Gray v. Gray
Filing
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ORDER denying 42 Motion to Dismiss. So Ordered by Judge Joseph A. DiClerico, Jr.(gla)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Evan W. Gray
v.
Civil No. 18-cv-522-JD
Opinion No. 2019 DNH 088
Chester L. Gray, III
O R D E R
As discussed in the court’s order dated May 14, 2019, doc.
no. 54, this case involves disputes among Chester and Barbara
Gray’s three children, Skip, Scott, and Evan Gray.1
Evan brought
suit against Skip as executor of the CLG Estate; as sole trustee
of the CLG Trust; and as co-trustee of the BJG Trust.
In his
Amended Complaint, Evan alleges that Chester, prior to his
death, breached his fiduciary duties while he was trustee of the
BJG Trust (Counts 1 and 2).
Evan also alleges that Skip
breached his fiduciary duties as trustee of the CLG Trust (Count
3), and he seeks removal of Skip as co-trustee of the BJG Trust
based on alleged conflicts of interest (Count 4).
As in its previous orders, the court will refer to the
principals in this case by their first names for clarity and
succinctness.
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In his capacity as trustee of the BJG Trust, Skip filed
counterclaims (the “BJG Trust Counterclaims”).2
In Count I, Skip
seeks reimbursement of expenses, attorneys’ fees, and costs
under N.H. Revised Statutes Annotated (“RSA”) 564-B:7-709 and
RSA 564-B:10-1004.
In Count II, Skip also seeks attorneys’
fees, costs, and expenses under Harkeem v. Adams, 117 N.H. 687
(1977), alleging that Evan brought his claims with knowledge
that they were “deficient, untimely, frivolous, or otherwise
brought in bad faith.”
Doc. 37 ¶¶ 52-53.
In Counts I and II,
Skip seeks reimbursement for himself and the BJG Trust from Evan
personally.
Skip also seeks reimbursement for himself from the
BJG Trust assets.
Evan moves to dismiss the BJG Trust Counterclaims.
Skip
objects.
Background and Standard of Review
The court provided the relevant background and standard of
review in its order dated May 14, 2019, addressing Evan’s motion
to dismiss the CLG Estate Counterclaims.
Doc. 54.
Skip also filed counterclaims for indemnification and a
declaratory judgment in his capacity as executor of the CLG
Estate and trustee of the CLG Trust (the “CLG Estate
Counterclaims”). This order addresses only doc. no. 42, which
is Evan’s motion to dismiss the BJG Trust Counterclaims.
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Discussion
Evan moves to dismiss the BJG Trust Counterclaims.
In
support, he contends that the court lacks subject matter
jurisdiction over the counterclaims; that the counterclaims are
not “mature”; and that Skip must make a claim for attorneys’
fees through a motion under Federal Rule of Civil Procedure
54(d)(2).
The court already discussed and rejected these
arguments in its order addressing the CLG Trust Counterclaims
(doc. no. 54).
The court’s reasoning in doc. no. 54 rejecting
those arguments applies to Evan’s motion to dismiss the BJG
Trust Counterclaims.
In addition, Evan contends that Skip misuses the term
“indemnification” in the BJG Trust Counterclaims; that Skip
failed to plead facts sufficient to state claims for relief;
that Skip, in his capacity as trustee of the BJG Trust, cannot
assert counterclaims related to Counts 1 and 2 of Evan’s Amended
Complaint because he is not the real party in interest; and that
because Skip shares responsibility for the claims in the Amended
Complaint, the counterclaims are barred by the pari delicto
doctrine.
Skip objects, arguing generally that the
counterclaims were properly brought and state cognizable claims
for relief.
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A.
“Indemnification”
Evan takes issue with Skip’s use of the word “indemnify” in
the counterclaims.
He argues that the counterclaims seek only
attorneys’ fees, costs, and reimbursement for expenses, not
indemnification.
Skip’s use of the word “indemnify” does not
warrant dismissal of the counterclaims.
As explained in the order on the CLG Estate Counterclaims,
RSA 564-B:7-709 and RSA 564-B:10-1004 support claims for
reimbursement of properly incurred expenses, attorneys’ fees,
and costs.
Evan argues that Skip cannot show that he is
entitled to attorneys’ fees and costs under RSA 564-B:10-1004.
That argument is premature in a motion to dismiss, and Skip’s
pleading is adequate to give Evan notice of the claims alleged.
See Shelton v. Tamposi, 164 N.H. 490, 502-03 (2013) (indicating
that trial court should determine whether an award of attorneys’
fees is warranted under RSA 564-B:10-1004 after considering the
merits of the lawsuit).
B.
Pleading of Facts Showing Entitlement to Relief
1.
Count I (Reimbursement of Expenses)
Evan argues that Skip cannot obtain relief under RSA 564B:7-709, which allows a trustee to be reimbursed from trust
assets for properly incurred expenses, because Evan does not
have access to the BJG Trust assets.
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Evan, however, is a
trustee of the BJG Trust, and he is a proper defendant in that
capacity to the extent Skip seeks reimbursement from assets of
the BJG Trust under RSA 564-B:7-709.
17(a)(1)(E).
See Fed. R. Civ. P.
Evan also ignores RSA 564-B:10-1004, which
provides that costs, expenses, and reasonable attorneys’ fees
may be paid to any party from another party in a proceeding
involving the administration of a trust.
In Count I, Skip
claims attorneys’ fees against Evan personally under RSA 564B:10-1004 in addition to claiming them from the BJG Trust.
Next, Evan argues that Skip cannot “properly” incur any
expenses as trustee of the BJG Trust.
Evan contends that Skip
breached his fiduciary duties as trustee of the BJG Trust by
answering Skip’s third-party complaint and crossclaim against
himself; that Skip’s counsel has engaged in “excessive
overbilling and overzealous filings” that are “patently
unreasonable”; and that this legal dispute creates a conflict of
interest that prevents Skip from fulfilling his fiduciary
responsibilities.
Evan offers no authority in support of his contention that
Skip per se violated a fiduciary duty by filing and answering a
crossclaim against himself in different capacities, or that the
mere existence of an unresolved legal dispute between a trustee
and one of a trust’s beneficiaries means that the trustee
violated his fiduciary duties.
Trustees are required to act in
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the best interests of the trust’s beneficiaries and in
accordance with the terms and purposes of the trust, and that
includes trustees’ actions in bringing and defending lawsuits.
See RSA 564-B:8-801 (requiring trustees to administer trusts “in
accordance with” the trust terms and purposes, the
beneficiaries’ interests, and the New Hampshire Trust Code).
To the extent Evan relies on assertions and rhetoric
directed at opposing counsel to support his motion to dismiss,
they do nothing to advance his cause.3
4-9.
See, e.g., doc. 42-1 at
The court expects all parties and counsel to refrain from
ad hominem rhetoric in advancing arguments.
The court concludes
that none of Evan’s arguments warrant dismissal of Count I of
the BJG Trust Counterclaims.
2.
Count II (Harkeem v. Adams)
In Count II, Skip alleges that he is entitled to costs and
expenses under Harkeem v. Adams because Counts 1, 2, and 4 of
Evan’s Amended Complaint are frivolous.4
Skip contends that
Evan also refers to the BJG Trust Counterclaims with
reference to counsel’s first name without any explanation for
that unusual practice.
3
In Counts 1 and 2 of the Amended Complaint, Evan alleges
that Chester breached his fiduciary duties as trustee of the BJG
Trust by failing to properly invest trust assets and by
improperly distributing trust principal to himself. In Count 4,
Evan alleges that the court should remove Skip as co-trustee of
the BJG Trust because Skip failed to keep Evan reasonably
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Count 1 of the Amended Complaint is frivolous because Chester
properly invested in municipal bonds in the BJG Trust as
permitted by Article 4.11 of the BJG Trust.
Skip contends that
Count 2 of the Amended Complaint is frivolous because Article
2.3.A(4) of the BJG Trust permitted Chester an “unconditional
right to withdraw up to five percent” of the BJG Trust’s
principal balance each year, and Skip alleges that Chester
withdrew amounts below that sum.
Skip alleges that Evan knew or
should have known about these facts.
In his motion to dismiss, Evan contends that Skip
misinterprets or mischaracterizes Articles 2.3.A(4) and 4.11 of
the BJG Trust and that his Amended Complaint and the facts show
or will show that his claims are not frivolous.5
arguments are premature.
Evan’s
While Skip alleges that Chester’s
investments were proper and that Evan knew or should have known
that this was the case, Evan disputes this.
Whether or not
informed of his actions as trustee, because he breached his
fiduciary duties, and because he has conflicts of interest.
In Count II, Skip also alleged that, under the second
paragraph of Article 4.3 of the BJG Trust, he cannot be liable
as a successor trustee for the actions of a prior trustee. In
his motion to dismiss, Evan asserts that Article 4.3 is
irrelevant because he has not brought any claim against Skip
himself for Chester’s actions as a predecessor trustee. The
relevance of this article is yet to be determined and does not
warrant dismissal at this point.
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Evan’s claims are frivolous will ultimately depend on the
evidence.
a.
Real Party in Interest
Evan argues that Skip cannot include allegations about the
frivolity of Counts 1 and 2 of the Amended Complaint in the BJG
Trust Counterclaims because Skip, in his capacity as trustee of
the BJG Trust, is not the real party in interest.
Evan contends
that Counts 1 and 2 of the Amended Complaint raised claims
against the CLG Estate, through Skip in his capacity as executor
of the CLG Estate, not against Skip as trustee of the BJG Trust.
Because he is a trustee of the BJG Trust, Skip is a real
party in interest with respect to his counterclaims for
attorneys’ fees, costs, and expenses that he incurs as trustee
of the BJG Trust.
709.
See Fed. R. Civ. P. 17(a)(1); RSA 564-B:7-
Skip also brings claims against Evan, personally, for
expenses under RSA 564-B:10-1004.
Therefore, Evan’s argument
that Skip is not the real party in interest as to these
counterclaims lacks any merit.6
Evan asks the court, alternatively, to strike ¶¶ 11-30 of
the BJG Trust Counterclaims as “immaterial and impertinent”
under Federal Rule of Civil Procedure 12(f) and to strike ¶¶ 7,
10, and 52 as “scandalous”. Doc. 42-1 at 21. Evan provides no
compelling justification for striking those paragraphs which
contain assertions that are related to Counts I and II of the
counterclaims.
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Evan also contends that the BJG Trust or Skip in his
capacity as trustee of the BJG Trust cannot be held liable for
damages stemming from Counts 1 and 2 and the Amended Complaint,
which he brought only against the CLG Estate.
Evan is incorrect
because the CLG Estate (through Skip), has given notice to Evan
that it will seek attorneys’ fees, costs, and other expenses
related to Counts 1 and 2 of the Amended Complaint from the BJG
Trust.
Under Harkeem v. Adams, the BJG Trust can seek to pass
on those expenses to Evan personally based on the alleged
frivolity of the claims in the Amended Complaint.
b.
Pari Delicto
Finally, Evan argues that the pari delicto doctrine should
bar the BJG Trust Counterclaims.
Pari delicto “is an ‘ill-
defined group of doctrines that prevents courts from finding for
a plaintiff equally at fault as the defendant.”
Denby, 974 F. Supp. 2d 51, 56 (D. Mass. 2013).
Tamposi v.
Evan contends
that because he and Skip are at equal fault for this litigation,
Skip cannot prevail in his counterclaims for attorneys’ fees and
costs.
Courts will not rule on an affirmative defense in a motion
to dismiss when the facts underlying the defense have not been
established with certitude.
Id. at 57-58 & n.8 (applying New
Hampshire law and explaining that “[s]ince facts concerning the
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in pari [delicto] defense have not been established with
certitude, the motion to dismiss on this basis must be
denied.”).
The facts underlying Evan’s “equal fault” defense
have not been established with certitude.
Therefore, Evan has
not shown that the BJG Trust Counterclaims should be dismissed
because the parties are in pari delicto.
Conclusion
For the foregoing reasons, Evan’s motion to dismiss (doc.
no. 42) is denied.
SO ORDERED.
__________________________
Joseph A. DiClerico, Jr.
United States District Judge
May 16, 2019
cc:
Evan W. Gray,
Adam M. Hamel, Esq.
Ralph F. Holmes, Esq.
Bradley M. Lown, Esq.
Roy S. McCandless, Esq.
Neil B. Nicholson, Esq.
Andrea Jo Schweitzer, Esq.
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