Ferri v. Powell-Ferri
165 A.3d 1137
| Conn. | 2017Background
- Paul J. Ferri Sr. created a 1983 trust for the sole benefit of his son, Paul J. Ferri Jr. (Ferri); trustees were Michael Ferri and Anthony Medaglia. The 1983 trust allowed Ferri to withdraw increasing percentages of principal as he aged (up to 75% at the relevant time).
- In March 2011, while Ferri’s marital dissolution action with Nancy Powell‑Ferri was pending, the trustees created a new trust (2011 trust) for Ferri’s sole benefit and transferred a substantial portion of the 1983 trust assets into it. The 2011 trust gave the trustees discretionary control and did not permit Ferri to withdraw principal as of right.
- The trustees then filed a declaratory judgment action seeking validation of the decanting and to exclude Powell‑Ferri’s claim to the 2011 trust assets; Powell‑Ferri counterclaimed alleging, among other things, breach of fiduciary duty and sought restoration of assets and attorneys’ fees.
- The trial court ruled that trustees lacked authority to decant 75% of the 1983 trust because Ferri had a vested, irrevocable interest in that portion; it ordered restoration of 75% and awarded Powell‑Ferri attorneys’ fees.
- The Connecticut Supreme Court certified novel questions of Massachusetts law to the Massachusetts SJC. The Massachusetts SJC answered that trustees were empowered to decant under the 1983 trust language; the Connecticut Supreme Court adopted that decision and reversed the trial court’s decanting ruling and fee award, but otherwise affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to decant 1983 trust assets | Trustees: 1983 trust language unambiguously permits decanting; Ferri’s unexercised withdrawal rights do not restrict decanting | Powell‑Ferri: Ferri had a vested, irrevocable withdrawal interest (75%) so trustees lacked power to decant that corpus | Decanting was authorized under Massachusetts law (Mass. SJC). Connecticut Supreme Court adopts that view and reverses the trial court on decanting |
| Standing to challenge decanting | Trustees: Powell‑Ferri lacks standing because she is not a trust beneficiary | Powell‑Ferri: She has a colorable interest because the trust assets are marital property affecting equitable distribution and alimony | Powell‑Ferri has standing under Connecticut law — her inchoate marital interest gives a colorable claim of injury; trial court correctly allowed her to be heard |
| Award of attorney’s fees to Powell‑Ferri | Trustees: Fees improper; American Rule applies and no statutory/contractual basis or bad faith shown | Powell‑Ferri: Fees appropriate under applicable law (trial court relied on Mass. G. L. c. 215 § 45) | Trial court abused discretion: neither Connecticut nor Massachusetts law (outside probate statutory exception) justified fees absent bad faith; fee award reversed |
| Removal of trustee (Michael Ferri) / self‑settled trust claim | Powell‑Ferri: Trustee should be removed due to conflict and pending fiduciary‑duty claim; alternatively, 2011 trust is self‑settled because beneficiary effectively provided the corpus | Trustees: No proof of breach; Ferri did not create or fund the 2011 trust; no conflict warranting removal | Removal was not warranted on record — mere allegations without proof insufficient; 2011 trust is not self‑settled because Ferri did not participate in creating or funding the trust |
Key Cases Cited
- Ferri v. Powell‑Ferri, 476 Mass. 651, 72 N.E.3d 541 (Mass. 2017) (Massachusetts SJC answers certified questions and holds trustees authorized to decant under the 1983 trust language)
- Bender v. Bender, 258 Conn. 733, 785 A.2d 197 (Conn. 2001) (trust withdrawal rights can make trust marital property includable in equitable distribution)
- In re Estate of King, 455 Mass. 796, 920 N.E.2d 820 (Mass. 2010) (Massachusetts probate statute authorizes fee‑shifting in probate proceedings; not applicable to general superior court equity cases)
- Ramsdell v. Union Trust Co., 202 Conn. 57, 519 A.2d 1185 (Conn. 1987) (grounds and standards for removal of fiduciaries for conflicts of interest)