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Seal Cove Auto Museum v. Spinnaker Trust

Superior Court of Maine, Cumberland

May 3, 2017

SEAL COVE AUTO MUSEUM, Plaintiff,
v.
SPINNAKER TRUST, JOHN HIGGINS, and JOHN SANFORD Defendants, and RICHARD C PAINE, JR. AUTOMOBILE COLLECTION CFIARITABLE TRUST Party-in -Interest, and JANET T. MILLS, in her capacity as ATTORNEY GENERAL Party-in-Interest and Cross Claimant.

          AMENDED ORDER ON DEFENDANTS' AND PARTY-ININTEREST RICHARD C. PAINE, JR. AUTOMOBILE CHARITABLE TRUST'S MOTION TO DISMISS

          Lance E. Walker Justice, Superior Court.

         The matter before the court is a Motion to Dismiss filed by Defendants[1] and Party-In-Interest Richard Paine, Jr. Automobile Charitable Trust. For the following reasons, the Motion to Dismiss is granted.

         I. Background

         Richard Paine, Jr. ("Paine") collected antique cars. In 1963, Paine established the Seal Cove Auto Museum (the "Museum"). In 1986, Paine established the Richard C. Paine, Jr. Automobile Charitable Trust (the "Trust") in order to maintain and control his automobile collection (the "Collection"). It remained unfunded until Paine's death in 2007, when Paine left almost all of his collection of antique automobiles to the Trust. The Trust's automobile collection is currently worth $24 million and the endowment for the maintenance of the automobile collection as held by the Trust is approximately $6 million.

         The Trust states that:

(a) All or part of the net income and principal may be paid for the charitable purposes of 1) providing educational and scientific study of antique automobiles, whether owned by the trust or any other charitable organization, and other methods of transportation, 2) providing for the display to the public of antique automobiles, whether owned by the trust or by any other charitable organization, and 3) maintaining in suitable condition for public display and study any antique automobiles owned by the trust or any other charitable organization.
In furtherance of the foregoing purposes, the Trustee may, without limitation, sell such automobiles as he from time to time deems necessary or advisable, whether to provide a suitable endowment to maintain the Collection or to permit the continued display of antique automobiles by Seal Cove Auto Museum or by any other museum (provided in either case that that such organization is then an organization described in Section 501(c)(3) of the Code); acquire additional antique automobiles in order to upgrade the Collection; insure and otherwise maintain the Collection; loan all or any part of the Collection to museums, including without limitation Seal Cove Auto Museum, or any other charitable organizations (in either case provided such organization is an organization described in Section 501(c)(3) of the Code) for public display or study; permit access to the Collection for educational purposes by scholars or students; and generally do all such acts as may be necessary or appropriate to educate the public with respect to antique automobiles and to make the Collection available for public viewing.

The Trust, ¶2. Notably, the only mentions of the Museum in the Trust document are found in the section transcribed above.

         In 2008, the Attorney General filed a complaint that led to a consent decree requiring that a Co-Trustee be appointed to serve with John Sanford, who has acted as Trustee since the creation of the Trust. Spinnaker Trust served as Co-Trustee before resigning. John Higgins now serves as a Co-Trustee.

         In 2008 and 2014, the Trustees entered into agreements (the "Agreements") with the Museum. Pursuant to the Agreements, the Collection is currently being housed at the Museum and the Trust agreed to provide at least $200, 000 in support to the Museum on an annual basis. There is no contention that there have been any breaches to the Agreements.

         Plaintiffs bring this action seeking declaratory judgment that the Museum is a beneficiary of the Trust under 18-B M.R.S § 802 and a qualified beneficiary under §§ 103(12) and 110(1), declaratory judgment that the Trustees paid themselves excessive fees and engaged in other conduct detrimental to the interests of the Trust in violation of 18-B M.R.S. §§ 708(1) and 802(1) and the common law of fiduciary duty; injunction barring further excessive payments to the Trustees; injunction requiring Trustees to repay excessive fees and attorney fees; injunction requiring the Trustees to correct IRS 990 forms; injunction barring Trustees from paying investment companies they own to invest funds; and injunction requiring Trust to respond to requests for information.

         The Attorney General has asserted crossclaims against Defendants for violation of order, breach of fiduciary duty - loyalty, breach of fiduciary duty -prudent administration, and ultra vires payments and unjust enrichment.

         Defendants John Higgins and John Sanford and Party-in-Interest Richard C. Paine, Jr. Automobile Collection Charitable Trust move the Court to ...


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