194 Conn.App. 1
Conn. App. Ct.2019Background
- Ruth B. Tyler executed an irrevocable trust (2004) that incorporated a 1999 will and named Richard Tatoian as trustee; the trust contained an exculpatory clause shielding a trustee from liability except for willful misconduct and a provision about trustee accountings. After Ruth’s death in 2010 the trustee liquidated assets and provided accountings to the grantor and her attorney-in-fact but not to other adult beneficiaries.
- Jay Tyler (self‑represented) sued in 2010 (later amended) alleging, inter alia, failure to provide accountings, undue influence, breach of prudent‑investor duties (§§ 45a‑541b, 45a‑541c), failure to diversify, and failure to pursue claims against an investment advisor; Bruce Tyler (an attorney and beneficiary) assisted Jay and later filed a cross complaint mirroring many claims against the trustee.
- The trustee prevailed in the prior litigation (partial summary judgment and jury verdict). He then sued Bruce and Jay for vexatious litigation (common law and statutory § 52‑568) seeking recovery of attorney’s fees and costs incurred defending the prior suit.
- At bench trial the court originally concluded the trustee had conceded that failure to prove lack of probable cause as to one claim would defeat his vexatious‑suit action and ruled for defendants; after reconsideration the court awarded the trustee double damages under § 52‑568(1) only for the failure‑to‑diversify claim, and otherwise ruled for defendants (no malice proven).
- On appeal the defendants argued lack of subject‑matter jurisdiction (trustee lacked standing), that the court ignored undue‑influence evidence, misapplied the law on diversification duty, and misapplied the rule on logical severability; the trustee cross‑appealed arguing more claims lacked probable cause and showed malice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing/subject‑matter jurisdiction to bring vexatious suit after trust termination | Trustee (Tatoian) had a fiduciary duty during winding up to recoup trust assets (including attorney’s fees) and thus had standing to sue within a reasonable winding‑up period | Defendants (Tyler) argued trustee lacked authority/standing because the trust did not explicitly authorize bringing a vexatious‑litigation claim and such suits were not trust "assets" | Court: Trustee had standing—trustee’s fiduciary duties survive termination for reasonable winding‑up time and pursuing recoupment was a proper winding‑up act; motion to dismiss denied. |
| Whether trial court ignored undue‑influence evidence (relevance to probable cause and exculpatory clause) | Trustee: court properly considered facts; exculpatory clause protected him absent willful misconduct | Defendants: court failed to consider evidence that settlor was unduly influenced when creating trust, which would void exculpatory clauses and support probable cause | Court: no failure to consider undue influence; court found settlor was advised and satisfied with trust; but whether defendants reasonably believed undue influence existed is relevant to probable‑cause inquiry. |
| Duty to diversify (§ 45a‑541c) and probable cause to assert failure‑to‑diversify claim | Trustee: trust language and § 5 plainly waived diversification duty; defendants lacked probable cause | Defendants: statutory duty exists and trustee could be liable despite trust language; undue influence could invalidate exculpatory waivers | Court: trust unambiguously waived duty to diversify under § 45a‑541a/§45a‑541c, so defendants lacked probable cause on diversification claim; other investment claims (prudent‑investor, failure to act, failure to sue advisor) could have probable cause based on accountings showing large depreciation and related facts. |
| Logical severability — must plaintiff disprove probable cause as to all claims? | Trustee argued he need only show lack of probable cause for any logically severable claim(s) | Defendants argued the claims arose from same core facts and were not severable; plaintiff had conceded needing to disprove all claims (trial court earlier relied on such concession) | Court: DeLaurentis governs—plaintiff may prevail by proving lack of probable cause for one or more logically severable counts; failure‑to‑diversify count was severable and lacked probable cause. |
| Role of trust’s exculpatory clause in assessing probable cause | Trustee argued exculpatory clause should preclude probable‑cause for claims unless willful misconduct pleaded/proved; it effectively barred reasonable belief of liability | Defendants argued exculpatory clause does not prevent bringing a suit and undue influence could render it unenforceable; thus probable cause could exist | Held: Exculpatory clause is relevant to the probable‑cause inquiry and the court should assess whether a reasonable litigant (and for Bruce, a reasonable attorney) could have believed the clause could be overcome (e.g., by proof of undue influence). Trial court erred by largely discounting the clause in assessing probable cause and must reconsider certain counts on remand. |
Key Cases Cited
- May v. Coffey, 291 Conn. 106 (Conn. 2009) (standing of trustee to pursue claims on behalf of trust recognized)
- DeLaurentis v. New Haven, 220 Conn. 225 (Conn. 1991) (vexatious‑suit plaintiff may prevail by proving lack of probable cause as to one or more logically severable claims)
- Ramondetta v. Amenta, 97 Conn. App. 151 (Conn. App. 2006) (trustee’s duties and powers continue for reasonable time after termination to wind up trust affairs)
- Falls Church Group, Ltd. v. Tyler, Cooper & Alcorn, LLP, 281 Conn. 84 (Conn. 2007) (probable cause standard and objective/reasonable‑attorney nuance in vexatious‑suit claims against lawyers)
- Jackson v. Conland, 178 Conn. 52 (Conn. 1979) (exculpatory/trust‑waiver clauses do not create absolute immunity from suit)
- Peck v. Searle, 117 Conn. 573 (Conn. 1933) (statutory immunity for maintaining original investments is not absolute; prudence standard applies)