Martin v. Harris

[l\IT£R£D JAN 1 3 20tr

STATE OF MAINE BUSINESS AND CONSUMER COURT

CUMBERLAND, ss Location: Portland

Docket No.: BCD-CV-2014-07 /

4MJt- GW'Yl-IJ--13-1 4-

Barbara T. Martin, Trustee of the MARY )

LOUISE MIKOLS LIVING TRUST )

U/T/D October 17,2012. )

)

Plaintiff/Counterclaim Defendant, )

)

V. )

)

CYNTHIA C. HARRIS, ELIZABETH )

H. MIKOLS, JULIA A. HARRIS, AND )

APRIL F. PARRAS, et al. )

)

Defendants I Counterclaim Plaintiffs )

)

ORDER ON DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

AND ON CROSS-MOTIONS RELATING TO NO-CONTEST PROVISION

This Order addresses the Motion for Partial Summary Judgment filed by

Defendants/Counterclaim Plaintiffs' Cynthia C. Harris, Elizabeth H. Mikols, Julia A. Harris,

and April F. Parras et al. (collectively the "Harris Defendants") on Counts III and V of the

Harris Defendants' Counterclaim, which relate to the terms of Section 6.01 ofthe Mary Louise

Mikols Living Trust dated October 17, 2012 (the "Trust"). This Order also addresses the

cross-motions for summary judgment that the parties have filed regarding the no-contest

provisions of the Trust.

I. FACTUALBACKGROUND

In 2012, Mary Louise Mikols ("Mary Louise") lived and resided in Eagle Lake, Maine.

(Supp. S.M.F. ~ 1; Opp. S.M.F. ~ 1.) On or about June 28, 2012, Mary Louise patronized the

office ofWilliam Smyth of Smyth and Associates, P.A.located in Kennebunk, Maine to discuss

and seek legal counsel in the revision of her estate plan. (Supp. S.M.F. ~ S; Opp. S.M.F. ~ s.)

1

At the time of her first meeting with Attorney Smyth, Mary Louise was 84 years old. Id. Mary

Louise met with Attorney Smyth on three occasions and exchanged a series of phone calls. 1

(Supp. S.M. F. tJ 6; Opp. S.M.F. tJ 6.) During the course of these meetings, Attorney Smyth

drafted a new last will and testament, as well as several other estate planning documents.

(Supp. S.M.F. tJ 7; Opp. S.M.F. tJ 7.) Smyth also drafted an inter vivos trust to dispose of

certain real property and accounts held by Mary Louise. (Supp. S.M.F. tJ 8.) Mary Louise had

concerns that a beneficiary might challenge or contest her estate plan after her death. As a

result, Smyth included no-contest provisions in the will and the Trust. (Pl.'s A.S.M.F. tJ 55;

Defs.' Rep. A.S.M.F. tJ 55.)

The final meeting was held on August 2, 2012. During this meeting, Mary Louise

executed the new Last Will and Testament as well as a Durable Power of Attorney naming her

daughter, Barbara Martin, as personal representative and attorney-in-fact. (Supp. S.M.F. tJ 9;

Opp. S.M.F. tJ 9.) According to statements by the parties, the newly executed will was meant

to be a temporary document in place only until the Trust and pour-over will were

implemented. (Pl.'s A.S.M.F. tJ 58 Defs.' Rep. A.S.M.F. tJ 58.)

On or about September 1, 2012, Mary Louise travelled to Kentucky to visit her other

daughter, Judith Montoya, and to undergo a routine endoscopy procedure during the visit.

(Supp. S.M.F. tJ 10; Opp. S.M.F. tJ 10.) However, Mary Louise suffered a reaction from the

procedure and fell into a coma. On September 5, 2012, Ms. Martin contacted Attorney Smyth

and requested that he send the executed estate planning documents so she could bring them to

Kentucky. 2 (Supp. S.M.F. tJ 11; Opp. S.M.F. tJ 11.) Smyth responded by emailing Ms. Martin

1 Though her daughter, Barbara Martin, recommended Attorney Smyth, Mary Louise attended all three

meetings with Mr. Smyth alone. (Defs.' Rep. A.S.M.F. ~ 50.)

2 The parties dispute whether Ms. Martin requested the unexecuted Trust document on September 5,

20I2 when she requested the other estate planning documents from Attorney Smyth. (Supp. S.M.F. ~

IS; Opp. S.M.F. ~ IS.) Ms. Martin contends that she requested only the executed documents.

2

all of Mary Louise's estate planning documents, including the unexecuted Trust instrument.

(Supp. S.M.F. ~ 14; Opp. S.M.F. ~ 14.) In said email, Attorney Smyth instructed Ms. Martin

how to execute the document if Mary Louise was unable to sign on her own. (Supp. S.M.F. ~

15; Opp. S.M.F. ~ 15.)

Between early September and October 17th, 2012, Mary Louise regained consciousness,

but did not execute the Trust document. 3 (Supp. S.M.F. ~ 16; Opp. S.M.F. ~ 16.) On October

15, 2012, Mary Louise began to fail rapidly. On or about October 17, 2012, Ms. Martin

requested another copy of the unexecuted Trust instrument.4" (Supp. S.M.F. ~ 18; Opp. S.M.F.

~ 18.) Attorney Smyth sent a second email to Ms. Martin instructing her how the Trust

should be executed if Mary Louise was unable to sign on her own. (Supp. S.M.F. ~ 20; Opp.

S.M.F. ~ 20.) Thereafter, on the same day, Barbara Martin executed the Mary Louise Mikols

Living Trust on Mary Louise's behalf. 6 (Supp. S.M.F. ~ 21.) Mary Louise passed away on

October 20, 2012. (Supp. S.M. F.~ 2S; Opp. S.M.F. ~ 2S.)

The Trust was to be funded with various real property and bank accounts held by Mary

Louise. However, most of the accounts were either joint accounts or payment on death

accounts, which benefited a number ofheirs. 6 (Supp. S.M.F. ~ 22.) Upon Mary Louise's death

only three pieces of real property were transferred to the Trust including: the Imperial Beach,

California property; a home in Eagle Lake, Maine; and land in Oroville, California. (Supp .

.~ The parties dispute the number of days Mary Louise was in a coma. Ms. Martin contends that Mary

Louise regained consciousness on September 6, 2012, whereas the Harris Defendants contend that she

regained consciousness on September 10, 2012.

·J· The parties dispute whether October 17, 2012 was the first time Ms. Martin had requested the Trust

instrument from Attorney Smyth.

5 Barbara Martin remains unsure of the date the Trust instrument was executed, but admits that it was

subsequent to the receipt of the documents from Attorney Smyth. (Opp. S.M.F. ~ 21.)

6

The Parties dispute whether enough action was taken by Mary Louise and Ms. Martin to fund the

Trust. Ms. Martin claims that the creation of the pour-over will was intended to assist in the funding of

the Trust. (Supp. S.M.F.~ 24; Opp. S.M.F. ~ 24.)

3

S.M.F. ~~ 32, 53; Opp. S.M.F. ~~ 32, 33.) Because the bank accounts failed to transfer into

the Trust, the Trust has limited funds to operate. 7 (Supp. S.M.F. ~ 34; Opp. S.M. F. ~ 34.)

Following Mary Louise's death, Ms. Martin, as successor trustee under the terms of the

Trust, retained Attorney Smyth to assist in the implementation of the Trust. (Pl.'s A.S.M.F. ~

61; Defs.' Rep. A.S.M.F. ~ 61.) Section 5.02 deems the Trust to be in an administrative phase

"for a reasonable period oftime necessary to complete [] administrative tasks." See Mary

Louise Mikols Living Trust§ 5.02. Section 6.01 of the Trust appoints Mary Louise's daughter,

Cynthia Harris, as Trustee of the Imperial Beach, California property. In April2013, Ms.

Martin changed the locks on the Imperial Beach property and refused to provide keys to Ms.

Harris who intended to occupy the premises pursuant to Section 6.01 of the Trust instrument. 8

(Supp. S.M.F. ~ 35; Opp. S.M.F. ~ 35.) Ms. Martin explained to Ms. Harris and her other

siblings that she believed the Trust to be in an administrative phase until the Trust could be

adequately funded. (Opp. S.M.F. ~ 39.) On May 7, 2013, Ms. Martin again contacted her

siblings and beneficiaries under the Trust and explained that the Trust still did not have

enough liquid assets to satisfy its obligations. Ms. Martin recommended that the Imperial

Beach property be put on the market and sold. 9 (Supp. S.M.F. ~ 43; Opp. S.M.F. ~ 43.)

Ms. Martin asserts that because the Trust is still in the administrative phase pursuant

to Section 5.02 of the Trust instrument, the Harris Defendants are not entitled to occupation or

7 Ms. Martin asked the beneficiaries of the payment on death and joint accounts to return the sums to

fund the Trust. Ms. Martin contends that the beneficiaries refused. (Pl.'s A.S.M.F. ~ 60; Defs.' Rep.

A.S.M.F. ~ 60.) The beneficiaries contend that they did not have enough information from Ms. Martin

to contribute their funds to the Trust. (Defs.' Supplemental S.M.F. ~ 24.) Ms. Martin further qualifies

this fact by indicating that the Trust has remained unfunded since Mary Louise's death and because no

beneficiaries were willing to return their funds, Ms. Martin has had to administer the Trust with no

liquid assets.

8 Ms. Martin alleges that she sought to prevent all trespassing from the property and did not

specifically exclude Ms. Harris. (Opp. S.M.F. ~ S4.)

9 The email correspondence from Ms. Martin to her siblings recommends that the property be sold, but

also asks for alternative suggestions on how they might hold onto the property. (Supp. S.M.F. ~ 4S;

Opp. S.M.F. ~ 4S.)

4

use of the real property held by the Trust. The Harris Defendants claim that the provisions of

the Trust are not contingent on completion of the administrative phase and allege that the

trustees of the sub-trusts were entitled to the trust property immediately upon the death of

Mary Louise.

II. STANDARD OF REVIEW

M.R. Civ. P. 56( c) instructs that summary judgment is warranted "if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if

any ... show that there is no genuine issue as to any material fact set forth in those statements

and that any party is entitled to a judgment as a matter oflaw." To survive a motion for

summary judgment, the opposing party must produce evidence that, if produced at trial, would

be sufficient to resist a motion for a judgment as a matter oflaw. Rodrigue v. Rodrigue, 1997

ME 99, ~ 8, 694 A.2d 924. For purposes of summary judgment, "[a] material fact is one that

can affect the outcome of the suit." Burdzel v. Sobus, 2000 ME 84, ~ 6, 750 A.2d 57S (citing

Kenny v. Dep't if Human Services, 1999 ME 158, ~ S, 740 A.2d 560); see also Mcilroy v. Gibson's

Apple Orchard, 2012 ME 59, ~ 7, 4S A.sd 948. A genuine issue exists when sufficient evidence

supports a factual contest to require a fact-finder to choose between competing versions of the

truth at trial. See Prescott v. Tax Assessor, 1998 ME 250, ~ 5, 721 A.2d 169 (citing Garside v.

Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990)).

A party wishing to avoid summary judgment must present a prima facie case for each

element of a claim or defense that is asserted. See Reliance Nat'! Indem. v. Knowles Indus. Services,

2005 ME 29, ~ 9, 816 A.2d 6S. "If material facts are disputed, the dispute must be resolved

through fact-finding." Curtis v. Porter, 2001 ME 158, ~ 7, 784 A.2d 18. When the court rules

on a motion for summary judgment, '"[it] is to consider onry the portions of the record referred

to, and the material facts set forth, in the Rule 7(d) statements."' Handy Boat Serv., Inc. v. Prof!

5

Services, Inc., 1998 ME 134, ~ 16, 711 A.2d 1306 (quoting Gerrity Co. v. Lake Arrowhead Corp.,

609 A.2d 293 (Me.1992)). The court will view the evidence in light most favorable to the non-

moving party. See, e.g., Steeves v. Bernstein, Shur, Sawyer & Nelson, P.A., 1998 ME 210, ~ 11, 718

A.2d 186. The parties in this case agree that the Mary Louise Mikols Living Trust is

governed and enforced in accordance with the laws of the State of Maine.

III. ANALYSIS

The Harris Defendants' Motion for Partial Summary Judgment focuses on Count III of

their Counterclaim, alleging breach of trust pursuant to Maine Revised Statutes§§ 801-813,

and Count V of their Counterclaim, seeking a declaration that Cynthia Harris's interest as

trustee in the Imperial Beach property vested immediately upon the death of the grantor and

that Plaintiff/Counterclaim Defendant ("Barbara Martin" or "Ms. Martin") lacks authority to

sell the property.

During the briefing process, Barbara Martin and the Harris Defendants have also

asserted cross-motions on the no-contest provisions of the Trust and will. The two issues are

addressed in the order just framed.

A. Authority of the Administrative Trustee Regarding the Imperial Beach Property

The crux of the parties' legal dispute lies in their differing interpretations of how the

Trust operates. The Harris Defendants suggest that the Trust instrument unambiguously

vested title to the Imperial Beach, California property in Cynthia Harris immediately upon

Mary Louise's death. Conversely, Ms. Martin contends that Section 5.02 of the instrument has

locked the Trust in an administrative phase until such time as it is adequately funded. Acting

as trustee, Ms. Martin has proposed that the Imperial Beach property be sold to fund the Trust.

6

i. Interpretation of the Trust Instrument

Pursuant to the Maine Uniform Trust Code, "[t]he rules of construction that apply in

this State to the interpretation ... and disposition of property by will also apply to the

interpretation of the terms of a trust and the disposition of trust property." I8-B M.R.S. § II2.

Further, the general rules of construction, which apply to deeds and contracts, also apply to

trusts. See In Re Ross Family Tmsts, 2002 ME 89, ~ 5, 797 A.2d I268. In construing a will, a

court must give effect to the testator's intent, as expressed by the language of the will. I8-A

M.R.S. § 2-605. In other words, "[a] court must interpret the will within the four corners of

the document but may use the context of the entire will to interpret specific sections." Estate of

Silsby, 2006 ME 138, ~ 15, 914 A.2d 70S; Cassidy v. Murray, 144 Me. S26, 328, 68 A.2d S90, S91

(1949) (intention of settlor must be found from the language ofthe will read as a whole); Skillin

v. Skillin, ISS Me. 347, S50, I77 A. 706, 707 (1935) (A trust instrument "must be construed as

an entirety and in such manner as to give life to all its parts"). The settlor's intent is "gathered

from the whole will." In re Pike Family Trusts, 2012 ME 8, ~ 7, S8 A.sd 329, (quoting Univ. of

Me. Found. v. Fleet Bank ofMe., 200S ME 20, ~ 10,817 A.2d 871).

The proper interpretation of unambiguous language in a will is a question oflaw. Lord

v. Soc'yjor the Pres. ojNew Eng. Antiquities, Inc., 6S9 A.2d 623, 624 (Me. 1994); In re Estate of

Hodgkins, 2002 ME I54, ~ 8, 807 A.2d 626; Langille v. Norton, 628 A.2d 669, 670 (Me. 1993);

Reed v. A.C. McLoon & Co., SII A.2d 548, 551 (Me. I97S); Susi v. Davis, ISS Me. S54, S62, 177

A. 610, 613 (19S5).

The Law Court has long held that "[a] testator is presumed to use words in their

ordinary meaning, if such a construction would not be in conflict with his manifest intention."

Osgood v. Lovering, SS Me. 464,464 (185I); Lyon v. Lyon, 88 Me. S95, 400, S4 A. 180, 18S

(1896). However, when language in a will is ambiguous or subject to two or more

7

interpretations, the Law Court has stated that "[e]xtrinsic evidence may be admitted to resolve

any ambiguity in the will." Estate of Leighton, 6S8 A.2d 725, 724 (Me.1994 ). There is, however,

"a clear distinction between the admission of extrinsic evidence offacts and circumstances

existing at the time of the execution of the will and the admission of testator's declaration of

intent," the former being admissible and the latter inadmissible. First Portland Nat'l Bank v.

Kaler-Vaill Mem'l Home, 155 Me. 50, 62, 151 A.2d 708, 715 (1959) (emphasis in original).

ii. The Operation of the Mary Louise Mikols Living Trust

In accordance with the well-established principles set forth above, the court looks to the

settlor's intent at the time the Trust was executed. Looking at the instrument as a whole, it is

clear that Section S.OS of the Trust unequivocally appoints Barbara Martin as successor trustee

of the Trust. 10 In such position, Ms. Martin was conferred the discretionary power to pay from

Trust property the following: expenses from settlor's last illness, funeral, and burial or

cremation, including expenses of memorials and memorial services; legally enforceable claims

against settlor or settlor's estate; expenses relating to the administration of the Trust and

settlor's estate; and court-ordered allowances for those dependent upon the settlor. See Mary

Louise Mikols Living Trust§ 5.0S. It is further undisputed that upon Mary Louise's death,

Section 5.02 of the Trust established an "administrative trust" for the specific purposes set forth

in Article Five:

Section 5.02 Administrative Trust:

After my death and before the distribution of trust property as provided in the

subsequent Articles of this trust, the trust will be an administrative trust, but may

10Section 3.03 Trustee Succession after My Death

After my death, this Section will govern the removal and replacement of my Trustees.

(a) Successor Trustee

I name the following to serve as successor Trustees after my death, replacing any then serving

Trustee, in the order named:

Barbara T. Martin; then

Judith E. Montoya; and then

Paul J. Martin.

8

continue to be known as the Mary Louise Mikols Living Trust. The

administrative trust will continue for a reasonable period of time necessary to

complete the administrative tasks set forth in this Article.

Considering the plain and ordinary meaning of Section 5.02, it is clear that Mary Louise

intended to establish an administrative phase to ensure that certain administrative tasks be

completed before the distribution ofTrust property. The administrative trust is to continue for

a reasonable period until such time as the tasks set forth in Article 5 are complete. To date, the

Trust remains unfunded. To fund the Trust, Ms. Martin has asked beneficiaries of Mary

Louise's pay-on-death accounts to return funds to the Trust and has recommended that the

Imperial Beach property be sold to fund the Trust. (Supp. S.M.F. ~ 4S; Opp. S.M.F. ~ 4S.)

The Maine Law Court has long held that, "the chief issue is to be determined from the

intent of testatrix, not to be resolved by study of separate clauses, sentences, and paragraphs by

themselves, but by orienting the problem to the entire instrument." Thaxter v. Fry, 222 A.2d

686, 688 (Me. 1966). Thus, in reading the four-corners of the instrument and interpreting the

document as a whole, the court must also look to the plain language ofSection 6.01. Said

Section unambiguously establishes a sub-trust for real property located in Imperial Beach,

California, and appoints Cynthia Harris as the sole trustee. 11

The Harris Defendants rely on generally accepted rules of construction noting,

"[w]here a word is used in one sense in one part of a will, and there is nothing to indicate a

different meaning when the same word is used in another part, it may be presumed that the

same meaning was intended." Blaine v. Dow, 111 Me. 480, 482, 89 A. 1126, 1128 (1914). Here,

11

Section 6.01 Specific Distribution to Trust Share for Cynthia C. Harris

After my death, Cynthia C. Harris, as Trustee, shall hold my real estate located in Imperial Beach,

California in trust for the use of my descendants. I specifically authorize Cynthia C. Harris to occupy the

property as her primary residence, should she wish to do so. It is my desire that my Trustees permit my

descendants to vacation at the property at such times as may be mutually agreed upon by my Trustees

and those ofmy descendants who wish to use the property. After a period of five years following my

death, my Trustees, by unanimous agreement, may sell the property and distribute the proceeds to the

trust share established for Cynthia C. Harris under Article Seven.

9

Mary Louise utilized the phrase "[a]fter my death" at the beginning of both Sections 5.02 and

6.0 1. However, in other similar provisions of the Trust, Mary Louise began the sections with

the language "[a]s soon as practicable after my death." See, e.g., Mary Louise Mikols Living

Trust§ 6.02. The Harris Defendants contend that this change in language is demonstrative of

the settlor's intent that Cynthia Harris was to be vested immediately as trustee of the Imperial

Beach property notwithstanding the administrative phase.

While Defendants' argument is persuasive, the court cannot ignore the controlling

language in Section 5.02 which states, "[a]fter my death and bifore the distribution of trust

property as provided in the subsequent Articles of this trust ... " (emphasis added). This indicates

that Section 5.02 must be satisfied prior to the distribution of Trust property provided in

subsequent sections, including Section 6.01 regarding the Imperial Beach property. Thus, the

administrative phase shall continue for a reasonable period of time until the Article Five

obligations can be carried out.

For that reason, Defendants are not entitled to summary judgment on whether Cynthia

Harris was vested with immediate possession as trustee of the Imperial Beach property.

Control over that property remains with Barbara Martin as administrative trustee until the

property is distributed. The court has considered whether to render judgment against the

Harris Defendants on this issue, see M.R. Civ. P. 56( c) ("summary judgment, when appropriate,

may be rendered against tl1e moving party"), and elects not to, mainly because whetl1er Ms. Martin

is justified in not having distributed t11e Imperial Beach property already to Ms. Harris cannot be

determined on the present record.

The next question is whether the Imperial Beach property may be sold in order to fund

the administrative phase of the trust. For the reasons that follow, the court's answer to that

question is, maybe, but not yet.

10

111. Authority of the Trustee to Sell Trust Property To Fund the Administrative

Trust

Maine has limited case law defining the authority of the trustee of an "administrative

trust." Thus, the court looks to the case law of sister states for guidance. Massachusetts, for

example, limits the powers of an administrative trustee to ministerial tasks. See Boston Safe

Deposit & Trust Co. v. Stone, 203 N.E.2d 547, 552 (Mass. 1965) ("Administrative trust provisions

... are ordinarily designed merely to simplify distribution and to make unnecessary requests

for court instructions. Such a provision gives to trustees no discretion to shift beneficial

interests in the trust assets.").

Here, Ms. Martin contends that Mary Louise intended that the Trust be implemented

in discrete phases, beginning with the administrative phase and progressing to the sub-trusts

listed in Article Six. The Harris Defendants argue that notwithstanding Section 5.02, general

principles of trust law dictate that specific dispositive provisions should take precedence over

general administrative provisions.

The Harris Defendants cite The Restatement (Third) if Property (Wills & Don. Trans.)§

11.3 (2003), which states that in construing donative documents, "[t]he foundational

constructional preference is for the construction that is more in accord with common intention

than other plausible c~:mstructions." The Restatement goes on to explain:

Constructional preferences derived from the preference for common intention include the

constructional preferences for ... the construction that is more in accord with the donor's

general dispositive plan than other plausible constructions [as well as] the construction

that renders the document more effective than other plausible constructions, including the

construction that favors completeness of disposition and the construction that avoids

illegality.

Id. at §1103 (c)(1)-(6).

In this case, while the Trust remains unfunded and in an administrative phase, denying

Cynthia Harris the possession and use of the Imperial Beach property prohibits and impedes

11

the efficient distribution of the Trust. Further, Section 5.02 does not give Ms. Martin the

authority as trustee to sell the Imperial Beach property or any other property that was granted

by the settlor to designated beneficiaries. 12 Section 12.01 specifically prohibits any trustee

from exercising any power inconsistent with the beneficiaries' right to enjoyment of the Trust

property.

Section 6.01 provides Ms. Martin, as successor trustee, the authority to sell the Imperial

Beach property only after a period of five years following Mary Louise's death and by

unanimous agreement among the trustees. Neither of these conditions has been satisfied.

Further, a plain reading of the Trust instrument makes clear that any proceeds derived from

the sale of the property are to be contributed to Cynthia Harris' trust share. Because Ms.

Martin does not, at this time, have the authority to sell the Imperial Beach property and

because all proceeds from the sale of the property are to be distributed to the trust share

established for Cynthia Harris, the Court sees no reason for Ms. Martin to continue to hold the

property.

IV. A Court-Ordered Sale To Fund the Administrative Trust

The fact that Barbara Martin does not have authority today to sell the Imperial Beach

property without the consent of the Harris Defendants does not mean that she is without

recourse to fulfill her responsibilities as administrative trustee.

Maine courts have exercised their equitable powers to approve modifications or

deviations from the terms of a trust due to unanticipated circumstances. See e.g., Richardson v.

Knight, 69 Me. 285, 287 (1879) (allowing stocks to be transferred into more stable securities

absent language in the testamentary instrument); City ofAugusta v. Attorney Gen., 2008 ME 51,

~ s 1, 94.'3 A.2d 582, 591 (granting modification to both administrative and dispositive terms of

12 While other sub-trusts were created in Article Six of the Trust instrument those properties are

outside of the scope of the considered motions.

12

the Cony Charitable Trust allowing the City of Augusta to sell the property upon which the

original Cony High School was located). 13 Pursuant to 18-B M.R.S.A § 412 (1):

Modification or Termination: The court may modify the administrative or dispositive

terms of a trust or terminate the trust if, because of circumstances not anticipated by the

settlor, modification or termination will further the purposes of the trust. To the extent

practicable, the modification must be made in accordance with the settlor's probable

intention.

This statute applies to all trusts created "before, on, or after July 1, 2005." 18-B M.R.S.A §

1104( 1 )(A).

Section 412 is unambiguous. It permits modification ofboth administrative and

dispositive trust terms in the event of unanticipated circumstances. Any modification or

termination must be made, if at all practicable, in accordance with the settlor's intent. !d.; City

ofAugusta, 2008 ME 51, ~ s 1, 943 A.2d 582. Further, the Maine Comments to Section 412

indicate that Section 412 "was intended to expand Maine law beyond Porter to permit

modification of dispositive terms of trusts and eliminate the requirement that an emergency

exist." 14 Id. ~ 32.

Thus, while the court recognizes that the Imperial Beach sub-trust became effective

upon the death of Mary Louise, notwithstanding the administrative trust in place, the court

also leaves open the possibility that the Imperial Beach property will need to be sold as the

result of unanticipated circumstances. Those circumstances could include Mary Louise

Mikols's mistaken assumption that funds from accounts would be available to fund the Trust in

the manner she intended. Further, should the continuation of the trust on its existing terms

1

~ The court allowed the modification even though the original intent of the settlor was for the property

to be used as a school and held in trust in perpetuity. Clty ofAugusta, 2008 ME 51,~ 15,943 A.2d 582.

I·> "Comment a of the Restatement of Law (Third) Trusts§ 66 (2003) also indicates emergencies are no

longer necessary, and that modification or even termination because of unforeseen circumstances are

permitted in order to give effect to what the settlor probably would have intended had he anticipated the

change. This includes modification to provisions expressly forbidding the sale of a trust's corpus." I d. n.

16 (citing Restatement of Law (Third) Trusts§ 66 cmt. b (2003)).

13

"become impracticable or wasteful or impair the trust's administration" the court may modify

the administrative provisions of the Mary Louise Mikols Living Trust and allow sale of the

property. 18-B M.R.S.A § 412.

B. The Parties' Cross-Motions Regarding No-Contest Provisions

Mary Louise included a no-contest provision in both her pour-over will and the Trust

instrument. Based on the plain language of the provisions, Mary Louise sought to prevent

beneficiaries from challenging provisions of the Trust by disinheriting anyone seeking to

challenge the construction of the instruments. Generally, such provisions "serve to protect

estates from costly and time-consuming litigation [by] minimize[ing] family bickering over

the competence and capacity of testators, and the various amounts bequeathed. However, the

function of the court is to effect the testator's intent to the greatest extent possible within the

bounds of the law." In re Seymour, 1979-NMSC-069, ~ 19, 93 N.M. 328, 332, 600 P.2d 274.

The no-contest clause in the Mary Louise Mikols Living Trust is unambiguous. It

states:

Section 13.03 Contest Provision

The right of a beneficiary to take any interest given to him or her under this trust or

any trust created under this trust instrument will be determined as if the beneficiary

predeceased me without leaving any surviving descendants if that beneficiary, alone or

in conjunction with any other person, engages in any of these actions:

Contests by a claim of undue influence, fraud, menace, duress, or lack of

testamentary capacity, or otherwise objects in any court to the validity of this

trust, any trust created under the terms of this instrument, my Will, or any

beneficiary designation of any annuity, retirement plan, IRA, Keogh, pension,

profit-sharing plan, or insurance policy signed by me, (collectively referred to in

this Section as Document or Documents) or any amendments or codicils to any

Document;

seeks to obtain adjudication in any court proceeding that a Document or any of

its provisions is void in any court proceeding, or otherwise seeks to void, nullify,

or set aside a Document or any ofits provisions;

files suit on a creditor's claim filed in a probate of my estate, against the trust

estate, or any other Document, after rejection or lack of action by the respective

fiduciary;

14

files a petition or other pleading to change the character (community, separate,

joint tenancy, partnership, domestic partnership, real or personal, tangible or

intangible) ofproperty already characterized by a Document;

files petition to impose a constructive trust or resulting trust on any assets of the

trust estate; or

participates in any of the above actions in a manner adverse to the trust estate,

such as conspiring with or assisting any person who takes any of these actions.

Mary Louise Mikols Living Trust § I3.0S. Specifically, Mary Louise sought to prevent the

following contests: "undue influence, fraud, menace, duress, O lack of testamentary capacity, or

other[] [objections] in any court to the validity of[the] trust." Id.

The Maine Probate Code states, "[a] provision in a will purporting to penalize any

interested person for contesting the will or instituting other proceedings relating to the estate

is unenforceable if probable cause exists for instituting proceedings." IS-A M.R.S. § S-905.

Thus, any claim by the Harris Defendants falling into the above-mentioned causes of action

must be supported by adequate probable cause. See In re Estate of Shumway, 9 P.sd I062, 1066

(Ariz. 2000) (explaining Section S-905 expressly invalidates a no-contest clause if a challenger

has probable cause to assert the claim).

"Whether there has been a 'contest' within the meaning of a particular no-contest clause

depends upon the circumstances of the particular case and the language used much depends on

the phrasing and reach of the in terrorem clause even though such clauses must be strictly

construed." Redman-Tafoya v. Armijo, 2006-NMCA-OII, ~ 55, ISS N.M. S36, S4S, I26 P.3d

I200 (quoting In re Watson, 22S Cal. Rptr. I4, I6 (Cal. Ct. App. I9S6)). Further, "[a] case-by-

case evaluation is necessary to decide whether an heir's conduct, including legal actions,

constitute a contest of a will." Armijo, ISS N.M. SS6, S45, I26 P.sd at I209.

While Maine courts have had little opportunity to question the implications and validity

of no-contest provisions in estate documents, in In re Estate ofLewis, the Law Court

unambiguously held that a no-contest or in terrorem clause may not be "invoked or otherwise

15

used to chill a legitimate legal action." 2001 ME 74, ~ 10, 770 A.2d 619. Other states, which

adhere to the Uniform Probate and Trust Codes, have consistently held "no-contest provisions

are valid and enforceable ... but they are not effective to disinherit a beneficiary who has

contested a will in good faith and with probable cause to believe that the will was invalid."

Armijo, 1S8 N.M. 8S6, 846, 126 P.sd at 1210. Generally, "courts will not apply a no-contest

provision in cases where the beneficiaries have not challenged the will and do not seek to

nullify the estate document." Id. at 1214.

Ms. Martin contends that no probable cause or good faith can be discerned from the

Harris Defendants' pleadings and that the Harris Defendants simply prefer the terms ofMary

Louise's previous estate plan. Ms. Martin avers that the counterclaims asserted by the Harris

Defendants should be interpreted as a challenge to the validity of the Trust in its entirety.

Although some ofthe Harris Defendants' defenses sweep that broadly, the thrust of the

counterclaims presented by the Harris Defendants is not to challenge the validity of the Trust,

but rather, to challenge Ms. Martin's interpretation of the Trust and her actions in the

implementation of the Trust as designated successor trustee.

Count I of the Harris Defendants' counterclaim challenges Ms. Martin's action as

holder of Power of Attorney and her failure to ensure that the Trust was adequately funded.

Under this claim, the Harris Defendants seek reliefpursuant to 18-B M.R.S. § 412, which

allows the court to modify or terminate the Trust. Count II makes a claim against Ms. Martin

for her personal negligence in the funding and operation of the Trust. Count III alleges breach

of trust on behalf of Ms. Martin as trustee and alleges a breach of the duty to administer the

trust impartially; breach of the duty to administer the Trust in good faith; breach of the duty to

inform beneficiaries of material information; and breach of the terms of the Trust. Count IV

requests that the court exercise its powers to terminate an uneconomic trust pursuant to 18-B

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M.R.S. § 414. Finally, Count V requests specific declaratory reliefpreventing Ms. Martin from

selling the Imperial Beach property and imposing a constructive trust over assets Ms. Martin

holds personally. None of these claims seek to invalidate or nullify a provision of the Trust.

Counts I and IV ofthe Harris Defendants' counterclaims are authorized under Maine

law by statute. The pursuit of claims authorized by statute "are [] to be characterized not as

attacks on the validity of the Will or of a provision of the Will, but as legal actions under a

valid Will with valid provisions to enforce rights granted expressly by statute." Armijo, 1.38

N.M. 8.36, 850, 126 P ..sd at 1210. Counts II, III, and V challenge only Ms. Martin's personal

actions as trustee and are therefore outside of the scope of Mary Louise's no-contest provision.

Ms. Martin further argues that the Harris Defendants made a tactical decision to

litigate the issue of this case in a separate federal court proceeding while also removing the

original probate action to Superior Court. Ms. Martin contends that this was an intentional act

to ensure that Ms. Martin would be forced to litigate in two forums at once. She further argues

that this action on behalf of the Defendants demonstrates their lack of good faith and probable

cause.

However, "conduct and actions comprising resistance and lack of cooperation, even with

hostility and opinion mixed in, cannot be characterized as attacking the validity of the Will or

as seeking to nullify a material provision in the Will." Id. Thus, the court does not find this

argument persuasive. It is generally accepted that testators and settlors "are still free to

disinherit beneficiaries on any ground that does not violate public policy and that clearly and

specifically expresses what type oflegal proceedings, or what type of other conduct and actions,

[testators or settlors] intend to discourage through the threat of disinheritance." Id. at 1215.

Lastly, Barbara Martin points to certain affirmative defenses asserted by the Harris

Defendants, challenging the validity of the Trust and will. On their face, these defenses do

17

meet the definitions of the no-contest provisions. However, the circumstances surrounding the

Trust in particular supply probable cause for such a challenge-it was Ms. Martin who

recommended that Mary Louise Mikols consult with attorney Smyth, and it was Ms. Martin

who actually signed the Trust. Although there is no indication of undue influence beyond

whatever may be made of those circumstances, those circumstances, coupled with Ms. Martin's

position regarding the administrative trust trumping the Imperial Beach proviso, confers

enough legitimacy to the Harris Defendants' position to avoid a forfeiture through the no-

contest provisions of the will and Trust.

The court denies the cross-motion ofMs. Martin based on the present record. Because

this proceeding is still in progress, it would be inappropriate to grant judgment to the Harris

Defendants on their cross-motion on this issue.

IV. Conclusion

Based on the foregoing, the Harris Defendants are entitled to summary judgment as to

Count V of their Counterclaim insofar as it seeks a declaratory judgment preventing Ms.

Martin from selling the Imperial Beach, California property, without the consent of other

trustees and without authorization from the court. This ruling is without prejudice to

revisitation in the context of an application to the court for authority to sell.

As stated in the Mary Louise Mikols Living Trust, the Trust shall continue in an

administrative phase for a "reasonable period oftime necessary" to complete the administrative

tasks set forth in this Article Five of the Trust. The present record does not enable the court

to decide what is a "reasonable time necessary" to complete the administrative tasks. The

Harris Defendants' motion on Count III of their counterclaim is therefore denied.

Finally, for the reasons given above, the court denies both of the parties' cross-motions

on the issue of the no-contest provision in the Mary Louise Mikols Living Trust.

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The en try will be:

(1) Defendants' Motion for Partial Summary Judgment is DENIED as to COUNT III

and is GRANTED IN PART as to COUNT V, in that it is DECLARED that Barbara

Martin as successor trustee of the Mary Louise Mikols Living Trust does not have

authority to sell the Imperial Beach Property absent consent of other trustees, or

unanticipated circumstances, or a court order authorizing sale.

(2) Plaintiffs and Defendants' Cross-Motions for Summary Judgment concerning the

no-contest provisions are both DENIED.

Pursuant to M.R. Civ. P. 79(a), the Clerk is herby directed to incorporate the Order by

reference in the docket.

Dated: November 0.2014

Justice, Business & Consumer Court

19

Barbara T. Martin, Trustee of the Mary Louise Mikols Living Trust

UIT ID October 12, 2012 v. Cynthia C Harris, Elizabeth H. Mikols,

Julia A. Harris, and April F. Parras, et al.

BCD-CV-14-07

Barbara T. Martin, Trustee of the Mary Louise Mikols Living Trust

UITID October 12,2012

Plaintiff I Counterclaim Defendant

Counsel: William Devoe, Esq.

80 Exchange Street

P.O. Box 1210

Bangor, ME 0442-1210

Cynthia C Harris, Elizabeth H. Mikols, Julia A. Harris, and April F.

Parras, et al.

Defendant I Counterclaim Plaintiffs

Counsel: Christian Chandler, Esq.

One Canal Plaza Suite 1000

PO Box 7320

Portland, ME 041112-7320