IN THE SUPERIOR COURT OF GUAM
2 ) CIVIL CASE NO. G~1~~0~ "-'i 'o,-/~
3 DEREK PELLETIER, ) Plaintiff, ) 4 VS. ) ) FINDINGS OF FACT AND 5 ) CONCLUSIONS OF LAW 6 WARREN PELLETIER, ) ) 7 Defendant. ) 8 9 This matter came before the HONORABLE VERNON P. PEREZ on November 14, 10 2011 at bench trial. Attorney Vincent Leon Guerrero appeared representing Plaintiff Derek 11 Pelletier. Attorney James Maher appeared representing Defendant Warren Pelletier. Attorney 12 William Pesch appeared representing the third party administrator of the Trust at issue, Stanley 13 C. Wilson. Having reviewed the pleadings and the arguments presented, the Court now issues 14 the following Findings of Fact and Conclusions of Law. As the parties share a common 15 surname each will be identified herein by their litigation position rather than by proper name. 16 FINDINGS OF FACT 17 1. This litigation concerns the administration of the Mary E. Pelletier Trust (hereafter 18 "Trust"). Mary Pelletier passed away on December 24,2005. 19 2. Both parties are beneficiaries of the Trust as well as Trustees. There is also a third 20 beneficiary, Stefan Pelletier. Both parties have accused each other of repeated abuse 21 and malfeasance in administering the Trust, and seek to have each other removed. 22 3. The Plaintiff filed a complaint on December 28, 2007 alleging that the Defendant had 23 violated several of his obligations as a Trustee and failed to seek Plaintiff's
24 concurrence on several matters of Trust business. See Complaint. The Plaintiff
25 requested that Defendant be removed as Co-trustee, be brought to account for funds
26 allegedly taken from the Trust illegally and pay fees associated with suit. See
27 Complaint. Attached to the complaint was a copy of the Trust Agreement
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CVI562-07 - Page 1 of II - (hereinafter "Agreement") establishing the Trust and signed by the settlor of the trust,
2 Mary Pelletier. 3 4. On January 28, 2008, Defendant filed both his answer and a series of counter-claims 4 against the Plaintiff. Plaintiff filed his answer to the counterclaims on February 2,
5 2008. 6 5. The Trust has approximately $350,000.00 in cash, some jewelry, fee simple 7 ownership of two lots in Yigo, three lots in Malojloj and two lots in Sinajana and 8 leasehold ownership of Denny's Dededo lot (Taco Bell) and the Blue Lagoon lot in 9 Tumon. Plaintiffs Exhibit 6; See Trial Transcript. 10 6. The Trust is a lessor to McDonalds in Agana, Blue Lagoon in Tumon, Denny's Guam 11 in Dededo and Eons Corporation. All leases expire after the termination date of the
12 Trust. 13 7. Plaintiff currently lives III Louisiana and is unemployed. He lives on worker's 14 compensation payments. Plaintiff will return to Guam after his payments cease.
15 8. Defendant is resident of Guam. 16 9. Stefan Pelletier resides on Guam but spends significant time III the Philippines 17 undergoing medical treatment. 18 10. After Mary Pelletier's death, Defendant attempted to terminate Stefan Pelletier as Co- 19 trustee for failing to tum death benefits over to Trust. Both Parties turned over their 20 death benefit to the Trust, but both Parties withdrew their death benefit from the Trust 21 after Stefan Pelletier refused to deposit his death benefit. 22 11. At some point, Defendant took Stefan Pelletier's truck without Stefan's consent. 23 12. Stefan Pelletier agrees with Plaintiffs handling of the Trust. 24 13. Plaintiff and Defendant agreed to use Trust funds to purchase Lot 21, Block 16, 25 Dededo (hereinafter "Lot 21 "). That property was purchased with the intent to reflect 26 a 50% interest ownership by the Trust, but ownership of Lot 21 is in Defendant's 27 name alone. Plaintiffs Exh. 5. Defendant issued Trust Check No.1 18 in the amount 28 of $60,000.00 on March 6, 2006 for the purchase of Lot 21. Plaintiffs Exh. 3.
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Casc No. CVI562-07 - Page 2 of 11 - 14. Plaintiff received a loan for $6,000.00 from the Trust. 2 15. Plaintiff desires to be sole Trustee. 3 CONCLUSIONS OF LAW 4 16. In this case, the language of the Agreement controls. 5 17. Amendment of Pleadings 6 Amendment of the pleadings to conform to the evidence may be allowed at or after 7 trial under 15 GRCP Rule 15(b). Plaintiffs request to amend the pleadings to 8 conform to the evidence is granted. Here, evidence was elicited concerning the 9 control of the Trust and the Court finds that amendment is proper. 10 18. Stefan Pelletier 11 Stefan Pelletier was a dependent of Mary Pelletier at the time of her death and he 12 shall remain rent free living at the Yigo house under the operation of §5.1.6.l of the 13 Agreement. Stefan Pelletier requested from this Court and was granted early 14 disbursement in the amount of $13,500.00 on February 26, 2012. That amount shall 15 be reflected in any future determination of distribution as all Beneficiaries are equal 16 under the Trust. 17 19. Removal of Defendant as Trustee; Plaintiff's Complaint 18 A. Opening and Closing of Accounts 19 Plaintiff alleges that the Trust had several accounts in various financial institutions. 20 Defendant unilaterally opened and closed bank accounts without the consent of 21 Plaintiff as the Co-trustee. Plaintiff later quotes Title 18 Guam Code Annotated § 22 66302 which states: "where there are several Co-trustees, all must unite in any act to 23 bind the Trust property, unless the declaration of Trust otherwise provides." 24 Defendant argues that he notified Plaintiff of his actions, thus, the opening and 25 closing of the accounts would not be improper. Further, Defendant argues that such 26 conduct is specifically permitted by the language of the Agreement and it does not 27 require a Trustee to obtain the consent of the Co-trustee to open a bank account under 28 § 5.1.3 . Yet, § 5.9 requires that the decision to grant such an opening belongs to the
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CVI562-07 - Page 3 of II - other Trustee where the Trust property or Trust income increases the Individual 2 Trustee's gross income or estate such that it requires disclosure on filing federal 3 taxes. 4 Plaintiff, in making this argument, seems to ignore the terms of the 5 Agreement. § 5.8 provides Trustees with broad discretion in exerclSlng powers 6 conferred upon them under the power to "open and maintain checking, savings and 7 other accounts in any bank, savings and loan, credit union or other financial 8 institution."l The Agreement also allows each Trustee to "do any act or transact any 9 business authorized by this agreement even if the situation may be one of 'conflict of 10 interest', provided full disclosure is made to the living beneficiaries of the particular 11 Trust involved in such action or the guardians thereof." § 5.1.8. 12 Applying these clauses to this particular allegation by the Plaintiff, as the
13 Defendant (in the scope of this allegation) is not alleged to have removed funds from
14 the Trust's overall holdings, but merely "opened and closed" several individual bank 15 accounts, § 5.9 of the Agreement is not implicated. The "opening and closing" would 16 therefore be a permissible action by a Trustee. Defendant correctly argues that he is 17 not required to obtain the consent of the Co-trustee to open a bank account." 18 Defendant is not in violation of the Agreement or his duties of Trustee as it applies to 19 the opening and closing of bank accounts. 20 B. Dededo Property 21 It is undisputed that at some point in 2006 Defendant purchased a Dededo lot
22 (Lot 21, Block 16, Dededo) from a third party using $60,000 of his own money and 23 $60,000 of money withdrawn from the Trust. At the present time, Defendant is the 24 sole owner of the lot. Defendant maintains that his purchase of the lot in his name 25
26 27 1 The Court notes that while this provision does not explicitly include closing accounts as is alleged here, Section 5.1 of the Agreement ("Powers") states that the powers conveyed by the Agreement "shall be liberally construed." The act of closing an empty bank account would 28 further have the effect oflimiting the Trust's liability to further banking fees from the relevant financial institution. See Agreement § 5.1.4 (minimizing expenses of the Trust)
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CV1562-07 - Page 4 of II - was temporary until the Trust paid back Defendant and the title would be transferred
2 to be solely the Trust's property. 3 § 5.1.2 and § 5.1.11 appear to allow Trustees to loan Trust monies to other
4 legal entities upon terms approved by the relevant Trustee. § 5.1.2. The making of
5 such a loan would appear to be permissible. However, as such a loan results "in the
6 inclusion of the Trust property in [Defendant's] gross estate for federal tax purposes,"
7 under Section 5.9 then "loan" to Defendant must have been "approved" by Plaintiff in
8 order to be proper under the Agreement. The question then is not whether such a loan
9 could be made, but rather did Plaintiff approve the "loan proposal" before it was
10 executed. 11 Defendant argues that there was no agreement that the property be held in the
12 Trust's name alone. The Court concludes that Plaintiff approved the loan but
l3 approved on the grounds that Defendant maintain co-ownership with the Trust. The
14 fact that to this day Defendant retains title alone to Lot 21 concerns the Court. 15 Defendant remains bound to transfer the title to the Trust upon a payment by the 16 Trust to him of a $60,000. Alternatively, should Defendant continue to retain title to
17 the property, he would be indebted to the trust in the amount of $60,000. The Court 18 believes that title should be joint and upon complete satisfaction of either the Trust's
19 $60,000.00 or Defendant's $60,000.00, then title could be solely Defendant's or 20 belong to the Trust. The Court is confident based on the preponderance of evidence
21 that Defendant failed in his obligations as to Lot 21. However, the Court does not 22 doubt Defendant's intentions to benefit the Trust. 23 C. $35,000.00 Inheritance Payment 24 Plaintiff states that Defendant caused to be issued a check in the amount of 25 $35,000.00 payable to Defendant from the Trust. Defendant did not inform Stefan
26 Pelletier of the withdrawal. In response, Defendant argues that his withdrawal of the 27 $35,000.00 was in fact proper, that the withdrawal was authorized by the Plaintiff.
28 The Court finds that Defendant failed to disclose to all beneficiaries a transaction that
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CVI562-07 - Page 5 of 11 - consists of a conflict of interest as required by § 5.1.8. Clearly, the transaction just
2 mentioned was a conflict of interest. Notice of such a transaction must be given to all
3 beneficiaries of the Trust. The evidence indicates that Stefan Pelletier was not noticed
4 of the transaction and no evidence showed that he approved said transaction. Once
5 again, Defendant failed to comply with the obligations and duties created when he
6 became Trustee. The Court does acknowledge that Defendant only removed the
7 inheritance payment once in the Trust because permission was given by Plaintiff and
8 Stefan Pelletier failed to deposit his inheritance. Yet, the law does not differentiate
9 on intent as the Agreement is clear on the matter. Stefan Pelletier was not notified
10 impliedly or actually that Defendant intended to remove $35,000.00 from the Trust
11 even if Defendant's intentions were to make the withdrawal with notions of fairness
12 in mind and in hopes of even distribution. 13 D. Locking of Family Home 14 The Court finds that Defendant locked Mary Pelletier's home in an effort to
15 prevent Plaintiff from entering the home. Defendant changed the locks to the parents'
16 home in an attempt to restrict Plaintiffs access. Defendant states that his decision to
17 change the locks was based on a previous tenant's decision to move out of the house,
18 well prior to any attempt by the Plaintiff to enter the home. Defendant claims that the
19 lock out was for security purposes and not to prevent Plaintiff from entering the home 20 or accessing Trust Property. Trustees maintain an on-going duty to maintain property
21 owned by the Trust. See Coast Indian Community v. Us. 550 F.2d 639, 653 (1977) 22 ("A trustee is under a duty to exercise due care and prudence to preserve the trust
23 property. As the Plaintiff has up to this point failed to present any evidence to
24 support either: (1) his assertion that the changing of the locks was done with some
25 impermissible purpose, or (2) his legal argument that such a violation would be
26 grounds for removing the Defendant as Trustee of the Trust, the Court finds that 27 Defendant was reasonable as he performed his duties lawfully as to the issue of
28 blocking access to the family home.
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CV 1562-07 - Page 6 of 11 - 2 3 E. Vehicle 4 Defendant allegedly committed criminal acts including taking Stefan
5 Pelletier's personal vehicle while Stefan was off island. Stefan Pelletier testified that
6 Defendant stole Stefan Pelletier's truck. Money from the sale of the truck was 7 deposited into one of the Trust's bank accounts. This allegation, true or not, indicates 8 the lack of trust amongst the beneficiaries. It is axiomatic that a criminal indictment 9 is not evidence of guilt. Yet, the issue creating the scenario in which the truck was 10 taken, sold or otherwise indicates the need to have an independent set of Trustees or 11 terminate the Trust entirely. The Court will not rule on the legality of Defendant's 12 actions regarding the truck as this case is a civil matter. 13 20. Plaintiff's Removal as Trustee: Defendant's Counter Claim 14 A. Life Insurance Premiums 15 The Court concludes that Plaintiff used Trust funds to pay insurance premiums for his 16 personal benefit without proper approval or at least notification to all beneficiaries. 17 Those insurance premiums paid out between 2006 and 2011 decreased the Trust 18 property value significantly. § 5.8 of the Agreement provides that "any discretion 19 granted to the trustee shall be absolute and uncontrolled. Thus, if another provision 20 provides Plaintiff with ability to use Trust funds to pay insurance premiums then 21 Plaintiffs discretion should be absolute and uncontrolled. 22 § 5.1.12 provides that Trustee shall have the discretion to "purchase and own 23 policies of insurance on the life of a Settlor, and any beneficiary of any trust created 24 herein". On its face, Plaintiff appears to have uncontrolled discretion to own and use 25 Trust funds to maintain the insurance premiums at issue in Defendant's counterclaim. 26 Yet, Plaintiff did not notify Defendant of the Trust funds being used to pay life 27 28
Pelletier v. Pelletier Findings of Faet and Conclusions of Law Civil Case No. CVI562-07 - Page 7 of 11 - insurance premiums as required by the Agreement. 2 Plaintiffs mismanagement of
2 the Trust and violations of the duties of loyalty under the Trust provisions also causes
3 alarm for the Court. The Court must remove Plaintiff as Trustee for his failings to
4 appeal to the discretion of the other Trustee when increasing his personal estate.
5 B. $6,000 Loan 6 The Court concludes that Plaintiff took out a loan from the Trust and did not
7 repay to the Trust the full amount. § 5.9 provides that if the 8 "exercise of any power by any individual Trustee would result in the inclusion of the Trust income in the individual Trustee's gross 9 income ... or if the possession or exercise of any power of the 10 individual Trustee would cause the inclusion of Trust property in such Individual Trustee's estate,... then such power shall be 11 exercised by the other Trustee of the Trust". 12 Therefore, Plaintiff violated his duties under the Trust by not first obtaining approval 13 from the other Trustee, which was Defendant. Plaintiff did not disclose an action that 14 increased his estate or wait for exercise of power of the other Trustee. Plaintiff still 15 owes the Trust the $6,000.00. 16 C. Backdating Trust Allotment 17 The Court does not find any evidence to support the claim that Plaintiff 18 backdated his monthly Trust allotment in order to receive it early. Even if Plaintiff 19 did perform such backdating, the Court is not certain that backdating monthly 20 installments of what is properly owed to Plaintiff is against the provisions of the 21 Trust. The Court finds no violation of Plaintiffs duties or under the law on the issue 22 of backdating two allotment checks. If found to be true and in violation of the 23 Agreement, Plaintiff would owe the interest accrued for two months which this Court 24 finds to be diminimus. The issue of notice as discussed above applies here as well. 25
26 27 § 5.9 provides that ifthe "exercise of any power by any Individual Trustee would result in the inclusion ofthe Trust income in the individual Trustee's gross income ... or if the possession or exercise of any power of the Individual Trustee would cause the 28 inclusion of Trust property in such Individual Trustee's estate, ... then such power shall be exercised by the other Trustee of the Trust.
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CV1562-07 - Page 8 of II Plaintiff failed to notify all beneficiaries or the Co-trustee that he would be taking his
2 monthly allotment out early. 3 D. Public Disclosure 4 The Court agrees with Defendant that § 5.7 of the Trust prevents the 5 disclosure of the Trust document with any court. Yet, the same section provides that 6 an exception applies where disclosure is required by law. Plaintiff could not lawfully, 7 under the Guam Rules Civil Procedure and Evidence, pursue this claim without 8 evidence on the contents of the Agreement before the Court. Therefore, the exception 9 applies and Plaintiff is not in violation of the Agreement on the issue of disclosing the
10 Agreement. 11 E. Failed Accounting 12 Derek maintained the obligation to provide an annual accounting to the 13 beneficiaries since 2005. He failed to provide an accounting to each beneficiary each 14 year since the Trust was created. Plaintiff claims that Defendant made it impossible 15 for Plaintiff to perform his obligations to provide accountings, but his duties have 16 been breached regardless of the reason and the Court does not find any lawful excuse 17 to performance of his duties. 18 21. Regardless of whether the Parties violated the provisions of the Trust and duties as 19 Trustees, their inability to work cohesively and provide for the best interest of all 20 beneficiaries could alone warrant their removal. Here, the Court finds ample 21 rationale for the removal of both Parties as Trustees. As to Plaintiff, he is a poor 22 candidate to remain Trustee because he resides in Louisiana and will not return until 23 his unemployment ceases. Warren is a poor candidate to remain Trustee as he 24 appears to behave cavalierly and makes decisions without communicating with the 25 other beneficiaries or Plaintiff regarding Trust decisions. Furthermore, the other 26 beneficiaries do not trust Defendant. The Settlor's intentions in the Trust cannot 27 possibly be carried out under the current circumstances and the Court must intervene. 28
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CV1562-07 - Page 9 of 11 - 22. The Court will remove both remaining Trustees and will give the Parties an option. 2 The Court will allow the Parties, which should include the interests of Stefan 3 Pelletier, to choose either the dissolution of the Trust and divvy out equal payments 4 of all Trust property or request the Court install independent Trustees. 5 23. The administrator appointed by the Court previously is a proper candidate for the
6 appointment if he chooses to accept. 7 24. Parties will return on August 3, 2012 @10:00 am to determine the future of the 8 Trust. 9 25. The Court Orders the following: 10 A. Costs 11 Plaintiff has prevailed in this matter, but Plaintiff is not due costs as a matter of 12 course under 7 GCA § 26602 because his complaint is not one for any of the actions 13 provided therein. Under the same rationale, Defendant will not be awarded costs in 14 his counterclaim. Both Parties will be responsible for their own costs and attorney's 15 fees as both the complaint and counterclaim were cases involving the removal of a 16 Trustee which is not a cause of action subject to the costs as a matter of course.
17 B. Defendant's Reimbursement 18 Defendant must reimburse the Trust with either the $60,000.00 he used to 19 purchase Lot 21 with interest provided for under Guam Law or he can tum over the 20 property to the Trust. Plaintiff may withdraw $13,500.00 in order to ensure equal 21 distribution as this Court approved a $4,500.00 withdrawal each month for three 22 months to Stefan Pelletier. 23 As to the truck incident, the Court is confident that the outstanding cases 24 relevant to the alleged theft will resolve any remaining conflict.
25 C. Plaintiff's Reimbursement 26 Plaintiff must reimburse the Trust with the $6,000.00 to pay back the loan he 27 took with the Trust with interest provided for under Guam Law. Defendant may 28
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CV1562-07 - Page 10 of II - withdraw $13,500.00 in order to ensure equal distribution as this Court approved a
2 $4,500.00 withdrawal each month for three months to Stefan Pelletier.
3 As to the insurance premiums, the Agreement allows for life insurance
4 premiums to be paid out of the Trust and the Court will not force Plaintiff to
5 reimburse the Trust regarding those premiums. As to the two backdated monthly
6 allotments, the Court will not require reimbursement of the allotments or interest.
7 D. Trustees 8 Both current Trustees, Warren and Derek Pelletier, are hereby removed as
9 Trustees of the Mary Pelletier Trust. The Parties will come back as Beneficiaries to 10 determine future independent Trustees or to terminate the Trust. The Court will
11 assign a Trustee as a default scenario if the Parties are unable to agree on the future of 12 the Trust. 13 E. Accounting 14 Neither Party shall be responsible for providing any accounting of the Trust as
15 both Parties are not suitable to do such now that they are no longer Trustees. The 16 Court has appointed an independent administrator who can perform such an
17 accounting function. 18 So ORDERED thiJlfvday of June, 2012.
20 PEREZ 21
26 27
Pelletier v. Pelletier Findings of Fact and Conclusions of Law Civil Case No. CV1562-07 - Page II of II -