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Hedger v. Bar Harbor Trust Services

United States District Court, D. Maine

May 18, 2018

STEPHEN HEDGER, et al., Plaintiffs,
v.
BAR HARBOR TRUST SERVICES, Defendant

          DECISION AND ORDER ON MOTION TO QUASH

          John C. Nivison U.S. Magistrate Judge

         In this action, Plaintiffs Stephen, Matthew, Adam, and Douglas Hedger, and Sarah English, claim Defendant Bar Harbor Trust Services breached its legal obligations in its capacity as trustee of the Frank Hedger Trust and the Nathalie Hedger Trust. Plaintiffs assert claims of breach of trust (count I), breach of fiduciary duty (count II), negligence (count III), and accounting (count IV).

         The matter is before the Court on the Joint Motion to Quash filed on behalf of Plaintiffs and their legal counsel in this case, Daniels, Porco and Lusardi, LLP, in connection with a subpoena Defendant served on Daniels, Porco and Lusardi, LLP. (Joint Motion to Quash, ECF No. 25.) In addition, the parties have raised a related issue regarding Plaintiff's response to Defendant's request for production of documents.

         Background

         Plaintiffs are the grandchildren of Frank and Nathalie Hedger, and the children of Robert Hedger. Frank and Nathalie Hedger each established a trust, which trusts included as beneficiaries their children and their grandchildren. (Complaint ¶¶ 30 - 37.) In 2001, Defendant served as the trustee of both the Frank Hedger and Nathalie Hedger trusts. (Id. ¶¶ 38 - 40.)

         Robert Hedger died on December 22, 2015, and his estate was probated in Florida. (Id. ¶ 29.) The Last Will and Testament of Robert A. Hedger named as its sole beneficiary the Robert Hedger Revocable Trust. Plaintiff Sarah English served as the personal representative of the Estate, and she is the trustee of the Robert Hedger Revocable Trust. Plaintiffs in this action are the sole beneficiaries of the Robert Hedger Revocable Trust.

         In addition to its representation of Plaintiffs in this action, in the past, the New York law firm of Daniels, Porco and Lusardi (DPL) served as counsel to Robert Hedger. DPL also represented Sarah English, in her capacity as trustee of the Robert Hedger Revocable Trust, following Robert Hedger's death, when Sarah English also served as personal representative of the Estate of Robert Hedger.

         Beginning approximately in August 2012 and ending approximately in August 2013, Robert Hedger retained DPL for purposes of an estate planning matter. (Affidavit of G. Brian Morgan, Esq. ¶ 4, ECF No. 25-1.) During its representation of Robert Hedger, DPL did not counsel Robert Hedger concerning the Frank and Nathalie Hedger Trusts. (Id. ¶ 6.) In connection with DPL's representation, on December 7, 2012, Attorney Morgan wrote to Joseph Pratt, then Defendant's Managing Director and Trust Officer. In his letter, Attorney Morgan requested information regarding Defendant's disbursement of trust funds to pay costs and expenses associated with Robert Hedger's home in Corea, Maine. (Defendant's Opposition, Ex. A, ECF No. 26-1.) In July 2013, DPL sent an invoice to Robert Hedger for services rendered. (Id., Ex. C, ECF No. 26-3.) Robert Hedger forwarded the DPL invoice to Defendant for payment, and Defendant paid the invoice with funds drawn against the Account of Frank H Hedger T/U/W FBO Robert A Hedger. (Id.; Affidavit of G. Brian Morgan ¶ 7, ECF No. 25-1.)

         In August 2013, DPL, at the request of Robert Hedger, provided Defendant with a copy of Robert Hedger's power of attorney, which power of attorney designated Sarah English and Michael Sjostrom (Robert's brother) as Robert Hedger's agents. (Defendant's Opposition, Ex. D, ECF No. 26-4.)

         In 2012, Robert Hedger authorized Sarah English to speak with his DPL attorneys about his estate planning matter. According to Ms. English, Robert English also later authorized his son, Stephen Hedger, to speak with DPL about the same matter, and she and her brother acted as agents for Robert Hedger and assisted in facilitating his communications with counsel regarding an estate planning matter. (Joint Reply, Statement of Sarah English, ECF No. 29-7.)

         After Robert Hedger's death, DPL represented Sarah English in her capacity as trustee of the Robert Hedger Revocable Trust, which trust was the sole beneficiary of the Estate of Robert Hedger. (Plaintiffs' Joint Reply, Second Affidavit of G. Brian Morgan ¶¶ 1 - 2, ECF No. 29-6.) DPL did not probate the will. Instead, the Estate retained Florida counsel for that purpose. (Id. ¶ 3.) Nevertheless, on September 6, 2016, Attorney Morgan wrote to Defendant to learn “the amount currently in the account” and other details, and to obtain a statement of the account in order to process the Estate. In his letter, Attorney Morgan asserted that DPL represented the Estate, and he attached Letters of Administration from the Florida probate court and a statement from Sarah English confirming her appointment as personal representative of the Estate. (Defendant's Opposition, Ex. E, ECF No. 26-5.) Attorney Morgan maintains that his assertion that DPL represented the Estate was made in error and, in fact, DPL represented Sarah English in her role as trustee of the Robert Hedger Revocable Trust, the sole beneficiary of the Last Will and Testament of Robert Hedger, and provided Ms. English with “trust administration assistance pertaining to the Revocable Trust.” (Plaintiffs' Joint Reply, Second Affidavit of G. Brian Morgan ¶¶ 1, 5.)

         In March 2017, Plaintiffs commenced this action and alleged that Defendant, in its role as the trustee of the Frank and Nathalie Hedger Trusts, failed to exercise proper fiduciary oversight and discretion concerning the expenditure of trust funds. In particular, Plaintiffs allege that Defendant made distributions to persons not related to Robert Hedger or Plaintiffs and for whom Robert Hedger and Plaintiffs had no obligation of support, failed to make distributions to Plaintiffs as contemplated by the terms of the trusts, failed to provide Plaintiffs with the statements regarding distributions from the trusts, and made distributions to Robert Hedger in excess of the amount needed for his education, comfortable support and maintenance. (Complaint ¶¶ 43 - 48, 51, 57 - 63, 77 - 83, 98 - 105.)

         In November 2017, Defendant served DPL with a subpoena for production of documents. (ECF No. 25-3.) Through the subpoena, Defendant requests the following documents and records:

1. All documents and files ever created or maintained by [DPL] for legal services provided to Robert Hedger and/or the Estate of Robert Hedger.
2. All documents pertaining to work performed by [DPL] on behalf of Robert Hedger and/or the Estate of Robert Hedger, including without limitation, legal advice provided, legal analysis, correspondence, billing records, invoices, time sheets, legal memoranda ...

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