IN THE SUPERIOR COURT OF GUAM 2 ) CIVIL CASE NQ .G:Vl562:-o::7' c -~ _; i-
3 DEREK PELLETIER, ) ) 4 Plaintiff, ) VS. ) DECISION AND ORDER 5 ) 6 ) WARREN PELLETIER, ) 7 ) Defendant. ) 8 ) 9
10 This matter came before the HONORABLE VERNON P. PEREZ on November 8, 2013 11 for a Motion to Clarify Interest Rate and Date of Commencement of Interest. Attorney Willia 12 D. Pesch appeared on behalf of Stanley C. Wilson, the Administrator of the Mary Pelletier Trust. 13
14 Attorney James M. Maher represented the Defendant, and Attorney Vincent Leon Guerrer
15 represented the Plaintiff. The Court took the matter under advisement. Having considered th
16 parties' arguments, pleadings, and exhibits, the Court now issues the following Decision an 17 Order. 18 BACKGROUND 19
20 In 2006, Defendant Warren E. Pelletier ("Defendant"), then a trustee of the Mar
21 Pelletier Trust, purchased Lot 21, Block 16, Dededo ("Lot 21") for$ 120,000.00. Defendan 22 purchased Lot 21 using $ 60,000.00 of his personal funds and $ 60,000.00 of the Trust's funds. 23 The property was purchased with the intent to reflect a 50% interest ownership by the Trust bu 24 the ownership ofLot 21 is in Defendant's name only. 25
26 On June 6, 2012, the Court issued Findings of Facts and Conclusions of Law on th
27 matter. The Court held that Defendant must reimburse the Trust with either the $ 60,000.00 h 28 used to purchase Lot 21 with interest provided for under Guam law, or he can tum over th
D. Pelletier v. W. Pelletier Decision and Order Civil Case No. CVI562-07 -Page I of 5- property to the Trust. Recently, Defendant expressed his desire to take full possession of Lot 21 2 and has indicated his willingness to reimburse the Trust for the $ 60,000.00 plus interest at th 3 rate of6%, accruing from the date ofthe Court's findings. Decl. of William D. Pesch. pg. 2. 4 The Trust Administrator, unsure of the appropriate interest rate and whe.,1 interest bega 5
6 to accme, then brought this motion, through Counsel, requesting that the Court slarify: 1) Wha
7 interest rate is applicable to [Defendant's] proposed purchase; 2) When does the interest begin t 8 accrue; and 3) If Defendant opts to allow the Trust to buy out his interest in the lot, what interes 9 rate is applicable and when does it begin to accrue? Mot. to Clarify pp. 4-5. 10 DISCUSSION 11
12 Interest Rate
13 At issue is the applicable rate of interest chargeable to Defendant should he take ful 14 possession of Lot 21. The Administrator's Motion cites to 18 GCA § 4 7106, which provides: 15 § 4 71 06 Legal Rate of Interest. 16 The rate of interest upon the loan or forbearance of any money, goods or things in action, or on accounts after demand or judgment rendered in any court of the 17 territory, shall be six percent (6%) per annum but it shall be competent for the 18 parties to any loan or forbearance of any money, goods or things in action to contract in writing for a rate of interest not exceeding the rates of interest 19 specified in Title 14 of this Code. 20 18 GCA § 47106. Title 18 also contains provisions relative to Trusts in General. Specifically 21 section 65210 provides: 22 23 § Liability for Breach.
24 A trustee who uses or disposes of the trust property, contrary to § 65202 of this Chapter, may at the option of the beneficiary, be required to account for all profits 25 so made, or to pay the value of its use, and, if he has disposed thereof, to replace 26 it, with its fruits, or to account for its proceeds, with interest.
27 18 GCA § 65210. 28
D. Pelletier v. W. Pelletier Decision and Order Civil Case No. CVI562-07 -Page 2 of 5- In its Findings of Fact and Conclusions of Law, the Court found that Defendant failed in hi 2 obligations as to Lot 21. Finds. Fact & Concl. L., June 6, 2012 ~ 19(b). Further, the Co 3 ordered that Defendant be removed as Trustee and that he either reimburse the Trust, wit 4 "interest provided for under Guam Law" or he: can tum over the property to the Trust. Finds. 5
6 Fact & Concl. L., June 6, 2012 ~ 25(b). Although the Court did not make an explicit finding o
7 a breach of Trust pursuant to 18 GCA § 65210, the Court finds that statute relevant to the genera 8 facts of this case, as the Defendant was ultimately ordered removed as trustee. Considering that, 9 the Court agrees that§ 47106 is the governing provision. Should Defendant take full possessio 10 of Lot 21, he will be charged with interest at a rate of six percent (6%) per annum. Relevant cas 11
12 law also supports charging the "legal rate of interest." See. Morris' Guardianship v. Cusack, 16.
13 N.W. 2d 442, 444 (1944) (Trustee chargeable with interest at the legal rate where truste 14 commits a breach of trust); Henderson v. Sherman, 11 N.W. 153, (1882) (A trustee who ha 15 administered the trust illegally is liable for interest at the legal rate). For the above reasons, th 16 Court concludes that the applicable interest is the Legal Rate of Interest of six percent (6%) a 17
18 set forth in 18 GCA § 47106.
19 Date of Accrual 20 The next issue is determining the date on which interest began to accrue. In June an 21 September of2013, Defendant forwarded to the Administrator of the Trust, a total of$63,940.00, 22 23 which represented the total principal amount owed, plus 6% interest from June 6, 2012, the dat
24 that this Court issued its Findings of Fact and Conclusions of Law. See Decl. of Stanley Wilso 25 ~ 4-5. Counsel for the Administrator argues that June 6, 2012 is the date contemplated by 18 26 GCA § 47106, which provides in relevant part, "[t]he rate of interest upon the loan o 27 forbearance of any money, goods or things in action, or on accounts after demand or judgmen 28
D. Pelletier v. W. Pelletier Decision and Order Civil Case No. CVI562-07 -Page 3 of 5- rendered in any court of the territory, shall be six percent per annum ...." See Decl. of Willi 2 D. Pesch ~ 5-6. 1 Plaintiff contends that because Defendant, charged with knowledge that the 3 co-trustee insisted that the property be held jointly with the Trust, was given an opportunity t 4 repay the Trustc::vr sell Lot 21, it would appear that Defendant was speculating using Tru~t.funds. 5
6 On that basis, Plaintiff argues that Defendant should not be allowed to profit from his 'action
7 and, further, that pay he the Trust 6% interest from the date of the loan instead. See Pl's. 8 Position Re: Interest pg. 2. 9 The Court notes that relevant case law provides for the accrual of interest from the date o 10 a trustee's wrongful taking of trust funds. See In re Carner, 906 N.Y.S.2d 771 (Forn1er truste 11
12 surcharged with interest to be computed from the date of wrongful taking); Owlsey v. Owlsey, 7
13 S.W. 394, 396 (1903) (Trustee charged with interest from the time principal was received). Th 14 Court, however, finds that the present case is distinguishable from the above cited cases by th 15 mere fact that this "loan" was permissible pursuant to the Trust Agreement. Plaintiff approve 16 of the loan albeit on the grounds that Defendant maintain co-owriership with the Trust. Finds. 17
18 Fact & Concl. L., June 6, 2012 ~ 19(b). Thus the loan was not wrongful. Ofmore concern to th
19 Court was the fact that Defendant retained sole title to Lot 21. Ultimately the Court ordered tha 20 both Plaintifi and Defendant be removed as Trustees. Those findings, of course, were not mad 21 until the Court issued its Findings of Facts and Conclusions of Law on June 6, 2012. On tha 22 23 basis, the Court concludes that the date on which interest began to accrue was on June 6, 2012.
24 Lastly, in the interest of fairness and mutuality, the Court concludes that if Defendant opts t 25
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IN THE SUPERIOR COURT OF GUAM 2 ) CIVIL CASE NQ .G:Vl562:-o::7' c -~ _; i-
3 DEREK PELLETIER, ) ) 4 Plaintiff, ) VS. ) DECISION AND ORDER 5 ) 6 ) WARREN PELLETIER, ) 7 ) Defendant. ) 8 ) 9
10 This matter came before the HONORABLE VERNON P. PEREZ on November 8, 2013 11 for a Motion to Clarify Interest Rate and Date of Commencement of Interest. Attorney Willia 12 D. Pesch appeared on behalf of Stanley C. Wilson, the Administrator of the Mary Pelletier Trust. 13
14 Attorney James M. Maher represented the Defendant, and Attorney Vincent Leon Guerrer
15 represented the Plaintiff. The Court took the matter under advisement. Having considered th
16 parties' arguments, pleadings, and exhibits, the Court now issues the following Decision an 17 Order. 18 BACKGROUND 19
20 In 2006, Defendant Warren E. Pelletier ("Defendant"), then a trustee of the Mar
21 Pelletier Trust, purchased Lot 21, Block 16, Dededo ("Lot 21") for$ 120,000.00. Defendan 22 purchased Lot 21 using $ 60,000.00 of his personal funds and $ 60,000.00 of the Trust's funds. 23 The property was purchased with the intent to reflect a 50% interest ownership by the Trust bu 24 the ownership ofLot 21 is in Defendant's name only. 25
26 On June 6, 2012, the Court issued Findings of Facts and Conclusions of Law on th
27 matter. The Court held that Defendant must reimburse the Trust with either the $ 60,000.00 h 28 used to purchase Lot 21 with interest provided for under Guam law, or he can tum over th
D. Pelletier v. W. Pelletier Decision and Order Civil Case No. CVI562-07 -Page I of 5- property to the Trust. Recently, Defendant expressed his desire to take full possession of Lot 21 2 and has indicated his willingness to reimburse the Trust for the $ 60,000.00 plus interest at th 3 rate of6%, accruing from the date ofthe Court's findings. Decl. of William D. Pesch. pg. 2. 4 The Trust Administrator, unsure of the appropriate interest rate and whe.,1 interest bega 5
6 to accme, then brought this motion, through Counsel, requesting that the Court slarify: 1) Wha
7 interest rate is applicable to [Defendant's] proposed purchase; 2) When does the interest begin t 8 accrue; and 3) If Defendant opts to allow the Trust to buy out his interest in the lot, what interes 9 rate is applicable and when does it begin to accrue? Mot. to Clarify pp. 4-5. 10 DISCUSSION 11
12 Interest Rate
13 At issue is the applicable rate of interest chargeable to Defendant should he take ful 14 possession of Lot 21. The Administrator's Motion cites to 18 GCA § 4 7106, which provides: 15 § 4 71 06 Legal Rate of Interest. 16 The rate of interest upon the loan or forbearance of any money, goods or things in action, or on accounts after demand or judgment rendered in any court of the 17 territory, shall be six percent (6%) per annum but it shall be competent for the 18 parties to any loan or forbearance of any money, goods or things in action to contract in writing for a rate of interest not exceeding the rates of interest 19 specified in Title 14 of this Code. 20 18 GCA § 47106. Title 18 also contains provisions relative to Trusts in General. Specifically 21 section 65210 provides: 22 23 § Liability for Breach.
24 A trustee who uses or disposes of the trust property, contrary to § 65202 of this Chapter, may at the option of the beneficiary, be required to account for all profits 25 so made, or to pay the value of its use, and, if he has disposed thereof, to replace 26 it, with its fruits, or to account for its proceeds, with interest.
27 18 GCA § 65210. 28
D. Pelletier v. W. Pelletier Decision and Order Civil Case No. CVI562-07 -Page 2 of 5- In its Findings of Fact and Conclusions of Law, the Court found that Defendant failed in hi 2 obligations as to Lot 21. Finds. Fact & Concl. L., June 6, 2012 ~ 19(b). Further, the Co 3 ordered that Defendant be removed as Trustee and that he either reimburse the Trust, wit 4 "interest provided for under Guam Law" or he: can tum over the property to the Trust. Finds. 5
6 Fact & Concl. L., June 6, 2012 ~ 25(b). Although the Court did not make an explicit finding o
7 a breach of Trust pursuant to 18 GCA § 65210, the Court finds that statute relevant to the genera 8 facts of this case, as the Defendant was ultimately ordered removed as trustee. Considering that, 9 the Court agrees that§ 47106 is the governing provision. Should Defendant take full possessio 10 of Lot 21, he will be charged with interest at a rate of six percent (6%) per annum. Relevant cas 11
12 law also supports charging the "legal rate of interest." See. Morris' Guardianship v. Cusack, 16.
13 N.W. 2d 442, 444 (1944) (Trustee chargeable with interest at the legal rate where truste 14 commits a breach of trust); Henderson v. Sherman, 11 N.W. 153, (1882) (A trustee who ha 15 administered the trust illegally is liable for interest at the legal rate). For the above reasons, th 16 Court concludes that the applicable interest is the Legal Rate of Interest of six percent (6%) a 17
18 set forth in 18 GCA § 47106.
19 Date of Accrual 20 The next issue is determining the date on which interest began to accrue. In June an 21 September of2013, Defendant forwarded to the Administrator of the Trust, a total of$63,940.00, 22 23 which represented the total principal amount owed, plus 6% interest from June 6, 2012, the dat
24 that this Court issued its Findings of Fact and Conclusions of Law. See Decl. of Stanley Wilso 25 ~ 4-5. Counsel for the Administrator argues that June 6, 2012 is the date contemplated by 18 26 GCA § 47106, which provides in relevant part, "[t]he rate of interest upon the loan o 27 forbearance of any money, goods or things in action, or on accounts after demand or judgmen 28
D. Pelletier v. W. Pelletier Decision and Order Civil Case No. CVI562-07 -Page 3 of 5- rendered in any court of the territory, shall be six percent per annum ...." See Decl. of Willi 2 D. Pesch ~ 5-6. 1 Plaintiff contends that because Defendant, charged with knowledge that the 3 co-trustee insisted that the property be held jointly with the Trust, was given an opportunity t 4 repay the Trustc::vr sell Lot 21, it would appear that Defendant was speculating using Tru~t.funds. 5
6 On that basis, Plaintiff argues that Defendant should not be allowed to profit from his 'action
7 and, further, that pay he the Trust 6% interest from the date of the loan instead. See Pl's. 8 Position Re: Interest pg. 2. 9 The Court notes that relevant case law provides for the accrual of interest from the date o 10 a trustee's wrongful taking of trust funds. See In re Carner, 906 N.Y.S.2d 771 (Forn1er truste 11
12 surcharged with interest to be computed from the date of wrongful taking); Owlsey v. Owlsey, 7
13 S.W. 394, 396 (1903) (Trustee charged with interest from the time principal was received). Th 14 Court, however, finds that the present case is distinguishable from the above cited cases by th 15 mere fact that this "loan" was permissible pursuant to the Trust Agreement. Plaintiff approve 16 of the loan albeit on the grounds that Defendant maintain co-owriership with the Trust. Finds. 17
18 Fact & Concl. L., June 6, 2012 ~ 19(b). Thus the loan was not wrongful. Ofmore concern to th
19 Court was the fact that Defendant retained sole title to Lot 21. Ultimately the Court ordered tha 20 both Plaintifi and Defendant be removed as Trustees. Those findings, of course, were not mad 21 until the Court issued its Findings of Facts and Conclusions of Law on June 6, 2012. On tha 22 23 basis, the Court concludes that the date on which interest began to accrue was on June 6, 2012.
24 Lastly, in the interest of fairness and mutuality, the Court concludes that if Defendant opts t 25
27 1 28 Counsel for the Administrator acknowledges that although the Court's findings might not technically b considered a "judgment" it could be interpreted as a demand for payment and thus trigger the accrual of interest.
D. Pelletier v. W Pelletier Decision and Order Civil Case No. CVI562-07 -Page 4 of5- allow the Trust to buy out his interest in Lot 21, the applicable interest rate is also 6% per annun 2 and the date of accrual would be June 6, 2012. 3 CONCLUSION 4 For the foregoing reasons, the Court concluder, that the applicable interest rate fo 5
6 Defendant's proposed purchase is 6% per annum, with *the accrual date beginning on June 6,
7 2012. The same is also true if the Defendant opts to allow the Trust to buy out his interest. 8 applicable interest is 6% per annum, with the accrual date beginning on June 6, 2012.
So ORDERED this day of~ February, 2014. 9
13 HONORABLE VERNON P. PEREZ JUDGE, SUPERIOR COURT OF GUAM 14
15 II 16
20 FEB 05
22 23
26 27
D. Pelletier v. W Pelletier Decision and Order Civil Case No. CV1562-07 -Page 5 of 5-