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In re George Parsons 1907 Trust

Supreme Court of Maine

September 5, 2017

IN RE GEORGE PARSONS 1907 TRUST

          Argued: March 1, 2016

          Deborah M. Mann, Esq. (orally), and Brendan P. Rielly, Esq., Jensen Baird Gardner & Henry, Portland, for appellant David Gourevitch.

          Dennis J. ODonovan, Esq. (orally), and Jennifer L. Kruszewski, Esq., Epstein & ODonovan, LLP, Portland, for appellee Thomas Maxwell.

          Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

          SAUFLEY, C.J.

         [¶1] Thomas Maxwell appeals from a summary judgment entered by the Cumberland County Probate Court (Mazziotti, J.) in favor of David Gourevitch, a qualified beneficiary of the George Parsons 1907 Trust, on his complaint for a declaratory judgment that Maxwell is not a beneficiary of the Trust. Because we agree with Maxwell that the undisputed facts establish that Gourevitchs claim was barred by the statute of limitations, we vacate the judgment.

         I. BACKGROUND

         [¶2] The summary judgment record contains the following facts, which are not in dispute. See Harlor v. Amica Mut. Ins. Co., 2016 ME 161, ¶ 7, 150 A.3d 793. On November 1, 1907, George Parsons executed an indenture creating the George Parsons 1907 Trust. Parsons died on December 4, 1907, without having amended or revoked the Trust. The Trust provides that it will terminate twenty-one years after the death of the last member of a group of named individuals. The last person in that group died in 2002. Thus, the Trust will terminate in 2023.

         [¶3] The dispute in this case has its genesis in the death of a descendant of George Parsons-Philippa Wistrand-in May 1990, raising the question as to who was to receive her share of the Trust distributions. Philippa was a beneficiary of the Trust and was the unmarried, biological mother of Thomas Maxwell, who was born in 1963 and was adopted by Philippas sister, Sylvie Maxwell.[1] Sylvie was also a descendant of George Parsons and a beneficiary of the Trust in the same branch of the family tree. Pursuant to the applicable portion of paragraph 5 of the Trust, Philippas share of the Trust income was to be paid to her surviving "issue" upon her death, or if there was none, to any surviving siblings or their issue if a sibling was already deceased, with other provisions applying if no siblings survived. Therefore, upon Philippas death, a question arose as to whether her share of the income was to be paid to Thomas Maxwell as her surviving issue even though he was a nonmarital child, [2] or to Sylvie as her surviving sister.

         [¶4] At the recommendation of the Trustees, in September and November 1990, Sylvie executed documents to release any rights she had in Philippas share of the Trust income and assign those rights to Maxwell. In 1990, the Trustees began distributing income to Maxwell.

         [¶5] In 1994, addressing a separate matter, the Trustees petitioned the Cumberland County Probate Court for instructions on whether adopted children were included as beneficiaries of the Trust. Although Maxwell had been adopted by Sylvie and received notice of the petition, the Trustees agreed that the courts decision would not "affect" him, and he did not participate in the proceeding. In the resulting 1995 judgment, the court (D. Childs, J.) determined that the provisions of the Trust should be interpreted according to "the rules of construction set by common law during the lifetime of George Parsons." Applying the common law rules of construction in effect in 1907, the court concluded that Parsons did not intend to include adopted children as beneficiaries, and it instructed the Trustees that the two adopted children who were respondents in that matter were not beneficiaries.

         [¶6] In 1996, after the court had issued that judgment, one of the Trustees became concerned that no formal decision had been made about whether Maxwell was a beneficiary entitled in his own right to Philippas share of income or whether he was entitled to receive income only by virtue of the assignments executed by Sylvie. On July 26, 1996, the Trustees passed a resolution recognizing Maxwells status as Philippas biological son and as a beneficiary of the Trust.[3] Maxwell will continue to receive monthly and annual distributions of Trust income while the Trust continues, and will receive ten percent of the corpus of the Trust when the Trust terminates in 2023 if he is then living.

         [¶7] In April 2014, Gourevitch filed a complaint in the Cumberland County Probate Court requesting a declaratory judgment that Maxwell, as a nonmarital child, cannot be a beneficiary of the Trust. Gourevitch is a descendant of George Parsons under the same branch of the family tree as Philippa, Sylvie, and Maxwell and served as a Trustee from 1999 to 2002.

         [¶8] Gourevitch also alleged in his complaint that Maxwell is not a beneficiary of the Trust because he is an adopted child and requested a declaratory judgment to that effect. As the Probate Court (Mazziotti, J.) ultimately noted, however, "Maxwells status as an adopted child of Sylvie Maxwell is of no consequence in this proceeding" because, as a result of the courts 1995 judgment, adopted children are not beneficiaries. Neither party challenges that conclusion on appeal.

         [¶9] Gourevitch moved for a summary judgment, see M.R. Civ. P. 56(a), [4] arguing that the terms of the Trust entitled him to a judgment as a matter of law because Maxwell was indisputably born to Philippa when she was not married. Maxwell opposed Gourevitchs motion and filed a cross-motion for a summary judgment.[5] He argued, among other things, that Gourevitchs claim was barred by the statute of limitations.

         [¶10] In May 2015, the court denied Gourevitchs motion and granted Maxwells cross-motion for a summary judgment based on the statute of limitations. Although the court determined, as a matter of law, that the terms of the Trust did not include nonmarital children as beneficiaries, the court concluded that Gourevitchs cause of action to challenge Maxwells status was barred by the statute of limitations because it accrued, at the latest, in 1996, when the Trustees formally recognized Maxwell as Philippas son and as a beneficiary of the Trust. In reaching that conclusion, the court rejected Gourevitchs argument that each monthly payment to Maxwell constituted a breach of fiduciary duty giving rise to a new cause of action. The court likened Gourevitchs argument to the common law "continuing tort doctrine, " McLaughlin v. Superintending Sch. Comm. of Lincolnville, 2003 ME 114, ¶ 23 n.6, 832 A.2d 782, and concluded that the doctrine did not apply here because the 1996 resolution was a discrete action that created the harm of which Gourevitch complained. The court concluded that Gourevitchs claim therefore was outside the six-year limitations period, see 14 M.R.S. § 752 (2016), and that Maxwell was entitled to a judgment as a matter of law on that basis.

         [¶11] On May 19, 2015, Gourevitch filed a timely motion to alter or amend the judgment, see M.R. Civ. P. 59(e), [6] based on a decision that the Supreme Court of the United States had issued on the previous day holding that a new cause of action accrues each time a trustee breaches a continuing fiduciary duty owed to a beneficiary "to monitor investments and remove imprudent ones." See Tibble v. Edison Int'l, 575 U.S. ___, 135 S.Ct. 1823, 1828-29 (2015). Gourevitch contended that his complaint was timely because the Trustees had a continuing duty to distribute income only to beneficiaries, and therefore each payment to Maxwell constituted a new injury.

         [¶12] While the motion to alter or amend was pending, Gourevitch appealed based on the statute of limitations issue, and Maxwell cross-appealed the courts separate determination that, as a nonmarital child, he was not a beneficiary. See 18-A M.R.S. § 1-308 (2016); M.R. App. P. 2. The court then granted Gourevitchs Rule 59 motion and entered an amended summary judgment in his favor.[7] Accordingly, the courts final judgment integrates its earlier determination that, as a matter of law, Maxwell is not a beneficiary of the Trust, and its later conclusion, based on Tibble, that Gourevitchs claim was timely.

         [¶13] Although the courts ultimate judgment was in Gourevitchs favor and he is defending it, in most respects, on this appeal, he remains an appellant because he was the first party to file a notice of appeal. See M.R. App. P. 2(c)(3).

         II. DISCUSSION

         [¶14] A party is entitled to summary judgment when the statements of material fact and referenced evidence establish that there is no genuine issue of material fact and that a party is entitled to a judgment as a matter of law. M.R. Civ. P. 56(c). We review de novo the grant of a motion for summary judgment. Fiduciary Tr. Co. v. Wheeler, 2016 ME 26, ¶ 8, 132 A.3d 1178. A genuine issue of fact exists if "sufficient evidence supports a factual contest to require a factfinder to choose between competing versions of the truth at trial." Baillargeon v. Estate of Daigle, 2010 ME 127, ¶ 12, 8 A.3d 709 (quotation marks omitted).

         [¶15] Maxwell argues that Gourevitchs claim for a declaratory judgment, commenced in 2014, is barred by 14 M.R.S. § 752, which provides that "civil actions shall be commenced within 6 years after the cause of action accrues and not afterwards." A cause of action accrues when a claimant sustains a "judicially cognizable injury." Estate of Miller, 2008 ME 176, ¶ 25, 960 A.2d 1140 (quotation marks omitted). When the relevant facts are not in dispute, determining when a cause of action accrued and whether a claim is time-barred are legal questions subject to de novo review. See Estate of Weatherbee, 2014 ME 73, ¶ 14, 93 A.3d 248; McLaughlin, 2003 ME 114, ¶12, 832A.2d782.

         [¶16] As courts of other jurisdictions have held, a cause of action based on the breach of a trust accrues, and the statute of limitations begins to run, at the time of the breach. See Renz v. Beeman, 589 F.2d 735, 743 (2d Cir. 1978) (holding that the statute of limitations was measured from the time of the breach of the trust), cert. denied, 444 U.S. 834 (1979); Harris Tr. Bank of Ariz. v. Superior Court, 933 P.2d 1227, 1231 (Ariz.Ct.App. 1996) (holding that the statute of limitations began to run when the trustee "violate[d] one or more of his obligations to the beneficiary or repudiate[d] the trust"); see also Cecil v. Cecil, 712 S.W.2d 353, 355 (Ky. Ct. App. 1986) (holding that the statute of limitations began to run when a beneficiary received written notice of a termination of trust agreement); cf Tersavich v. First Nat'l Bank & Tr. Co. of Rockford, 551 N.E.2d 815, 819-20 (Ill.App.Ct. 1990) (holding that the statute of limitations on an illegitimate childs claim seeking construction of a trust runs from the later of (1) the childs reaching the age of majority or (2) the time when the child knows, or should know, that the trustee has "repudiated, disavowed or acted in hostility to the trust" (quotation marks omitted)).[8]

         [¶17] In some circumstances, determining the date of the breach may be complicated, such as when a beneficiary claims that a trustee has imprudently retained an investment. See Tibble, 575 U.S. ___, 135 S.Ct. at 1828-29. For good reason, the Supreme Court of the United States has held that a trustee has an ongoing duty to monitor the ever-changing performance of investments, which may bring the date of accrual within a statute of limitations. See id.

         [¶18] There is no legal basis, however, to support a continuing duty to monitor a persons status as a beneficiary of a heritable trust. To the contrary, as the Court of Appeal of California held, a beneficiarys challenge to his proportion of trust income may be barred if proportionate shares have been paid for the requisite limitation period. See Getty v. Getty, 187 Cal.App.3d 1159, 1168-69 (Cal.Ct.App. 1986). In Getty, a beneficiarys claim was barred because he did not take legal action until after distributions had been made in consistent proportions for about twenty-five years following his attainment of adulthood. Id.

         [¶19] We have also previously held that statutes of limitations begin to run when discrete events make potential litigants aware of possible claims. Specifically, we held that a health care trusts cause of action for unjust enrichment against its beneficiary accrued upon the beneficiarys settlement of an automobile insurance claim and did not continue to accrue each time monthly annuity payments to the injured beneficiary were made ...


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