ROBERT L. CONNARY et al. v. RICHARD A. SHEA et al.
Docket: Cum-20-263
MAINE SUPREME JUDICIAL COURT
September 14, 2021
2021 ME 44
Argued: June 3, 2021; Reporter of Decisions
HUMPHREY, J.
[¶1] In 2003, Patricia and William Shea established the Shea Family Living Trust with assets that included stock issued by a particular bank. The Trust was to conclude upon the death of the survivor of them, and all of the bank stock in the Trust was to be distributed to Patricia‘s nieces and nephews. In 2006, William died and, coincidentally, the bank redeemed all of its stock. Twelve years later, Patricia died and the successor trustee distributed the remaining assets of the Trust, which no longer included the bank stock.
[¶2] The plaintiffs, including Robert L. Connary, are the nieces and nephews of Patricia (collectively Connary).1 Connary appeals from a judgment of the Superior Court (Cumberland County, Stewart, J.) granting a partial summary judgment in favor of the defendants, Richard A. Shea and two of his family members (collectively Shea),2 on Count 2 of Connary‘s second amended complaint seeking a declaratory judgment “interpret[ing] and/or reform[ing]” part of the Trust.3 Connary challenges both the court‘s determination that the provision gifting the bank stock to Connary was a specific devise that had adeemed and the court‘s ruling for Shea on Connary‘s reformation claim. We affirm the judgment except as to reformation. That claim must be remanded to the trial court for further proceedings.
I. BACKGROUND
[¶3] The following facts are drawn from the parties’ supported statements of material facts, viewed in the light most favorable to Connary. See Kurtz & Perry, P.A. v. Emerson, 2010 ME 107, ¶ 15, 8 A.3d 677.
[¶4] In July 2003, Patricia and William created the Trust and funded it, in part, with stocks in General Electric and in Siwooganock Bank (the Bank), a private
[¶5] In 2006, William died. That same year, the Bank stock was recalled and redeemed, and the Trust received approximately $460,000 for the stock. Over the next twelve years, after taxes related to the redemption were paid, the net funds from the redemption were variously deposited in and moved among the Trust‘s investment accounts, commingled with other funds in the Trust, and used to purchase various securities.
[¶6] In 2018, Patricia died, and Richard Shea became the successor trustee.5 Shea liquidated the General Electric stock and distributed those proceeds to Connary. Shea determined that the Bank stock was no longer in the Trust and, after consulting with the attorney who drafted the Trust, informed Connary that he could not distribute any funds to Connary in its place. Connary responded that he would contest the Trust.
[¶7] On October 1, 2019, Connary filed a second amended complaint6 seeking in Count 2 that the court either (A) declare that the Trust clearly and unambiguously “provides that the Connary heirs are entitled to the ‘[p]roceeds’ from the involuntary sale of” the Bank stock or, if the Trust is ambiguous, “conclude that [Patricia] intended to gift any proceeds” from the redemption of that stock to Connary, or (B) reform the Trust to “conform to [Patricia‘s] intentions” that “[t]he proceeds are to be distributed in equal shares to [Connary].”7
[¶8] On October 15, 2019, Connary filed a motion for partial summary judgment seeking a summary judgment only on Count 2 of the second amended complaint. In Count 2, Connary sought a declaratory judgment that the Trust provided for a general devise of the Bank stock and that Connary was entitled to the proceeds from its 2006 redemption. Connary‘s motion did not address Connary‘s alternative claim for reformation, which he also asserted in Count 2. Shea opposed the motion and filed a cross-motion for partial summary judgment, arguing that Connary was not entitled to the proceeds because the Bank
[¶9] On March 31, 2020, the court entered a partial summary judgment for Shea on Count 2 of the complaint, concluding that the Trust makes “clear and plain” that the settlors intended a specific devise of the Bank stock, which adeemed in 2006 following its recall and redemption by the Bank, and it “denied and dismissed” the reformation claim. Connary then filed a motion for reconsideration of the court‘s partial summary judgment order and a motion to strike the ruling on the reformation claim. Connary argued that the court erred in denying and dismissing the reformation claim because it was not subject to the motions for summary judgment. The court denied both motions and stated that it had entered a summary judgment on Count 2 based on its finding of the clear and plain intent of the settlors.
[¶10] On September 22, 2020, the parties stipulated to a final judgment in favor of Shea on all remaining counts of the second amended complaint. Connary timely appealed. See
II. DISCUSSION
[¶11] We review the entry of a summary judgment de novo, “considering the evidence in the light most favorable to the nonprevailing party to determine whether the parties’ statements of material facts and the record evidence to which the statements refer demonstrate that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Kurtz & Perry, P.A., 2010 ME 107, ¶ 15, 8 A.3d 677 (quotation marks omitted). “A material fact is one that can affect the outcome of the case, and there is a ‘genuine issue’ when there is sufficient evidence for a fact-finder to choose between competing versions of the fact.” Stewart-Dore v. Webber Hosp. Ass‘n, 2011 ME 26, ¶ 8, 13 A.3d 773.
[¶12] The parties agree that the disposition of the Bank stock is governed by the terms of the Trust, but they dispute whether the evidence, viewed in the light most favorable to Connary, demonstrates that it was a specific or a general devise, that the stock was adeemed by the 2006 redemption, and that the Trust should be reformed to reflect William‘s and Patricia‘s intent, all of which is reviewed de novo. See Kurtz & Perry, P.A., 2010 ME 107, ¶ 15, 8 A.3d 677.
A. General or Specific Devise
[¶13] “Courts are averse to construing [devises] as specific” and will do so only when the intent of the settlor to make them specific “is clear and plain.” Maxim v. Maxim, 129 Me. 349, 354, 152 A. 268 (1930); see also
[¶14] Prior to engaging in that review, we note that although the Maine Uniform Trust Code,
[¶15] A devise like “[a] legacy is general when it is so given as not to amount to a bequest of a particular thing or money of the testator, as distinguished from all others of the same kind.” Spinney v. Eaton, 111 Me. 1, 5, 87 A. 378 (1913) (quotation marks omitted); see, e.g., Perry v. Leslie, 124 Me. 93, 94, 126 A. 340 (1924) (concluding that a bequest of “twenty shares in the capital stock of [a corporation]” was a general legacy because the total shares held by the testator at her death exceeded the shares disposed of and there was no language “directly identifying the shares bequeathed” (quotation marks omitted)).
[¶16] Conversely, a specific devise is like “a bequest of a specific thing or fund that can be separated out of all the rest of the [settlor]‘s estate of the same kind, so as to individualize it, and enable it to be delivered to the legatee as the particular thing or fund bequeathed.” Maxim, 129 Me. at 353, 152 A. 268 (quotation marks omitted); see, e.g., Gorham v. Chadwick, 135 Me. 479, 483, 200 A. 500 (1938) (concluding that a bequest of “my stock in [a corporation]” was specific because the testator “identifie[d] that particular stock as then belonging to her and distinguishe[d] it from all other parts of her property of like kind” (quotation marks omitted)).9
[¶17] A specific devise is often accompanied by a personal pronoun indicating the testator‘s personal ownership of the property. See Restatement (Third) of Property: Wills and Donative Transfers § 5.1 cmt. b (Am. L. Inst. 1999); I Benoit et al., A Practical Guide to Estate Planning in Maine § 3.1.4(g) at 3-14 (Hunt 2d ed., 2021) (suggesting that “[t]o avoid any ambiguity as to whether the devise is specific or general,” a specific devise should use personal pronouns such as “‘my’ automobile” or, in the case of a bequest, “the AT&T stock ‘owned by me at the date of my death‘“); see, e.g., Gorham, 135 Me. at 483, 200 A. 500 (reasoning that the testator‘s “use of the possessive ‘my’ is convincing indication that [the testator] intended to make her gift specific“).
[¶18] Here, the Trust devised “all” of the Bank stock to Connary. Although not a personal pronoun, “all” clearly refers to the finite pool of Bank stock held by the Trust. It is distinguishable from, see Gorham, 135 Me. at 483, 200 A. 500, and can be separated out of, see Maxim, 129 Me. at 353, 152 A. 268, the rest of the Trust‘s assets, such that the language disposes of
B. Ademption
[¶19] “The distinctive characteristic of a specific legacy is its liability to ademption. If the specific thing or particular fund bequeathed is not in existence or has been disposed of by the testator subsequent to the making of the will, the legacy is extinguished or adeemed.” Gorham, 135 Me. at 484, 200 A. 500. As noted above, although Title 18-B provides rules for the creation and administration of trusts, see
[¶20] Currently, those rules of construction are found in the Maine Probate Code codified in Title 18-C, which became effective on September 1, 2019. See
[¶21] The difference is important because the current code, Title 18-C, disfavors the ademption of a specific devise in certain circumstances. In particular, paragraphs E and F of
1. The Relevant Rules of Construction
[¶22] Title 18-A and Title 18-C both include identically worded rules of construction or presumption regarding the applicability of the Code to trusts executed before the Code‘s effective date—January 1, 1981, for Title 18-A and September 1, 2019, for Title 18-C—as follows:
Any rule of construction or presumption provided in this Code applies to instruments executed . . . before [this Code‘s effective date] unless there is a clear indication of a contrary intent.
[¶23] However, in Scribner v. Berry, 489 A.2d 8 (Me. 1985), we interpreted
testator died after the effective date of the new Probate Code, the new Code‘s rules of construction applied to the testator‘s will).
[¶24] The same considerations that guided us in Scribner persuade us that
2. Application of 18-A M.R.S. § 2-607
[¶25] Section 2-607(a)(1) states that “[i]f the will provides for a specific devise of certain securities rather than the equivalent value thereof, the specific devisee is entitled only to . . . [a]s much of the devised securities as is a part of the estate at the time of the testator‘s death.” Paragraphs 2 through 4 of section
2-607(a) allow the specific devisee—in certain circumstances—to receive different securities in lieu of what was specified in the instrument. However, none of those circumstances exists here because in 2006, Patricia received cash in exchange for her stock, and paragraph 2 applies only to stock splits, while paragraph 3 relates to mergers and paragraph 4 applies to reinvestment plans. See
C. Reformation
[¶26] Finally, Connary argues that the court erred when it sua sponte ruled on his alternate reformation claim15 after concluding that the Trust
language unambiguously provided for a specific devise of the Bank stock. Connary pleaded his reformation claim in part C of Count 2 of the second amended complaint as an alternative to his requests in part A and B for a declaratory judgment that either (A) “the Trust is clear and unambiguous and provides that the Connary heirs are entitled to the ‘Proceeds’ from the involuntary sale of [the Bank stock]” or (B) the Trust is ambiguous and must be construed to grant the proceeds of the sale to Connary. In his motion for partial summary judgment on Count 2 of the complaint, Connary requested a “declaratory judgment that the provisions of [the Trust] unambiguously provide for a general devise of the [Bank stock].” Connary did not argue for summary judgment on the reformation claim asserted in part C of Count 2, nor did he present evidence through his statement of material facts that, if believed, would demonstrate a “mistake of fact or law” necessitating reformation.
[¶27] Shea acceded to Connary‘s confinement of his motion for summary judgment to parts A and B of Count 2. Specifically, Shea argued in a footnote in his opposing memorandum that the reformation claim set forth in part C of Count 2 should be dismissed for failure to state a claim upon which relief can be granted, see
[¶28] The court ruled on Count 2 in its entirety, which is understandable given the motion‘s language seeking summary judgment “on Count II of the[] Second Amended Complaint” without explicitly setting apart the reformation claim in part C. In its summary judgment, the court “denied and dismissed” the reformation claim presented in part C of Count 2, though the court ultimately appears to have rejected Shea‘s invitation to dismiss the claim for failing to state a claim upon which relief can be granted. (Emphasis added.) Instead, the court ultimately concluded, in denying Connary‘s motion to strike the court‘s ruling on that claim, that the court‘s construction of the Trust negated the existence of a mistake of fact or law, and that summary judgment was therefore appropriate. See
[¶29] By statute, however, a “court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor‘s intention if it is proved by clear and convincing evidence that both the settlor‘s intent and the
[¶30] We therefore vacate the judgment as to the reformation claim alleged in part C of Count 2 and remand that claim for further proceedings.
The entry is:
Judgment on parts A and B of Count 2 affirmed.
Judgment on part C of Count 2 vacated and remanded for further proceedings consistent with this opinion.
Jeremy W. Dean, Esq., Portland, and Eric R. Clark, Esq. (orally), Clark & Associates, Attorneys, Eagle, Idaho, for appellants Robert L. Connary et al.
Daniel A. Nuzzi, Esq., and Eamonn R.C. Hart, Esq. (orally), Brann & Isaacson, Lewiston, for appellees Richard A. Shea et al.
Cumberland County Superior Court docket number CV-2019-39
FOR CLERK REFERENCE ONLY