Fox v. Fox

• Court: Superior Court of Maine
• Decided: October 21, 2008
• Docket: YORcv-08-196
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CIVIL ACTION YORK, ss. DOCKET NO. CV-08-l96 ., C"c\) _YbV\­ I.' (',)'( .j, ,~j

JANE PHINNEY FOX,

Plaintiff

v. ORDER

B. WILMSEN FOX, II, et aI.,

Defendants

This case comes before the Court on Defendants' Motion to Dismiss pursuant to

M.R.Civ.P. l2(b)(6). Following hearing, the Motion is Denied.

BACKGROUND

Plaintiff Jane Fox is the wife of the late Samual Crozer Fox, the father of the three

Defendants. During his lifetime, Mr. Fox owned a beneficial interest in a trust account

administered by Mellon Banle Based on this interest, Mr. Fox received quarterly

distributions of income from the trust. The terms of the trust provided that, upon Mr.

Fox's death, his interest in the trust would pass to the Defendants, his children.

Some time in 2004, Mr. Fox was diagnosed with esophageal cancer. Faced with

this diagnosis, Mr. Fox wanted to make arrangements to ensure that Ms. Fox's financial

needs were met. As such, on April 23, 2004, Mr. Fox, Ms. Fox, and all three Defendants

entered into an agreement (the Agreement) whereby each Defendant would execute a

revocable direction to Mellon Bank, instructing it to "pay all distributions of income

from the Trust Estate that [the Defendants] are each entitled to receive directly to [Ms. Fox] for as long as she shall live." fJI 2 Plaintiff's Exhibit A. Moreover, while the

Agreement was to terminate automatically upon Ms. Fox's death, fJI 6 Plaintiff's Exhibit

A, the Agreement also states that it may be "cancelled, modified or amended only by

written instrument executed by the parties affected by said cancellation, modification or

amendment." fJI 5 Plaintiff's Exhibit A.

Contemporaneous to the Agreement, each Defendant also signed and submitted

to Mellon Bank a revocable direction, which stated that "[a]ll distributions of income

from the Trust Estate ... shall be paid directly to [Ms. Fox] for so long as she shall live.

Thereafter, all distributions shall be made directly to" each separate Defendant.

Defendants' Exhibit 1. Each Revocable Direction also stated that they were "wholly

revocable" and could be revoked flat any time, upon written notification to" Mellon

Bank. Defendants' Exhibi t 1.

On June 8, 2004, Mr. Fox died. In August 2004, Ms. Fox received her first

quarterly payment from the trust, and continued to receive these payments for several

years. On or about February 9, 2008, Defendant B. Wilmsen Fox sent a letter to Ms. Fox

informing her that the Defendants had decided to gradually reduce the amount of

money she received each quarter until 2012, when the payments would cease

altogether. In response to this information, Ms. Fox initiated suit to enforce the

Agreement.

DISCUSSION

1. Standard of Review

A motion to dismiss "tests the legal sufficiency of the complaint." Livonia v.

Town of Rome, 1998 ME 39, fJI 5, 707 A.2d 83, 85. Because the Court reviews the

complaint in the light most favorable to the plaintiff to ascertain whether it properly

sets forth elements of a cause of action, "the material allegations of the complaint must

2 be taken as admitted." Id.

'sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to

relief pursuant to some legal theory.'" Doe v. District Attorney, 2007 ME 139,

A.2d 552, 558 (quoting Persson v. Dep't. of Human Servs., 2001 ME 124,

365). Dismissal is warranted only "when it appears beyond a doubt that the plaintiff is

not entitled to relief under any set of facts" that might be proved in support of the

claim. Johanson v. Dunnington, 2001 ME 169,

II. Count I, Breach of Contract

Contract interpretation is generally a question of law. Allstate Ins. Co. v. Bearce,

412 Mass. 442, 446-46, 589 N.E2d 1235, 1238 (1992).1 Moreover, a determination of

whether a contract is ambiguous is largely a question of law. Eigerman v. Putnam Invs.,

Inc., 450 Mass 281, 287, 877 N.E.2d 1258, 1263 (2007). "When the words of the contract

are not ambiguous, the contract will be enforced according to its terms." Mejia v.

American Casualty Company, 55 Mass.App.Ct. 461, 465, 771 N.E.2d 811, 814 (2002).

Contract language is ambiguous where "an agreement's terms are inconsistent on their

face or where the phraseology can support reasonable difference of opinion as to the

meaning of the words employed and obligations undertaken." Post v. Belmont Country

Club, 60 Mass. App. Ct. 645, 652, 805 N.E.2d 63, 70 (2004)(quoting Fashion House, Inc. v. K

Mart Corp., 892 F.2d 1076, 1083 (1st Gr. 1989)).

Under the agreement, the Defendants were required to execute a revocable

direction to Mellon Bank directing the bank to provide Ms. Fox with quarterly

distributions of income from the trust. The Defendants argue that, because the term

The Agreement provides that it "shall be governed in all respects by the laws of the Commonwealth of Massachusetts." As such, where appropriate, the analysis will cite to Massachusetts law.

3 "revocable" in unambiguous, that under the agreement, they were within their rights to

revoke the direction to Mellon Bank, and in so doing, cease the quarterly trust payments

to Ms. Fox.

While the Defendants are correct in arguing that the term "revocable direction"

is unambiguous, they ignore the fact that the Agreement also contains conflicting terms

which state that Ms. Fox will receive payments from the trust "for so long as she shall

live," and that the Agreement may be only be canceled, modified, or amended by

written agreement of all interested parties. Even taking into account the separately

executed revocable direction language that the "direction is wholly revocable," this

does not change the fact that both the Agreement, and the separately executed

revocable trusts, state that Ms. Fox is entitled to receive trust payments "for so long as

she shall live."

Therefore, because there seems to be an inconsistency on the face of the contract

terms, the contract is ambiguous, and as such, Ms. Fox may have a claim for breach of

contract. Consequently, at this stage in the proceedings, granting a motion to dismiss

for Count I is inappropriate.

III. Count II, Declaratory Judgment

Under Maine's Declaratory Judgment Act, courts have the power to "declare

rights, status and other legal relations whether or not further relief is or could be

claimed." 14 M.R.S.A. § 5953 (2007). Moreover, under this same act, "a contract may be

construed either before or after there has been a breach thereof." 14 M.R.S.A. §5955

(2007).

Because Ms. Fox's breach of contract claim was not dismissed for failure to state

a claim, her rights under the agreement have yet to be decided, and as such, dismissal

of Count II of the complaint, seeking a declaration of those rights, is inappropriate.

4 IV. Count III, Action for Constructive Trust

The constructive trust is a remedial device to prevent unjust enrichment.

RESTATEMENT OF RESTITUTION § 160 (1937). A constructive trust may be imposed

whenever necessary to do equity and to avoid unjust enrichment "when title to

property is acquired by fraud, duress, or undue influence, or is acquired or retained in

violation of a fiduciary duty." Horton & McGehee, Maine Civil Remedies § 9-3 at 207 (4th

ed. 2004)(quoting Thomas v. Fales, 577 A.2d 1181, 1183 (Me. 1990)). Here, Ms. Fox is

asking the Court to impose a constructive trust based on the Defendants' alleged

constructive fraud and/ or abuse of fiduciary relationship.

"The general rule is that property acquired through fraud ... may be subjected to

a constructive trust, provided that it would be inequitable for no constructive trust to be

imposed. The fraud or similar conduct must have actually caused the disposition."

Horton & McGehee, Maine Civil Remedies § 9-3(c) at 209 (4th ed. 2004)(quoting

Whitehouse v. Bolster, 95 Me. 458, 50 A. 240 (1901)). A constructive trust may be imposed

on the basis of constructive fraud where there is clear and convincing evidence of an

agreement between the grantor and the grantee to benefit another party. Baizley et al., v.

Baizley, 1999 ME 115 'TI8, 734 A.2d 1117, 1119 (citing Gaulin v. Jones, 481 A.2d 166, 168

(Me. 1984)).

Here, it is alleged by Ms. Fox in her complaint, that upon his death, Crozer Fox

left the Defendants certain interests in real and personal property believing that the

Defendants would follow the terms of the Agreement, and provide quarterly trust

payments to Ms. Fox. The complaint further alleges that, had he known that the

Defendants would breach the Agreement, that he "could have made or executed

various different other arrangements for the care and comfort of [Ms. Fox] following

[his] death, and would have made other arrangements relating to the children's use of

5 potential interest in other real and personal property owned by Crozer and Jane before

Crozer died." Complaint, «[38.

While Crozer did not give his children certain real and personal property

believing that one day they would share that property with Ms. Fox, the complaint does

allege that Crozer gave his children certain real and personal property because he

believed that in so doing, the Defendants would follow the terms of the Agreement, and

Ms. Fox would be benefited by receiving periodic trust payments. Therefore, because

the Defendants would arguably be unjustifiably enriched in having receiving the trust

payments in addition to the real and personal property they received from their father

upon his death, and there are allegations that Mr. Fox agreed to give certain real and

personal property to his children in response to their agreeing to provide Ms. Fox with

their trust payments, a dismissal of the constructive trust count would be inappropriate.

CONCLUSION

Defendants' Motion to Dismiss Counts I, II and III is DENIED.

Dated: October 21,2008

Russell Pierce, Jr., Esq. - PL Daniel J. Mitchell, Esq. - DEFS Daniel J. Murphy, Esq. - DEFS