "speculation"
that "all [Stephen] had to do to get the loan was 'obtain
another form of security or someone else's personal guarantee to
convince the Bank to lend the money.'" Stephen takes the
judge's statement out of context. The judge made that statement
in concluding that it was not "willful misconduct to seek the
Bank of Canton loan, even though the DFIT's debt service
increased substantially." The judge explained that at the time,
"Stephen had few, if any, other options. He also had to obtain another form of security or someone else's personal guarantee, to convince the Bank to lend the money. Given the DFIT's challenging financial circumstances and the economy, Stephen acted for the purpose of preserving the DFIT's existence and to pursue the development of the Trust Properties."
Indeed, the judge continued, "[t]he DFIT's difficult
circumstances resulted, of course, from many risky and
extravagant decisions that Stephen made earlier, but none of
that went beyond the protection of the exculpatory clause." The
judge awarded no damages on the decision to borrow $3.2 million
from Bank of Canton. As discussed, the damages award derived
from the trustees' decisions to abdicate to Scimone their
responsibilities to the beneficiaries of the trust -- not from
their decision to obtain the Bank of Canton loan.
16 4. Mary's loans. The judge ordered Stephen to reimburse
the trust $92,983 in excess payments from DFIT funds that
benefitted Mary because Mary was not a beneficiary of the trust.
The judge found that Mary made loans to the DFIT totaling
$1,471,783.99, as Christopher asserted; on appeal, Stephen
asserts that Mary made loans totaling $2,571,783.99. Stephen
contends that the judge's choice between the amounts Christopher
contended were paid on Mary's behalf and the amounts that
Stephen now contends were paid was clearly erroneous. We
disagree. "If the trial judge makes one of several possible
choices of what facts are supported by the evidence, the judge's
choice is not clearly erroneous." Rood v. Newberg, 48 Mass.
App. Ct. 185, 191 (1999), quoting W. Oliver Tripp Co. v.
American Hoechst Corp., 34 Mass. App. Ct. 744, 751 (1993).
Here, Stephen's testimony was inconsistent, and we discern
no error in the judge's finding that on redirect examination,
Stephen testified that the trust owed Mary $1.4 million.
Moreover, the difference between the amounts seems to equal the
amount of proceeds from a Countrywide mortgage loan that Mary
obtained on December 8, 2005. While Stephen contends that the
trust's account received $1,293,597.06 on December 8 as a result
of that loan, he also concedes that $1.1 million was wired to
Mary's investment account from the trust's account. The judge
drew the reasonable conclusion that the trust was entitled to a
17 $1.1 million credit to Mary's loans from that transfer. Stephen
offers no alternative explanation as to how the $1.1 million
transfer should be considered. Accordingly, the judge's finding
was not clearly erroneous.
5. Donna's loans and interest. The judge credited
testimony that Stephen's wife, Donna, and her company made
substantial loans to the DFIT that benefitted the DFIT and were
obtained in good faith. The judge also found that Donna was
paid a total of $474,447 in interest. The judge found that
although the loans violated Stephen's duty of loyalty due to the
presumptive conflict of interest between Stephen's personal
interests and his duties as trustee, because the loans were
necessary and beneficial to the DFIT, and because court
approval, had it been requested, likely would have been granted,
the judge initially declined to disallow the $474,447 in
interest. On a motion for reconsideration, however, Christopher
argued that some of the interest paid to Donna should have been
allocated to 6 Mary's Way. The judge agreed and ordered Stephen
to account for use of proceeds from Donna's loans to benefit 6
Mary's Way. When Stephen responded that he was "unable to
determine a logical way to attribute loans made by Donna to 6
Mary's Way," the judge concluded that "[t]his inability is
entirely of Stephen's own making, as it results from his
commingling of accounts and failure to keep contemporaneous
18 records[;] . . . it constitutes self-dealing and intentional
misapplication of DFIT assets, for which Stephen is liable."
The judge disallowed the entire $474,447 of interest.
Stephen's sole argument on appeal is that the judge's
conclusion is clearly erroneous because there are no facts on
which to base the conclusion that the loans from Donna were not
used solely for DFIT purposes. "It was for the defendants to
keep the trust fund distinguished from other moneys in their
hands; and the consequences of any failure on their part to
comply with this duty must fall upon themselves." Attorney Gen.
v. Bedard, 218 Mass. 378, 386 (1914). Further, Stephen ignores
that the judge allowed him the opportunity to provide those
facts, but he could not do so -- because he had commingled the
accounts. "Where a trust is established the burden is upon a
trustee to show that he acted with reasonable skill and judgment
and to account for all the trust property which came into his
possession. If unable to account he must stand the loss."
Markus v. Markus, 331 Mass. 394, 399 (1954). We discern no
error.
6. Stephen's fees. Stephen challenges the judge's
reduction of fees he charged to the trust for property
management, professional services, and construction fees. While
concentrating on specific findings that he contends were clearly
erroneous, Stephen ignores the portion of the judge's analysis
19 that all of Stephen's fees, unapproved by the disinterested
trustee, constituted self-dealing; that with no credible
evidence of specific hours and tasks performed, and without
timely accountings that would have resolved many unanswered
questions, the judge's findings were necessarily made on "meager
evidence" about long-past matters; and that the judge found
Stephen's testimony on these matters was not credible. Thus,
the judge reasonably cautioned that especially in the absence of
detailed, contemporaneous and reliable records, as well as
consensus about a reference point to evaluate the fees,
mathematical precision of the amount of damages was unlikely.
Stephen charged the trust a professional services fee
separate and apart from a property management fee, and the judge
reduced the professional services fee by fifty percent. Stephen
argues that the judge, without basis in the record, erroneously
concluded that a property management fee would have included
"professional services," including the costs of lawn care and
maintenance of the properties, and erred in reducing the fee
Stephen charged. First, the evidence simply was not as clear or
compelling as Stephen suggests. He testified that a property
management fee is a "fee that the management company charges to
maintain and operate" a property. He attempted to distinguish
between arranging for maintenance and actually doing some of the
necessary tasks -- which he characterized as "professional
20 services" -- but the judge did not credit that distinction. We
discern no error in the judge's conclusion that Stephen had not
presented credible evidence the fees were not duplicative.
Moreover, even aside from determining that the fees were
duplicative, the judge reduced the fees because, in the
aggregate, the fees exceeded the lower bound of property
management fees in the area and because of the unauthorized
nature of the fees and the trustees' willful breaches of their
duty to account. The judge noted that a timely accounting would
have answered the obvious question: "if third parties already
performed services for fees that already came close to full
payment for comprehensive property management, what else was
left [for] Stephen [to] do?" Applying equitable principles and
extrapolating from the strictly conservative principles applied
to awards of attorney's fees in a nonvoluntary relationship, see
Mulhern v. Roach, 398 Mass. 18, 31 n.15 (1986), the judge
determined that a fifty percent reduction of fees was warranted.
The judge applied the same analysis to the construction
management fees14 Stephen paid himself or charged to the trust
14The trust entered into a joint venture with Edward Medeiros to construct a home on 2 Mary's Way in the fall of 2014. The joint venture paid Stephen a "general contractor's fee" of ten percent, which, the judge found, was less than that charged by general contractors in the vicinity. The judge also found, however, that Stephen's role was more akin to "owner's representative," because he did not track his hours or submit time sheets.
21 and also reduced those by fifty percent. In the circumstances
of this case, we discern no abuse of the judge's discretion.
See Lattuca v. Robsham, 442 Mass. 205, 210 (2004) (attorney's
fee award generally based on interplay of many factors and is
always highly discretionary).
7. Miscellaneous. The miscellaneous factual challenges
raised by Stephen demonstrate no clear error. The judge
rejected on credibility grounds Stephen's explanation for how
the $200,000 holdback related to the Wainwright payoff was
handled. "Findings that are based on credibility assessments
are uniquely the province of the trial judge, and we will not
disturb them on appeal." Corrado v. Hedrick, 65 Mass. App. Ct.
477, 484 (2006). Similarly, the judge rejected on credibility
grounds Stephen's explanation for a $100,000 payment to an
attorney which Stephen and Donna suggested was a partial
repayment of amounts due to Donna or her companies. We agree
that the documentation regarding the $100,000 payment is unclear
and discern no error in the judge's credibility determination.
8. Attorney's fees. Relying on a statement in Tocci v.
Tocci, 490 Mass. 1 (2022), Stephen contends that the trustees
should not be charged with Christopher's attorney's fees because
Christopher brought his claims only for his own benefit. Tocci,
however, addressed closed corporations and specifically
distinguished trusts from closed corporations. Id. at 19-21.
22 Further, Tocci, supra at 20, quoted with approval Allard v.
Pacific Nat'l Bank, 99 Wash. 2d 394, 408 (1983), which states
that "[w]here litigation is necessitated by the inexcusable
conduct of the trustee, . . . the trustee [of a trust]
individually must pay" plaintiffs' attorney's fees. Cf. A.
Newman, G.G. Bogert, & G.T. Bogert, Trusts and Trustees § 970
(3d ed. 2010) (trustee is liable for damage to trust estate
caused by trustee's breach of trust).
Stephen also argues that because his sisters helped fund
the lawsuit in exchange for a share in Christopher's beneficial
interest in the DFIT, Christopher did not suffer a loss.
Although Christopher may not have to pay back his sisters'
expenditures on his attorney's fees, he does have to share his
beneficial interest in the DFIT. Thus, Stephen's suggestion
that Christopher has suffered no harm is without merit.
23 For all of the foregoing reasons, we affirm the amended
judgment.15
So ordered.
By the Court (Sacks, Singh & Walsh, JJ.16),
Assistant Clerk
Entered: May 21, 2024.
15Stephen's and Aronson's requests for appellate attorney's fees and costs are denied. Christopher's request for appellate attorney's fees and costs against Stephen and Aronson is allowed. Christopher is invited to file a verified and itemized application for such fees and costs within fourteen days of the date of this decision, and Stephen and Aronson will have fourteen days thereafter in which to file any opposition to the amounts requested. See Fabre v. Walton, 441 Mass. 9, 10-11 (2004). For substantially the reasons set forth in the judge's decision on the parties' motions for attorney's fees, Stephen individually will be liable for the full amount to be awarded, and Aronson individually will be jointly and severally liable for about fifteen percent of that amount.
16 The panelists are listed in order of seniority.