Opinion
C.A. No. 17060-NC
Date Submitted: February 19, 2002
Date Decided: August 13, 2002
Thomas S. Neuberger and Edward M. Luria, Esquires of THOMAS S. NEUBERGER, P.A., Wilmington, Delaware; Attorneys for Plaintiff.
Peter S. Gordon and Jane T. Monahan, Esquires of GORDON FOURNARIS MAMMARELLA, P.A., Wilmington, Delaware; Attorneys for Defendant, Samuel J. DiFerdinando.
P. Clarkson Collins, Jr. and Michael A. Weidinger, Esquires of MORRIS JAMES HITCHENS WILLIAMS, LLP, Wilmington, Delaware; Attorneys for Defendant, Gary Farrar.
MEMORANDUM OPINION ON REMAND
This lawsuit was brought to challenge the testamentary plan of Michael J. DiSabatino (the "decedent") by the decedent's brother, Paul DiSabatino ("Paul" or the "plaintiff"), on the ground of undue influence. The defendants are Gary Farrar, the Executor of the decedent's estate, and Samuel DiFerdinando, the recipient of a challenged bequest under the decedent's will. Paul, the plaintiff, alleges that DiFerdinando unduly influenced the decedent to bequeath his largest asset to Farrar. That same conduct is also the basis for a claim for intentional interference with inheritance. In an Opinion dated July 9, 2001, the Court granted the defendants' motion to dismiss the lawsuit on the ground that the plaintiff's claims are time-barred. On February 19, 2002, the Supreme Court remanded the case to this Court to determine, in addition to the previously determined limitations defense, whether the plaintiff has standing to bring this action. This is the Opinion of the Court on remand. For the reasons set forth below, I conclude that the plaintiff lacks standing to maintain this action.
I. FACTUAL BACKGROUND
The facts recited herein are derived from the well-pled allegations of the complaint and the documents (the Will and the Trust) that are incorporated therein by reference. A more detailed factual background is set forth in the Court's July 9, 2001 Opinion. Disabatino v. DiFerdinando, 2001 WL 812014 (Del.Ch. July 9, 2001).
The decedent executed his self-proved will on September 2, 1993 (the "Will"). At the same time, and as part of his estate plan, the decedent executed a revocable trust agreement, also dated September 2, 1993 (the "Trust Agreement"). The decedent died on October 8, 1997, and the Will was accepted for probate by the Register of Wills. Letters Testamentary were granted to Farrar on October 16, 1997.
The Will and Trust Agreement create a detailed testamentary plan that provided for gifts to the decedent's immediate family, including four of his siblings. The Will further provides that the "residue of my estate not previously disposed of effectively by my Will, of whatever kind and wherever located at the time of my death . . . [will pass to] the Trustee under my Revocable Trust Agreement . . . to be held, administered, and ultimately distributed in accordance with the provisions of that Trust Agreement."
Will, at Art. 2.
The Trust Agreement sets out a detailed plan for the disposition of the Trust assets upon the decedent's death. The subject of this lawsuit is a bequest to DiFerdinando, which arises out of a direction in the Trust Agreement that the trustee pay over to DiFerdinando 49% of the decedent's stock in Di's, Inc., a corporation that represented the principal asset of the decedent's estate.
The Trust Agreement also provides that the remainder of the assets will then be distributed into two separate sub-trusts: one for the benefit of Kelli DiSabatino, the decedent's daughter ("Kelli"), and the other for the benefit of the decedent's brother, Paul. Under the Trust Agreement's "residuary clause," "any other property held in the trust fund not otherwise allocated herein, [shall be transferred] into . . . [Kelli's trust]." Upon Kelli's death, the remainder of her trust passes to her living issue, per stirpes.
Trust Agreement § I.B.3A(b). Paul has a life interest in his trust, and upon his death (or the death of his wife, if she survives Paul), the residue of Paul's trust passes to Kelli's trust.
II. ANALYSIS
The sole issue presented here — whether Paul has standing to bring this action — depends on the interpretation of the above-quoted residuary clause. At oral argument on the motion to dismiss, the plaintiff (through counsel) conceded that he lacked standing if the Court were to determine that under the residuary clause, Kelli DiSabatino is the only person who would be entitled to take under the Trust Agreement should the bequest to DiFerdinando fail. In that circumstance, the plaintiff would take nothing under the Trust, because the entirety of DiFerdinando's failed bequest would pass to Kelli through the residuary clause. Therefore, since the plaintiff would have no interest, economic or otherwise, in the disposition of the decedent's estate, he would have no standing to bring this action.
The first sub-issue is whether at this (motion to dismiss) stage the Court may determine as a matter of law that Paul would have no interest in the Trust (and thus would lack standing) if the gift to DiFerdinando fails. The plaintiff contends that any such determination would be "premature at the motion to dismiss stage without any discovery as to the decedent's intent and without a developed record." That is, Paul argues that if the gift to DiFerdinando is found by the Court to be void, the Court would then have to determine whether the decedent intended for Kelli to receive all of the assets formerly gifted to DiFerdinando, or whether Paul would take a portion of those assets. The decedent's intent (Paul argues) can only be determined on a fully developed factual record. Therefore, the issue of whether Paul has standing (which depends on whether Paul would receive any portion of DiFerdinando's voided gift) cannot be determined at this stage of the proceedings.
Pl. Ans. Br. at 40.
The defendant, DiFerdinando, responds that an evidentiary inquiry by the Court into the decedent's intent is proper only if the Trust Agreement were ambiguous as to whether under the residuary clause, Kelli would become the sole beneficiary of the Trust assets (invalidly) gifted to DiFerdinando. DiFerdinando argues that because the residuary clause unambiguously provides that Kelli takes any Trust assets "not otherwise allocated herein," the residuary clause is unambiguous and the Court cannot resort to extrinsic evidence to discern the decedent's intent. I agree. In construing a trust instrument, the Court will "attempt to discern the decedent's intent as expressed by the instrument, read as a whole, in light of the circumstances surrounding its creation." The words used in the instrument will be "given their ordinary meaning and the Court will not consider extrinsic evidence to vary or contradict express provisions of a trust instrument that are clear, unambiguous and susceptible of only one interpretation."
Trust Agreement § I.B.3A(b).
Wilmington Trust Co. v. Annan, 531 A.2d 1209, 1211 (Del.Ch. 1987).
Id.; see also Benz v. Wilmington Trust Co., 333 A.2d 169, 170 (Del. 1975) (holding that if the Court of Chancery finds a trust document to be unambiguous, it was proper for the Chancellor to decline to "consider extrinsic evidence of the trustors' intent"); Hanavan v. Dudley, 1994 WL 384592, at *3 (Del.Ch. July 19, 1994) (holding that an affidavit is inadmissible to alter unambiguous testamentary provisions).
The plaintiff ignores the above-cited case law which holds that the Court may not look to extrinsic evidence to interpret an unambiguous trust agreement. He relies upon cases decided before Benz et al. that suggest that extrinsic evidence may be used to discern a testator's intent during a will contest. See, e.g., Bird v. Wilmington Soc'y of Fine Arts, 43 A.2d 476, 480 (Del.Ch. 1973); Sec. Trust Co. v. Bulcroft, 187 A. 13, 15 (Del.Ch. 1936). While those cases hold that "in the interpretation of wills the testator's intent is paramount," Sec. Trust Co., 187 A. at 15, nothing in those cases suggests that the Court should look to extrinsic evidence in cases where a trust agreement is unambiguous. To the extent that those cases can be so interpreted, under Benz and its progeny that interpretation is no longer the law.
That being the governing principle, the issue becomes whether the residuary clause of the Trust Agreement unambiguously provides that Kelli would receive the assets gifted to DiFerdinando if the Court were to void that gift. I find that it does. The residuary clause provides that Kelli will receive "any other property held in the trust fund not otherwise allocated herein." Were the Court to void the gift to DiFerdinando by reason of undue influence, then the assets would remain in the Trust, because they are not otherwise "allocated" by the Trust Agreement. In that case, Kelli would receive those unallocated assets. Moreover, if a gift fails because of "undue influence," that gift would pass through the residuary clause of the Trust, again going to Kelli. Accordingly, the Trust Agreement unambiguously provides that Kelli would receive DiFerdinando's failed gift under the residuary clause.
Language is ambiguous only if the terms are reasonably or fairly susceptible to different interpretations or may have two or more different meanings. ABB Flakt, Inc. v. Nat'l Union Fire Ins. Co., 731 A.2d 811, 816 (Del. 1999). "`Ambiguity does not exist where the court can determine the meaning of a contract without any other guide than a knowledge of the simple facts on which, from the nature language in general, its meaning depends.'" E.I. duPont de Nemours Co. v. Admiral Ins. Co., 711 A.2d 45, 57 (Del. 1995) (quoting Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992)).
Trust Agreement § I.B.3A(b).
Equitable Trust Co. v. Delaware Trust Co., 61 A.2d 529, 540 (Del. Ch. 1948). In making the residuary gift to Kelli's trust, the decedent is presumed to know that any void gift would pass under the residuary clause. See Reynolds v. Russell, 433 A.2d 699, 702 (Del.Ch. 1981) (holding that a testator is presumed to know the law as it existed at the time the will was executed).
Paul does not attack the validity of the residuary clause, nor does he contest the validity of any part of the Trust Agreement. He has pointed to no evidence relating to the Will or the Trust Agreement that would create any ambiguity as to the decedent's testamentary plan of disposition. Nor do the Will and the Trust Agreement evidence any intent for Paul to take more than that to which he is entitled under the plain language of the Trust Agreement, in the event of a failed specific gift. It follows that because Paul will stand to take nothing under the Will and the Trust Agreement if the gift to DiFerdinando fails, Paul has no standing to bring this lawsuit.
Paul points to the numerous provisions in the Trust Agreement designed to ensure that Kelli does not "squander her inheritance through drug use or an undesirable partnership." Pl. ltr. to the Court, dated February 25, 2002. Those provisions, Paul argues, evidence that the decedent did not intend "to bestow on Kelli a beneficial interest of 59% of DIS at this period in her life." Id. That argument is without merit, however, because it disregards the fact that if the gift to DiFerdinando fails and passes to Kelli, those assets would be subject to the same restrictions as the other assets gifted to Kelli.
Kelli — who would unarguably have standing in this action — has elected not to join in this action with Paul.