Ciampa v. Bank of America

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14-P-1179 Appeals Court

JAMIE CIAMPA, individually and as administratrix,1 vs. BANK OF

AMERICA2 & another.3

No. 14-P-1179.

Essex. June 3, 2015. - August 13, 2015.

Present: Meade, Hanlon, & Blake, JJ.

Individual Retirement Account. Mistake. Trust, Beneficiary,

Mistake.

Complaint for instructions filed in the Essex Division of

the Probate and Family Court Department on May 5, 2010.

The case was heard by Susan D. Ricci, J.

W. Matthew Iler, Jr., for the plaintiff.

Robert A. Delle for J. Edward Cotgageorge.

MEADE, J. This case requires us to review the propriety of

the allocation of a sixty-six percent share of an individual

retirement account (IRA) of the decedent, Priscilla Cotgageorge

1

Of the estate of Priscilla Cotgageorge.

2

Doing business as Merrill Lynch Wealth Management.

3

J. Edward Cotgageorge.

2

(Priscilla). Following her death, that share was to be paid to

a named contingent beneficiary whose identity cannot be

ascertained. Both Priscilla's daughter, the plaintiff Jamie

Ciampa (Jamie), and her stepson, the defendant J. Edward

Cotgageorge (Edward), claim to be that contingent beneficiary

and, consequently, to be entitled to that share. After a trial,

a judge of the Probate and Family Court awarded the sixty-six

percent share, as well as the other thirty-four percent share,

to Edward. Jamie appeals, and we vacate the decree.

1. Background. We summarize the facts found by the judge,

supplementing with uncontroverted evidence in the record.

Yankee Microwave, Inc. v. Petricca Communications Sys., Inc., 53

Mass. App. Ct. 497, 499 (2002). Priscilla died intestate in

2007; her husband, James Cotgageorge (James), had predeceased

her. Priscilla and James had two children during their

marriage: a daughter, Jamie, who enjoyed a close relationship

with Priscilla, and a son, Michael.4 Edward was Priscilla's

stepson, and except for a few short visits and a summer spent

living with her and James in Marblehead, Edward lived across the

country and was generally uninvolved in the family affairs.

At the time of her death, Priscilla owned an IRA held by

the defendant Bank of America, doing business as Merrill Lynch

4

Michael is not a party to this action.

3

Wealth Management (Merrill).5 Priscilla opened the account in

November, 1997, by signing an IRA agreement form and funding the

account. The parties stipulated that while Priscilla had signed

the form, the handwriting on the rest of the form was not hers.

The form named her husband, James, as the sole primary

beneficiary,6 and named two people as contingent beneficiaries:

"James Cotgageorge, Jr." was to receive a sixty-six percent

share, and "J. Edward Cotyup" was to receive the other thirty-

four percent share. Each was identified as Priscilla's "son,"

but no Social Security number or date of birth was entered for

either of them. In addition, Priscilla's Social Security number

was incorrectly recorded on the form. The parties stipulated

that "J. Edward Cotyup" was a reference to Edward. No person

with the name "James Cotgageorge, Jr." exists in either

Priscilla's or James's families.

In October, 2009, two years after Priscilla's death,

Merrill notified Edward that he was entitled to both shares of

the IRA and that it intended to pay him the full account

5

The decedent and Jamie had another IRA as joint tenants;

that IRA is not the subject of this dispute.

6

Because James predeceased Priscilla, the contingent

beneficiaries are entitled to the value of the IRA.

4

balance.7 Jamie, as administratrix of Priscilla's estate, then

sought to prevent Merrill from distributing the sixty-six

percent share to Edward, claiming in a letter that she believed

that share "must be made payable to the estate of [Priscilla]."

In December, Merrill agreed to refrain from distributing the IRA

pending the filing of a complaint for instructions and a

subsequent court order. Merrill took no position on the

question of who was entitled to the share, stating only that it

would pay it to whomever the court determined was the proper

beneficiary. Subsequently, on May 5, 2010, Jamie filed a

complaint for instructions in the Probate and Family Court.

While Jamie initially asked for a declaratory judgment that

Merrill pay the share into Priscilla's estate, she subsequently

abandoned that strategy, intervened in her individual capacity,

and sought payment of the share directly to herself instead of

to her mother's estate.

The parties agreed that Edward was entitled to the thirty-

four percent share; however, Jamie and Edward each testified at

trial to his or her belief that he or she was the person

incorrectly recorded as "James, Jr." Following trial, the judge

found that Jamie had not proved that the IRA agreement form did

not reflect Priscilla's intent. The judge found "no evidence to

7

Edward testified at trial that he only learned of the

IRA's existence when he received this correspondence from

Merrill. Prior to that, he had no knowledge of the account.

5

prove that the beneficiaries on the form were not as [Priscilla]

intended or that [Priscilla] intended to distribute any of the

IRA to [Jamie]." She concluded that Priscilla -- a legal

secretary and the wife of a local attorney -- knew how to

designate or change beneficiaries to her IRA, and would have

done so if that had been her intent. The judge ordered payment

of the contested sixty-six percent share to Edward.

2. Discussion. The judge held that Jamie failed to

establish that a mistake was made in the formation of the IRA.

We review the propriety of that decision. More specifically, we

must determine whether the IRA agreement form contains a mistake

due to a scrivener's error and, if it does, whether we can

reform the IRA agreement form to conform to Priscilla's intent.

In so doing, we review the judge's factual findings for clear

error, giving deference to her assessment of witness

credibility. We will, however, review her conclusions of law de

novo. See, e.g., Martin v. Simmons Properties, LLC, 467 Mass.

1, 8 (2014).

Our resolution of this case turns on an application of

trust law.8 See 26 U.S.C. § 408 (2012) (defining an IRA as "a

8

Jamie appeals on a related but somewhat different theory

of a mutual mistake made at the time of contract formation and

seeks to reform the instrument on that basis. "The doctrine of

reformation for mistake with regard to trusts differs from that

with respect to instruments such as contracts . . . .

6

trust created or organized in the United States for the

exclusive benefit of an individual or [her] beneficiaries").9

See Restatement (Third) of Trusts § 25 comment c(3) (2001). "In

order for a trust to be valid in the Commonwealth, it must

unequivocally show an intention that the legal estate be vested

in one person to be held in some manner or for some purpose on

behalf of another." Ventura v. Ventura, 407 Mass. 724, 726

(1990) (citation omitted). A drafting error may be grounds to

reform the trust instrument "once the existence of a mistake is

established by full, clear, and decisive proof." Bellemare v.

Clermont, 69 Mass. App. Ct. 566, 572 (2007) (citation omitted).

"Included in the category of unilateral mistakes for which

relief may be obtained is a settlor's acceptance of a trust

instrument which, because of the mistake or inadvertence of the

scrivener, fails to embody the settlor's intentions." Berman v.

Sandler, 379 Mass. 506, 510 (1980). Finally "[t]he

interpretation of a written trust is a matter of law to be

resolved by the court. A trust should be construed to give

effect to the intention of the settlor as ascertained from the

[M]utuality of mistake is not always required where trusts are

concerned." Berman v. Sandler, 379 Mass. 506, 509-510 (1980).

9

During the life of the settlor, an IRA is essentially a

revocable, inter vivos trust, and the settlor may name or remove

beneficiaries at any time until death. Following death, the

trust becomes irrevocable.

7

language of the whole instrument considered in the light of the

attendant circumstances. We are in as good a position as the

[trial] judge to do this." Redstone v. O'Connor, 70 Mass. App.

Ct. 493, 499 (2007) (citations omitted).

Here, the parties agree that the thirty-four percent share

belongs to Edward. The sole issue is to whom Priscilla (or the

scrivener) intended to refer by naming "James, Jr.," a person

who does not exist, as a contingent beneficiary.

a. Scrivener's error. Jamie claims that the misnomer of

"James, Jr." constitutes a scrivener's error on the IRA

agreement form. We agree. The judge found that "James, Jr."

does not exist in the Cotgageorge family.10 Designating a person

who does not exist as the intended beneficiary of a trust is,

without more, "clear and decisive proof of mistake due to

scrivener's error." Pond v. Pond, 424 Mass. 894, 898 (1997).

Despite this, the judge nevertheless concluded that "[Priscilla]

signed the form and sent funds to open the account making her

intentions clear" (emphasis supplied). The judge's findings of

fact do not support this conclusion. The mere fact that

Priscilla opened and funded an IRA does not mean that her

intended beneficiaries were correctly recorded on the form,

10

This finding is not clearly erroneous, and is supported

by the testimony of both Edward and Jamie, as well as Edward's

certificate of live birth, which was introduced in evidence.

8

particularly where it was uncontroverted that the form had been

filled out by a third party, not Priscilla.11 The misnomer is

therefore attributable to the "mistake or inadvertence of the

scrivener, [which] fails to embody the settlor's intentions."

Berman v. Sandler, 379 Mass. at 510. The judge erred in

concluding otherwise.

b. Reformation. Having proven a scrivener's error, Jamie

next seeks the reformation of the IRA agreement form to reflect

her asserted right to the sixty-six percent share, while Edward

defends the judge's decree awarding the entire account to him.

The Supreme Judicial Court has "allowed the reformation of an

ambiguous trust instrument based on extrinsic evidence of the

settlor's intent and provisions in the instrument that showed

that the [scrivener] who drafted it failed to carry out the

settlor's intent." Putnam v. Putnam, 425 Mass. 770, 772 (1997).

As discussed above, Jamie proved that the scrivener failed to

name the sixty-six percent beneficiary in accordance with

11

Edward testified to his belief that Priscilla had

deliberately named him as "James, Jr." on the IRA agreement

form, because his father and Priscilla had used the nicknames

"Jimmy" or "Junior" to refer to him in childhood. Thus, Edward

characterized the reference to him as "James, Jr." as a "tongue-

in-cheek . . . joke" which was a secret among him, James, and

Priscilla. The judge imputed significant legal acumen to

Priscilla as a secretary to her late husband (an attorney); even

if this finding is left undisturbed, it cuts against Edward, not

in his favor. An experienced legal secretary would not have

made a reference to a joke on an important legal document.

9

Priscilla's intent. Jamie goes further, however, and claims

that "James, Jr." is an obvious reference to her. We disagree.

Jamie's claim that she is "James, Jr." is primarily based

on the similarity of her first name to James, and her

explanation of the word "son" and "Junior."12 She also points to

the close familial relationship she enjoyed with her mother, as

well as the fact that her late father had distributed sixty-six

percent of his estate to her and thirty-four percent to Edward -

- the same proportion she now suggests Priscilla intended for

her IRA. The judge, however, rejected this explanation as

merely "possible [but] not plausible," noting "it is not

probable that [Priscilla] would misspell her daughter's name,

call her daughter 'Jr.'" and list her daughter as her son."

When we compare Jamie's offer to other cases, the party seeking

reformation in those cases presented much more. See, e.g.,

DiCarlo v. Mazzarella, 430 Mass. 248, 250 (1999) (trust language

indicated settlor's intent to qualify for marital deduction);

Grassian v. Grassian, 445 Mass. 1012, 1014 (2005) (trust

language and drafting attorney's affidavit stated settlor's

intent to minimize tax liability); Ryan v. Ryan, 447 Mass. 1003

(2006) (record contained affidavits of settlors stating their

intent). The judge found that Jamie's explanation was based on

12

Jamie testified to her belief that a Merrill employee had

erroneously filled out the signed form on Priscilla's behalf.

10

speculation and also, we presume, considered her credibility as

a witness; we see no reason to disturb that finding on appeal.

See Kendall v. Selvaggio, 413 Mass. 619, 625 (1992). Therefore,

Jamie has not clearly and decisively proven that she was the

intended beneficiary of the share held for "James, Jr."

Our inquiry is not at an end. We must address the judge's

decision to award the sixty-six percent share to Edward. Even

viewing the evidence in the light most favorable to him, see

Foster v. Group Health Inc., 444 Mass. 668, 672 (2005), the

evidence does not support the decree. The award to Edward rests

primarily on the judge's determination that Jamie is not "James,

Jr.," in addition to the facts that Priscilla had legal

experience, signed the IRA agreement, could have changed the

beneficiary at any time, and funded the account.13 None of those

facts suggest the conclusion that Edward is entitled to the

entire account. Indeed, we see no basis for the judge to have

concluded that the "two gifts were designated and intended to be

to the same beneficiary," i.e., Edward. Rather, where two

beneficiaries are designated, each taking a share of a trust,

the settlor logically intended to make two separate gifts, not

13

Edward's testimony that he expected to receive

"something" from Priscilla's estate is satisfied by his receipt

of the thirty-four percent share. In addition, the judge

declined to explicitly credit his self-serving testimony

concerning a secret childhood nickname about which only he,

Priscilla, and James knew. See note 10, supra.

11

one. See DiCarlo v. Mazzarella, 430 Mass. at 250 (settlor's

intent based on "the trust instrument as a whole and the

circumstances known to the settlor on execution" [citation

omitted]). "While intent is the lodestar of testamentary

construction, it cannot be used . . . to supply a missing clause

or to permit speculation as to what the testatrix might have

intended . . . ." Redstone v. O'Connor, 70 Mass. App. Ct. at

501 (citation omitted). With respect to the factual findings in

Edward's favor, we are therefore "left with the definite and

firm conviction that a mistake has been committed." Woodward

Sch. for Girls, Inc. v. Quincy, 469 Mass. 151, 159 (2014)

(citation omitted). See Director of Div. of Employment Sec. v.

Mattapoisett, 392 Mass. 858, 862 n.5 (1984); Kendall v.

Selvaggio, 413 Mass. at 625.

On the record before us, where neither Jamie nor Edward has

established a viable claim to the share held for the benefit of

"James, Jr.," we are unable to reform the instrument. If the

intended beneficiary of all or part of an express trust is

unascertainable, that portion of the trust fails, and a

resulting trust arises in favor of the settlor or her estate if

she has died. See 6 Scott & Ascher, Trusts, § 41.13 at 2883 &

n. 1 (5th ed. 2009). That is the result we reach here.14 See

14

We decline to order a new trial because neither party has

requested that relief, and there is no suggestion that either

12

Ventura v. Ventura, 407 Mass. at 730. See Stanwood v. Stanwood,

179 Mass. 223, 226-227 (1901) (where trust fails as to one of

multiple intended beneficiaries, resulting trust arises

regarding failed beneficiary's pro rata share).

Accordingly, the decree is vacated. A new decree shall

enter as follows: the sixty-six percent share held for the

benefit of "James, Jr." will be held in a resulting trust for

the benefit of Priscilla's estate.15 The thirty-four percent

share held for the benefit of Edward will be paid to him,

without interest.16

So ordered.

Jamie or Edward was denied the opportunity to present all of his

or her evidence at trial.

15

Because Priscilla died without a valid will, the share

must be distributed in accordance with the provisions of G. L.

c. 190B, § 2-103. See Woodbury v. Hayden, 211 Mass. 202, 206

(1912) ("The trust having ended, whatever remains of the trust

fund should be disposed of as intestate property").

16

Interest should not have been awarded on any portion of

the IRA. See O'Shea v. Barry, 252 Mass. 510, 511 (1925) ("An

executor or administrator is not chargeable with interest on the

money of the estate in his hands, unless he has received

interest thereon or put it to some profitable use or

unreasonably detained it"). Jamie has not unreasonably detained

any of the proceeds of the estate where she sought to release

Edward's thirty-four percent share and properly filed a

complaint seeking instructions as to the disposition of the

sixty-six percent share.