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STATE OF NEW FIAMPSHIRESUPREME COURT
NO. 2010-0634
JULIE SHELTON, Trustee of the Elizabeth M. Tamposi GST Exempt Trust and the ElizabethM. Tarnposi Trust, both created under the Samuel A. Tamposi, Sr. 1 992 Trust and the Elizabeth
M. Tamposi Trust created under the Samuel A. Tamposi, Sr. 1994 Irrevocable Trust, andELIZABETH M. TAMPOSI
V.
SAMUEL A. TAMPOSI, JR. and STEPHEN A. TAMPOSI, Individually and as investmentDirectors of the Elizabeth M. Tamposi GST Exempt Trust and the Elizabeth M. Tamposi Trust,both created under the Samuel A, Tamposi, Sr. 1992 Trust and the Elizabeth M. Tamposi Trust
created under the Samuel A. Tamposi, Sr. 1994 irrevocable Trust and as Directors of theTamposi Companies
RULE 7 MANDATORY APPEAL FROM RULINGOF THE PROBATE COURT AFTER TRIAL
CONSOLIDATED RESPONSE BRIEF FOR ALL APPELLEES
SAMUEL A. TAM POSI, JRSTEPHEN A. TAMPOSI
By: Robert A. SteinNew Hampshire Bar No. 2438One Barberry LaneConcord, NH 03302-2 159(603) 2281 109
MICHAEL TAMPOSICELINA TAMPOSI
By: Frank E. KenisonNew Hampshire Bar No. 1346Ransmeier & Spellman, P.C.1 Capitol StreetConcord, NH 03301(603) 228-0477
SAMUEL A. TAMPOSI, JR.STEPHEN A. TAMPOSI
By: Michael Kendall (pro hac vice)McDermott Will & Emery LLP28 State StreetBoston, MA 02109(617) 535-4000
GERALD PRUNIER, TRUSTEE
By: Pamela J. NewkirkNew Hampshire Bar No. 4101Barradale, O’Connell, Newkirk & Dwyer3 Executive Park Drive, Suite 12Bedford, NH 03110(603) 644-0275
DATED: December 8, 2011
TABLE OF CONTENTS
Page
COUNTERSTATEMENT OF THE CASE AND OF THE FACTS
A. The Creation And Evolution Of The Tamposi Family Trusts 2
B. The Trust Assets 6
C. Betty’s Historical Vendetta Against 1-Icr Siblings Culminates In AGlobal Settlement Agreement 8
D. Shortly After Settlement, Betty Appoints Shelton To Restart TheLitigation 12
E. Betty And Shelton Begin Making Unreasonable Demands 14
F. Betty’s Claim Of “Immediate Need” Masks Her Own RecklessSpending 17
G. Communication And Cooperation By The Investment Directors 18
H. The Massachusetts Lawsuit And The Sale Of The Red Sox Shares 19
I. The Instant Lawsuit, The Probate Court’s Decision, And Its Aftermath 21
J. Shelton’s Management Of Trustee’s Legal Counsel 25
SUMMARY OF THE ARGUMENT 28
ARGUMENT 31
I. The Probate Court Correctly Found Betty And Shelton’s Suit To BeMeritless 3 1
A. The Probate Court Properly Determined The Intention Of SamuelA. Tamposi, Sr., Under The Trust 31
1. Background Legal Principle 31
2. The Probate Court Properly Determined Samuel A.Tamposi’s Unambiguous Intent Regarding The Trust’sTerms And Purposes 32
3. Extrinsic Evidence Reinforced The Probate Court’sReading Of The Trust Instruments 35
13. The Probate Court Then Properly Enforced The Trust’s Terms 38
I. The Investment Directors Fully Cooperated With BettyAnd Shelton, In The Face Of Substantial Contrivances AndObstruction 38
2. Betty And Shelton’s Cash Demands Were Unsupported ByEither Legal Power Or Factual Circumstances 40
11. The Probate Court Correctly Held That Betty’s Actions In Contesting TheTrusts’ Terms Violated The In lerroren, Clause 46
A. Shelton Does Not Have Standing To Challenge The ProbateCourt’s In Terroren, Holding Through This Appeal 46
B. Betty’s Actions Violated The In Terrorern Clause 50
I, The In Terrorem Clause Is Both Enforceable And Broad 50
2. Betty’s Lawsuit Was A Contest In Violation Of The InTerroreni Clause 52
C. There Is No Inconsistency Between The Probate Court’s RulingOn The In Terrorem Violation And Prior Rulings 58
III. The Probate Court Properly Awarded Fees To The Respondents AndIntervenors
61
IV. The Probate Court Did Not Abuse Its Discretion By Removing Shelton AsTrustee For The EMT Trusts 65
CONCLUSION70
REQUEST FOR ORAL ARGUMENT 70
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TABLE OF AUTHORITIES
CASES Page(s)
Barr/el! v. i)umaine,128 NH. 497(1986) 31
Buriman v. Buirnan,97 N.H. 254 (1952) 51
(orcoran i.’. i)epartmeiit a/Social Services,271 Conn. 679 (2004) 41
Daigle i.’. PorLcmouth,137 N.H. 572(1993) 66
George v. A / Hoyt & Sons, liic.,27 A.3d 697 (N.H. 2011) 61
Glick V. 1’/aess,143 N.H. 172(1998) 65
Green v. Foster,104 N.H. 287 (1962) 46, 50
I-Iearst i Ganzi,145 Cal. App. 4th 1195 (2006) 56
Hertz (oip. i’. State Tax C’omm ‘ii,
528 S.W.2d 952 (Mo. 1975) 49
In re Borthwick Estate,102 N.H. 344 (1959) 70
In re Estate ofKelly,130 N.H. 773 (1988) 47
Lfe v. Cnty. ofLos Angeles,218 Cal. App. 3d 1287 (1990) 49
Massaro v. Carter,122 N.H. 804 (1982) 59
Pa. Commercial Drivers Conf v. Pa. Milk control Comm ‘ii,
360 Pa. 477 (1948) 50
— 111 —
1?ho!1L’—PoI!lenc I?orer, l,,c. ‘. JloI,,e Ilkleinnily (a.,32F.3d851(3rdCr. 1994) .64
Stratton 1’. tItl!k)I1,
68N,11.582(1896)32
Satiborn i’. Sanborn,62N.11.631(1882)
32
Spiiiner i Null,417 Mass. 549(1994)
64
Slate ‘. Stavmaii,138 N.H. 397 (1997)
36
Swan i’. Bailey,84 N.H. 73 (1929)
47
Thwii ofSwanzey v. Lieheler,140 N.H. 760 (1996)
62
STATUTES
RSA 564-B: 1-11232
RSA 564-B:2-201(c)56
RSA 564-B:7-706(b)(1)69
RSA 564-B:7-706(b)(3)69
RSA 564-B:8-80367
RSA 564-B:8-80914, 38, 67
RSA 564-8:8-81214
RSA 564-B:9-90267
RSA 564-B:10-100461
RSA 564-B:12-1202(b)34
RSA 567-A: I46, 48
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RSA 567A:4 .2
OTHER AUTHORITIES
New Hampshire Rule of Evidence 502(d)(2) 60
N.H. R. Prof. Conduct 1.3 (Diligence) 25
N.H. R. Prof. Conduct 1.7 (Conflict of interest) 25
Restatement (Second) of Trusts 107 65
Restatement (Third) of Trusts § 27 32
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COUNTERSTATEMENT OF THE CASE AND OF THE FACTS
Ms. Shelton’s approach to the history of this case is transparent and disingenuous. She
starts by casting herself and Elizabeth Tamposi (“Betty”) as sympathetic victims of the
Appellecs’ machinations and the probate court’s rulings. Shelton then relies upon a caricature of
the events below to support her claims that the probate court made multiple errors in rejecting
her petition, in finding that Betty’s conduct triggered the trust’s in terrorem clause, in assessing
attorneys’ fees against Shelton in light of her bad-faith conduct, and in removing her from her
position as trustee. This caricature, cobbled together from scattered pieces of evidence and
artfully edited snippets of testimony, is fatally flawed for one simple reason—Shelton refuses to
acknowledge or engage with the facts of the case as found by the probate court.
After nearly six weeks of trial and the admission of 556 exhibits, an exceedingly able and
patient probate court found the evidence painted a very different picture. The probate court’s
detailed 54-page opinion describes appalling behavior. Shelton, a lawyer with over twenty-five
years of litigation experience, became a trustee only to immediately launch a litigation campaign
designed to undermine a valid settlement agreement that had ended six years of emotionally
charged, intra-family litigation costing millions of dollars. Shelton manufactured disputes,
contrived events, and launched two more intra-family lawsuits, all to force two fiduciaries to
liquidate trust assets and turn the cash over to only one of the trusts’ several beneficiaries. She
ignored and mishandled the most basic issues of trust administration. She engaged counsel with
such serious conflicts of interest that her behavior resembles a fact pattern from an ethics exam,
not the proper conduct of an experienced litigator. Even though the probate court admonished
her twice in pretrial orders, Shelton ignored the warnings and continued to waste trust assets and
act with gross partiality. Although she was supposed to be an impartial and disinterested
fiduciary, Shelton paid herself $538,359 of trust proceeds and seeks further reimbursement from
the trusts for over $250,000, for a total olnearly $800,000 in legal fees. Supplemental Appendix
54 (Shelton’s Revised Accounting Pursuant to Order Date November 1, 2010 at 4). Shelton also
paid her friend, fellow Chicago lawyer Stephanie Denby, another $686,770 in trust proceeds to
supervise this gratuitous litigation. Supp. App. 500, 504—505 (Exs. 10.52 & 10.53).
Unfortunately for Shelton, a lower court’s factual findings are controlling unless “clearly
erroneous.” See RSA 567A:4. Here, Shelton occasionally asserts that some of the probate
court’s Factual findings were “incorrect,” “unfounded,” or “unsupportable,” but the majority of
her arguments degenerate into variations upon a common theme—she wishes either that the
court had credited evidence that it rejected or that it rejected evidence that it credited. Such
credibility determinations are inherently the province of the finder of fact, and they provide no
basis for setting aside the probate court’s factual findings on appeal. Although Shelton may
complain about some of the probate court’s findings, she makes no effort to set forth evidence
sufficient to establish that these findings were clearly erroneous.
Before the Appellees can address the flaws in Shelton’s arguments, they must first correct
her recitation of the facts. The following counterstatement summarizes and elaborates upon the
probate court’s factual findings, explaining to this court the actual state of affairs and detailing
the facts that should control this Court’s legal analyses.1
A. The Creation And Evolution Of The Tamposi Family Trusts
Samuel A. Tamposi, Sr. (“Sam Sr.”) was a prominent New Hampshire real estate
developer who developed and managed properties in New Hampshire and Florida. Order at 2, 6.
Tn 1992, Sam Sr. created an estate plan to protect and grow these assets for the benefit of his six
children—Samuel, Jr. (“Sam Jr.); Stephen (“Steve”); Michael; Celina (“Sally”); Nicholas
This summary emphasizes only the most critical parts of the probate cowls factual findings, rather than repeatingthem verbatim. This statement should therefore be read in tandem with the probate court’s Order below.
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(“Nick”); and Elizabeth (“I3etty”)and their issue. Order at 2.2 I-Ic created the Samuel A.
Tamposi, Sr. 1992 Trust (“SAT Sr. Trust”), which was designed “to confer lifetime benefit to
himself during his lifetime, and his children and their issue after his death.” Order at 2.
Upon Sam Sr.’s death in 1995, the trust corpus was divided into twelve separate trusts:
two for each of his six children and their issue.3 Order at 3. Under this division, each Tamposi
sibling and their issue are beneficiaries of a trust containing assets exempt from federal
generation skipping transfer tax ( “GST” or “GST Exempt” trusts) and a trust containing assets
that are not exempt from such taxes (“Non-GST” trusts). Sam Sr. treated each of his six children
equally, with a one-sixth share each of the GST exemption and remainder (the non-GST-exempt
assets) allocated to each child. Add. 3 (1992 Trust Instrument) at Art. Fourth(b)—(c).4
The trust documents, as amended at the time of Sam Sr.’s death, contained a number of
provisions detailing Sam Sr.’s intent to have the corpus of the trust—real estate holdings—
administered in very specific ways, all of which are central to the probate court’s holdings.
These provisions included the following tailored features:
1. The trust documents anticipated that the trust would continue to focus primarily upon the
same type of investments that Sam Sr. pursued during his lifetime—real estate. Order at
2—3; see also Add. 14 (Third Amendment) at Art. Tenth-A (“The Grantor [i.e., Sam Sr.j
considers real estate interests as proper investments of trust property even though such
investments may constitute a substantial part or all of the trust property.”). Sam Sr.
2 Following the probate court’s lead, this brief refers to the Tamposi siblings by their nicknames.Following the probate court’s convention and for simplicity’s sake, descriptions of (he respective tmsts for theTamposi siblings and their issue will generally only reference the name of the sibling. Order at 3 11.5. That said, the
fact that each sibling’s issue are beneficiaries to these trusts (and all issue born during the sibling’s lifetime becomecurrent beneficiaries) is central to many of the probate court’s holdings.
Shelton incorrectly states that these exempt and nonexernpt trusts were created during Sam Sr.’s lifetime. SheltonBr. at 3. They were allocated after Sam Sr.’s death, according to his instructions.
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established transfer restrictions on the trust assets—holdings in LLCs and other
corporations that in turn held real estate—-that evidenced his intention that the assets
would not be easily liquidated for the benefit of one set of beneficiaries. His structure
also secured favorable federal estate tax treatment. Because of the transfer restrictions
and because any specific trust only held a one-sixth or smaller interest in any specific
asset, at the time of Sam Sr.’s death, the IRS would value each trust asset as a minority
holding subject to a substantial discount for lack of control. This would generate
substantial estate tax savings that would also be enjoyed upon the death of a sibling.
Such practices are effective, ethical, and frequently utilized. Tr. 5 14:17—515: 1 8.
2. The trust documents also appointed two of Sam Sr.’s sons as “investment directors,” who
would manage the trust assets and were thus empowered with many of the fiduciary
responsibilities that are more typically vested in a trustee. Order at 5—6. The trust
instrument gave the investment directors complete and exclusive authority over and
responsibility for the investment and management of the trust assets. Order at 5; Add.
15—I 7 (Third Amendment) at Art. Tenth-B. They have the authority to control, finance,
and structure the trusts’ various real estate assets and operating entities, and they control
whether trust assets will be purchased, retained, and/or sold. Order at 5. The investment
directors also act in a nontrust capacity as the business managers or directors of entities in
According to the trial testimony of Jeff Knight, the Tamposi Companies’ chief financial officer, Sam Sr.’sdecision to structure the trusts to give each Tamposi sibling’s trusts minority interests in various companies. LLPs,and LLCs enabled Sam Sr.’s $20 million estate to save at least $6 million in estate taxes. Tr. 3049:21—3050:11.When the siblings decease and the trust assets pass to their heirs (assumingly, Sam, Sr.’s grandchildren), as providedby the trust instruments, these structures will likewise allow the deceased sibling’s estates to obtain substantialvaluation discounts and a lower tax liability for similar minority discounts. Betty’s demand that the family buy hertrusts’ assets without minority discounts iould have thwarted Sam Sr.’s tax planning. A purchase of one sibling’ssubtrust’s interest in an entity for a price that does not reflect the minority discount could be used by the IRS as acomparable sale to deny a minority discount valuation to all of the siblings’ subtrusts. Tr. 3153:9—23. This would be“disastrous” to the other five subtrusts and Betty’s heirs, as well as contrary to Sam Sr.’s intent to ensure that hischildren and their issue benefit equally from tax savings. Id.
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which the trusts hold ownership interests, with the trust instruments waving any contlicts
of interests that might otherwise arise trom such an arrangement. Add. 1 7 (Third
Amendment) at Art. Tenth-C, With highly detailed and broadly encompassing language,
Sam Sr. specifically instructed the trustee to follow the investment directors and their
decisions regarding “investments, purchases, sales, real estate interests and operating
entities.” Order at 6, Add. 15 (Third Amendment) at Art. Tenth-B(a)—(d).
3. Given the scope and nature of the powers allocated to the investment directors, as well as
the intrinsic directions regarding the nature of appropriate investments, the trust
documents narrowed the role of the trustee. The trustee retained the authority and
discretion to make distributions to the trust beneficiaries. Before the 2006 Settlement
Agreement (discussed infra), the trustee was required to take into account the amount of
cash available before making such distributions, and said cash was controlled by the
investment directors. After the settlement agreement restructured this aspect of the EMT
Trusts, the trustee of the EMT Trusts could distribute any assets within that trustee’s
control (including cash and in-kind distributions of ownership interests). The trust
instruments constrained this discretion through “ascertainable standards” that limit the
distributions. With respect to the GST trusts, the trust instrument gives the trustee
discretion to distribute proceeds as “necessary for [the beneficiaries’} education and
maintenance in health and reasonable comfort, taking into consideration the income and
cash resources known to the trustee to be available for such purposes from other
sources.” Add. 3—4 (1992 Trust Instrument) at Art. Fifth (emphases added).
Disbursements from the Non-GST trusts are controlled by the same narrow standard—
“necessary for their education and maintenance in health and reasonable comfort”—but
without reference to the beneficiaries’ access to other sources of cash or income. Add, 4—
5 (1992 Trust Instrument) at Art. Sixth (emphasis added).
4, Although each of the trusts is separate and distinct, the trust documents envisioned that
their assets may be combined and commingled into a common fund for the convenience
of administration. Order at 3---4; Add. 15—17 (Third Amendment) at Art. Tenth-B.
5. Finally, the trust documents included a “no contest” clause (also known as an in terrorern
clause), similar to clauses often found in wills. This clause provides, in pertinent part:
If any person shall at any time commence or join in the prosecution of anyproceedings in any court or tribunal . . . to have . . . this trust . . . set aside ordeclared invalid or to contest any part or all of the provisions included in . . . thistrust . or to cause or to induce any other person to do so, then and in that eventsuch person shall thereupon forfeit any and all right, title and interest in or to anyportion of this trust, and this trust shall be distributed in the same manner aswould have occurred had such person died prior to the fate of execution of thistrust. Nothing contained in this Article, however, shall preclude any beneficiaryfrom enforcing, by litigation or otherwise... the trustee’s duties under this or anyother trust.
Add. 12—13 (1992 Trust Instrument) at Art. Fourteenth.
B. The Trust Assets
At the time of his death in 1995, Sam Sr.’s assets were a jumble of nearly 400 pieces of
property. Tr. 303 8—3039; Tr. 4268:15—20. Many were undeveloped land that generated no
income. Tr. 4265:18—2 1. Valued at $70 million, they were encumbered by $50 million in debt
and were often co-owned with several nonfamily persons. Tr. 3048:1—17; Tr. 4563:6—14.
Pursuant to the express terms of the trust, Sam Jr. and Steve assumed their assigned roles
as investment directors upon their father’s death. Order at 2—3; Add. 15 at Art. Tenth-B. Today,
Sam Jr—the oldest of the siblings—serves as the president of the Tamposi Companies, a
consolidated term that generally encompasses the Tamposi family’s various trust and non-trust
interests and real estate holdings. Order at 11. Steve resides in Florida, from where he works
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with Sam Jr. in the overall management of the Tamposi Companies. Order at II. From 1995
until Shelton and Betty filed suit in 2007, Sam Jr. and Steve rationalized the holdings—
eliminating almost all debt, swapping partial interests with nonfamily partners to reduce
nonfarnily ownership, and utilizing IRS “real estate swap” provisions (a section 1031 exchange)
that allowed them to sell nonincome producing properties and reinvest the proceeds into income
producing properties without having to pay any capital gains, all of which benefitted the trusts
equally. Tr. 3024—3037, Neither Sam Jr. nor Steve has ever asserted the authority either to
make distributions or to determine when distributions should be made from the individual
subtrusts, rather, their role as managers of the Tamposi family businesses empowers them to
make managerial determinations that affected when income or capital gains would be disbursed
from the businesses to the owners, including the trusts.
Sam Jr. and Steve’s management of the Tamposi Companies has been extraordinary—the
family assets earned an average annual internal rate of return of 207% over 14 years Tr.
4282:15—22. The siblings’ trust and nontrust assets grew from $20 million (before estate taxes
were paid) in 1995 to $146 million in 2008. Order at 9, Supp. App. 555, 557—558 (Ex. 13.5
(Expert Report of Wexier at 1, 3, 4)). Since 1994, Sam Jr. and Steve have reduced the debt
encumbering these assets from $45 million to $7 million. Tr. 4270:5—7. In addition to the capital
appreciation, each of the six siblings’ families received cash distributions; over $10 million in
disbursements to each of their families just from 2002 to 2008, Tr. 4731:13—4732:17. The court
credited the “considerable knowledge and expertise” shown by Sam Jr. and Steve’s management
of the trust assets, Order at 22, particularly given the complications Betty created over the years,
Order at 21. Sam Jr. and Steve receive compensation from their employment as businessmen
who manage the various Tamposi Companies, but neither receives any payment from the SAT
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Sr Trust or the sibling subtrusts for their services as investment directors. Order at 1 I. Their
salaries from the business entities—in the mid-$300,000 range—-are far below market
compensation for executives who run a business of such scale and success. Tr. 4550—4552.
i’hey receive no retirement benefits, as this aligns them more with their siblings by causing them
to depend on the trusts and other family investments. Tr. 4552: 19—20; Tr. 4553:9—22.
C. Betty’s Historical Vendetta Against Her Siblings Culminates In A GlobalSettlement Agreement
From when she first learned in 1994 of her father’s trust plans during Sam Sr.’s lifetime,
to the probate court’s 2010 ruling to exercise the in lerrorem clause, Betty has contested her
father’s decisions regarding the nature and structure of the Tamposi trusts.
Prior to his death, Sam Sr. met with his children several times in 1994 and 1995 to
discuss his plans regarding the trusts, including his determinations that (1) the family businesses
should continue after his death, (2) the six Tamposi siblings should all be treated equally under
the trust, and (3) Sam Jr. and Steve would be placed in charge of managing the trust investments
after his death. Order at 26; Tr. 5423—5430. At that time, Betty opposed her father’s decision to
leave Sam Jr. and Steve in charge of the family businesses. Order at 26. In response, Sam Sr.
told his children that a child’s inclusion in the trusts was a gift—each sibling could either accept
Sam Sr.’s terms or decline to be a beneficiary entirely. Order at 26. Sam Sr. also warned the
Tamposi siblings that provisions in the trust were designed to enforce his intention that the
siblings’ various trusts would be operated in harmony, primarily though Sam Jr.’s and Steve’s
roles as investment directors for all of the sibling trusts. Order at 26.
Presented with a “take it or leave it” choice, Betty chose to accept her father’s generosity.
Order at 26—27. Before the probate court, Betty testified that she had “no recollection” of these
conversations with her father and his attorney, Alan Reische. Order at 26—27. But Reische had
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memorialized his 1994 conversations with Betty in contemporaneous memoranda, Tr. 3436:16—
3437:1, App. 1740—1743 (Ex. 11.97); Tr, 3457; App. 1745 (Ex. 1 1,97A), and his testimony was
corroborated by Betty’s sister, Sally Tamposi, who witnessed both Sam Sr.’s explanations of his
intentions and Betty’s resistance thererto. Ti. 5423:5—12; 5424:2—10; 5319:11—5320:7; 5424:21—
5425:7; 5427:8—5430:18. The court therefore “disbelieve[dj that Betty would have no
recollection of such significant and momentous occurrences touching her financial self-interests”
and found her testimony to provoke “sentiment going beyond mere disbelief.” Order at 27, 45.
Immediately after her father’s death, Betty made her first attempt to defeat his design by
trying to negotiate an end to her participation in the family trusts, proposing that her siblings
“buy her Out” by paying off her mortgage and giving her $500,000 to no longer be involved with
the family. Ti. 5328: 1—12; Tr. 5383:18—5384:3. Her siblings declined the offer, respecting Sam
Sr.’s intention that each sibling would benefit in tandem from the family trusts. Id.
In 1999 and 2000, Betty revived her efforts to sever her financial interests from the
common family holdings in response to a dispute that arose regarding a proposed transaction
between the trusts. Order at 7. in September of 1999, Sam Jr. and Steve proposed to transfer
certain assets from the Non-GST Trusts to the GST Trusts, in order to create substantial tax
savings for each sibling. Order at 7. Betty and Nick opposed the transfer. Order at 7.
in order to resolve this dispute, in January 2000, Sam Jr. and Steve (as investment
directors) and Gerald Prunier (as trustee of the twelve sibling sub-trusts) filed a petition for a
declaratory judgment, to ascertain whether the investment directors or the trustee had the
authority to enter into the proposed transaction. Order at 7; App. 296—314; see generally Samuel
A. Taniposi, Sr. 1992 Trust, No. 2000-178 (Hillsborough Co. Probate Ct.). In response, Betty,
Nick, and their children filed their own declaratory judgment petition in April 2000, asking
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whether they could participate in the January 2000 action without triggering the in tc’rrorenl
clause. Order at 7; App. 3 1 5—321; see ge’iieru//v Tamosi ‘. Prunier, No. 2000—786
(Hilisborough Co. Probate Ct,). On November 13, 2000, both actions were dismissed without
prejudice through an agreed order. Order at 8.
Less than a year later, in September 2001, Betty and Nick filed a new complaint against
Sam Jr., Steve, and Prunier, alleging breaches of fiduciary duty and seeking again, ititer a/ia, to
remove Sam Jr. and Steve from their roles as the investment directors. Order at 8; see geiieral/y
Jamposi V. Jamposi, No. 2004-1687 (Hillsborough Co. Probate Ct.). The parties turned to
private mediation, and Betty and Nick withdrew their complaint. Order at 8.
After several years of mediations, negotiations, and unreasonable demands, the parties
finally agreed upon a Settlement Agreement in November 2006. App. 381—390 (Ex. 1.3). As
relevant here, the Settlement Agreement made two major amendments to the trusts’ structures.
First, it allowed Betty and Nick to each appoint the trustee for the sub-trusts in their name, rather
than continuing to require a single trustee for the collective group of sibling subtrusts. Order at
8. Betty used this opportunity to select a trustee that she thought she could influence, to give her
more control over the distribution of assets from the EMT Trusts. Second, Sam Jr. and Steve
agreed to resign as investment directors over all but ten assets in Betty and Nick’s sub-trusts, and
would resign from these remaining ten if and when they were sold or liquidated. Order at 8—9.
Between these two accommodations, Betty received some—but not all—of the
independence she had sought through the years, in the form of a permissible amendment of the
trusts. In exchange, Betty, along with her other siblings, waived and released any and all claims
they may have had for all causes of action, through the Settlement Agreement’s effective date of
November 13, 2006. Order at 21. Betty also agreed to retain certain aspects of the trust’s
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historical structure: for example, the Settlement Agreement had no effect upon “the
organizations or legal structure and ownership of the assets,” Order at 9, and Sam Jr. and Steve
remained investment directors over an agreed-upon list of assets in the EMT Trusts. Among the
assets specifically left under Sam Jr. and Steve’s direction was Tamposi LLC, a family entity
which held 50 shares of the primary owner of the Boston Red Sox. Order at 17—18. Throughout
this process, Betty accrued over $900,000 in legal fees. Order at 10. The Settlement Agreement
stated that those fees were her sole responsibility and prohibited her from seeking reimbursement
for these costs from any entity or trust other than her own subtrust. App. 385, § 4, ¶ A (Ex. 1.3).
The Settlement Agreement provided that Sam Jr.’s and Steve’s legal fees would be paid by each
of the Tamposi siblings’ trusts proportionally. App. 386, § 4, ¶J C—D (Ex. 1.3).
As a result of the Settlement Agreement, Betty and her issue’s one-sixth share in
Tamposi family assets fell into three categories: (1) EMT trust assets for which the investment
directors had no role as trnst fiduciaries, Supp. App. 506 (Ex. 116); (2) EMT trust assets for
which Sam Jr. and Steve remained in control as investment directors, Id.; and (3) assets Betty
and her children owned outside of any trust, Supp. App. 532—537 (Ex. 11.196). As businessmen
and not trust fiduciaries, Sam Jr. and Steve managed the business entities that owned all of these
assets. Much to Betty and Shelton’s chagrin, their management of the nontrust assets, and the
business decisions made to manage the entities that owned trust assets, were beyond the probate
court’s jurisdiction and not part of the trial. The probate court only had jurisdiction over Sam Jr.
and Steve’s role as investment directors for the ten assets over which they retained control
pursuant to the Settlement Agreement. App. 384, § 3, ¶ V (Ex. 1.3).
The Settlement Agreement stated that the signatories, including Betty and Shelton’s
predecessor as trustee for the EMT Trusts, intended that the agreement would “buy peace and
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cease all controversies, claims, litigations, threats of litigation, by and between the signatories
from the beginning of the world” until its effective date of November 13, 2006. App. 382—
383, § 2 (Ex. 1.3). Although the parties signed the Settlement Agreement on November 13,
2006, it would take time to implement. The probate court approved the amendments to the SAT
Sr. Trust on February 22, 2007. Order at 9.
D. Shortly After Settlement, Betty Appoints Shelton To Restart The Litigation
The process of approving and implementing the Settlement Agreement took several
months. Richard Couser, Betty’s then-attorney, began to succumb to what proved to be a long
battle with brain cancer, rendering him unable to serve as trustee for the EMT Trusts as provided
in the Settlement Agreement. Order at 11. At the time of Couser’s withdrawal as trustee (May
19, 2007), he had not yet requested nor taken possession of any trust assets. Order at 11. Further
complicating matters, the Settlement Agreement did not provide a mechanism for the transition
from Prunier, the siblings’ common trustee, to a new trustee chosen by Betty. Order at 11.
After the Settlement Agreement was signed in November 2006, the parties waited months
for Betty to appoint a successor trustee who would effectuate the transition, as Couser could not
do so. During Spring 2007, Betty finally turned to Julie Shelton, the Appellant—a longtime
friend who lived in Chicago and who had worked as a construction litigator for over twenty-five
years. Tr. 1949, 1951, 1957; 1959:13—1960:12. Shelton attempted to help Betty find a suitable
trustee. Tr, 1960:15; 1961:12—14. She also referred Betty to Shelton’s friend, Stephanie Denby,
a Chicago trust attorney, whom Betty retained to advise Betty on trust issues. Tr. 1960:13—23.
In June 2007, Denby agreed that as part of replacing Couser as the EMT trustee, Betty would
need to update the release in the Settlement Agreement to cover the period caused by Betty’s
failure to promptly name a replacement trustee. App. 540 (Ex. 2.35); Tr. 4396—4399. Nick, who
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received the same concessions under the Settlement Agreement that Betty did, executed the
updated release without a problem. Ti. 4407; 1607:17—22; App. 411—420 (Ex. 1.8).
After failing to locate a willing institutional trustee for the EMT Trusts, Shelton agreed
on August 10, 2007, to serve as the trustee herself. Order at 12. Shelton accepted the position
with reluctance, as she had no experience in trust administration. For example, as the probate
court observed, Shelton was not even aware that her role as trustee gave her fiduciary duties to
Betty’s future-born issue until months after she became the trustee, when the subject of Shelton’s
duty to other beneficiaries arose during this litigation. Order at 12; Tr. 1974:7—15. After she
became trustee, Shelton retained Denby to serve as her counsel on trust issues—despite the fact
that Denby was already personally retained by Betty, one of the EMT Trust beneficiaries, but not
by any of the other trust beneficiaries. App. 527-528 (Ex. 2.30: Betty/Denby Agreement); App.
1028—1029 (Ex. 2.138: Shelton/Denby Agreement).
When she assumed her new role as trustee of the EMT Trusts in August 2007, Shelton
had no evidence that Sam Jr. and Steve had mismanaged any of the EMT Trusts’ assets. Order at
12. Ignoring that fact, in August 2007 Betty and Shelton began interviewing Boston lawyers to
pursue two potential lawsuits: (1) further litigation against the Appellees regarding the EMT
Trusts, notwithstanding the Settlement Agreement that was, at that point, only eight months old;
and (2) a malpractice action against Couser, Betty’s ailing prior counsel and trustee, based upon
his negotiation of the Settlement Agreement. Order at 13—14 (finding it “reasonable to infer
from their actions and the exhibits” that Betty and Shelton’s offensive against her siblings began
at this time). This search for litigation counsel occurred before Shelton introduced herself to the
investment directors or the former trustee, suggesting Betty’s true priorities. Order at 14.
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Shelton also sent Couser a letter in August 2007-—in the midst of his treatment for a fatal
brain tumor—asking him to inform his insurance carrier that Betty, his longtime client, was
planning to sue him for malpractice. ‘Fr. l975:l4—I976:6; App. 618—620 (Ex. 2.62) (letters
threatening suit). Besides providing a reason to not pay the last $137,000 owed on Couser’s bill,
see App. 6 18—620 (Ex. 2.62); Supp. App. 539 (Ex. 11.198) (letter from Couser regarding unpaid
fees); App. 533 (Ex. 2.33) (email between Betty and Shelton regarding the issue with Couser
“heating up”: App. 581 (Ex. 2.48) (letter from Couser regarding $137,000 due), this letter
evidenced Betty’s buyer’s remorse over having entered the Settlement Agreement.6
E. Betty And Shelton Begin Making Unreasonable Demands
Ordinarily, one of the first actions of a trustee is to take possession of the trust assets and
inventory them. RSA 564-B:8-809, 8-812. But rather than doing her duty as a trustee, Shelton
instead helped Betty make a series of baseless requests and demands—moves which highlighted
Betty’s continued unwillingness to abide by the terms of the trust instruments and the Settlement
Agreement she had recently signed. The record proves and the probate court found:
1. Having neither met with nor talked to Sam Jr. or Steve, on or about August 29, 2007,
Shelton wrote to them requesting a face-to-face meeting to discuss Betty’s alleged
financial needs. Order at 13. Sam Jr. and Steve agreed to Shelton’s proposed dates, but
Steve requested that he participate via conference call rather than travelling from Florida.
Order at 13; App. 601—607, 692—694 (Exs. 2.53, 2.54, 2.55, 2.87). Shelton refused to
meet unless Steve flew from Florida to meet her face-to-face. Order at 15.
2. Betty’s actual agenda for this meeting was to once again raise Betty’s interest in having
Sam Jr. and Steve buy out Betty’s interest in the family trusts, as well as to raise
By contrast, Couscr thanked Sam Jr., whom he had sued for years, for sending a get-well card and correspondenceshowing concern for his health. Tr. 4830:6—8.
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“issue[sj” regarding the family’s Red Sox investment that the Settlement Agreement left
under the investment directors’ control. App. 607 (Ex, 2.55); Tr. 2140—2143, Betty and
Shelton decided not to inform Sam Jr. and Steve of their secret agenda. Order at 13.
3. On September 7, 2007, Shelton sent a letter to the investment directors demanding that
they provide her with $2 million within seven days, for the “immediate needs” of the
EMT Trusts’ beneficiaries. Order at 14; App. 639 (Ex. 2.73).
4. Before sending the demand letter, Shelton had not taken possession nor inventoried any
trust assets, nor had she considered the beneficiaries’ outside income and other resources.
5. Shelton demanded $2 million without having any knowledge of Betty’s cash-flow
situation, Tr. 2153:3—2154:6, including the fact that Betty had been receiving
distributions from the Tamposi Company, on average, of $1,500,000 per year. Order at
9; Supp. App. 532—537 (Ex. 11.196).
6. Neither Betty nor her children “had any emergency that required a cash payment, let
alone $2 million within 7 days[,J” Order at 14.
7. The demand was unprecedented. No one in the family had ever presumed to make a
demand for so much money or in such a short time. Order at 16.
8. After Shelton made her demand, Betty e-mailed Shelton to instruct her to “whack really
really hard to get their attention,” App. 651 (Ex. 2.81), further demonstrating that the
demand was intended to sow discord rather than to remedy a good-faith financial need.
9. Based on the timing of communications between Shelton, Sam Jr., and Steve, the probate
court determined that Shelton deliberately timed the sending of the 7-day demand letter
so that it arrived at a time that Shelton knew Sam Jr. would be out of the country from
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before it arrived until after the expiration of its “deadline,” in order to strengthen Betty
and Shelton’s demand for a faceto-face meeting with Sam Jr. and Steve. Order at 15.
10. On September 14th, Betty and Shelton made a new demand—that Sam Jr. and Steve
arrange for the immediate sale of a key Tamposi investment, 50 shares of the primary
owner of the Boston Red Sox. Order at 15. This demand conflicted with the Settlement
Agreement, which had resolved the issue by including Tamposi LLC (the family entity
that held the Red Sox shares) as one of the ten EMT Trust assets that specifically
remained under Sam Jr. and Steve’s management. Order at 18. In September 2007,
Barbara Tamposi, the siblings’ mother, tried to defuse the tension between Betty, Sam Jr.,
and Steve by arranging for a family meeting scheduled to take place on September 28,
2007. App. 691 (Ex. 2.86) (email from Sam to Betty regarding meeting); Tr. 4706:10—
15. Betty insisted on having her and Shelton’s litigation counsel attend, which delayed
the meeting. Order at 17; App. 733 (Ex. 2.92). Instead of honoring Barbara’s request for
a meeting, Ms. Shelton’s and Betty’s lawyer sent a September 26, 2007 letter with
another proposal that the investment directors buy all assets in the EMT trusts and Betty’s
nontrust assets in the Tamposi Companies, for more than $24 million. Order at 16—17,
App. 740 (Ex. 2,96). Thus, nine months after agreeing to a settlement agreement that
placed Betty and Shelton in partial control of the EMT trust and nontrust assets in
exchange for remaining part of the collective family trust structure, Betty was again
pressing to have the family buy the EMT assets without any minority discounts and give
her free reign over the cash.
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F. Betty’s (mliii Of’Imrnediate Need” Masks Her Own Reckless Spending
Throughout the fall of 2007, Betty and Shelton offered intermittent and inconsistent
explanations to support Betty’s alleged “immediate need” for a substantial disbursement from the
trust, which the probate court factually rejected.
For example, Betty fabricated a need for $40,000 by claiming that she could not pay her
daughter Maggie Goodlander’s Yale tuition, which was due on October 5, 2007. Order at 22.
Noting that during the same time period Betty paid $6,780 for her own Harvard graduate school
tuition, a $20,000 charitable donation to Georgetown University, and a $7,150 down payment on
a family weekend retreat, the court rejected this concern. Order at 23; Tr. 1324—1325; 1397.
Betty also paid over $300,000 for luxury renovations to her lake house, Order at 23, and had
recently paid approximately $50,000 in tuition for her other daughter, Tr. 1087:15—108913.
Additionally, although the EMT Trusts’ cash accounts collectively contained over $269,000 that
could have been used to pay Maggie’s tuition, Shelton had simply failed to take possession of or
evaluate those assets in a timely manner. Order at 24; App. 1010, 1044—1045, 1072 (Exs. 2.133,
2.145, 2.150). Sam Jr. also advised Maggie that she was about to receive approximately $50,000
from her nontrust interest in a Tamposi family holding, which could have been used to cover her
tuition. Tr. 1049. Instead, Maggie took out a student loan, co-signed by Betty. Order at 23.
Although the loan could have been repaid without interest or penalty within 30 days, and even
though Maggie received her distribution from the Tamposi assets the day after the loan was
approved, neither she nor Betty repaid the loan within the grace period. Order at 23.
Taken together, these facts amply established that Betty’s financial needs had nothing to
do with tuition. Rather, Betty’s “urgent” financial desires were the consequences of her own
excess: expenses from a costly divorce, the cost of building her luxurious $5.7 million home, Tr.
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2154: l42l55:2l, and the close-to-$l million in legal fees spent pre-2007 pressing her
vendettas against her siblings, Tr. 21 53:21 -21 54:6; see a/so Shelton Br. at 7—8.
G. Conimirnication And Cooperation By The Investment Directors
Given Shelton’s repeated claims that Sam Jr. and Steve failed to keep her informed or
otherwise aware of issues relating to the Tamposi family trusts, Shelton Br. at 9—11, it is
important to note the brothers’ standard practices in this area. The investment directors instituted
several practices to keep their siblings thily informed of the performance and administration of
the family’s trust and nontrust holdings. They hold two in-person meetings a year in which they
spend a substantial amount of time discussing the assets and answering questions from their
siblings, Tr. 3113:19—3114:7; they distribute detailed biannual balance sheets on each individual
investment, Tr. 3058:12—15; Supp. App. 79—297 (Ex. 3.4) (2007 Balance Sheets); they provide
monthly cash flow projections for the eight properties that produce the most cash flow, Tr.
3110:7—14; they provide quarterly tax projections, Tr. 3089; Supp. App. 541 (Ex, 11.201); and
they provide annual summaries of the holdings and annual cash flow projections on an asset-by-
asset basis, Tr. 3010—3011; App. 1381—1539 (Ex. 3.1) (2007 cash flow projection). Jeffiey
Knight, the Taniposi Companies’ chief financial officer, was available to meet and or discuss
finances with the siblings, their trustees and their lawyers. Tr. 427—428, 3133—3134, 3156; see,
e.g., App. 1067, 1085, 1086—1088, 1089, 1128 (Exs. 2.148, 2.159,2.T60,2.161,2.182).
Supp. App. 508 (Ex. 11.51) is a videotape that documents the home’s excessive luxuxy. For example, it had a$60,000 fireplace sold as “The Big Mambo.” which is typically used in hotels and ski lodges. Tr. 2154.19—2155:21.
Indeed, as the guardian ad litein appointed to represent the interests of Betty’s unborn issue would later report, “thesingle largest drain on the assets of each of the individual sub-Trusts” was the spiraling costs of Betty’s continuedlitigation. App. 1618 (Report of GAL at 35, 2).
See also Supp. App. 530—531 (Ex. 11.195) (complete summaiy of all information that is provided to Tamposifamily members about the trust and non-trust holdings).
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During the time from August 2007 through the start of the 2009—20 10 trial, Shelton, as
trustee, regularly contacted Sam Jr. or Steve concerning trust administration issues. See, e.g.,
App. 745 (Ex. 2.98); App. 617 (Ex. 2.61). Sam Jr. typically responded to emails and facsimiles
within minutes or a few hours. Tr. 2286: 14—20; see, e.g., App. 745, 746 (Exs. 2.98, 2.99). The
brothers’ responses were timely, professional, and businesslike. See, e.g., App. 63 1, 637, 1116,
1120 (Exs. 267, 2.71, 2.176, 2.178). It is therefore unsurprising that the probate court concluded
that it was Shelton—not Sam Jr. or Steve—who refused to behave cooperatively. Order at 37.
Meanwhile, Shelton’s tenure as trustee was repeatedly marred by administrative errors
occasioned by her ineptness. Shelton continued to make similar demands that Sam Jr., as
investment director, distribute funds to Shelton, rather than addressing Prunier, who maintained
control of the cash accounts and could effect such a transfer—demonstrating her lack of
understanding of how the trust worked. Order at 24. Shelton finally contacted Pmnier in
October of 2007, requesting an immediate transfer of funds, but these efforts were complicated
because Shelton directed Prunier to deposit and commingle all cash from both EMT Trusts into a
single designated bank account—an action that if taken could have had disastrous consequences
for the EMT Trusts because commingling fI.inds with different tax statuses could have ended one
trust’s generation skipping tax exemption. Order at 25. As a result, the transfer of assets was not
completed until November of 2007, several months after Shelton became trustee. App. 780 (Ex.
2.1 11) (Newkirk Letter); App. 995 (Ex. 2.130); App. 1039 (Ex. 2.143).
H. The Massachusetts Lawsuit And The Sale Of The Red Sox Shares
Shelton and Betty tiled the fourth Tamposi family lawsuit on September 28, 2007, in
Massachusetts state court, to force the sale of the Red Sox shares. Supp. App. 437 (Ex. 6.2)
(Docket Report: SUCV2007-04283). Shelton had been Betty’s trustee for only seven weeks.
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They did not serve the complaint upon Sam Jr. and Steve until weeks later, in November, App.
1033—1035 (Ex. 2141); App. 1036—1038(Ex. 2142).
Shelton’s and Betty’s Massachusetts complaint demanded that Sam Jr. and Steve sell the
Red Sox by exercising a contractual right to “put” the shares to the Red Sox and to force the
team to pay a price based upon a valuation derived through an independent appraisal. Supp.
App. 470 (Ex. 6.4). Their complaint also demanded that their litigation counsel, Mr. Weisman,
participate in the negotiations with the Red Sox. id. For unrelated reasons, the Red Sox did not
want to have to conduct a valuation of its business enterprise. Tr. 4820:7—16; 4826:11—4827:19.
Thus, in early 2008, Sam Jr. and Steve began a three-tiered strategy to maximize the sale price of
the Red Sox shares: they (1) told the Red Sox they would exercise the “put” and force the Red
Sox to conduct the valuation, (2) agreed to negotiate with the Red Sox for a sale price
independent of the put, and (3) began negotiations with other potential buyers.
Acting through shared counsel, Betty and Shelton sent an acrimonious February 1, 2008,
letter to the Red Sox, and then asked highly suggestive questions at the deposition of a Red Sox
executive, to besmirch Sam Jr. and Steve and undercut their negotiations with the Red Sox.
Order at 19—20. Among the allegations and insinuations, they accused Sam Jr. of making several
fraudulent representations to the Red Sox and Major League Baseball, implied the brothers had
forged her signature, and accused them of violating fiduciary duties to the trusts. Supp. App.
520—523 (Ex. 11.141). They even raised a false concern that Sam Jr. and/or Steve had scalped
Red Sox tickets. Order at 19. The scalping allegation was quite reckless, because if the Red Sox
had believed it, they could have stripped the Tamposi family of highly prized ancillary
ownership privileges that increased the value of the shares they were trying to sell. Tr. 4859.
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By making these accusations through counsel, Shelton was potentially impairing the
value of an EMT asset without any countervailing benefit to the beneficiaries:
Incredibly, and for reasons serving no purpose other than to render more difficult, if notsabotage, the investment directors’ efforts to negotiate a sale of the Red Sox shares, onFebruary 1, 2008, on behalf of the petitioners, their attorney wrote the attorney for theRed Sox of Betty’s objections[.]
Order at 19.
Despite this assault, Sam Jr. and Steve remained mindful of their duties, as investment
directors for all six siblings, with respect to the Red Sox shares. They continued to negotiate the
package sale of the family’s entire interest in the franchise rather than a carve-out sale of only a
portion attributable to Betty’s interest. Order at 20. The Red Sox unsuccessfully tried to
negotiate for a $250,000 to $300,000 discount, so that the Tamposi family would reimburse the
legal fees and costs the team had or would incur as a result of the Massachusetts case, and it
sought indemnification for costs that might exceed this amount. Order at 20. Sam Jr. and Steve
ultimately sold the 50 shares on May 13, 2008, for a price “significantly greater than any prior
sale,” a victory that the probate court found lent “great compliments” to Sam Jr.’s and Steve’s
skills, as well as Sam Sr.’s decision to entrust them both with the responsibility of serving as
investment directors for the collective assets of the sibling trusts. Order at 19 n.1 6, 21.10
I. The Instant Lawsuit, The Probate Court’s Decision, And Its Aftermath
Betty and Shelton tiled the instant suit on October 12, 2007. Their original complaint
again sought judicial execution of Betty’s ultimate prize—the complete removal of Sam Jr. and
Steve as investment directors and the total “liquidation of the Tamposi Companies.” App. 54;
Order at 47. Betty and Shelton’s complaint asked the probate court to, among other things:
• “Remove Samuel and Stephen as Investment Directors of the EMT Trusts.”
‘° The specific sale price has been sealed by mutual request of the parties. Order at 19 11.16.
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• “Remove Samuel and Stephen as Directors of the Tamposi Companies.”
• “Order the liquidation of the Tamposi Companies so that the assets can effectively bemanaged for the benefit of Elizabeth and her children as intended by her father.”
App. 54 (Original Complaint dated October 12, 2007). Within a month of the complaint’s filing,
the Appellees moved to enforce the in lerroreni clause, by filing a Motion to Forfeit Betty’s
interest. App. 76 8O (Respondents’ Motion to Forfeit). The court reserved ruling on this motion
by agreement of the parties until evidence was presented on the merits. Supp. App. 3 (Order
(Aug. II, 2008)). Betty and Shelton’s counsel subsequently characterized the complaint as
“inartfiilly drafted” and filed an amended complaint that revised the wording of the remedies
sought. App. 57—75 (Am. Complaint). The amended complaint sought to “decouple” the EMT
interests from the rest of the family’s holdings. App. 73—74 (Am. Complaint at 18). Decoupling
was a euphemism for Betty and Shelton forcing Betty’s siblings’ trusts, or Sam Jr. and Steve
personally, to purchase all of the EMT trust and nontrust interests for cash. Order at 26.
This fifth lawsuit thus sought the same remedy that had precipitated lawsuits 1—3 and had
lead to the Settlement Agreement. The probate court correctly recognized that Betty and
Shelton’s decisions to bring this matter to court “were motivated by a desire to force a buy-out of
Betty’s share of the trust and non-trust assets,” rather than to meet any legitimate financial needs
or fiduciary concerns. Order at 46. The guardian ad litem for the unborn EMT issue wrote a
report that, in turn, provided a stark warning;
[It] is more likely than not that litigation in one form or another will continue unless oruntil it is possible to sever the EMT interests, both Trust bound and not, from the interestsof the other family members. In sum, one living beneficiary of the Samuel A. Tamposi,
‘ The Massachusetts complaint included a similar request to undo the trust plan: it asked the court to require theinvestment directors to sell one-sixth of the Red Sox ownership interest, even though it was a trust asset over whichthey retained investment authority under the Settlement Agreement. Supp. App. 470—471 (Ex. 6.4. Prayers forRelief.).
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Sr. Revocable Trust of 1992 [ie., Bettyl is not content to have her financial future tied tothose of her siblings and, in particular, to the investment directorship of her two brothers.
Order at 52 (quoting App. 1682 (GAL Report at 36)). In other words, despite first acceding in
1994 to her father’s plan to place Sam Jr. and Steve in control of the family trusts, and then
negotiating and signing a settlement agreement that preserved their continued exclusive authority
to manage the ten assets, Betty showed no signs of ending her opposition to the trust’s terms.
The probate court entered its rulings on August 18, 2010. The court’s opinion includes
four central holdings.
First, the probate court rejected Betty and Shelton’s petition on its merits, holding that
Sam Jr. and Steve did not violate their fiduciary duties to Betty. Order at 27—43. Such a holding
was unsurprising, given Shelton’s own admission “that there was no evidence that Sam Jr. and
Steve had mismanaged any of the EMT Trusts’ assets” at the time she and Betty began pursuing
the suit. Order at 12. The unborn issue’s guardian ad/item agreed, finding no specific evidence
that the investment directors in any way breached their fiduciary duties. Order at 51 (citing App.
1658 (GAL Report at 12)). Indeed, the guardian ad litem explained at trial that Sam Jr. and
Steve treated each of the sibling subtrusts equally “to the penny.” Tr. 1737:12—13.
Second, the probate court put an end to Betty’s assault on the trust’s design, and Sam Jr.’s
and Steve’s roles as investment directors thereunder, by ruling that Betty had violated the trust’s
in terrorem clause by filing the instant suit. Order at 43—49. As the court found, Betty’s suit
contested several provisions of the trust, including the role of the investment directors, their
authority to retain assets in common throughout the sibling trusts, and their right to retain
substantial trust assets in the form of real estate—all conditions that Sam Sr. made clear in the
trust documents prior to his death. Order at 45. As a result, Betty lost her rights to the benefits
of the EMT trusts, retroactive to her filing of the original complaint in this matter. Order at 48—.
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49. The benefits of the EMT trust instead fell to Betty’s children, as if Betty had died. Add. 12
(I 992 Trust [)ocurnent) at Art. Fourteenth.
Third, the probate court found that Betty and Shelton brought and litigated this action in
bad faith, Order at 45, and, therefore, were jointly liable to pay the reasonable attorneys’ fees
incurred by the Appellees in opposing the matter, Order at 49. This ruling had no impact on
Betty’s ownership of nontrust family assets.
Fourth, and finally, the probate court ordered that Shelton be removed as trustee of the
EMT Trusts.’2 In so ordering, the court credited Shelton’s own testimony that she had no prior
experience in trust administration, that she accepted the position without evaluating the trust
terms or understanding her duties, and that she had no interest in continuing to serve as the
trustee in the future. Order at 50. The court also found that Shelton had violated several of her
duties as trustee: Shelton’s failure to properly evaluate the costs and benefits of the lawsuit,
coupled with other financial missteps, mistakes, and excesses, compelled the conclusion that she
had violated her duties to “control and protect trust assets” and to manage them with “reasonable
care, skill, and caution.” Order at 50—5 1. Likewise, the court found Shelton had violated her
duty of impartiality by bringing litigation that suited only one beneficiary—Betty—to the
detriment of the other beneficiaries (most particularly the unborn). Order at 51. Such a finding
was unsurprising given the facts that Shelton was not even aware that she had fiduciary duties to
Betty’s future-born issue prior to bringing this suit, Order at 12, and that Shelton relied upon the
advice of counsel who had been concurrently retained by Betty to represent Betty’s personal
2 Originally, Appellees moved below seeking such disqualification. The probate court found that they were “not ina position to requesf’ such relief, as they are not settlors or beneficiaries of the EMT Trusts. Instead, the courtexercised its own statutory authority to enter such an order on its own initiative. Order at 5O RSA 564-B:7-706(a).
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interests. Although the court found that Shelton was entitled to reasonable compensation for her
duties as trustee, it also ordered that she be removed from the position.
Since the probate court’s ruling, the remaining beneficiaries of the EMT Trusts have
designated a series of new trustees. Meanwhile, the relationship between Betty and Shelton has
degenerated. importantly, Betty has not elected to appeal the probate court’s order.13 Instead—
in a move that brings Shelton’s legal involvement with Betty full-circle-—Betty has filed
malpractice charges against Shelton, just as Shelton helped Betty to allege against Couser,
Betty’s ailing prior trustee, when Shelton first entered the case. Shelton Br. at 15 n.14; see
generally Tamposi i’. Denbv, No. 1: 10-cv- 12283 (D. Mass) (complaint filed Dec. 31, 2010).
I. Shelton’s Management Of Trustee’s Legal Counsel
The way that Shelton, a highly experienced litigator, managed Betty’s various lawsuits is
noteworthy. As trustee, she was supposed to be an impartial fiduciary for Betty, Betty’s three
children, and the children’s unborn issue. Tr. 4022:18—23; Tr. 4033:22—4034:11. Yet, Shelton
hired as her trust counsel Stephanie Denby, whom Betty had already hired and thus owed a duty
of zealous advocacy to Betty alone. N.H. R. Prof Conduct 1.3 (Diligence), 1.7 (Conflict of
Interest). Shelton then retained as her litigation counsel Michael Weisman, whom Betty had
previously retained to be Betty’s advocate in seeking the liquidation of trust and nontrust assets
into cash that Betty would control, to the exclusion of the other beneficiaries. App. 697—700
(Ex. 289); App. 1132—1 133 (Ex. 2.186). In October 2008, the probate court warned Weisman
that he would be “well advised to consider the admonishment of [New Hampshire Rule of
Professional Conduct] 1.7 in carefully assessing the existence and risks of potential conflicts in
‘ More precisely, Betty noticed an appeal. then moved to withdraw her appeal, then moved to reinstate her appeal,then moved again to withdraw. Shelton Br. at 14—15. The final motion was granted, leaving Betty a non-party tothis appeal.
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consultation with [hisJ clients.’ Supp. App. 17 (Order (Oct. 22, 2008) at 5). On April 7, 2009,
the court again reminded Weisman and Shelton of its earlier admonishment regarding their
apparent conflicts of interest. Supp. App. 608 (Order (Apr. 7, 2009) at 3).
The (lay betbre the respondents and intervenors were to depose Maggie Goodlander,
Weisman, Shelton’s and Betty’s shared trial lawyer, suddenly began to represent Maggie solely
for the two days of deposition preparation and testimony. Tr. 932—934. At her deposition,
Maggie testified she had a failure of memory to nearly 150 questions, including as to events that
had occurred one day earlier. Tr. 946—952. When she later testified at trial, Maggie
unequivocally stated that Weisman represented her for the purposes of her trial testimony as
well. Tr. 928:10—15. Shelton allowed such truncated, conflicted legal representation to a
beneficiary for whom Shelton was then a fiduciary. Tr. 4022:18—23; 4033:22—4034:11,
For this litigation and related advice to challenge the Settlement Agreement and oversee
the trusts, Shelton disbursed $539,359 in trust proceeds to her two law firms for her time, paid
her friend Denby $686,770, and paid Weisman $941,480.14 In contrast, Prunier served for at
least two years as the trustee for all the siblings’ subtrust without being paid at all; he only
started charging administrative fees because of the demands of the litigation. Tr. 1491:22—
1492:1, Tr. 1545:13—16; Tr. 1584:7—16.
When the probate court released the substantial proceeds from the Red Sox sale to
Shelton as trustee, it explicitly reminded her to use her discretion to pay for costs and expenses
that would benefit “all” beneficiaries, and it warned her that her “myopic commitment to the
interest of one beneficiary at the expense of others exposes her to potential risk.” Supp. App. 24,
14See Supp. App. 54: 497—498: 500, 503—505.
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26 (Order (Dec. 3, 2008) at 5, 7). Shelton ignored the probate court’s admonishments and
warnings, as she continued to pay substantial trust proceeds for the two lawsuits,
Shelton agreed to pay Weisman partially by the hour, and partially by a contingent fee
running from IS to 33% of the trust and nontrust assets that were liquidated or “decoupled.”
App. 697—700 (Ex. 2.89); App. 1132—1133 (Ex. 2.186). This liquidation and contingent fee
served Betty, but not the interests of Shelton’s other beneficiaries, particularly the unborn issue.
Order at 50—5 1. Despite the fact that the investment directors sold the Red Sox shares pursuant
to a negotiation, and not the “put” as demanded in the Massachusetts complaint, Shelton paid
Weisman a contingent fee of $410,759 for his role in the Massachusetts litigation in addition to
the money he had already charged her on an hourly rate. Supp. App. 498 (Ex. 10.52). The New
Hampshire litigation alone caused the Respondents and Intervenors to incur $3,430,573. Supp.
App. 36-42 (Joint Application for Fees and Costs (September 17, 2010)). Thus, all told, the
litigation Shelton filed cost the entire Tamposi family over $5,600,000. ‘
While conducting this litigation for the purposes of liquidating the EMT trust assets and
placing the cash at Betty’s unfettered disposal, Shelton also was on notice that the judge in
Betty’s divorce case had made a finding that Betty had been a fiduciary to another trust that
existed to benefit her children and, therefore, ordered her to repay $320,000 that she had diverted
from her children’s trust. Order at 10. Furthermore, during the years when Trustee Prunier was
disbursing millions to Betty, Betty paid the college tuition for a second daughter, Christina, who
was also a beneficiary of the EMT Trusts, but required Christina to execute a loan document to
repay Betty the $50,000. Tr. 1087:15—1089:5.
‘ This amount excludes the Appellees’ fees in the Massachusetts case, which the probate court did not include in itsfee award. Order at 49.
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SUMMARY OF TIlE ARGUMFNT
Shelton’s reasons for filing the two lawsuits were both irrational and improper.
Typically, when trust fiduciaries are sued, they are accused of squandering the principal in
unsuccessful investments, or engaging in self-dealing, or lacking impartiality towards
beneficiaries. Here, Betty and Shelton had no such concerns—nor could they. Sam Jr. and
Steve’s performance as investment directors was extraordinary, and Betty’s average annual cash
income of $1.65 million was far beyond what was necessary to meet the trust instrument’s
ascertainable standard for distributions. Sam Jr. and Steve divided the trust assets and proceeds
in a scrupulously even way. Betty’s father left her and her issue a modest fortune; her brothers’
management of those assets gave her and her issue a far more sizeable one.
Betty and Shelton filed the fourth and fifth family lawsuits for the same reason that Betty
caused the first three lawsuits she did not accept her father’s decision to appoint two of her
brothers as investment directors. Instead, she wanted the trust and nontrust assets liquidated into
cash and put into her hands, without any fiduciaries regulating her spending. In short, Betty
wanted to destroy the carefully designed trust structure that Sam Sr. had left behind for his
children, and she tapped Shelton as her field marshal to run the litigation.
As explained above, Sam Sr. devised a trust plan that embodied many of the aspects of
the life he lived. He treated his children equally in terms of the wealth, but chose two to run the
business in a disciplined, efficient way. Sam Sr. amassed substantial real estate investments and
gave his sons wide discretion to continue in real estate. He believed in minimizing taxes, and his
sons used tax strategies wisely. He devised the family trust, through a complex and sophisticated
business document, in order to allow the continuation of the businesses that he transferred to the
trust. Many of those businesses were closely held entities; some businesses were co-owned with
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persons who were not members of the Tamposi family. During his lifetime, Sam Sr. also entered
into ownership agreements regarding many of those business interests, and most of the
ownership agreements contained some form of restriction on transfer. 1-fe therefore designed the
trust instruments to ensure a common management of the assets he left behind, so that they could
be used to collectively benefit each of his children (and their issue) equally.
But Betty always rebelled against her father’s decision to structure the trust in this
manner, and she has strived ever since to find a way—legal or otherwise—to separate her
“share” of these interests from those of her siblings. In doing so, Betty has acted without regard
for (1) the five other sets of sibling subtrusts, whose 28 beneficiaries were reaping the benefits of
the substantial cash flow generated as a result of the consolidated management of the entities
owned by the trusts; (2) the transfer restrictions and minority discounts that Sam Sr. put in place
for the benefit of all beneficiaries of the subtrusts; (3) the lack of any legal basis to force the
other subtnists to purchase the assets of the EMT Trusts; or (4) the harm that would result to the
other five sets of subtrusts if Betty’s demands for “liquidation” or “decoupling” were granted.
The instant suit was Betty’s latest (and, in light of the probate court’s in terroreni
holding, now her final) effort to achieve this impermissible end. Before they even filed the suit,
Betty and Shelton, along with attorney Stephanie Denby, orchestrated a series of events designed
to create the false appearance that Sam Jr. and Steve had breached their fiduciary duties as
investment directors—a pretext upon which to demand that the EMT Trusts be liquidated for
Betty’s benefit. From the moment Betty engaged Shelton as trustee, the two began searching for
litigation counsel to sue Betty’s siblings, even though Betty had just waived all claims against
them through the 2006 settlement. Shelton, Betty, and Denby then designed to create the
appearance of a breach of fiduciary duty by making a demand for $2 million, timed in such a
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way as to ensure that Sam Jr. would not even receive it until after the its expiration date.
Shelton, Betty, and Denby further contrived to use Betty’s daughter and her upcoming tuition
payment as the basis of an alleged breach of fiduciary duty.
Relying substantially upon these events, Betty and Shelton argued below—and Shelton
repeats on appeal—that Sam Jr. and Steve, as investment directors, violated their fiduciary duties
either by (1) failing to provide funds to Shelton on demand, or (2) by otherwise failing to
cooperate with Shelton in her new role as trustee for the EMT Trusts. The probate court
correctly saw through these spurious claims, crediting neither Betty and Shelton’s arguments nor
their factual allegations. Sam Jr. and Steve completely fulfilled their duties as investment
directors and as managers of the entities owned by the EMT Trusts, performing those duties in a
manner that generated vast wealth for the trust beneficiaries. Under the terms of the trust, the
brothers had no duty—fiduciary or otherwise—to liquidate assets in order to make more money
available for Betty’s alleged needs. Indeed, Betty’s so-called financial needs were illusory,
attributable to excesses that lie far outside of the trust’s narrow ascertainable standard for
distributions. Where legitimate needs arguably existed, such as for Maggie Goodlander’s tuition,
Shelton disregarded the ample assets already held in the EMT Trusts that were available to
address such needs. Thus, there was no basis for the probate court to side with Betty or Shelton:
Sam Jr. and Steve filly complied with their obligations under the terms of the trust documents
and fully cooperated, to the extent required, with Shelton. The failure of Betty’s suit below was
therefore dictated by the terms of the trusts, as properly construed by the probate court.
Consistent with New Hampshire common law and the principle that a testator is free to
dispose of his property as he wishes, the probate court then held that Betty had violated the
trust’s in terrorem clause, recognizing her suit as the latest gambit in her longstanding assault
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against the terms of the trusts and her father’s intention, Although Shelton appeals this holding,
she has no standing do to so—even though Betty and Shelton worked together to sue the
investment directors, enforcement of the in terroreni clause was a remedy personal to Betty
alone. In any event, Betty’s suit was designed from its inception to destroy the carefully
designed trust structure that Sam Sr. had created and, therefore, triggered the in terrorem clause.
Finally, in light of the substantial bad faith conduct that permeated this case, the probate
court ordered Shelton to pay the Appellees attorneys’ fees and removed her from her position as
trustee. Shelton’s claims that she behaved appropriately cannot be squared with the well-
considered and controlling factual findings of the probate court. Rather, the record below
establishes ample misconduct justifying the award of attorneys’ fees, and Shelton’s repeated
violations of her fiduciary duties—in particularly, her single-minded focus on supporting Betty’s
interests to the detriment of other trust beneficiaries—compelled her removal as trustee.
ARGUMENT
I. The Probate Court Correctly Found Betty And Shelton’s Suit To Be Meritless.
A. The Probate Court Properly Determined The intention Of Samuel A.Tamposi, Sr., Under the Trust.
1. Background Legal Principles
In determining the duties of fiduciaries in managing a complex business trust, the court’s
paramount duty is to effectuate the intention of the trust settler—in this case, Sam Sr. See
Bartlett v. Durnaine, 128 N.H. 497, 504—505 (1986)16 The settlor’s intent must be carried out
unless it is contrary to New Hampshire statutory law or public policy. Id. The settlor’s intent is
16 Although there are only a handful of cases previously before this court regarding construction of a trustinstrument, the many cases regarding will construction apply to trust construction. RSA 564-B: 1-112.
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determined by consideration of the written instrument and the circumstances surrounding the
settlor at the time the trust is made. Id. The circumstances to be considered include:
The situation of the testator, the surrounding circumstances, his family and relatives, thedevisees and legatees, the nature, amount, and situation of his property, facts tending toplace the court in the position of the testator.
Siration Simlion, 68 NFl, 582, 586 (1896). Further, the settlor’s intent is determined from
looking at the terms of the trust instrument in its entirety, not by examining part of it in isolation.
Stijihorn i’. Sanhorn, 62 N.H. 631, 644 (1882). A trust “may and most likely will serve multiple
objectives or purposes,” and a settlor has “considerable latitude in specifying the manner in
which a trust purpose is to be pursued.” Restatement (Third) of Trusts §27 cmt. 2(b) (2003).
The probate court’s determination of Sam Sr.’s intent is a question of fact and must be
sustained if, based upon the evidence presented, “any reasonable person could so find.” Ban/eli,
128 NH. at 505.
2. The Probate Court Properly Determined Samuel A. Tamposi’sUnambiguous Intent Regarding The Trust’s Terms And Purposes.
In the complaint, at trial, and again in this appeal, Shelton asks this Court to consider
only one part of the trust, the provision establishing the distribution standard, in determining Sam
Sr.’s intent. There is no question that only the trustee has the authority to make distributions to
the beneficiaries—authority cabined by a strict, ascertainable standard, discussed supra.
However, this disbursement authority does not give the trustee the ability to subvert all of the
other trust purposes and undo each of the other five sets of subtrusts in the process.
As the probate court explained, Sam Sr. created the trusts to further several purposes:
To provide income to the beneficiaries, minimize taxes, provide protection fromcreditors, maintain a family business, and provide long-term asset growth for multiplegenerations of beneficiaries.
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Order at 31 32. The trustees inability to liquidate all of the trust assets is a direct consequence
of Sam Sr.’s rntention to serve these multiple purposes. Order at 32. The trustee therefore has
no authority to direct the retention or sale of any assets managed by the investment directors.
Order at 32. The probate cowl thus colTectly ruled that the investment directors have no duty to
make assets available at the request of the trustee beyond what would be “necessary to provide
for the beneficiaries’ education and maintenance in health and reasonable comfort.” Order at 3 1.
Throughout the trust documents, Sam Sr. departed from traditional trust practices in order
to vest the investment directors with unique, superior authority over the trust assets. First, Sam
Sr. rejected the default rules regarding the investment directors’ standard of care, holding them to
the lesser standard known as the business judgment rule:’7
The investment directors shall exercise the powers and directions granted herein in afiduciary capacity for the benefit of the trusts held hereunder. However, the investmentdirectors shall not be held liable for any action taken or not taken or for any loss ordepreciation in the value of any trust property when the investment directors haveexercised good faith and ordinary diligence.
SAT Sr. 1992 Trust (Third Amendment) at Art. Tenth-B. In recognition of the fact that Sam Jr.
and Steve would face arguable conflicts of interest inherent in their dual roles as the trusts’
investment directors and as business managers of the assets owned by the trust, Sam Sr.
expressly immunized them from such concerns, requiring them only to act fairly. SAT Sr. 1992
Trust (Third Amendment) at Art. Tenth-C. Sam, Sr. also expressly authorized the investment
directors to concentrate all or any part of the trust corpus in real estate.18 SAT Sr. 1992 Trust
Common law has long recognized a settlor’s ability to lower a fiduciary’s standard of care. Bartlett, 128 N.H. at508 (settlor may impose on the trustee the “less stringent standard of a person free to take business risks”). Thisright was later codified at RSA 564-B: 1-105(b). which identifies 12 matters for which the default rules may not bewaived. The fiduciary’s standard of care may be modified so long as the trustee is required to “act in good faith andin accordance with the terms and purposes of the trust and the interests of the beneficiaries.” RSA 564-B:1-105(b)(2): see also RSA 564-B:9-901(b) (authorizing a settlorto alter or even eliminate the prudent investor mie).‘ The provisions of Article Tenth-A also applies to any investments managed by the Trustee.
- .,., -
(Third Amendment) at Art. Tenth-A. Even after the investment directors ceded control over
most of the EMT Trust assets through the 2006 settlement, the Settlement Agreement continued
to treat Betty’s trustee as an excluded fiduciary regarding the ten assets the investment directors
continued to manage. RSA 564-B: 12-1202(b).
The collective management of the trust investments is integral to the operation of the six
sets of subtrusts for the benefit of ll the living beneficiaries.’9 Regarding the ten EMT Trust
assets the investment directors continued to manage, the communal ownership of those assets
requires that the investment directors consider the interests of all of the beneficiaries—not just a
single sibling—when making investment decisions. Professor Charles Rounds, a leading expert
on trusts and fiduciary duties, testified:
These—the investment directors have a kind of a global writ, as you can see later on inthe instrument, to act for the benefit of the trusts plural. So they don’t—they’re not at thebeck and call of any particular beneficiary of any particular trust.
Tr. 3985:13—17. Sam Sr.’s trust works in terms of wealth generation precisely because, under its
plain terms, the trustee has no ability to control the investment decisions made by the investment
directors and no ability to control the business decisions made by the business entities. Sam Sr.
funded the trust with interests in closely held businesses, many of which are subject to
restrictions on transfer or sale,2° and he clearly did not intend that the fi.inding assets would be
When the investment directors ceded investment control over most of the EMT Trusts’ assets in the 2006Settlement Agreement, the management agreements in place over those assets ensured that they would continue tobe managed for the collective benefit of all of the subtrusts.° For example, the EMT Non-Exempt Trust’s 8.3 3% minority interest in Hampton Falls Properties. Ltd. may beassigned only with approval of the general partners. Any sale of the EMT Non-Exempt Trust’s 8.3 3% minorityinterest in Citrus Hills Investment Properties (“CHIP”) is subject to a right of first refusal held by all of the otherpartners. Supp. App. 426. 305 (Exs. 5.16 at ¶ 13: 5.12 at ¶ 17(b)). Since CHIP is owned 50% by the Tamposifamily and 50% by the Nash family, if all owners were to exercise their right of first refusal, the Tamposi familywould become minority owners. with a total of 45.83%. and the Nash family would control with 54.17%.
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liquidated at the whims of a single beneficiary.21 If the trustee could force the sale of trust assets,
as Shelton now argues, then the investment directors’ business judgment for the benefit of all
beneficiaries could be undermined by a single sibling, such as Betty, or a single trustee, such as
Shelton, who seeks to disregard Sam Sr.’s intent.
In short, while Article Tenth-B imposes upon the trustee a duty to defer to the investment
directors regarding matters concerning the ownership and management of the trust property,
there is no converse provision in the trusts that requires the investment directors to follow any
direction of the trustee. Rather, the trust instruments require that the investment directors
comply with the business judgment rule, exercising “good faith and ordinary diligence” as they
manage the trust assets. Thus, the probate court correctly determined the trustee’s authority to
make distributions does not create a superior purpose that trumps all other terms of the trusts;
Shelton is not entitled to focus solely upon one provision of the instrument that she believes
favors her position. The consequence of accepting her contention would be that for all trusts, the
settlor’s intent could be disregarded with respect to any purpose other than making distributions.
Any reasonable person would make these same findings regarding Sam, Sr.’s intent.
2. Extrinsic Evidence Reinforced The Probate Court’s Reading OfThe Trust Instruments.
Although Shelton protests that the probate court’s opinion also references extrinsic
testimony regarding Sam Sr.’s intentions, see Shelton Br. at 28—29, her argument overlooks two
21 Shelton argues that the probate Court erred by determining that, “to whatever extent there is a perceivedambiguity” between powers delineated in the original trust instrument and the role of the investment directors, setforth in the Third Amendment, the provisions of the Third Amendment control because it was a later draftedprovision. See Shelton Br. at 25—26: see also Order at 31. The only hannonious” way to give effect to the senior’sintent is to consider the entire document with all subsequent amendments and, therefore, to hold—as the probatecourt held—that the later amendments altering prior provisions to the extent that a conflict arises between them. Seefu,n,nert v. Security-FIrst Nat’! Bank of Los Angeles, 183 Cal. App. 2d 195 (1960). Shelton cannot vitiate theauthority of the investment directors by claiming that the provisions conferring exclusive investment authority tothem should be ignored if a trustee so demands.
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critical points. First, this testimony was relevant for reasons other than establishing Sam Sr.’s
intent—most importantly, it established Betty’s personal awareness of the history of the trusts,
which was relevant to the court’s in lerroreni holding. Second, this testimony was wholly
consonant with the plain terms of the trust instruments, as explained above, and therefore
provides no basis for disturbing the probate court’s rulings.
For example, the probate court heard testimony from Alan Reische, who served as Sam
Sr.’s attorney in drafting the trust instrument, and Sally Tamposi, Betty’s sister, regarding the
history of Sam Sr.’s conversations with his children while setting up the trusts and Betty’s
involvement therein. This testimony was particularly relevant in light of Betty’s claims that she
had no memory of the circumstances surrounding the formation of the trusts—in particular, her
vocal opposition to her father’s decision to name Sam Ji. and Steve as investment directors. The
probate court saw through Betty’s false claims, making an express finding that Betty’s denials
were not credible. Order at 26—27. To the extent that this testimony also reinforced the evidence
of Sam Sr.’s intent expressed through the trust documents, it was merely cumulative and well
within the probate court’s discretion to allow it, and the findings based upon the evidence should
not be disturbed. See State v. Stayrnan, 138 N.H. 397 (1997).
Shelton’s complaints are particularly curious in light of her own unreasonable reliance on
the opinion of Professor John Langbein to support her position, both before the probate court and
on appeal. See Shelton Br. at 20, 23, 25. Professor Langbein testified below that, in his view,
the investment directors of the trust are “mere service providers,” “no different than Vanguard [a
mutual fund company] for purposes of their fiduciary relationship to the trustee.” Tr. 1182:22—
1183:2. But Professor Langbein testified at trial that (a) he had never encountered before a trust
instrument that divided the fiduciary responsibilities between investment directors and a trustee,
-S-
as the trust instrument did, and (b) his role was to offer an opinion on national fiduciary
standards and that he relies on local counsel to advise him of differences between the local law
and those national fiduciary standards. Tr. 1145:5—19. In other words, while Professor Langbein
remains a noted authority regarding the law of trusts in general, he was not in any position to
provide a detailed analysis of the meaning of the sibling subtrusts, because his analysis was not
tailored to consider or reflect the unique provisions Sam Sr. included within the trust documents
or to comply with New Hampshire trust law. As a result, Professor Langbein’s opinion is
without foundation under the terms of either the trust or New Hampshire law—and, to be certain,
provides little insight into the proper construction of the trust or proper determination of Sam
Sr.’s intent. Also, Professor Langbein conceded that, in evaluating the investment directors’
performance under New Hampshire trust law and national trust law, one must consider whether
certain special circumstances are present—tax considerations, the nature of the assets the grantor
bequeathed, the investment directors’ specialized skill—and he was unaware if such factors
existed in the present case (which they clearly did). Tr. 1165—1172.
In short, throughout the history of this case and in this appeal, Shelton has focused upon
the distribution provision of the trust in isolation, insisting that it alone establishes Sam Sr.’s
intent to give her, as trustee, supreme authority over the control, investment, and liquidation of
all trust assets—even if those assets remain managed by the investment directors, and even if her
desires would wholly disrupt the administration and value of the other sibling subtrusts. But the
trust is a well-constructed, complex instrument, used by Sam Sr. as a mechanism to ensure that
two of his sons manage the family’s investments after his death. The trust bifurcates traditional
fiduciary duties between two types of fiduciaries, and it vests the investment directors with sole
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responsibility for the investment and management of the trust assets.22 The trustee is only
responsible for those fiduciary responsibilities not allocated to the investment directors, i.e.,the
responsibility to make distributions to beneficiaries within the ascertainable standard.
B. The Probate Court Then Properly Enforced The Trust’s Terms.
1. The Investment Directors Fully Cooperated With Betty AndShelton, In The Face Of Substantial Contrivances AndObstruction.
Properly understood, the history of events leading up to the filing of this case establishes
that the investment directors filly cooperated with Betty and Shelton. Where Shelton attempts to
cast Sam Jr. and Steve as uncooperative and uncommunicative, the truth is that Sam Jr. and
Steve made equal and timely disbursements of proceeds to the subtrusts,23 and, along with other
involved parties, diligently communicated with Betty and Shelton despite a calculated effort to
create the contrary impression. A few examples suffice to establish these points.
As explained above, Betty delayed substantially before appointing Shelton as her new
trustee. Once engaged, Shelton focused her efforts on manufacturing a conflict with Sam Jr. and
Steve, rather than tending to her duties as trustee. Shelton failed to take steps to take custody and
control of the EMT Trusts’ assets, in breach of her duties under RSA 564-B:8-809 (“A trustee
shall take reasonable steps to take control of and protect the trust property.”).24 During the time
that Shelton ignored her duty to collect the assets of the EMT Trusts, she demanded $2,000,000
22 The November 13, 2006 Settlement Agreement modified the bifurcation of fiduciary responsibility, under whichSam and Steve agreed to resign as the investment directors of all but ten assets of the EMT Trusts.23 Pursuant to the terms of the SAT Sr. Trust, for administrative purposes, two common fund checking accountswere established for the benefit of the six Non-Exempt Trusts and the six GST Exempt Trusts. Income from thetrust and non-trust business entities in which the trusts held an ownership interest would flow into the common fundaccounts. and the investment directors would make equal disbursements at least twice a month to the subtrusts ofany excess cash above the amount of $50,000 for the Non-Exempt Trusts and excess cash above $10,000 for theGST Exempt Trust. This policy was approved by Shelton. App. 803—804(Ex. 2.121) App. 984—985(Ex. 2.123).24 Shelton became Trustee sometime in mid-August 2007. She did not ask for the transfer of any assets untilOctober 1, 2007. and then was only interested in transfer of the liquid assets, ignoring the bulk of the trust assets inthe form of equity interests in real estate and small businesses. App. 757 Ex. 2.102).
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within seven days from the investment directors. But neither Betty nor the other beneficiaries
needed $2,000,000 within seven days, as demanded, and Shelton sent the demand out knowing
that Sam Jr. would not receive the demand within her seven-day response window because he
was travelling in Europe.25 By September 14, 2007, Shelton had Attorney Weisman working on
a complaint against Sam Jr. and Stephen. App. 626—629 (Ex, 2.65). Had the investment
directors acceded to Shelton’s demand, they would have had to empty the businesses of
operating cash, or conducted a Firesale of epic proportions, to make a distribution to Betty that
violated the exquisite symmetry that characterized their years of impartial distributions and the
settlor’s intent. That said, Sam Jr. testified that, if they had been given a more flexible time
frame, then they could have worked cooperatively to find an accommodation, but in this case,
Shelton gave no explanation for such an unusually high request in such a short amount of time.
Tr. 4623—4625.
Prior to taking custody of the EMT Trusts’ assets, Shelton also demanded cash for
Maggie Goodlander’s Yale tuition payment. But most of her demands were not directed at Sam
Jr. in his role as a trust fiduciary. Initially, Betty’s accountant sent faxes to Kelly Cote, who
handles Barbara Tamposi’s financial matters, asking for tuition money for Maggie and John
Goodlander. App. 640—643 (Exs. 2.74 & 2.75). Sam Jr. understood that the request was directedto his mother (who had sometimes paid tuition for her grandchildren over the years), discussed
the request with her, and replied to Sue Edwards that Barbara would not pay the tuition. App.689 (Ex. 2.84) Tr. 4637:6—4639:21. During this time, Prunier had custody and control over thecash in the EMT Trusts, and there were sufficient funds in the EMT GST-Exempt Trust to cover
25 Sam Jr. was on a one-week vacation in Scotland. He had no cell phone and he was not checking in with his officewhile on this trip. Tr. 4617: 1-13.
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any payments that were due.26 But Shelton and Betty never requested that he make a distribution
to cover the tuition, nor was he aware of any need for tuition, Tr. 1569:23—1570:3.
Sam Jr. and Steve responded to Shelton’s communications promptly and in good faith.
They continued their practice of extensive, monthly disclosures of the assets’ performance,
giving Shelton complete transparency as to their trust activities.
Shelton argues that Sam Jr. and Steve should not have asked Betty for an updated release
for the Settlement Agreement, covering the period during which Betty failed to appoint a
replacement trustee. Denby initially agreed to update the release, App. 540 (Ex. 235), but Betty
reneged as it became clear she and Shelton would abandon the Settlement Agreement and
reignite the litigation. The court rightly found no basis to criticize the investment directors.
From such events, Shelton now argues that Sam Jr. and Steve violated a fiduciary duty to
cooperate with her in her role as trustee for the EMT subtrusts, But the facts as found by the
probate court, which are controlling for purposes of this appeal, instead establish that Shelton
was the uncooperative party. Order at 37. The probate court was correct to hold that Betty and
Shelton had a hidden agenda, were not communicating with the investment directors in good
faith, and that the investment directors nevertheless fully and fairly cooperated with Shelton.
2. Betty And Shelton’s Cash Demands Were Unsupported By EitherLegal Power Or Factual Circumstances.
The heart of Betty’s complaints below—and, thus, Shelton’s complaint on appeal—is the
claim that the investment directors were required to liquidate trust assets on demand to satisfy
the $2 million demand Shelton made four weeks after becoming trustee, and without ever
26 Shelton acknowledged in her letter to Attorney Barrudale and Trustee Primier of October 1. 2007. that sheunderstood the EMT GST Exempt Trust had $192.3 13 in liquid assets. App. 757—758 (Ex. 2.102).
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looking to see how much cash was in the EMT trust checkbooks. Such a demand was
unreasonable, and the trust instrument did not require the investment directors to kowtow to it.
The distribution standard set forth in the EMT Non-Exempt Trust confers upon the
trustee the discretion to make distributions to Betty and her issue that the trustee “considers
necessary for their education and maintenance in health and reasonable comfort.” Add. at 4.
This standard affords the trustee with discretion to provide for the beneficiaries’ general support,
see (‘orcoran v. J)epartrnent of Social Services, 271 Conn. 679, 701 (2004), but does not
establish a standard for support in an extravagant or luxurious lifestyle. See Treas. Reg.
§ 20.204l127 The EMT Trust and nontrust family assets generated sufficient cash to meet this
standard. From 2002—2008, the EMT interests received an average of $1.65 million per year,
plus capital appreciation. The same cash flow enabled the other five sets of subtrusts to
accumulate millions of dollars in cash reserves. Tr. 3069:2—4. Thus, the investment directors’
usual management of the trust assets was providing more than enough income to cover
“education and maintenance in health and reasonable comfort.”
Nor can Shelton credibly argue that Sam Jr. and Steve violated their fiduciary duty by not
providing her with her demanded $2 million within seven days. See Shelton Br. at 22—24.
Under the trust instruments, Sam Jr. and Steve’s fiduciary obligations are defined by the business
judgment standard: they “shall not be held liable for any action taken or not taken” so long as
they have exercised “good faith and ordinary diligence.” SAT Sr. 1992 Trust 3t(1 Amendment
Article Tenth-B. The record is clear that Sam Jr. and Steve did so. Had Shelton made any effort
27 Section 2041 of the Internal Revenue Code. along with its implementing regulations. provide for preferential taxtreatment for estate assets that are managed pursuant to an ascertainable standard relating to the health, education,support, or maintenance of the decedent[.j” The Treasury regulations in turn provide that the “reasonable comfort”language used in the Tamposi trusts, while not limited to the “bare necessities” of life, is definitionally different inkind from a “best interests” standard that would allow distributions for luxury items and other such whims. SeeTreas. Reg. § 20.2041-l(c)(2).
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to explain the basis k)r Betty’s exorbitant demand, the investment directors would have made an
effort to be able to respond or accommodate it. Tr, 4623—4625. But given the history of
substantial distributions to Betty, the unreasonable size of the demand, Shelton’s failure to
explain the iieed, the arbitrariness of both the amount and the deadline, and the substantial harm
acquiescence would cause to the investments that Sam Jr. and Steve managed on behalf of all the
beneficiaries, Sam Jr. and Steve were well within their rights in making the good-faith business
decision that they could not liquidate $2,000,000-worth of assets on Betty’s whim.
Furthermore, Shelton consistently confuses the two distinct roles Sam Jr. and Steve
played. As trust fiduciaries, they serve as investment directors of the trust assets. Additionally,
as businessmen but not as trust fiduciaries, they manage family businesses that were sometimes
owned by the trusts and sometimes outside of the trusts and owned directly by family members.
Shelton also disregards the fact that, pursuant to the Settlement Agreement, the investment
directors resigned their responsibilities in favor of the EMT trustee as to all but ten assets owned
by the EMT Trusts, with cash proceeds from those remaining ten assets to go to the trustee.
App. 3 84—385 (Ex. 1.3 at § 3, ¶ V). Thus, as a consequence of this Agreement, all cash received
by the EMT Trusts was within the exclusive control of Betty’s trustee. Since each of the six
Non-Exempt Trusts held the same proportional interest in each non-cash asset, and each of the
six GST-Exempt Trusts held the same proportional interest in each non-cash asset, the cash
received from all investments was initially deposited into a common fund account merely for
administrative purposes and then disbursed equally to each of the six subtrusts. Tr. 3019:11—17.
Under the Settlement Agreement, Shelton had exclusive investment authority over 73%
of the EMT Trusts’ assets, including the right to sell or pledge those assets.28 But, at the time,
Supp. App. 506 (Ex. 11.6).
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Shelton ignored the fact that she would control all cash received by the EMT Trusts, instead
claiming that the investment directors controlled the EMT Trusts’ cash. Shelton never attempted
to sell or mortgage any of the EMT Trust assets under her control, when those assets could have
been used to address all of Betty’s alleged “needs.” Though these assets admittedly were not as
liquid as cash or shares in a public company, they had substantial value. Shelton’s complaints
therefore highlight her own deficiencies as a trustee, in failing to take control of these assets
promptly and apply them to her beneficiaries’ needs. As to the assets that the investment
directors still managed, Shelton had no authority to direct the investment directors to sell them.
Shelton’s confusion over Sam Jr.’s and Steve’s roles as investment directors to the trusts
and as managers of the business entities owned by the trust is made clear by her simplistic
demands for cash, regardless of where the cash was supposed to come from. Shelton sought to
access cash held by a business entity, which the brothers managed as businessmen, not trust
fiduciaries,29or to generate cash by forcing the sale of an asset by a business entity that, through
the Settlement Agreement, Betty agreed should be kept under the investment directors’ control.3°
Cash inside a business entity was the entity’s operating capital beyond Shelton’s grasp; cash that
left the entity as a distribution to its owners went into the trusts. Shelton demanded that the
brothers empty operating businesses of cash, as if the entities were piggybanks one merely had to
invert and shake. Such actions implicated Sam Jr. and Steve’s obligations as managers of the
businesses, not their duties as trust fiduciaries. Such impulsive demands are not consonant with
a management style that generates repeated 20% annual growth.
29 Stephanie Denbv testified that when looking to create liquidity, she understood “there was some buildup of cashin some of the Citrus Hills entities.’ Tr. 328:16—23.3° Both Denby and Shelton sought to have Tamposi LLC sell an interest in the Red Sox equal to the EMT Trusts’and Betty’s combined interests in Tamposi LLC. Tr. 576:22—577:6: App. 645 (Ex. 2.77).
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Additionally, the investment directors simply did not control any cash belonging to the
EMT Trusts.3’ The cash flowed from the business entities into the trusts, either as income or a
return of principal. Any decision to disburse cash was made at the entity level, and required the
entity managers to honor their fiduciary duties to all of the entity owners. For example, CHIP is
an entity that is owned 50% by the Tamposi family and 50% by the Nash family. Tr. 5322:18—
19. Steve’s business decisions about maintaining cash reserves, made in his capacity as one of
the managers of CHIP, are not subject to contest by Shelton because the business ejty is
maintaining the cash reserve, not any trust fiduciary. Shelton and Denby’s assumption that
CHIP’s cash reserves were theirs to demand is absurd. If the EMT trustee owned stock in
General Electric, as a shareholder, Shelton could not have directed GE to issue a dividend. No
provision of the trust instrument confers upon the trustee the authority to control a business
entity, especially one for which the investment directors managed the EMT Trusts’ investment.
Finally, in September of 2007, the beneficiaries of the EMT Trusts had no unmet pressing
cash needs—legitimate or otherwise. As of September 7, 2007, Betty had been billed $137,000
by Attorney Couser that was not paid, and that she disputed with her malpractice claim. Tr.
1333:6—1334:3. Betty also was current on her obligations under a construction contract with
Cobb Hill for renovations to her $5,700,000 lakefront home. Tr. 1334: 6—7. As a result, even if
these obligations could somehow be squared with the trusts’ stringent ascertainable standard for
disbursements to beneficiaries, “necessary for their education and maintenance in health and
reasonable comfort,” none of these obligations presented any urgency—much less the purported
urgency that underlay Shelton’s $2 million demand letter.
With Sheltons knowledge and consent. Jeff Knight determined the appropriate amount necessary to fundobligations common to the six sets of subtrusts, and would hold back the EMT Trusts’ proportionate share of thosecommon obligations as needed. App. 803—804: 984—985: 1007—1009 (Exs. 2.121. 2.123. 2.132).
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In tacit recognition of this, Shelton shills her focus towards Maggie Goodlander’s Yale
tuition payment. But this so-called peril” was illusory, the manufactured result of Betty and
Shelton’s own errors. At the time the tuition payment was due, Shelton had not taken custody of
the EMT Trusts’ assets, and there was over $260,000 available in those trusts—more than
enough to make the tuition payment. Shelton and Betty never informed trustee Prunier, who still
had custody of the EMT Trusts’ assets, that Maggie needed tuition money.
Even after taking custody of these, Shelton did not evaluate her decisionmaking to date
and determine whether it was in the best interests of the beneficiaries of the EMT Trusts to
proceed with the litigation. Instead, as soon as the EMT Trusts’ assets were turned over, Shelton
spent all of the cash on Betty’s expenses and legal fees. Supp. App. 474-494 (Exs. 10.50, 10.51).
After receiving $239,259 for the EMT GST-Exempt Trust from Trustee Prunier on October 29,
2007, Shelton immediately spent $93,757 on Denby’s law firm, Burke, Warren, MacKay &
Serritella, and $29,386 on her own firm, Butler, Rubin, Saltarelli & Boyd. Supp. App. 487. But
Shelton did reimburse Maggie so that she could repay the loan obtained to pay her Yale
tuition. Id. Nor did Maggie repay this loan within the no-interest grace period after Maggie
received a substantial distribution from her own Tamposi family assets. Order at 23.
As a result, Shelton’s post hoc claim that funds were urgently needed to cover Maggie’s
education is undermined by the simple truths that (1) Maggie received from Sam Jr.
approximately $50,000 in non-trust income, sufficient to cover her tuition needs; and (2) Betty
and Shelton ignored Maggie’s tuition once assets were available, focusing instead upon Betty’s
legal fees and home improvement expenses. The GST exempt trust instrument specifically states
that when making distributions, the trustee must consider the beneficiary’s other sources of
support, i.e. Maggie’s nontrust income. Trust Art. Fifth(a); Order at 14 n. 15. Instead, Shelton
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ignored Sam Sr’s clear intention as evidenced by all of the trust provisions, the cash Sam Jr. sent
from nontrust assets, her own culpability in creating a cash shortage, and Betty’s extravagant
spending, contending instead that the trustee’s authority to make distributions renders the
purpose of providing income to the beneficiaries superior to all other trust purposes.
In short, both the terms of the trust instruments and the facts as found by the probate
court plainly rebut Shelton’s arguments on appeal. Despite her protestations, Sam Jr. and Steve
were not obligated to liquidate additional trust assets upon Betty’s whims, nor did Sam Jr. and
Steve violate any other fiduciary duties. The probate court correctly rejected the suit below on
its merits, and this court should sustain that ruling.
II. The Probate Court Correctly Held That Betty’s Actions In Contesting TheTrusts’ Terms Violated The In Terrorem Clause.
A. Shelton Does Not Have Standing To Challenge The Probate Court’s InTerroreni Holding Through This Appeal.
As an initial matter, Shelton lacks the appellate standing necessary to challenge the
probate court’s interpretation of the in terrorern provision.
Under New F{ampshire state law, only a certain class of persons may appeal a probate
court decision to this Court: aggrieved persons. RSA 567-A: 1 (“A person who is aggrieved by a
decree, order, appointment, grant or denial of a judge of probate which may conclude that
person’s interest in a matter before the court may appeal therefrom to the supreme court on
questions of law in accordance with rules of the supreme court.”). This Court has consistently
construed the definition of “aggrieved person” narrowly: a person must have a “direct pecuniary
interest” in the trust to have standing to appeal a probate court decision. Green i Foster, 104
N.H. 287, 288 (1962) (“The general rule is that an aggrieved person under statutes similar to
RSA 567:1 [the predecessor to RSA 567:A-lj is one who has a direct pecuniary interest in the
estate of the alleged testator which will be defeated or impaired if the instrument in question is
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held to be a valid will.”). Such a “direct pecuniary interest” must exist at the time a will or trust
was established—it cannot evolve over time or through subsequent events. See hi re Es/ate of
Kell;.’, 130 N.H. 773, 778 (1988) (“Generally, persons who have a direct legal or equitable
interest in the estate are heirs, creditors or legatees under a prior will.”); see a/so Swan i’, Bailey,
84 N.H. 73, 74, (1929) (“A contestant of a will must have some direct legal or equitable interest
in the decedent’s estate, in privity with him, whether as heir, purchaser, or beneficiary under
another will, which would be destroyed or injuriously affected by the establishment of the
contested will.”). This case law neatly parallels the general rule of appellate standing—a party
must be personally affected by a court’s decision in order to seek to overturn it.
With respect to the enforcement of the in terrorem clause, Shelton cannot make such a
showing. Although Shelton and Betty pressed their claims of fiduciary violations against the
investment directors in tandem, with Shelton acting in her role as trustee, enforcement of the in
terrorern clause against Betty is a personal remedy based upon y..s bad acts and limited in
effect only to Betty herself. See, e.g., Order at 47 (holding that, under operation of the in
lerrorem clause, “Elizabeth M. Tamposi has forfeited her right, title, and interest in the trust”);
see a/so Order at 52 (ordering that “Elizabeth M. Tamposi has violated the “in terrorem” clause
and thereby forfeits all of her right, title and interest in or under” the family trust; “Elizabeth
Tamposi shall not receive distributions” from the EMT Trusts).
As a result, only Betty would have the “direct pecuniary interest” necessary to challenge
the probate court’s application of the in terroreni clause, as only Betty was directly (and
unquestionably) financially affected by the probate court’s order that Betty would lose all rights
to the trust assets. Shelton, on the other hand, never had such a direct pecuniary interest in the
trust or its assets. Indeed, reversal of the in terrorern holding would have no direct effect upon
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Shelton whatsoever—it is Betty, not Shelton, who suffered because of the court’s interpretation
of the in lerrorern clause, and it is likewise Betty who would gain if the holding were reversed
and Betty’s rights in the trust reinstated.32 Shelton lacks such a direct pecuniary interest and,
therefore, lacks standing to challenge the in lerrorem holding; she is not a “person aggrieved” by
the holding within the meaning of RSA 567-A:l.
Shelton insists that the in lerrorem holding served as the predicate for other decisions that
affected her personally: the assessment of legal fees against both Betty and Shelton and Shelton’s
removal as trustee. But a review of the probate court’s opinion belies that claim. Although the
court’s finding of “bad faith,” which it later used to support the fee award against Shelton, is
contained within the court’s discussion of the in terrorem clause, that discussion focuses entirely
upon Shelton’s errors in trust management—in particular, the fact that Shelton was more focused
on supporting Betty’s efforts to force a buy-out of her share of the trust assets through litigation
rather than upon the best interests of all beneficiaries:
The court finds that in bringing and prosecuting this litigation the petitioners have actedin bad faith.
Many of petitioners’ actions strike the court as contrived in a calculated endeavor tomanufacture evidence for purposes of litigation. Had Trustee Shelton concentrated ontaking possession of the assets, she would have had sufficient funds to pay Maggie’stuition. Had Trustee Shelton actually been driven to take over as trustee, she would haveagreed to an initial meeting in person with one investment director and telephonicallywith the other, who had suffered a back injury and lived in Florida. Had Trustee Sheltontruly sought to cooperate with the investment directors, she would not have sent the “$2million in 7 days letter” without first evaluating what assets the trusts held or howfeasible fulfillment of her request would be. Nor would she have sent such a letter onlynine days after introducing herself to the investment directors and prior to evaluating theother assets of the beneficiaries.
As noted above. Betty has chosen to appeal the probate court’s decision, including the in terrorern holding.
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Order at 46. While these findings certainly evidence the bad faith through which Betty and
Shelton initiated the instant suit, they do not serve to give Shelton a pecuniary interest in the
enforcement of the in terrorem clause itself Indeed, these bad-faith acts would have supported
an award of fees even if the in lerrorern clause had not also been implicated. It is therefore
unsurprising that none of the court’s subsequent Shelton-specific holdings—neither the
assessment of attorneys’ fees against Shelton nor the decision to remove Shelton as trustee—
reference the court’s prior iii terrorem holding.3:3 Shelton therefore cannot claim some derivative
personal interest in the in terrorem holding, as the portions of the probate court’s order that
affect Shelton directly do not rely upon the in terrorern holding. Whereas the overall merits of
the suit, like overall appraisals of Betty and Shelton’s joint conduct, may implicate Shelton
personally, the in lenoreni holding is a question of remedy that is unique and personal to Betty,
as a beneficiary of the trust including the operative clause.
Shelton’s true motivation for challenging the in terrorem holding is not its alleged
residual effect upon the holdings against her. It is the fact that Betty has sued her attorneys—
including Shelton—for malpractice. If this Court were to review and reverse the in terrorem
holding, such a decision might reduce Shelton’s financial exposure in that other suit. But the
threat of a malpractice suit does not allow an attorney to challenge an underlying decision. See
Lfe v. c’nty. of Los Angeles, 218 Cal. App. 3d 1287, 1294 (1990) (“If on&s status as attorney
were sufficient to confer standing to intervene on appeal, attorneys routinely would inject
themselves into their clients’ litigation in an attempt to preempt or minimize potential
malpractice claims. Such a consequence obviously would wreak havoc with the attorney/client
relationship.”); see also Hertz Corp. v. State Tax €‘ornrn ‘ii, 528 S.W.2d 952 (Mo. 1975)
Contrarily, when the court did invoke the in terrorein clause to mandate the replenishment of the fees spent fromthe EMT Trusts to finance this litigation, the court assessed such fees solely against Betty. Order at 48—49, 52—53.
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(appellant’s interest “must be immediate and not merely a possible remote consequence”); Pa.(‘onimercial J)riwrs (‘oii/ i’. Pa. .41i/k (‘o,,/ro/ (‘omni ‘n, 360 Pa, 477, 483—484 (1948) (same);cf Green, 104 NFl. at 288 (requiring personal interest to appeal probate court order). Rather,
such an interest is again derivative arid indirect—Shelton’s interest is not in the actual outcome
of the in Ie’rrorem decision, but in the events that might transpire if an aflirmance by this Court isfollowed by an adverse ruling in Betty’s suit against Shelton. Allowing Shelton to have standing
today, simply because of her fears of facing Betty’s malpractice claim in the future, would do
violence to the idea of needing a direct pecuniary interest to have standing.
Ultimately, Shelton has not and cannot offer evidence that she has a direct pecuniaryinterest in this aspect of the appeal. Shelton’s interest in the in terrorem holding is entirely
derivative to Betty’s interests, which Betty has chosen not to pursue. Given establishedprecedent, Shelton lacks standing to prosecute this appeal with respect to the in terrorem clauseand, therefore, this Court should dismiss her challenge to the probate court’s in ferrorern holding.
B. Betty’s Actions Violated The In Terroreni Clause.
Should this Court nevertheless elect to review the merits of the probate court’s inlerroreni ruling, it is evident that Betty’s suit falls within the clause’s reach. Although the actionwas couched as an effort to determine the investment directors’ fiduciary responsibilities, theseclaims were mere pretexts for a frontal assault on core elements of the trusts’ terms. As a result,the probate court correctly exiled Betty from her position as a beneficiary of the EMT Trusts.
1. The In Terrorent Clause Is Both Enforceable And Broad.
Relying upon secondary sources and extraterritorial opinions, Shelton first attempts tonarrow the broad wording of the in terroren? clause Sam Sr. designed. This court must disregard
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Shelton’s misguided efft)rts to cabin the clause’s scope or rewrite its terms. Regardless of what
other states have said, New Hampshire law on this point is clear and controlling.
Shelton cites foreign cases to support her claim that in lerroreni clauses must be
“construed narrowly, suggesting that an in terrorein clause does not apply where “probable
cause” existed to file a suit. Shelton Br. at 31—32. In making this argument, Shelton ignores this
Court’s declaration, in the analogous context of challenges to wills containing in (errorern
clauses, that “[p]robably no jurisdiction has stood more steadfastly for giving effect to the
intention of the testator rather than to arbitrary rules of law than New Hampshire.” Bitriman V.
Buirnan, 97 N.H. 254, 258 (1952). Under Burtrnan and its progeny, the law is clear—in terrorem
clauses are a well established part of the laws of trusts and estates, Id at 257, and must be
enforced according to their plain terms, Id. at 259. The Tamposi in terrorem clause includes no
exception for suits “based upon probable cause” or “filed in good faith”—it applies to y
proceeding to set aside, declare invalid, or contest any of the trusts’ provisions. Add. 12—13
(1992 Trust Instrument) at Art. Fourteenth.35
In short, regardless of the opinions of other states or of legal scholars, New Hampshire
has a long and proud tradition of treating the settlor’s own wishes as paramount, prioritizing the
terms of a will or trust above “arbitrary rules of law.” The In terrrorern clause is therefore
enforceable according to its plain terms.
A recent New Hampshire statute, RSA 564-B: 10-1014, codifies the validity and enforceability of in lerroremclauses in trusts. Although Shelton notes that other states have adopted statutes barring the enforcement of interroreni clauses in trusts, New Hampshire’s new statute approves the enforcement of such in terrorern clauses.Furthermore, nothing in the statute suggests that it was enacted in derogation of the preexisting common law, soShelton cannot ignore Burrman and pretend that in terrorein clauses were somehow unenforceable prior to thestatute’s enactment Although Burtman provides an exception for in terrorern clauses that contradict public policy,Shelton has made no argument that such an exception is triggered in the instant case.Shelton slops short of making such an argument directly, instead observing that “[tjhe New Hampshire legislaturehad not permitted the enforcement of in terrorein clauses at the time the pleadings in this case were filed.” SheltonBr. at 36 (emphasis added). But the obvious implicit argument must be rejected—the legislature also had not barredthe enforcement of such clauses, which were permissible under the common law of wills and trusts.
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2. Betty’s Lawsuit Was A Contest in Violation Of The In TerrorernClause.
Under the express terms of Article Fourteenth, a beneficiary who commences a
proceeding “to contest any part or all of the provisions in [...j this trust”, forfeits all right, title
and interest in the trust. App. 353. The probate court correctly held that some of Betty’s claims
contested specific provisions within Article Tenth, and some of her claims contested Sam Sr.’s
intent and the structure of the trust he established.
The Third Amendment added three sections to Article Tenth of the trust, further defining
the scope and authority of the trust fiduciaries. The first of these sections, Article Tenth-A,
authorizes the investment directors to concentrate trust investments in real estate and entities
owning real estate, Article Tenth-B establishes the investment directors’ role, defines their
authority, and directs the trustees to follow the direction of the investment directors. This section
also establishes the business judgment rule as the standard of care applicable to the investment
directors.36 Article Tenth-C recognizes the conflict of interest inherent in Sam Jr.’s and Steve’s
roles as investment directors and managers of the assets owned by the trusts and authorizes the
investment directors to take action despite those inherent conflicts.
The probate court correctly found that Betty’s suit, when viewed holistically, contested
several trust provisions, including without limitation Article Tenth-B; Article Tenth, which
authorizes the investment directors (and the trustee) to maintain trust assets in common with
other sibling trusts;37 and Article Tenth-A. Betty contested the express terms of Article Tenth-A
when she claimed that the EMT Trust real estate investments failed to generate an adequate rate
36 This lower standard of care is not applicable to the investment decisions made by the trustee.“ “Each of the trusts hereunder shall constitute a separate and distinct trust, but for convenience of administrationthe trustee may, in the trustee’s discretion, mingle or combine any of the investments or property of said trusts in acommon fund in which the several contributing trusts shall have undivided proportionate interests.” App. 350.
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of return and should be liquidated. App. 52 at ¶ 56b; 70 at ¶ 40b. This claim was a direct attack
on the clear language of Article Tenth-A:
The Grantor considers real estate interests as proper investments of trust property[andJ hereby expressly authorizes the trustee to retain indefinitely, and invest any part orall of the trust property in, real estate interests, and the trustee shall not be liable orresponsible to any person for any diminution in value of the trust property that may resultfrom retaining or investing in real estate interests.
Such a complaint targets the heart of Sam Sr.’s investment strategies, as enshrined in the trust
documents: the investment directors are expressly authorized to invest primarily or solely in
“real estate holdings,” without regard for the potential financial consequences of such
specialization. Add. 15 (Third Amendment) at Art. Tenth-B(a)--(d).
Betty also contested the express terms of Article Tenth-B when she claimed that the
trustee had the authority to direct the investment directors to liquidate assets of the EMT Trusts.
App. 47 at ¶ 3 1, 34; 65 at ¶f 28, 30. Betty contested the express terms of Article Tenth-C when
she complained that the investment directors abused their authority by paying themselves
excessive fees for their services to the EMT Trusts and acting in their own self-interests, when in
fact the investment directors received no compensation from the EMT Trusts. Tr. 4553:20—22.
The relief sought by Betty contested Sam Sr.’s intention to all the real estate business operations
to continue for the benefit of all of his children and their issue.
In addition to attacking these specific provisions of the trust, Betty also attacked Sam
Sr.’s intent to allow the real estate business to continue for the benefit of all of his children and
their issue. The trust provided that the assets, proportionally owned by the six sets of subtrusts,
would be managed collectively, and that all of the beneficiaries of those trusts would benefit
from that collective management. Betty’s effort to remove Sam Jr. and Steve from their roles as
investment directors over certain assets of the EMT Trusts, if successful, would have
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undermined Sam Sr.’s intent that the investments be managed collectively and could have
compromised the other siblings’ subtrusts,
An example of the harm that could result is demonstrated with the Red Sox investment.
The EMT Trusts owned proportionate interests in Tamposi, LLC, whose sole asset was 50 shares
in the Red Sox. Those 50 shares were subject to a one-time put option. If Shelton took over the
management of the EMT Trusts’ investment in Tamposi, LLC, she could have the opportunity to
interfere with Sam Jr. and Steve’s efforts to sell the Red Sox shares. The disastrous result that
this would cause is foreshadowed by Attorney Weisman’s actual interference in the Red Sox sale
by Sam Jr. and Steve. This interference “constituted precisely the type of decentralized and
fragmented approach to management that Sam Sr. sought to avoid under the Third Amendment,”
Order at 20—21, and was but one part of l3etty’s larger assault on the trust.
Whether it was trying to depress the price of the Red Sox shares, blocking tax savings in
2000, or discarding millions of dollars of estate tax savings available as minority discounts, Betty
did not care if she depleted flinds that could benefit either her issue or other members of the
Tamposi family. Rather, she willingly risked injury to the EMT Trust assets and other siblings’
trust assets whenever she thought her actions would help to force liquidation of the EMT Trust
assets, to her exclusive benefit.
Betty’s original complaint also demanded that the probate court both remove Sam Jr. and
Steve as investment directors and “[ojrder the liquidation of the Tamposi Companies” so that
trust assets could be managed for Betty’s sole benefit, App. 54, Prayers for Relief C and D, and
its subsequent amendments rebranded the same request under the new language of seeking a
“decoupling” of the EMT Trusts from the other five sets of subtrusts. Amended Complaint, App.
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73. The proposed decoupling was through a forced buy-out of the EMT Trusts’ assets by Sam
Jr. and Steve individually, or the other five sets of subtrusts. Such requests directly contested
Sam Sr.’s intent, were without any legal fbundation, and most importantly, they were detrimental
to the other five sets of subtrusts. These actions by Betty accomplished precisely what the in
lerrorern clause intended to prevent. Trust assets were wasted to protect the other five sets of
subtrusts from the attack made upon them by Betty and Shelton.
Betty’s candidly acknowledged goal of “decoupling” the EMT Trusts’ assets from the
other sibling subtrusts is indefensible. If Sam Jr. and Steve were forced to buy-out the EMT
Trusts’ assets, they would personally become joint owners of assets also owned by the other
subtrusts they serve as investment directors. That scenario would create a conflict of interest
between their personal interests as owners and their fiduciary duties as investment directors—a
conflict that does not otherwise exist. There is no legal foundation to force the other five sets of
subtrusts to buy-out the EMT Trusts’ assets and, even if there were, a buy-out would reduce the
liquidity of the other five sets of subtrusts solely for the purpose of increasing the liquidity of the
EMT Trusts. Under the basic structure of the trusts, the investment directors administer the
assets of all the sibling subtrusts as a whole, so as to maximize their collective value for the
benefit of all beneficiaries. But Betty instead sought to force the investment directors to buy out
her interest in the shared pool of assets, to give her exclusive control over the EMT Trusts
despite her father’s express wishes and the terms of the trust. App. 1769— 1774 (Expert Report of
Charles Rounds at l—6). Such a course of conduct necessarily “contested” those portions of the
Shelton claims that the original complaint must be ignored. Shelton Br. at 33 n.25. But, by its plain terms, the interrorem clause triggers upon the commencement of a suit, regardless of what later occurs. Add. 12—13 (1992 TrustInstrument) at Art. Fourteenth; see also Order at 48—39 (interpreting in terrorem clause as appIing as of date offiling of original complaint). As a result, filing of the original complaint, alone, would have sufficed to trigger the interrorern clause and mandate Betty’s ejection from the trusts, even if the suit had been immediately withdrawn ordismissed.
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trust instruments that specifically authorized and encouraged the commingling of assets among
the sibling subtrusts, treating each of the subtrusts as integrated parts of a larger whole as Sam
Sr. intended. Add. 7—9 (1992 Trust Instrument) at Art. Tenth. Whereas Sam Jr. and Steve were
disbursing trust assets equally to the penny, Tr. 1737:4—15, as Sam Sr. intended, Betty wanted to
replace the entire system with one designed to place her personal interests above all else.
Betty’s decision to style her suit as a challenge to the investment directors’ fiduciary
responsibilities is therefore irrelevant, as is her effort to mask her demands that the court remove
Sam Jr. and Steve as investment directors as “requests for relief” As the court recognized,
Betty’s plan to contest the trust, force out Sam Jr. and Steve, and seize control of the EMT Trusts
was made !cgjcfcje any of the alleged “fiduciary violations” occurred, illustrating the
pretextual nature of Betty’s later claims. Order at 47. Also, even if Betty’s fiduciary complaints
were credible, she made the choice to marry them to challenges to terms of the trust, rather than
presenting them in isolation. The relief Betty has sought—to destroy the trust’s structure,
eliminate the investment directors, and assume total personal control over the trust assets to the
exclusion of other beneficiaries—violates the in terrorern clause, regardless of Betty’s efforts to
style the suit as a question of fiduciary duty. See, e.g., Hearst v. Ganzi, 145 Cal. App. 4th 1195,
1210—1213 (2006) (claim of breach of fiduciary duty amounted to “contest” of a will; finding in
lerrorem clause triggered in part based upon relief sought). Betty chose to challenge the express
terms of the trust, and she must now live with the consequences of her choice.
Had Betty been focused solely upon determining the correct allocation of fiduciary
responsibility between Shelton and the investment directors, she could have filed a petition under
RSA 564-B:2-201(c) requesting clarification and instructions—a means through which she could
have raised any questions about the balance of power between Shelton and the investment
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directors making accompanying demands to depose Betty’s siblings and seize control of
her trust’s assets. Order at 48. This request for instructions would have been cheaper, quicker
and less acrimonious than the two lawsuits Betty launched.
Finally, this Court should remain mindful of the parties and their contentious history.
Any trust like the one established by Sam Sr. is set up primarily to keep the property in trust, tax-
free, through multiple generations. Evidence credited by the probate court established that Betty
protested in 1994 and 1995 her siblings’ appointment as investment directors even before her
father’s death, but agreed to benefit from the trusts rather than spurn her father’s generosity.
Order at 26—27, 45. Betty’s demand to remove Sam Jr. and Steve from their role as investment
director over a handful of EMT Trust assets came less than a year after the Tamposi family
negotiated a Settlement Agreement under which Betty expressly consented to retaining Sam Jr.
and Steve’s oversight over those discrete assets.39 Order at 45. As such, Betty’s suit not only
challenged longstanding trust provisions reflecting her father’s intent; she also was trying to
negate the terms of a settlement agreement she had willingly executed in the recent past. Even
the guardian ad I/tern recognized that, after multiple lawsuits and millions of dollars wasted on
legal fees, if Betty did not succeed in the instant lawsuit then she would undoubtedly continue to
press legal challenges until she had achieved her goal of severing her trusts from family
oversight or management—a goal that directly contradicted the terms of the trusts. See Order at
52 (quoting App. 1682 (GAL Report at 36)). The probate court thus did not apply the in
terrorern clause because of a single act, or even because of behavior over a short period of time.
Shelton attempts to use the fact that the siblings amended the trusts to remove Sam Jr. and Steve from serving asinvestment directors over some assets to argue that a lawsuit seeking similar relief does not violate the in terroremclause. Of course. the clause punishes only filing or joining in lawsuits—the parties are free to consensually amendthe trusts. Cf RSA 564-B: 10-10 14(c)(2) (in terrorern clauses do not apply to agreements among the beneficiariesin settlement of disputes). The parties can disagree. and they can modify the trusts in an effort to resolve thesedisagreements amicably. But when Betty sued to force her vision upon others, she violated the in terrorern clause.
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Betty waged a si icci1-yc campaign to destroy the trust, and she repeatedly endangered the
assets destined to her own issue, as well as her extended family.
1-lad Betty prevailed below, then every check on her unfettered access to the trust assets
would have been removed. Investment directors would have been removed, her captive trustee
would have taken over, and huge chunks of trust principal would have been converted into ready
cash (either through the sale of commingled trust property or the flat-out buyout of Betty’s
trusts), all to be distributed to Betty pursuant to her whims. Such a scheme was directly
offensive to the very concept of a multigenerational trust and, therefore, constituted a direct
assault on the trust Sam Sr. had created for his children. The probate court was both legally
correct and exceedingly wise to recognize Betty’s acrimonious patterns, to hold that her conduct
violated the in terroreni clause, and to deny her the future benefit of the trust—retaining the trust,
in the form Sam Sr. intended, for proper use by the other beneficiaries, Betty’s children.
C. There is No Inconsistency Between The Probate Court’s Ruling On TheIn Terrorern Violation And Prior Rulings.
Shelton’s final defense is to claim that the probate court’s in terrorem holding contradicts
prior rulings between the parties, but none of the rulings in question support Shelton’s claims.
First, Shelton cites to an October 3, 2000 Order from Judge Cloutier as being inconsistent
with Judge Cassavechia’s August 18, 2009 Order. Shelton fails to mention that a Motion for
Clarification was filed and was pending when the case was dismissed without prejudice by
agreement of all parties without a ruling on the Motion for Clarification.40 Therefore, the
October 3, 2000 Order is of no value as precedent, as the order was never final. See Massaro v.
40 See Supp. App. 66—78 (Tamposi v Prunier, Hilisborough County Probate Court Dkt. No. 2000-786. Petition forDeclaratory Judgmenl (March 7, 2000) Motion for Clarification (October 13. 2000): Order of Dismissal withoutPrejudice (November 13, 2000)).
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(‘ar/cr, 122 N.H. 804, 806 (1982) (holding that court has the power to reverse itself at any time
prior to final judgment if the interests ofjustice so require).
In any event, the arguments presented to Judge Cloutier in the March 2000 lawsuit were
both theoretical and circular. When Betty and Nick sought a declaratory judgment that various
general types of actions would not violate the in lerrorem clause, they did not specify the factual
grounds on which those actions would be based or the specific legal grounds for their actions. In
response, they received a circular order from Judge Cloutier: based upon Betty’s and Nick’s self-
serving affirmation that they did not “attack, contest or seek to invalidate or overthrow the
intentions of the Grantor of the Trust,” Judge Cloutier ruled that the in terrorem clause would not
take effect “if they do not challenge or attempt to challenge the validity of the trust or the
authenticity of the documents or signatures.” App. 324. Thus, Judge Cloutier’s order did not
opine whether the types of claims that Betty and Shelton pressed actually did contest the terms of
the trust. Only Judge Cassavechia has conducted such an analysis, in his decision below.
Shelton also notes that the probate court approved the investment directors’ resignation
over most of the EMT Trusts’ assets, and argues that such approval was not deemed a violation
of the in terrorern clause. In fact, the court never approved the Settlement Agreement, including
the resignation of the investment directors over all but ten assets owned by the EMT Trusts.
Rather, the Settlement Agreement required certain amendments to the EMT Trusts so that Betty
would have the right to select her own trustee. This amendment—not the Settlement Agreement
itself—was submitted to the probate court for approval. Shelton’s argument is misplaced.
Shelton further claims that one of the probate court’s evidentiary rulings is somehow
relevant. In August 19, 2009, Betty and Shelton subpoenaed documents from Alan Reische, the
attorney who represented Sam Sr. regarding the trust. The subpoena sought Reische’s file
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regarding the trust. Reische objected on the grounds of privilege, and Betty and Shelton claimed
that the exception set forth at New Hampshire Rule of Evidence 502(d)(2) applied;
There is no privilege under this rule As to a communication relevant to an issuebetween parties who claim through the same deceased client, regardless of whether theclaims are by testate or intestate succession or by inter vivos transaction.
This exception is commonly used to obtain discovery of an estate planning attorney’s files in awill or trust contest. The August 19, 2009 ruling was made in that context, not to determinewhether Betty had violated the in /errore’rn clause. The ruling as to whether the privilegeexception set forth at New Hampshire Rule of Evidence 502(d)(2) applied to Attorney Reische’sfile has nothing to do with the plethora of facts establishing Betty’s contest of the trust.
Finally, Shelton claims that Judge Cassavechia’s post-trial order allowing a distribution
of the EMT Non-Exempt Trust to Betty’s children to take advantage of a unique opportunityunder the federal tax laws is inconsistent with the in lerrorein ruling. There was no federal GSTtax in 2010. Shelton’s successor determined that if he distributed the assets of the EMT Non-Exempt Trust to Betty’s three children in 2010, those assets would pass to them free of federalGST tax, but any assets distributed to them after January 1, 2011 would be subject to GST tax.Therefore, the successor trustee sought court approval to distribute the EMT Non-Exempt Trustin 2010. All parties in interest agreed, although Shelton, who had no interest in the outcome,objected to the distribution.4’ The terms of the distribution included agreements by Betty’schildren that Sam Jr. and Steve would continue to manage the assets they were serving asinvestment directors. Therefore, despite the distribution, the terms and purposes of the EMT
It can only be inferred that Shelton sought to serve her own interests to the detriment of her fonner beneficiaries,Betty’s children. Because of Shelton’s objection and subsequent appeal of the December 30. 2010 decision, thedistributions from the EMT Non-Exempt Trust to Betty’s children and their issue will be subject to federal GST tax,effectively reducing the value of the trust property they will receive. Such behavior shows the absurdity of Sheltonasking for reinstatement as trustee.
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Trusts would continue to be served. There is no comparison between this accommodation,
which would allow the trust purposes to be fulfilled, and the relief sought by Betty, wherein she
sought to destroy all six sets of subtrusts in order to achieve her goal of financial independence.
In short, despite Shelton’s protestations, Betty’s lawsuit unquestionably contested both
the terms of the trust instruments and her father’s express intent—the exact conduct that the in
IerrorL’m clause was designed to prevent. Furthermore, the instant suit was the fifth action that
Betty had either filed or instigated, a pattern of harassment that required the investment directors
to devote millions of dollars in resources towards defense of the trusts, their structure, and Sam
Sr.’s intentions. The probate court correctly saw Betty’s lawsuit for what it was—a transparent
continuation of her efforts to break apart the family trusts—and held Betty accountable.
III. The Probate Court Properly Awarded Fees To The Respondents AndIntervenors.
The probate court awarded fees to the Respondents and Intervenors. Due to this appeal,
although the Respondents and Intervenors filed fee applications with the probate court, no fee
award has been made. Therefore all Shelton is appealing at this time is the ruling that the
Respondents and Intervenors shall be awarded fees.
The probate court has broad discretion to award fees:
In a judicial proceeding involving the administration of a trust, the court, as justice andequity may require, may award costs and expenses, including reasonable attorney’s fees,to any party, to be paid by another party or from the trust that is the subject of thecontroversy.
RSA 564-B:10-l004. This Court has not previously reviewed a trial court’s determination that
fees shall be awarded under this statute. Nevertheless, the probate court’s award of attorneys’
fees must be upheld unless there is an unsustainable exercise of discretion. George i’. Al Hoyt &
Sons, Inc., 27 A.3d 697 (N.H. 2011).
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The statute authorizing a fee award in this case does not require bad faith before an awardof fees may be made. Rather, bad faith is one of the many types of conduct that can support afee award; fees may be awarded where litigation was unnecessarily prolonged through a party’soppressive, vexatious, arbitrary, capricious or bad faith conduct.” Thwn (If Swanzey i Liebeler,
140 N.H. 760, 764 (1996) (citing references omitted). Thus, Shelton’s contention that fees mayonly be awarded in instances of bad faith is in error.
Any person who reviews Shelton’s behavior in this case and respects the ideals of legalpractice should feel disappointment. Shelton assumed the role of an impartial fiduciary, chargedwith preserving the trusts’ assets. She came to a family scarred by emotional intrafamilylitigation and the waste of assets such battles caused. Though not serving as a lawyer, she stillowed the EMT beneficiaries the benefit of her experience and training. App. 1784—1785.Instead of serving as a restraining presence and discouraging litigation, she attacked a validsettlement agreement that empowered her as the EMT trustee. She held a crucial role thatallowed her to keep the peace; instead she instigated and led the battle through contrivances andfalse characterizations. For such work, she collected over half of a million dollars in fees,demanded payment of an additional $250,000, sent $686,770 to her friend Denby, and paidWeisman over $900,000 of the EMT Trusts’ money. Supp. App. 54; 497—498; 500, 503—505.All told, the entire Tamposi family spent over $5,600,000 litigating two cases that Sheltonshould have never filed.
Consequently, the Order is replete with findings that support an award of fees:
1. Within three weeks of Shelton’s engagement as trustee, Betty and Shelton wereinterviewing legal counsel “to bring litigation concerning the trust, prior to most or all of
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the breaches alleged in the petition, and even prior to introducing the new trustee to the
investment directors or the former trustee.” Order at 13—14, 47.
2, When Shelton sent her September 7, 2007 letter requesting $2 million within seven days,
Betty and her children had no financial emergency. Order at 14. Shelton disregarded the
nearly $1,500,000 in average annual distributions that Betty had been receiving from her
various interests in the Tamposi Companies. Ex. 11.196. As the court found, this “press
for cash was unreasonable and not grounded in good faith.” Order at 16.
3. Shelton did not send her September 7, 2007, letter to Trustee Prunier, who still had
custody of the trust assets. Order at 14.
4. Trustee Prunier was never asked to pay Maggie Goodlander’s Yale tuition in the fall of
2007, when the EMT Trusts had approximately $275,000 in cash. Order at 24.
5. Maggie Goodlander received the cash resources to repay the loan for her fall 2007 Yale
tuition without penalty or interest, but did not do so. Order at 23.
6. Shelton and Betty sought a “decoupling” of the EMT Trusts, meaning “that the EMT
Trusts assets should be purchased by Sam Jr. and Steve, individually or as investment
directors on behalf of the remaining sibling subtrusts.” Order at 26.
7. This action contests several provisions of the trust. Order at 45.
8. “Many of petitioners’ actions strike the court as contrived in a calculated endeavor to
manufacture evidence for purposes of litigation.” Order at 46.
9. In bringing and prosecuting this action, the Petitioners acted in “bad faith.” Order at 45.
The express finding of bad faith alone justifies the probate court’s ruling that Respondents and
Intervenors are entitled to an award of fees. The additional findings only reinforce the
correctness of that ruling.
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In response, Shelton makes a token effort to claim she relied upon the advice of other
lawyers. But she needed no outside advice to tell her that valid settlement agreements are
enforceable contracts and must be honored. Further, her reliance on the advice of Denby and
Weisman, attorneys who were separately retained to represent Betty’s sole interests, created dual
representations that underscore Shelton’s divided loyalties in bringing and maintaining this suit.
See Spinner i Nut!, 417 Mass. 549, 552—553 (1994) (single attorney could not represent both
trustee and beneficiary without potential conflicts). Shelton cannot claim that reliance on the
advice of attorneys who were not admitted to practice in New Hampshire and who were notsolely representing her interests as trustee insulates her from the court’s fee award. Rather,
Shelton’s mere retention of these two lawyers establishes her personal culpability in breaching
her fiduciary duty of impartiality by relying upon attorneys engaged to act solely in Betty’s bestinterests, without regard for the EMT Trust’s other beneficiaries. In any event, Shelton has not
submitted to this Court what advice she was given by Denby and Weisman and without that, this
Court is unable to determine whether Shelton’s claim that she relied on their advice was justified.See, e.g., I?hoiie-Ponlenc Rorer, Inc. v. Home Indemnity Co., 32 F.3d 851, 863 (3rd Cir. 1994).
Shelton also implies that the Massachusetts Superior Court, during the course of her 2007
suit attempting to force the sale of the Red Sox shares, somehow endorses Betty and Shelton’sassault upon the terms of the trust. Shelton Br. at 41 (stating Red Sox litigation was “compelled”
by the investment directors’ refusal to “provide funds”). But that action provides little supportfor Shelton’s claims: the Massachusetts court denied Betty and Shelton preliminary injunctive
relief, ruling that they had not established any likelihood of success on the merits, Ex. 6.3 5,42 and
the suit was mooted by the sale of the Red Sox shares before further adjudication. In any event,
Supp. App. 473.
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the probate court below expressly limited its award to Appellees’ fees and costs incurred in
defending this New Hampshire action, while taking “no position on the litigation between the
parties in Massachusetts[,}” Order at 49. Given that the probate court excluded the
Massachusetts action from its attorneys’ fees holding, the suit gives Shelton no respite on appeal.
Finally, Shelton contends that the Intervenors should not be awarded fees because their
intervention was “voluntary.” Any party who intervenes does so voluntarily, because they have
an interest in the subject matter of the litigation. The intervenors in this case were four of the
five sets of other subtrusts, and two of Sam Sr.’s six children. Each would be harmed if
Shelton’s liquidation or decoupling remedy was granted. Their losses would have run into the
millions of dollars, given the significance of the minority discounts alone. Also, one remedy
Shelton sought was to force the siblings’ trusts to deplete their cash and buy the EMT assets.
The intervenors therefore properly interceded to protect their interests from the machinations of
Betty and Shelton. The intervenors are entitled to their fees and costs, especially since Shelton’s
claim for liquidation/decoupling were found to be a contest of the trust.
IV. The Probate Court Did Not Abuse its Discretion By Removing Shelton AsTrustee For The EMT Trusts.
Finally, Shelton argues that the probate court erred in removing her from her position as
trustee for the EMT Trusts. Shelton Br. at 47.-50. As Shelton implicitly acknowledges, the
question of whether to remove a trustee is soundly committed to the probate court and, therefore,
reviewable only for the unreasonable exercise of discretion. See Restatement (Second) of Trusts
§ 107 cmt. a (1959) (“[A] court may remove a trustee if his continuing to act as trustee would be
detrimental to the interests of the beneficiary. The matter is one for the exercise of a reasonable
discretion by the court.”); Shelton Br. at 48 (acknowledging that appointment of trustee is
usually reviewed for abuse of discretion). This standard is very deferential to the lower court; so
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long as “there is some support in the record for the [probatel court’s determination,” this Court
must uphold it. (Hick v. Nuess, 143 N.H. 172, 175 (1998) (emphasis added) (discussing standard
of review in general); I)aigle v Porismou!h, 137 N.H. 572, 574 (1993) (same).
The probate court justited Shelton’s removal upon its findings that Shelton violated
many of her statutory duties as trustee. By Shelton’s own testimony, litigating Betty’s ongoing
vendetta has cost millions of dollars in fees and other costs—expenditures that depleted the EMT
Trusts so heavily that there we no longer enough funds to provide for the education of Betty’s
children, who were (and remain) beneficiaries of the trusts. Order at 50—51. Although Shelton
insists in her brief that the suit, if successful, would have been of great value to the beneficiaries,
Shelton Br. at 49, she failed to conduct any such cost/benefit analysis in advance of pressing the
suit. Meanwhile, Shelton’s conduct throughout the case supports the probate court’s factual
finding that this litigation was brought to benefit Betty, to the detriment of the trusts’ other
benefkiaries—in particular, as the probate court stressed, the unborn. Order at 51. Indeed,
Shelton remained so focused upon pressing Betty’s legal claims against the Appellees that she
failed to gain even a basic understanding of her proper role as the new trustee for the EMT trusts.
Whereas a trustee is supposed to serve impartially, for the equal benefit of all trust beneficiaries,
Shelton devoted herself to a legal strategy that would only benefit Betty and her lawyers.
Two facts in particular reinforce this truth. First, although Shelton was quick to insist
that the investment directors immediately sell off trust assets, she made no contemporaneous
effort to either appraise herself of the amount of cash assets already available in the trusts or to
transfer those assets from Trustee Prunier’s control. Had she done so, she would have known
that the trusts already included ample monies to address legitimate financial issues, such as
Maggie’s college tuition. See Order at 24 (crediting Prunier testimony that, at the time of
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Shelton’s financial demands, EMT Trusts’ assets included cash accounts of approximately
$275,000, which could have been used to cover the $40,000 Yale tuition bill). But instead offocusing first and foremost on securing control of the EMT Trusts’ existing assets, Sheltoninstead led Betty’s aggressive and unsupportable demand that the investment directors
immediately sell assets in a fire sale in order to raise and disburse a further $2 million to theEMT Trusts. Then, once she secured control over the EMT Trust assets, Shelton failed toconduct any cost-benefit analysis as to whether proceeding with Betty’s suit was actually in the
best interests of the contingent trust beneficiaries:
Q. Ms. Shelton, yesterday I think you made a reference to a cost benefit analysis thatProfessor Langbein had discussed. Remember that?
A. Yes. Yes, I do.
Q. I believe you told us that you did not do such a cost benefit analysis with respect tobringing this lawsuit and trying to change the status of the EMT assets; is that correct?
A. Well, what I said was that I didn’t do a financial cost benefit analysis that involvedlooking at the actual assets and the value of the assets, and what it would—what thetransaction costs would be of decoupling. .
Tr. 2222:1—11.
Finally, Shelton testified below that she was not even aware until some point during thissuit that Betty’s future-born issue (grandchildren) were trust beneficiaries and that she owedthem fiduciary duties. Order at 12. It is incredible that Shelton represents to this Court that she
was properly acting in the interests of all trust beneficiaries, Shelton Br. at 48—49, when, at thetime she initiated this lawsuit, she was oblivious to her fiduciary obligations to anyone other thanBetty. It is therefore no surprise that the probate court rejected such a claim, finding instead thatShelton violated her duties to properly manage, control, and protect trust assets, see RSA 564-
B:8-809, 9-902, and her duty of impartiality among the beneficiaries, see RSA 564-B:8-803.
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Shelton’s arguments in response reduce to two easily rebuttable points. First, Sheltoninsists there was no “breach of trust” because her suit was arguably supported by testimony ofthe EMT Trusts’ other living beneficiaries and the guardian ad 1/tern’s opinion that Shelton“adequately” represented the interests of the unborn. Shelton Br. at 48 (citing Ti. 1 830), ButShelton’s accusation that the probate court “ignored” this evidence is misplaced. Rather, thecourt carefully considered this evidence and refused to credit it, valuing the ample directevidence of Shelton’s conflicts of interest and failure to respect her fiduciary obligations tobeneficiaries other than Betty over the guardian ad i/tern’s opinion testimony. This is reinforcedby the court’s order that Betty replenish to the EMT Trusts the “considerable assets” Betty andShelton drained from the trusts in order to fund this case—funds that should have been preservedfor the benefit of all beneficiaries rather than devoted to Betty’s pet lawsuit.
Second, Shelton attempts to justify her lack of management experience by noting that “atrustee is not required to have prior experience as a trustee.” Shelton Br. at 49. But the court’sholding was not rooted in the mere fact that Shelton was inexperienced. Shelton’s failing washow she handleç her lack of experience; her repeated mistakes and missteps establish that shefailed to maintain the EMT Trusts effectively. An “inexperienced” trustee still should haveidentified at the onset the fact she owed fiduciary duties to beneficiaries other than Betty and herthree children, or recognized that her first priority should have been to secure transfer of theavailable EMT Trust assets from Trustee Prunier. Shelton’s only answer—that she retainedDenby, an “expert,” to provide her with guidance—is unavailing, as such “expert” guidance stillfailed to prevent any of Shelton’s numerous missteps. Shelton’s engagement of Denby only
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deepened the conflict of interest between Shelton’s duties to Betty and to the other beneficiaries,
as Denby simultaneously served as one of Betty’s personal lawyers.43
Taken in the aggregate, the probate court’s factual findings amply support the conclusion
that Shelton “committed a serious breach of trust,” RSA 564-B:7-706(b)(l), and that Shelton’s
removal best served the interests of the beneficiaries in light of Shelton’s “persistent failure
to administer the trust effectively,” RSA 564-B:706(b)(3), notwithstanding Shelton’s arguments
to the contrary. During her time as trustee, Shelton consistently neglected her fiduciary duties to
other beneficiaries in favor of helping Betty press her vendetta against Sam Jr. and Steve—a
misguided effort for which Shelton received over $500,000 in legal fees. As a result, the probate
court’s decision to remove Shelton as trustee is justified by both law and fact and, therefore,
could not constitute an unreasonable exercise of discretion.
As a final matter, it is confusing to understand what, if anything, Shelton is seeking by
challenging the probate court’s removal decision. Shelton testified below that she had no interest
in managing the EMT Trusts as a long-term matter—testimony that the court credited. Order at
50; Tr. 2100:17—2101:17. And regardless of whether the current beneficiaries supported Shelton
below, they have since appointed a new trustee to manage their assets, Shelton Br. at 15, and
none of the trusts’ beneficiaries—past or present—have supported Shelton’s appeal. As a result,
even if this Court were to reverse the probate court’s removal determination, the probate court
could not in turn order that the current trustee be removed so that Shelton can be reinstated.44 A
probate court is ordered to exercise its appointment powers such that any appointment “will be
Indeed. Betty has since pursued malpractice claims against Denby and Weisman. just as she has against Shelton.See Tamposi i Denbv. No. l:10-cv-12283 (D. Mass) (complaint filed Dec. 31. 2010).Tellingly, while Shelton asks this Court to vacate the probate court’s various remedial orders, including Shelton’sremoval, she offers neither any suggestion that she is interested in reassuming her former role as tmstee nor anylegal support for such a reinstatement.
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more conducive to the proper administration of the trust[.j” In re Borihwick Aiate, 102 NH,
344, 348 (1959). It is unthinkable that the probate court would exercise this power to replace theEMT Trust’s beneficiaries’ current trustee of choice in order to return Shelton to a position shedoes not even want. Nor would such a decision be reasonable, given that Shelton’s entireconduct in pressing this appeal works zainst the interests of the present beneficiaries of theEMT Trusts, by seeking to overturn rulings that excluded Betty as a beneficiary and orderedfunds restored to the EMT Trusts, thus increasing the other beneficiaries’ share of the trusts’value. Once again, then, it seems that Shelton’s primary goal is simply to minimize her exposureas best as she can, at the expense of the beneficiaries, all in the hopes of deflecting Betty’spending malpractice claims.
CONCLUSION
For the reasons set forth above, this Court should affirm the probate court’s well reasoneddecision below.
STATEMENT REGARDING ORAL ARGUMENT
Given the amount of issues raised in Shelton’s appeal, Appellees request twenty minutesof oral argument, to be presented by Michael Kendall (fifteen minutes on behalf of all Appellees)and Frank E. Kenison (five minutes on behalf of Intervenors). A motion formally requestingextended time for oral argument will follow.
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Respectfully submitted,
SAMUEL A. TAMPOSI, JR. and STEPHEN A.TAM POSI, Individually and as InvestmentDirectors of the Elizabeth M. Tamposi GST ExemptTrust and the Elizabeth M. Tamposi Trust, bothcreated under the Samuel A. Tamposi, Sr. 1992Trust and the Elizabeth M. Tamposi Trust createdunder the Samuel A. Tamposi, Sr. 1994 IrrevocableTrust and as Directors of the Tamposi Companies
By their attorneys,
Dated: December 8, 2011Michael Kendall (pro hac vice)MCDERMOTT WILL & EMERY LLP28 State StreetBoston, MA 02109(617) 535-4000
Robert A. Stein, NH Bar. No. 2438One Barberry LaneConcord, NH 03302-2 159(603) 228-1109
GERALD R. PRUNIER, Trustee of the Trusts forthe Benefit of Samuel A. Tamposi, Jr., MichaelTamposi, Celina A. Tamposi, Celina A. TamposiGriffin, and Stephen A. Tamposi, created under theSamuel A. Tamposi, Sr. 1992 Revocable Trust
By his attorneys,
BARRADALE, O’CONNELL, NEWKIRK& DWYER, P.A.
Dated: December 8, 2011 By:Pan1a{ Newkirk, NH Bar. No. 41043 Executive Park Drive, Suite 12Bedford, NH 03110(603) 644-0275
CELINA TAMPOSI GRIFFIN & MICHAEL A.TAMPOSI
By their attorneys,
RANSMEIER & SPELLMAN, P.C.
Dated: December 8, 2011Frank F, Kenison, NH Bar. No. 1346Lisa M. Lee, NH Bar. No, 14896One Capitol StreetConcord, NH 03301(603) 228-0477
CERTIFICATE OF SERVICE
I hereby certify that on December 8, 2011, an original and eight (8) copies of this Briefand the Supplemental Appendix are being hand-delivered to the Supreme Court of NewHampshire. An electronic copy of the brief is also enclosed.
I also certify that two (2) copies of this Brief and one (1) copy of the SupplementalAppendix are being sent by overnight mail on the same day to counsel for Appellant, Robert S.Frank, Jr. and Robert M. Buchanan, Jr., at Choate, Hall & Stewart, LLP, Two InternationalPlace, Boston, Massachusetts, 02110 and John C. La Liberte at Sherin and Lodgen LLP, 101Federal Street, Boston, Massachusetts, 021 10. 1 also certify that an electronic copy of the Briefwill be sent this day to above-listed counsel of record and the Guardian Ad Litem.
Copies of the Brief and the Supplemental Appendix will be sent to all counsel of recordand non-represented parties via first-class mail (or email upon counsel or non-parties’ request)
Dated: December 8, 2011
![BRIEF OF APPELLANT JULIE SHELTON · JULIE SHELTON, AS TRUSTEE OF THE ELIZABETH M. TAMPOSI GST EXEMPT TRUST AND THE ELIZABETH M. TAMPOSI [NON-EXEMPT] TRUST By her attorneys, Robert](https://img.dokumen.tips/doc/110x75/5ead2093b72f59682c56a54a/brief-of-appellant-julie-shelton-julie-shelton-as-trustee-of-the-elizabeth-m-tamposi.jpg)
