This case involves a dispute between plaintiff Allyne T. Perry (Plaintiff) and defendant Rose-Ann Lauria (Defendant) regarding the ownership of propertylocated at 22-24 Belknap Street in Arlington, MA (Locus) and Defendants conduct in her role as the trustee of The Belknap Trust (the Belknap Trust), a beneficial trust created for the purpose of holding title to Locus for the benefit of Plaintiff and Defendant, the Belknap Trusts sole beneficiaries. Plaintiff alleges that Defendant improperly divested Plaintiff of her interest in the Belknap Trust, and thereafter conveyed Locus to herself personally, after which she used Locus as collateral to secure several mortgages between 1999 and 2005. The parties trade allegations of improper usage of Belknap Trust assets.
Subsequent to the commencement of this action, Defendant conveyed Locus back to herself and Plaintiff as joint tenants. The parties have represented that they intend to have Plaintiff buy out Defendants interest in Locus and terminate the Belknap Trust. In effect, then, resolving this dispute will be to put the parties in a position of readiness to undertake such a transaction. To do so, the court must determine (a) the extent of the parties interests in the Belknap Trust and Locus, and (b) what contributions, if any, are due from the respective parties to the Belknap Trust in order to account for their usage of Belknap Trust assets.
Plaintiff commenced this action by filing a verified complaint on October 14, 2011, in which she sought, among other things, (a) the issuance of a lis pendens with respect to Locus, (b) an injunction preventing Defendant from misusing Belknap Trust funds, (c) the imposition of a constructive trust over Belknap Trusts assets [Note 1], (d) a judicial determination as to the ownership of Locus, (e) an accounting of the assets and interests of the Belknap Trust, and (f) her attorneys fees and costs. Concurrently, Plaintiff moved for the issuance of a lis pendens. Although Defendant appeared pro se at the first court appearance in this case, she never filed an answer to Plaintiffs complaint, as a result of which Plaintiff requested the entry of a default against Defendant pursuant to Mass. R. Civ. P. 55(a). [Note 2] Plaintiffs request was not acted upon by the court.
A case management conference was held on November 29, 2011, at which the court allowed Plaintiffs motion for a lis pendens. At the direction of the court, the parties engaged in mediation, but were unable to resolve their dispute. A pre-trial conference was held on June 26, 2013.
A site view at Locus and trial at the Land Court in Boston were held on February 10, 2014. [Note 3] Testimony at trial was given by Plaintiff and her husband (Michael Perry), and by Defendant and her husband (Michael Lauria). The parties submitted twenty-seven exhibits into evidence. Defendant filed a post-trial brief on April 11, 2014; Plaintiff filed a post-trial brief and a request for findings of fact on April 18, 2014. At that time, the matter was taken under advisement.
Based upon Plaintiffs verified complaint, the evidence submitted at trial, and the reasonable inferences drawn therefrom, I make the following findings of material fact.
The Belknap Trust
1. The Belknap Trust is a blind nominee trust that was created by the parties in November of 1996 for the specific purpose of holding title to Locus for the benefit of Plaintiff and Defendant. Pursuant to the declaration of trust dated November 26, 1996, which was recorded with the Middlesex County South District Registry of Deeds (the Registry) on the same date at Book 26889, Page 497 (the Declaration of Trust), Defendant was appointed as trustee of the Belknap Trust, of which Plaintiff and Defendant were the sole beneficiaries.
2. Regarding Defendants powers in her role as trustee of the Belknap Trust, the Declaration of Trust provides, in relevant part, that the [trustee] shall: (a) [e]xecute such instruments. . . as the [trustee] may from time to time be specifically directed by the persons who at the time may be the beneficiaries of the [Belknap Trust], or by persons on their behalf who are in a capacity so to do. However, the trustee was permitted to [e]xecute only such instruments and [to] take only such actions as shall have been authorized and directed by the beneficiaries hereof, or by persons on their behalf who are in a capacity so to do.
3. In 1997, shortly after the Belknap Trust was created, Defendant opened a checking account in the name of the Belknap Trust (the Trust Account), which was used for conducting trust business, including receiving rent and payment of taxes and expenses. Defendant testified that in or around March of 2008, she gave Plaintiff a debit card that allowed Plaintiff access to the Trust Account, including drawing upon the account, making deposits, and checking the accounts balance. Defendant deactivated Plaintiffs debit card in November of 2011, after this action was commenced.
4. Locus is a residential property containing a three-story, two family house with one apartment comprising the ground floor and a second comprising the second and third floors. Plaintiff and her husband and child reside in the upper unit, which is designated as 22 Belknap Street (the Upper Unit). The lower unit, which is designated as 24 Belknap Street (the Lower Unit), is leased to third-party tenants, currently for $1,450.00 per month. The total value of Locus for the tax years 2010 through 2013 was assessed by the Town of Arlington to be $583,600.00. Plaintiff alleged that the assessed value of Locus for the tax year 2014 was $590,300.00.
5. By quitclaim deed dated December 2, 1996, which was recorded with the Registry on December 3, 1996 at Book 26876, Page 173, Mildred F. Walsh (Walsh), the parties late aunt, conveyed Locus to Plaintiff and Defendant as joint tenants for $63,000.00 -- $13,000.00 of which was forgiven as a gift, resulting in a net purchase price of $50,000.00 -- which was financed by a $50,000.00 purchase money mortgage (the 1996 Mortgage). [Note 4] On the same date, Plaintiff and Defendant executed another deed that reconveyed Locus from themselves to the Belknap Trust (the Trust Deed), which was recorded with the Registry on December 9, 1996 at Book 26889, Page 504. The parties did not adduce evidence as to the value of Locus as of December 1996, but its value in the following tax year was $255,000.00.
6. On February 1, 1999, Plaintiff purportedly conveyed her 50% beneficial interest in Locus to Defendant (in her capacity as trustee of the Belknap Trust) for nominal consideration of $1.00. This purported transfer is memorialized in a quitclaim deed dated February 1, 1999 (the February 1999 Document), which was notarized but never recorded. For the tax year 1999, the assessed tax value of Locus was $278,000.00. Defendant testified that she had Plaintiff sign over her interest in Locus in order to enable Defendant to transfer Locus to herself individually for purposes of refinancing Locus because banks and mortgage companies will not finance a nominee trust...[i]t has to be in a persons name. Plaintiff testified that she does not recall signing the February 1999 Document on February 1, 1999, which was also the date on which Walsh, the parties aunt who had originally conveyed Locus to them, passed away.
7. By deed dated March 8, 1999, which was recorded with the Registry on March 12, 1999 at Book 29909, Page 387 (the March 1999 Deed), Defendant, in her capacity as trustee of the Belknap Trust, purported to convey Locus to herself individually for consideration of less than . . . $100.00. On the same date, Defendant recorded with the Registry at Book 29909, Page 388 a trustees certificate stating that I have been dulyauthorized byallof the beneficiaries of [the Belknap Trust] to execute, and deliver a [d]eed into myself individually.
8. After this action had been commenced, by deed dated January 6, 2012, which was recorded with the Registry on the same date at Book 58240, Page 470 (the 2012 Deed), Defendant conveyed Locus to herself and Defendant (rather than back to the Belknap Trust) as joint tenants.
The Parties Conduct
9. The parties testified that Defendant took on sole responsibility for paying the monthly mortgage bills on Locus out of the Trust Account. [Note 5] Plaintiff, because she lived at Locus, received rent payments from tenants of the Lower Unit, which she typically deposited herself into the Trust Account. At Defendants request, Plaintiff would also periodically make supplemental contributions to the Trust Account, which she described as maintenance and payment towards taking care of the property. The record reflects that Defendant did not contribute to the Trust Account.
10. The parties testified that when they purchased Locus in 1996, the entire building was in disrepair. The Lower Unit was renovated (primarily, the parties agree, by Defendant and her husband) in or around 1996-1997. Defendant and her husband alleged that this renovation cost approximately between [$40,000.00] and [$50,000.00] out of pocket, but she did not provide invoices or receipts for any expenses incurred. At trial, Defendants husband agreed that he came up with the $50,000.00 figure by guessing, later clarifying that it was his estimation as a tradesman what things cost. Renovation was completed in or around early 1997, and the Lower Unit has been rented to third-party tenants almost continuously since that time. [Note 6]
11. On March 8, 1999, Defendant refinanced the 1996 Mortgage on Locus by taking out a new mortgage in the sum of $100,000.00 (the 1999 Mortgage). See Ex. G. The proceeds of this mortgage were used to satisfy the 1996 Mortgage, and the net balance (an estimated $50,000.00) was kept by Defendant -- allegedly to reimburse herself and her husband for expenses incurred to remodel the Lower Unit. [Note 7] Shortly after refinancing Locus, Defendant and her husband used some of the proceeds of the 1999 Mortgage kept by Defendant to finance the purchase of property located at 20 Avalon St. in Reading, Massachusetts (the Reading Property). The Reading Property appears to be Defendant and her husbands current residence; it is entirely unrelated to the Belknap Trust, and Plaintiff has no ownership interest in it.
12. The parties testified that, at or around the time that Defendant took out the 1999 Mortgage, they agreed that Plaintiff and her family would move into the Upper Unit with the parties father so that Plaintiff could care for him. They did so in August of 1999. The parties father lived there until sometime in 2009, during which time he paid $325.00 per month for room and board. From August of 1999 through October of 2009, the parties father paid a total of $39,975.00 in use and occupancy payments for the Upper Unit. Plaintiff and her husband continue to live in the Upper Unit, and they estimated that they pay between $600.00 and $750.00 per month into the Trust Account (not including out of pocket expenses for repairs and renovations), which they describe as contributions to the Belknap Trust, but not as rent. However, they also admitted that there was a period in or around the year 2000 in which they did not make any payments into the Trust Account. From August of 1999 through February 1, 2014, these contributions totaled $55,192.32.
13. On September 20, 2002, Defendant again refinanced Locus, taking out a mortgage in the sum of $125,000.00 (the 2002 Mortgage). As with the 1999 Mortgage, Defendant kept the balance of the proceeds of this refinance that remained after the 1999 Mortgage was satisfied -- $20,831.29. Defendant claims that these funds were used to rebuild the second floor front porch of the Upper Unit, but did not provide any evidence substantiating this explanation.
14. On September 29, 2005, Defendant took out yet another mortgage, this time in the sum of $145,000.00 (the 2005 Mortgage [Note 8]). [Note 9] As was the case with the 1999 and 2002 Mortgages, Defendant kept the balance of the proceeds of the 2005 Mortgage remaining after the the 2002 Mortgage was satisfied -- $21,903.02. Defendant testified that [a]bout 9,000 -- 8, 9,000 of that amount was used to renovate a bathroom in the Lower Unit, and that the remainder was deposited into the rainy day fund. [Note 10] Defendant submitted no evidence to substantiate this explanation.
15. Defendant took tax deductions on Locus for all of the tax years in which she held title to Locus, although only tax documents for 1999, 2001, and 2002 were submitted into evidence. Neither party submitted evidence substantiating the extent of this tax benefit.
16. Plaintiff submitted evidence of $15,566.60 in unreimbursed out of pocket expenses incurred for the benefit of the Belknap Trust between 2002 and 2013, plus $1,494.72 in unreimbursed payments of water bills relative to Locus.
17. The only unreimbursed out of pocket expense of which Defendant submitted proof is a $2,998.32 payment made by Defendant in connection with the closing of the 1996 Mortgage. [Note 11]
18. Plaintiff admitted that she charged personal expenses to the Trust Account maybe once . . . maybe twice, I dont know, during the period when she had a Trust Account debit card, but claimed that she always immediately reimbursed the Trust Account for her use of such funds. Plaintiff specifically admitted incurring a June 22, 2010 charge of $92.13 at 99 Restaurant; there is no indication in the Trust Accounts records that a corresponding deposit was made to reimburse this charge. [Note 12]
19. Plaintiff produced evidence indicating (and Defendant does not dispute) that Defendant made personal charges to the Trust Account totaling $4,962.39 during the period of May of 2001 through November of 2004. [Note 13] Defendant also does not dispute having made personal charges to the Trust Account totaling $24,034.10 during the period of November of 2006 through October of 2013. [Note 14] [Note 15]
* * * * * *
Plaintiffs principal claimrequests a judicialdeterminationas to the ownership of Locus. While Plaintiffs complaint is devoid of any allegations as to the courts jurisdiction, it is clear that this claim falls under the courts concurrent jurisdiction to hear [a]ll cases and matters cognizable under the general principles of equity jurisprudence where any right, title or interest in land is involved, including actions for specific performance of contracts. G. L. c. 185, § 1(k). Since determining the ownership of Locus will involve assessing the post-1996 conveyances and mortgages entered into by Defendant, this claim also implicates the courts exclusive jurisdiction under G. L. c. 185, §§ 1(e) - 1(g).
Plaintiffs second main claim requests an accounting relative to the Belknap Trust -- an obligation imposed on Defendant, in her capacity as trustee of the Belknap Trust, pursuant to Section 813 of the Massachusetts Uniform Trust Code, G.L. c. 203E, §§ 101-1013 (2012) (the Trust Code). Although, pursuant to G.L. c. 203E, § 240, the preferred venue for claims brought under the Trust Code is the probate and family court department of the trial court of the commonwealth in the county where [the trusts] principal place of administration is located, this court has previously held that [w]here the parties have been brought before a court of competent jurisdiction, their controversy so far as practicable ought to be completely and finally disposed of. M & T Bank v. Murillo, 2014 WL 345348, *8 (Mass. Land Ct. Jan. 30, 2014) (quoting Ritter v. Bergmann, 72 Mass. App. Ct. 296 , 302 (Mass. App. Ct. 2008)); see also Essex Co. v. Goldman, 357 Mass. 427 , 434 (1970) ([A] final decree in a bill for declaratory relief should determine the whole controversy between the parties and should . . . (leave) for future determination no issue reasonably raised by the bill and prayers for relief . . . . (quotations omitted)). This has been interpreted as giving the Land Court the power to award damages where such damages are ancillary to an underlying real property dispute. M & T Bank, 2014 WL 345348 at *7 (quotations omitted).
Here, the parties seek a judicial declaration with respect to their respective equitable interests in Locus so that they can be in a position to have Plaintiff buy out Defendants interest therein. In order to do so, the court must necessarily take into account not only the post-1996 transfers of title to Locus, but also the parties alleged financial misfeasances with respect to Belknap Trust funds, as well as credits the parties may be due for rents received for the two apartments at Locus. As such, to the extent that issuing such a declaration could be construed as imposing damages as against either party, the court concludes that awarding same would be ancillary to a resolution of the parties real property dispute.
As discussed above, the Belknap Trust is a nominee trust by operation of Paragraph 3(d) of the Declaration of Trust, which limits the trustees powers to act on behalf of the trust (including the power to enter into legally-binding contracts) only with the authorization of the trusts beneficiaries. In essence, this merely restates the legal standard for the typical operation of nominee trusts: [T]he trustees of a nominee trust have no power, as such, to act in respect of the trust property, but may only act at the direction of the beneficiaries. Morrison v. Lennett, 415 Mass. 857 , 860 (1993); see also Bellemare v. Clermont, 69 Mass. App. Ct. 566 , 571 (Mass. App. Ct. 2007) (trustee possesses only the barest incidents of ownership). Given this arrangement, [n]ominee trusts have characteristics of both agency and trust; the trustee is an agent-trustee who holds title to property for the benefit of and subject to the control of another. Roberts v. Roberts, 419 Mass. 685 , 688 (1995) (quotations omitted). Where a person is both agent and trustee for another, the agency relation predominates. Bellemare, 69 Mass. App. Ct. at 571 (quotations omitted).
Insofar as they do have power to act on behalf of their trust, nominee trustees owe their trust beneficiaries a fiduciary duty of loyalty, a duty to keep accurate accounts regarding trust property, and a duty to not commingle trust property with their own personal property. See generally RESTATEMENT (THIRD) OF TRUSTS §§ 76-84 (2007). As such, the trustee:
must exercise good faith and act solely in the interests of the beneficiaries in administering the trust. He must lay aside self-interest when it becomes adverse to the rights of the [trust], for the office of trustee cannot be subverted to fostering the personal advantage or individual gain of the incumbent. There can be no divided loyalty.
Bos. Safe Deposit & Trust Co. v. Lewis, 317 Mass. 137 , 140 (1944); see also Johnson v. Witkowski, 30 Mass. App. Ct. 697 , 706 (Mass. App. Ct. 1991); Briggs v. Crowley, 352 Mass. 194 , 199 (1967); Samia v. Cent. Oil Co. of Worcester, 339 Mass. 101 , 126 (1959).
The trustees fiduciary duty of loyalty entails that
no person holding trust [property] can be allowed to derive any personal gain or advantage, either directly or indirectly from the use thereof, but he must manage them with a single eye to the advantage of the trust estate; and, if he assumes to use them in any manner for his own benefit or in his own business, he must account for all the profits arising from such use, if profits are made, or for the principal and interest, in case of loss.
Bowen v. Richardson, 133 Mass. 293 , 296 (1882). Therefore, the trustees use of trust property for personal purposes is a violation of the fiduciary duty to preserve trust assets. See id.; Pantazis v. Tsourides, 2009 WL 2603147, *3 (Mass. Super. Ct. July 8, 2009) (trustees use of trust funds for personal expenses constituted a breach of fiduciary duties); Quinton v. Gavin, 2001 WL 1194151, *23 (Mass. Super. Ct. Feb. 15, 2001) ([Trustees] misuse of trust funds as his own personal bank account represents the type of self dealing in which a fiduciary may not engage.). Where a trustee obtains a gain or advantage through a violation of his duty of loyalty, a court may properly order restitution of the gain, so as to deny any profit to the wrongdoer and prevent his unjust enrichment. Berish v. Bornstein, 437 Mass. 252 , 271 (2002) (citing New Eng. Trust Co. v. Paine, 317 Mass. 542 , 550 (1945).
Where there is a question as to the propriety of a transaction made by the trustee on behalf of the beneficiaries, the trustee has the burden of proving compliance with fiduciary duties, and that said transaction was advantageous to the beneficiaries. E.g., Johnson, 30 Mass. App. Ct. at 706; Samia, 339 Mass. at 126 ([W]hen called upon for an accounting, [the trustee] has the burden of proving that he properly disposed of funds which he is shown to have received for his principal or trust.). Therefore, a trustee who fails to accurately account for expenses and handling of trust property is in breach of his or her fiduciary duty and, as such,must stand the loss. Markus v. Markus, 331 Mass. 394 , 399 (1954).
Paragraph 7 of the Declaration of Trust provides that no [trustee] hereunder shall be liable for any error of judgment nor for any loss arising out of any act or omission in good faith, but shall be responsible only for his or her own willful breach of trust. Trust agreements are permitted to limit a trustees liability in this way, but any such exculpatory provisions . . . are generally held effective except as to breaches of trust committed in bad faith or intentionally or with reckless indifference to the interest of the beneficiary and as to any profit which the trustee has derived from a breach of trust. New Eng. Trust Co., 317 Mass. at 550. Moreover, a trustee who is found to have breached a fiduciary duty is liable for such damages as may be sufficient to restore the beneficiary to the position he would have been in if no breach of fiduciary dutyhad been committed. Berish, 437 Mass. at 270 (2002); see also Fine v. Cohen, 35 Mass. App. Ct. 610 , 616 (Mass. App. Ct. 1993); rev. denied, 416 Mass. 1 ,110 (1994) (When a breach of trust occurs, the beneficiary is entitled to be put in the position he would have been in if no breach of fiduciary duty had been committed.).
In the event a breach of fiduciary duty is found and damages are sought, the party seeking such damages must prove a sum-certain pecuniary loss, and must establish his claim upon a solid foundation in fact; as such, the claimant cannot recover when any essential element is left to conjecture, surmise, or hypothesis. White Spot Const. Corp. v. Jet Spray Cooler, Inc., 344 Mass. 632 , 634 (1962) (finding insufficient evidence to award damages for lost profits where the plaintiff used profits of other projects to establish estimated damages); see also Sullivan v. Leonard, 2007 WL 2916464 (Mass. Land Ct. Oct. 9, 2007). Accordingly, claims that are remote, or so uncertain, contingent, or speculative as not to be susceptible of trustworthy proof may only be awarded nominal damages. [Note 16] White Spot Const. Corp., 344 Mass at 634.
Having recited the standard of review, there are two primary issues to be determined in this case. First, the court must determine the ownership of Locus and assess the propriety of Defendants actions in entering into the post-1996 conveyances of and mortgages upon Locus. Second, since the parties wish to resolve all issues between them relative to Locus and the Belknap Trust so as to effectuate a buyout by Plaintiff of Defendants interest therein, the court will conduct an accounting of the Belknap Trusts assets and expenses.
Ownership of Locus
A. The February 1999 Document
As discussed above, pursuant to the Declaration of Trust, Defendant, inher capacityas trustee of the Belknap Trust, was authorized to enter legally binding agreements for the benefit of the beneficiaries only with explicit authorization to do so. Thus, whether it was a proper exercise of Defendants powers as trustee of the Belknap Trust for her to enter into the post-1996 transfers and mortgages rests on the validity of the February 1999 Document, by which Plaintiff purportedly assigned her 50% beneficial interest in Locus to Defendant (in her capacity as trustee, not beneficiary of the Belknap Trust), and thus would have resulted in Defendant holding a 100% beneficial interest in the Belknap Trust -- half in her capacity as trustee, and half personally. For several reasons, it is clear that the February 1999 Document is defective, and thus null and void.
First impressions of the February 1999 Document reveal that it purports to be a quitclaim deed, but is in fact not, since it did not actually purport to convey title to any real property -- only a beneficial interest in the Belknap Trust. It is also clear and undisputed that the February 1999 Document was never recorded. Moreover, the proper form for conveying a beneficial interest in a nominee trust is not a deed at all, but rather an assignment agreement, which is used not only to convey the interest, but also to amend the trusts schedule of beneficiaries to reflect the assignment. [Note 17] See 28B MASS. PRAC., REAL ESTATE LAW WITH FORMS §§ 57.6-57.8 (4th ed. Supp. 2013). Yet, Defendants testimony confirmed that no such amended schedule of beneficiaries exists.
Neither these technical defects in the February 1999 Document nor Defendants failure to record same would, by themselves, necessarily invalidate the instrument, because it is the parties intent that governs such documents. E.g., Kaufman v. Fed. Natl Bank, 287 Mass. 97 , 100-101 (1934) (defects of form can be overridden by the parties intent); SunTrust Mortg., Inc. v. Chan, 20 LCR 571 , 573 (Nov. 9, 2012) (Sands, J.) (same holding); Cooper v. Monroe, 237 Mass. 192 , 198 (1921) (the failure to record an instrument of conveyance is not fatal to its effectiveness between the parties thereto). As discussed below, however, Plaintiffs intent to convey her 50% interest in the Belknap Trust appears to be absent.
Plaintiff alleges that the February 1999 Document was a forgery and that she had no knowledge of it. Forged conveyancing instruments are void and [have] no effect even when recorded. Countrywide Home Loans v. Bruce, 19 LCR 207 , 210 (April 25, 2011). However, the notarization of an instrument creates a presumption of validity. E.g., Hale v. Hale, 332 Mass. 329 , 333 (1955). This presumption may be overcome only by an appropriate showing. Countrywide, 19 LCR at 210; see also Cleary v. Cleary, 427 Mass. 286 , 290 (1998) (the burden of proof to establish forgery rests on the party alleging same).
Here, Plaintiffproduced no evidencesuggesting unusualor unclear circumstances surrounding the signing or notarization of the February 1999 Document, nor did she offer the testimony of the notary public whose seal appears on the document or any exert witness testimony undermining the authenticity of her signature. Moreover, her testimony at trial was inconsistent. In one instance, she outright denied that the signature was hers. [Note 18] However, she also admitted that I cant say if it is my signature or it isnt. It looks like it could be mine. I cant say a hundred percent that its mine. [Note 19] Such an equivocal denial is plainly insufficient to rebut the presumption of authenticity imbued by the notarization of the February 1999 Document and to meet the high burden of proving forgery.
Even if the February 1999 Document is authentic, in order for Plaintiffs purported transfer of her beneficial interest in the Belknap Trust to be valid, there must be a clear demonstration that Plaintiff intended to do so. See RESTATEMENT (THIRD) OF TRUSTS § 52 (2003). A demonstration of Plaintiffs intent is all the more important here because the recipient of the purported conveyance was the trustee. See LORING, A TRUSTEES HANDBOOK § 8.24 (C.E. Rounds ed., 2007)([T]he burden is on the trustee to prove that the trustee acted in good faith, the transaction was fair, and that [the] beneficiary was apprised of all relevant facts.); see also GEORGE GLEASON BOGERT, BOGERTS TRUSTS AND TRUSTEES § 188 (2014) ([T]here is a burden on the trustee to show the utmost fairness and complete disclosure of all relevant facts.); Cleary, 427 Mass. at 290 (a party who benefits from an allegedly fraudulent transaction with its fiduciaries has the burden of proving that no fraud occurred).
Under the circumstances, it does not appear that Plaintiff actually intended to divest herself of her interest in the Belknap Trust or Locus. Given that Plaintiff testified that she trusted [Defendant] a hundred percent and left management of the Belknap Trust and Locus entirely up to Defendant, it appears that Defendant induced Plaintiff to sign the February 1999 Document -- possibly in connection with their discussion of protecting Plaintiffs interests -- without Plaintiff fully understanding the meaning of that document or what Defendant would later use it to do. Notably, the parties testimony establishes that both Plaintiff and Defendant understood that it was the intent of the parties that Plaintiffs one half interest in the Belknap Trust was -- notwithstanding the change in title to Locus -- completely undisturbed. [Note 20]
That Plaintiff did not actually intend to conveyher 50% interest in the Belknap Trust is further supported by the fact that the purported transfer in 1999 of Locus, whose assessed value for the tax year 1999 was $278,000.00, was for only the nominal consideration of $1.00. Since Locus was the primary asset of the Belknap Trust, for Plaintiff to have sold her interest in the Belknap Trust would be tantamount to Plaintiff selling her interest in Locus itself. And, for Plaintiff to do so for such a low purchase price raises concerns of undue influence and fraud.
Moreover, Plaintiffs behavior during the years following the purported conveyance of her beneficial interest in the Belknap Trust does not accord with that of a fully-informed beneficiary who had intended to divest herself of her interest in Locus. Most significantly, she continued to live at Locus with her family without regularly paying rent until well after Defendant had transferred title to Locus to herself personally; as Plaintiff questioned rhetorically: why would I pay rent for a property that I own[?] Further, she continued to collect rent from the downstairs tenant at Locus, and continued to deposit such rent payments (and supplemental personalcontributions) into the Trust Account well after the purported conveyance in 1999 -- clearly indicating her understanding that the parties ownership of Locus and their interests in the Belknap Trust (which was created for the sole purpose of holding title to Locus) were, essentially, one and the same thing. Then, years later, when she discovered a water lien upon Locus in 2011, she immediately commenced this action to confirm the return of her interest in Locus. Taken together, Plaintiffs behavior suggests that she had no intention to surrender her 50% beneficial interest, nor any awareness that Defendant used the February 1999 Document to transfer title to Locus away from the Belknap Trust and thereafter refinance it multiple times.
In conclusion, while Plaintiff has not proved that the February 1999 Document was a forgery, there is simply no reasonable interpretation of the February 1999 Document as a full, binding transfer of Plaintiffs one-half interest in the Belknap Trust. As a result, I find that the February 1999 Document is null and void, and of no legal force and effect.
B. The March 1999 Deed
Apart from the fact that Defendant did not sign the March 1999 Deed both individually and in her capacity as trustee, the March 1999 Deed appears to suffer from no patent defects. It contains an accurate identification of Locus, and was notarized and recorded. The $100.00 consideration provided for in the March 1999 Deed is obviously nominal, but this, by itself, is no bar to validity. E.g., Ward v. Ward, 70 Mass. App. Ct. 366 , 371 (Mass. App. Ct.), rev. denied, 460 Mass. 1106 (2007). On its face, then, the March 1999 Deed appears to be a valid conveyance.
However, because, as established above, the February 1999 Document was ineffective insofar as it purported to be a conveyance of Plaintiffs beneficial interest in the Belknap Trust, Plaintiff remained a 50% beneficiary of the Belknap Trust. Thus, Defendant needed Plaintiffs explicit approval to effectuate the transfer of Locus to herself personally. Defendant admitted that she never sought Plaintiffs consent or approval to execute the March 1999 Deed, and it is clear that Plaintiff never granted such approval.
In addition, the nominal consideration of only $100.00 provided for in the March 1999 Deed -- when coupled with the fact that Defendant executed the March 1999 Deed without Plaintiffs knowledge or consent -- strongly suggests a breach of Defendants fiduciary duty of loyalty to Plaintiff. See Lewis, 317 Mass. at 140 (1944) (trustee must lay aside self interest when it becomes adverse to the rights of the [beneficiaries]. . . . There can be no divided loyalty.); see also Steele v. Kelley, 46 Mass. App. Ct. 712 , 734 (1999) (trustees duty of loyalty presumptively precludes . . . any sale of trust property or any interest therein to the trustee individually . . . however fair the consideration). As this court has previously held with respect to essentially identical circumstances, [s]uch [a] conveyance is a textbook example of self-dealing . . . and was a breach of [the trustees] fiduciary duty. Dapkus v. Dapkus, 20 LCR 602 , 607 (Mass. Land Ct. Nov. 29, 2012).
In view of the foregoing, by entering into the March 1999 Deed without Plaintiffs approval, and in breach of the terms of the Declaration of Trust, I find that Defendant breached her fiduciary duty to Plaintiff, both as her agent and as her trustee. I further find that, because Defendant lacked the authority to convey title to Locus to herself personally, the March 1999 Deed is null and void and of no force and effect.
C. The Post-1996 Mortgages
As with the March 1999 Deed, because the February 1999 Document was ineffective, Defendant needed Plaintiffs consent to enter into the Post-1996 Mortgages. Defendants vague, unspecific allegations that she consult[ed] with [Plaintiff] about the Post-1996 Mortgages is not credible. Even if these allegations were credible, Defendant never alleged that she actually obtained Plaintiffs explicit approval for each of the Post-1996 Mortgages -- which Plaintiff emphatically and crediblydenies granting. Thus, the court concludes that Defendant did not seek such consent, and that Plaintiff did not grant it.
The fact that Defendant -- knowing full well that Plaintiff was trusting her entirely to handle the Belknap Trusts affairs -- went behind Plaintiffs back and refinanced Locus (and pocketed the net proceeds therefrom) not once, but on three separate occasions, indicates a serious breach of trust. Accordingly, I find that, by entering into the 1999, 2002, and 2005 Mortgages without Plaintiffs approval, and in breach of the terms of the Declaration of Trust, Defendant breached her fiduciary duty to Plaintiff, both as Plaintiffs agent and as her trustee. The monetary consequences of these actions are discussed below.
I further find that, because Defendant lacked authority to enter into the 2005 Mortgage, it would be null and void unless it were to be confirmed. [Note 21] Courts of equity have broad powers to direct the reformation of conveyancing instruments and/or the execution of confirmatory instruments in order to maintain the legal force and effect of such conveyancing documents in cases of mutual mistake, in cases of unilateral mistake where one party knew (or should have known) about the others mistake, and in cases of fraud. See America's Wholesale Lender v. Gurinian, 2010 WL 3984750, at *4 (Mass. Land Ct. Oct. 12, 2010).
I find that such a course of action would be appropriate here. Because the February 1999 Document was never recorded, the mortgagees of the Post-1996 Mortgages had no wayto know that Defendant lacked the authority to grant such mortgages. [Note 22] Accordingly, because (as discussed below) title to Locus is restored to the Belknap Trust pursuant to this Decision, the 2005 Mortgage is reformed to the extent of substituting the Belknap Trust in place and in the stead of Defendant as the mortgagor thereof. Further, the parties are directed to execute a confirmatory note for the 2005 Mortgage naming the Belknap Trust as the mortgagor thereof and naming Defendant as personal guarantor thereof.
D. The 2012 Deed
As discussed above, after this actionwas commenced, Defendant conveyed title to Locus back to herself and Plaintiff as joint tenants. This was a transparent attempt by Defendant to sweep this dispute under the rug without being called to account for her financial misfeasance with Belknap Trust assets. There is no suggestion by either party that this was done with Plaintiffs knowledge or consent, and therefore -- for the same reasons as applied to the March 1999 Deed -- I find that it constituted a breach of Defendants fiduciary duty. I further find that the 2012 Deed is null and void and of no legal force and effect.
E. Effective Title to Locus at Present
Because, as discussed above, the February 1999 Document is of no legal force and effect, it was improper for Defendant to convey title to Locus to herself personally pursuant to the March 1999 Deed and to convey title to Locus again to herself and Plaintiff as joint tenants pursuant to the 2012 Deed -- to say nothing of the Post-1996 Mortgages. Had Defendant not engaged in these ultra vires transfers in breach of her fiduciary duties as trustee of the Belknap Trust, title to Locus would have rightly remained in the hands of the Belknap Trust, where it would be today.
As such, as a matter of equity, the court grants Plaintiffs request in her Second Amended Complaint for an order restoring [title to Locus] to the Trust. Upon the entry and recording of the documents required by this Decision, the Trust Deed will be restored as the deed of record for Locus, and the Belknap Trust will be the rightful holder to title to Locus, subject to any encumbrances of record (including, without limitation, the 2005 Mortgage, as reformed and confirmed pursuant to this Decision) as may be applicable to Locus. In order to avoid any future issues relating to the title to Locus, the parties shall execute a confirmatory deed confirming the legal force and effect of the Trust Deed.
Further, the court grants Plaintiffs request to substitute her as the trustee of the Belknap Trust in place and in the stead of Defendant. As of the entry and recording of this Decision, Plaintiff shall be the sole trustee of the Belknap Trust. The parties shall complete, execute, file, and/or record such notices and other documentation as may be required pursuant to the Declaration of Trust and by law. Defendant shall immediately turn over to Plaintiff all documents in her possession needed to carry out her duties as trustee of the Belknap Trust and shall immediately arrange for Plaintiff to be given sole control over the Trust Account.
The Belknap Trust Accounting
The parties have expressed that they intend to resolve this matter by winding up the Belknap Trust with Plaintiff buying out Defendants interest in Locus. In order to do so, a full accounting of the Belknap Trust assets (i.e., Locus and the Trust Account) is needed. The parties respective equitable shares of said assets must therefore be adjusted to account for (1) the equity extracted from the trust by Defendant by the Post-1996 Mortgages, (2) any unreimbursed out of pocket expenses properly incurred by the parties for the benefit of the Belknap Trust, (3) the parties personal use of Trust Account assets, (4) the value of Plaintiffs use and occupancy of the Upper Unit at Locus, and (5) the amount of damages (if any) to be imposed upon Defendant as a consequence of her breaches of her fiduciary duties as trustee of the Belknap Trust.
A. Defendants Conduct
1. The Post-1996 Mortgages
It is undisputed that Defendant refinanced Locus on three separate occasions following the March 1999 Deed, in 1999, 2002, and 2005 -- each time without the knowledge or consent of Plaintiff. Defendant and her husband acknowledged at trial that they kept around $50,000.00 in net proceeds from the 1999 Mortgage after the 1996 Mortgage was satisfied -- which they claimed they took as payment for renovation work done at Locus, and which they ultimately used to help purchase their home. Defendant also kept $20,831.29 in net proceeds from the 2002 Mortgage and $21,903.02 in net proceeds from the 2005 Mortgage.
Defendant, through these acts, breached her fiduciary duty to Plaintiff in two ways. First, for the same reason as she lacked authority to enter into the March 1999 Deed and the 2012 Deeds (discussed above), Defendant lacked the proper authority to enter into these mortgage agreements without Plaintiffs knowledge and explicit consent. See Roberts, 419 Mass. at 687; Morrison, 415 Mass. at 860. Second, by undertaking additional indebtedness upon Locus and claiming borrowed monies for herself personally, Defendant not only diminished the equity in Locus, but also deprived the Belknap Trust of its rent profits -- which had to be used to pay off the unauthorized loans Defendant had taken. See Boston Safe Deposit & Trust Co., 317 Mass. at 140; Johnson, 30 Mass. App. Ct. at 706.
That Defendant lacked authority to take out these loans is irrefutable, as are the diminishment in Locuss equity and the Belknap Trusts increased indebtedness that resulted from Defendants actions. As such, Defendants equitable share in Locus must be reduced in the amount of the additional indebtedness undertaken through the 1999, 2002, and 2005 Mortgages over and beyond what would have been owed under the 1996 Mortgage. [Note 23] Her share must also be reduced in the amount (to be determined) of the tax benefits she received by virtue of her ownership of Locus commencing in March of 1999. [Note 24] See Berish, 437 Mass. at 271 (court may order restitution so as to prevent trustee from profiting from wrongdoing).
2. Personal Expenses Charged by Defendant to the Trust Account
As trustee, Defendant has a duty to account for her uses of Trust Account funds, and to the extent she cannot do so, she is responsible for reimbursing the Belknap Trust for them. See Markus, 331 Mass. at 399. Trust Account records indicate that Defendant charged numerous personal expenses to the Trust Account between the years of 2001-2004 and 2006-2013 -- many of which she does not dispute. Defendant must reimburse the Trust Account for all such charges.
For the period of May of 2001 through November of 2004, Plaintiff alleges $4,838.68 of improper charges (plus $2,277.11 of suspicious transactions) were made by Defendant. Upon reviewing the documentation of these charges and considering Defendants explanations that several of these charges were bona fide expenses for the benefit of the Belknap Trust, I find that Defendant has not properlyaccounted for improper charges totaling $4,962.39 during the period of Mayof 2001 through November of 2004, for which she must reimburse the Trust Account.
For the period of November of 2006 through October of 2013, Plaintiff identified $26,163.84 in allegedly improper personal charges made by Defendant. [Note 25] Of this total, Defendant disputes $7,000.00 -- a $400.00 charge on November 2, 2012, a $6,000.00 check dated March 1, 2013, and a $600.00 check dated June 27, 2013, each of which she satisfactorily explained at trial were bona fide expenses for the benefit of the Belknap Trust. [Note 26] Thus, I find that Defendant has not properly accounted for improper charges totaling $19,071.71 during the period of November of 2006 through October of 2013, for which she must reimburse the Trust Account.
In total, the court determines that Defendant must reimburse the Trust Account for a total of $24,034.10 for improper personal uses of the Trust Account during the periods of May of 2001 through November of 2004 and November of 2006 through October of 2013 -- for which she has been unable to account.
3. Defendants Out of Pocket Expenses and Trust Account Contributions
Although Defendant paid no personal contributions into the Trust Account, it is undisputed that Defendant and her husband incurred out of pocket expenses in connection with the renovation of Locus. [Note 27] Yet, while Plaintiff concedes that Defendant incurred numerous expenses relative to the renovation of Locus, she disputes the amount and reasonableness thereof. Defendant, for her part, claims that the post-1996 refinancings of Locus (which the court has determined were improper) were intended, at least in part, to compensate herself and her husband for these renovation expenses.
Defendant, however, failed to produce any receipts, invoices, expense sheets, or indeed any documentation whatsoever as to these alleged expenses. In fact, Defendant explicitly stated at trial that the only thing the court had to go on was her word. Yet, she and her husband also testified that they did not actually know exactly how much they spent on the renovations nor how much they claimed as payment therefor. When pressed for an exact number, they could offer only a broad estimate of [p]robably between [$40,000.00] and [$50,000.00].
Had Defendant or her husband produced any documentary proof of such expenses, they certainly could have been able to claimthemas contributions to the Belknap Trust. However, without such proof, Defendant would have the court award compensation for these alleged expenses based only on her rough estimate of what she paid herself without any information about what was paid for. This amounts to pure conjecture, and is an insufficient basis for the court to award compensation. See White Spot Const. Corp., 344 Mass. at 634. Defendant had a duty as trustee to account for Belknap Trust assets, which would have included any expenses incurred for repair work. See Samia, 339 Mass. at 126. That she failed to do so means that she must stand the loss for expenses she cannot prove. Markus, 331 Mass. at 399.
Based upon the limited evidence before the court, I cannot, at this time, award Defendant any compensation for the alleged expenses incurred by her and her husband in connection with renovations at Locus. [Note 28] Defendant is therefore entitled to be reimbursed from the Trust Account only for her out of pocket expense of $2,998.32 incurred in connection with the closing of the 1996 Mortgage.
4. Rent Attributable to the Lower Unit
Because the parties are joint 50% beneficiaries of the Belknap Trust, they each have a 50% interest in the beneficial uses of Locus. And, because Locus contains two apartments, each party is entitled to the beneficial use of one of the two apartments -- which they can realize either by living there or by receiving the rents therefor. Plaintiff received 100% of the benefit of the Upper Unit (by occupying same), so Defendant is entitled to 100% of the benefit of the Lower Unit. Since the Lower Unit was used as a rental property, that means Defendant is entitled to 100% of the rents paid. [Note 29]
From June of 2002 through February of 2014, $198,187.50 in rent payments for the Lower Unit were paid into the Trust Account. I find that Defendant is entitled to a credit towards her share in Locus in this amount. She may also be due a credit for rent paid for the Lower Unit subsequent to February 2014, but no evidence on that issue is before the court. [Note 30]
B. Plaintiffs Conduct
1. Personal Expenses Charged by Plaintiff to the Trust Account
Plaintiff admitted incurring a June 22, 2010 charge of $92.13 at 99 Restaurant, which was not paid back to the Trust Account. The court therefore finds that Plaintiff must reimburse the Trust Account in the amount of $92.13 for her improper use of the Trust Account for personal expenses during the period of November of 2006 through October of 2013.
2. Plaintiffs Out of Pocket Expenses and Trust Account Contributions
Plaintiff produced evidence of out of pocket expenses totaling $15,566.60 that she incurred in connection with the repair and maintenance of Locus between 2002 and 2013, which were not reimbursed by funds taken from the Trust Account. [Note 31] Plaintiff also produced what appears to be a bank record substantiating out of pocket expenses of $1,494.72 for water bills paid in March and November 2013. Defendant made no attempt to dispute any of these expenses. Thus, Plaintiff is entitled to reimbursement from the Trust Account of $17,061.32.
In addition to these expenses, Plaintiff paid into the Trust Account $55,192.32 in personal contributions between January 1, 2007 and February 1, 2014. Plaintiff also deposited $39,975.00 contributions made by the parties father between August of 1999 and October of 2009, which was accounted by the parties as room and board payments. [Note 32] Plaintiff is entitled to credits in these amounts when the parties close on the sale of Defendants interest in Locus and the Belknap Trust to Plaintiff. She may also be due credits for contributions subsequent to February 2014, but no evidence of such contributions is before the court.
3. Plaintiffs Use and Occupancy of the Upper Unit
Plaintiff has lived in the Upper Unit of Locus from August of 1999 to date without paying use and occupancy therefor -- only making the above-described personal contributions to the Trust Account. [Note 33] Plaintiff thus received 100% of the benefit of the Upper Unit for this period. As discussed above, Defendant is therefore entitled to 100% of the benefit of the Lower Unit. Because Defendant did not opt to reside in the Lower Unit, she should receive the rents paid therefor. [Note 34]
From June of 2002 through February of 2014, $198,187.50 in rent payments for the Lower Unit were paid into the Trust Account. I have found that Defendant is entitled to a credit towards her share in Locus in this amount. She may also be due a credit rent paid for the Lower Unit subsequent to February 2014, but no evidence on that issue is before the court. [Note 35]
C. Results of the Accounting
Based upon the foregoing, adjustments must be made both to the Trust Account and to the parties respective interests in Locus when it is sold. Turning first to the Trust Account, per the above, Defendant owes the Trust Account the sum of $24,034.10 for improper personal uses of the Trust Account during the periods of May of 2001 through November of 2004 and November of 2006 through October of 2013. This amount should be reduced by the $2,998.32 in Defendants out of pocket expenses to which she is entitled to reimbursement from the Trust Account. In sum, then, I find that $21,035.78 is immediately due from Defendant to the Trust Account. Plaintiff, for her part, is entitled to reimbursement from the Trust Account of $15,566.60 in out of pocket expenses incurred in connection with the repair and maintenance and repair of Locus, plus $1,494.72 for water bills for Locus paid by Plaintiff -- in total $17,061.32. That amount is to be reduced by the $92.13 that she must repay to the Trust Account for the personal charge she made on the Trust Account. In total, I find that Plaintiff is immediately due $16,969.19 from the Trust Account. In conclusion here, Defendant shall immediately pay $21,035.78 into the Trust Account, upon which Plaintiff shall immediately be paid the $16,969.19 that she is due. The remaining funds in the Trust Account will be split between the parties in the usual course when they terminate the Belknap Trust.
Having resolved the outstanding issues pertaining to the Trust Account, it is necessary to consider the parties interests in Locus, which must be adjusted so as to give credit to Defendant for the rent for the Lower Unit and to effect the disgorgement of the benefits Defendant realized as a result of her financial misfeasance. These amounts are handled separately from the above-discussed adjustments to the Trust Account not only because they involve significantly larger sums of money, but also because they represent amounts that are not to be shared between the parties, as would be the case if they went through the Trust Account. Thus, these amounts will be taken into account when the parties arrange for the sale of Defendants share therein to Plaintiff. At that time, the amount due to Defendant in such sale shall be increased in the amount of $198,187.50, because, I have determined, Defendant is entitled to receive 100% of the rents paid for the Lower Unit from April 2002 through February 2014. However, the amount due to Defendant must be decreased in the amounts of $39,975.00 and $55,192.32, which represent, respectively, room and board payments for the Upper Unit made by the parties father and personal contributions to the Trust Account made by Plaintiff. [Note 36] The amount due to Defendant shall be further decreased in the amounts (to be determined in accordance with the courts instructions herein) of (a) the increased indebtedness undertaken through the Post-1996 Mortgages, (b) the tax benefits realized by Defendant by virtue of holding title to Locus personally, and (c) the courts below-discussed award of Plaintiffs attorneys fees and costs incurred herein.
Costs and Legal Fees
In contrast to the usual case, in which litigants are responsible for payment of their own costs and attorneys fees, a beneficiary who successfully brings suit against a trustee to enforce the terms of a trust or for breach of fiduciary duty may be reimbursed for her attorneys fees. E.g., Davis v. Bay State League, 158 Mass. 434 (1893); see also G.L. c. 215, § 45; ALLOWANCE OF ATTORNEYS FEES IN, OR OTHER COSTS OF, LITIGATION BY BENEFICIARY RESPECTING TRUST, 9 A.L.R.2d 1132, §II(A)(4b) (2007). On the other hand, where a trustee successfully defends herself from a charge of misfeasance, she may be entitled to her costs and legal fees. E.g., Gordon v. Guernsey, 316 Mass. 106 , 110 (1944). However, whereas a trustee may normally look to the trust for reimbursement of legal fees incurred in connection with administration of the trust, if she is found to have breached a fiduciary duty, she may not do so. E.g., Natl Acad. of Sciences v. Cambridge Trust Co., 370 Mass. 303 , 312 (1976). Ultimately, the decision of whether to award legal fees to either party to a trust dispute is a matter within the sound discretion of the trial judge. E.g., In re Estate of King, 455 Mass. 796 , 805 (2010); Lattuca v. Robsham, 442 Mass. 205 , 210 (2004); see also G.L. c. 215, § 45; RESTATEMENT (SECOND) OF TRUSTS, § 257, supra.
Here, both parties have been shown to have deprived, to some extent, the Belknap Trust of assets and/or equity. Defendant not only charged thousands of dollars of improper personal expenses to the Trust Account (even after this case had been commenced), she secretly conveyed Locus to herself and then refinanced it three times, each time claiming the net proceeds for herself. Plaintiff, for her part, made only a single improper use of a small amount of Trust Account funds, but she also substantially failed to pay the full use and occupancy for the Upper Unit for approximately fifteen years, thus inadvertently depriving Defendant of a 50% beneficial interest in rental income from the Upper Unit.
The court concludes that Defendants conduct was far more egregious than that of Plaintiff, who contributed to the Trust Account, but did not pay the full use and occupancy for the Upper Unit. While this deprived Defendant of some of the beneficial use of Locus, Plaintiff did not do so maliciously. Defendant, on the other hand, acted knowingly and in a manner that was not only highly suspicious, but was the exact opposite course of conduct that Plaintiff reasonably expected from Defendant. Accordingly, I find that Defendant shall be responsible for her own legal fees and costs incurred in connection with this action, and shall not be entitled to reimburse herself for such fees and costs from the Belknap Trust. [Note 37] Further, I find that Plaintiff is entitled to reimbursement of at least some of her legal fees and costs from Defendant (personally).
The amount of Defendants liability for Plaintiffs fees and costs incurred herein can be determined only after Plaintiff provides proof of her reasonable legal fees and costs incurred herein. Plaintiff will carry the burden of proof to establish not only the amount of her reasonable legal fees and costs, but also the amount for which Defendant should be held liable. [Note 38] These issues, as well as the other undetermined matters in this case, willbe discussed at the status conference set forth below.
* * * * * *
In conclusion, the rulings of the court are as follows:
(a) The February 1999 Document, the March 1999 Deed, and the 2012 Deed are null and void, and of no legal force and effect;
(b) The Trust Deed is restored as the deed of record to Locus, and the parties are directed to execute a confirmatory deed to this effect;
(c) Defendant is removed as trustee of the Belknap Trust, and Plaintiff is appointed as trustee in her stead; the parties shall complete, execute, file, and/or record such notices and other documentation as may be required pursuant to the Declaration of Trust and by law; and Defendant shall immediately turn over to Plaintiff all documents in her possession needed to carry out her duties as trustee of the Belknap Trust and shall immediately arrange for Plaintiff to be given sole control over the Trust Account;
(d) The 2005 Mortgage is reformed to the extent of substituting the Belknap Trust as the mortgagor thereof in place and in the stead of Defendant, and the parties are directed to execute a confirmatory note to this effect, which shall also provide that Defendant is the personal guarantor of the 2005 Mortgage; [Note 39]
(e) Defendant breached her fiduciaryduty as trustee of the Belknap Trust by executing the March 1999 Deed; the Post-1996 Mortgages; and the 2012 Deed without Plaintiffs knowledge or consent;
(f) Defendant owes $24,034.10 to the Trust Account to repay improper personal expenses, which may be reduced by the $2,998.32 in out of pocket expenses to which Defendant is entitled to reimbursement from the Trust Account;
(g) Plaintiff is owed $15,566.60 plus $1,494.72 from the Trust Account to reimburse, respectively, out of pocket expenses incurred for the benefit of the Belknap Trust and water bills for Locus paid by Plaintiff out of pocket; the amount due to Plaintiff from the Trust Account is reduced by the $92.13 that Plaintiff must repay to the Trust Account;
(h) The amount due to Defendant when the parties arrange for the sale of Defendants interest in Locus to Plaintiff shall be increased in the amount of $198,187.50 (representing the rent paid for the Lower Unit through February 2014), but reduced in the amounts (to be determined) of the increased indebtedness incurred through the Post-1996 Mortgages, of Defendants post-1999 tax benefits relative to Locus, and of the legal fees and costs to be awarded to Plaintiff;
(i) The amount due to Defendant when the parties arrange for the sale of Defendants interest in Locus to Plaintiff shall be decreased in the amounts of $39,975.00 and $55,192.32 (representing, respectively, room and board payments made by the parties father and the personal contributions to the Trust Account made by Plaintiff);
(j) Plaintiffs request for an award of her legal fees and costs incurred herein is granted; the amount of such fees and costs to be awarded will be determined after additional information is provided by Plaintiff;
(k) Defendant is barred from reimbursing herself for her legal fees and costs incurred herein out of the Trust Account; and,
(l) All other requests for relief (including the request to establish a constructive trust) are hereby denied.
The parties have mutually represented that they intend to have Plaintiff buy out Defendants interest therein. To that end, the parties shall arrange for an immediate appraisal of Locus in order to determine the current fair market value of buying out Defendants interest therein. The above- discussed amounts due to and from the parties shall be taken into account in the settlement of the purchase price for Locus. To the extent that such amounts remain undetermined by this Decision and/or unproved by the parties, the parties must make such determinations for themselves; once again, the parties are strongly encouraged to resolve any such issues between themselves. [Note 40] Concurrently with the sale of Locus, the Belknap Trust shall be terminated, and any remaining assets in the Trust Account dispersed between the parties in the usual course.
The parties shall have sixty days to effectuate such buyout, and they shall immediately notify the court when such buyout is complete. If, notwithstanding the parties expressed intent to have Plaintiff buy out Defendants interest in Locus, they have, in the opinion of this court, unreasonably failed to do so within sixty days of the date of this Decision, Plaintiff shall at that time (but not before) be permitted to construe Defendants expressed willingness (on the record in this case) to convey her interest to Locus to Plaintiff as an authorization under the Declaration of Trust for Plaintiff, as trustee of the Belknap Trust, to convey title to Locus to Plaintiff individually, subject to the buyout of Defendants equitable interest therein in accordance with the courts instructions in this Decision.
The parties shall attend a status conference on Thursday, January 8, 2014 at 10:00 A.M. to discuss all remaining issues in this case, as well as the status of the prospective buyout of Defendants interest in Locus.
Judgment shall enter upon the resolution of the remaining issues yet to be determined in this case.
[Note 1] In the alternative, Plaintiff requested a judicial determination that the Belknap Trust is the rightful owner of Locus, and an order removing Defendant as trustee thereof and appointing Plaintiff in her stead.
[Note 2] In her complaint, Plaintiff alleged that the original grantor of Locus had intended Locus to go solely to Plaintiff. Because Defendant never filed an answer to the complaint, she therefore never expressly denied this allegation.
[Note 3] From November of 2011 to March of 2013, the parties engaged in discovery. At and after trial, Plaintiff alleged that Defendant failed to produce numerous documents sought in discovery, but neither party moved to compel discovery of non-produced documents. At the request of the parties, the trial was postponed a number of times for medical reasons.
[Note 4] This deed erroneously refers to the Belknap Trust as Belknap Realty Trust.
[Note 5] As of November of 2006, Defendant was paying $1,826.02 per month in mortgage payments out of the Trust Account. By October of 2013, the payments were $2,004.03 per month. Counsel for both parties stated at trial that the taxes and insurance on Locus were included in the monthly mortgage payment as escrow.
[Note 6] The first month in which rent for the Lower Unit was received was April of 1997, at which time the rent was $1,200.00 per month. The rent increased to$1,600.00 per month from June of 2007 to August of 2007. Since September of 2007 to date, the rent has been $1,450.00 per month. From June of 2002 through February of 2014, $198,187.50 in rent payments were paid to the Belknap Trust, plus an estimated $76,950.00 from April of 1997 through April of 2002, for which period Defendant did not produce any Trust Account records. It appears that the Lower Unit was vacant only in May of 2002, July - August of 2003, April - May of 2006, and April - May of 2008.
[Note 7] Defendant did not produce the settlement statement for the 1999 Mortgage or any receipts documenting how the proceeds of the 1999 Mortgage were used, so the exact amount that Defendant kept from the proceeds thereof (and what became of those funds) is not known. Defendant also produced no invoices or receipts documenting expenses incurred during the alleged renovation of the Lower Unit. When asked if the court would have to take [Defendants] word for where the money went, Defendant testified: Thats correct. My word is good.
[Note 8] The 1999 Mortgage, the 2002 Mortgage, and the 2005 Mortgage, when referred to collectively, will be referred to as the Post-1996 Mortgages.
[Note 9] Plaintiff claims that she was unaware of any of the changes in ownership or new mortgages subsequent to the Trust Deed and 1996 Mortgage, and that she only discovered the existence of the March 1999 Deed in 2011 after learning of the existence of a water lien encumbering Locus. This led her to investigate the title to Locus, upon which she discovered the post-1996 deeds and mortgages, and commenced this action in the Land Court.
[Note 10] Defendant did not specify whether this rainy day fund was kept in a personal account or in the Trust Account. Moreover, Plaintiff disputed that the bathroom in the Lower Unit was renovated in 2005.
[Note 11] The record also indicates that Defendants husband made a mortgage payment in 2001 out of personal funds, but that this payment was reimbursed from the Trust Account.
[Note 12] Plaintiff also suggested that she may have made charges at a Wal-Mart store maybe twice, but the Trust Account records do not reflect any such charge during the time period in which Plaintiff had the Trust Account debit card. In addition to the charges that Plaintiff admits making, the Trust Account records indicate multiple charges at a Stop & Stop store (where Plaintiff admitted shopping) and a Walgreens store (which is where Plaintiff testified that she deposited funds into the Trust Account). These charges might be attributable to Plaintiff, as they occurred only during the time period in which Plaintiff had access to the Trust Account, and did not recur after such access was revoked. Defendant, however, did not raise this issue, nor did she meet her burden, as trustee, of accounting for these charges. The only charges Defendant suggested may be attributable to Plaintiff are several charges at Music & Arts, at a Market Basket store, and at a business called Chicos, all of which Plaintiff credibly denied incurring.
[Note 13] The specific inappropriate charges were highlighted by Plaintiff in Exhibit R. The only charges from this period that Defendant disputed, and for each of which she provided a satisfactory explanation, were December 4, 2003 and January 1, 2002 checks for $320.00 and $713.18 to Cubby Oil, a January 18, 2004 check for $10.86 to Target, a May 11, 2002 check for $12.45 to US Postal Svc, January 15, 2001 and November 24, 2004 checks for $1,143.93 and $100.00 to Michael Lauria (Defendants husband), a November 25, 2004 check for $263.57 to Lowes, a June 16, 2003 check for $152.60 to A.J. Black, and a September 9, 2002 check for $499.00 to Phillip Leonard.
[Note 14] The specific inappropriate charges were highlighted by Plaintiff in Exhibits Q-A through Q-I. The only charges from this period that Defendant disputed, and for each of which she provided a satisfactory explanation, were a November 2, 2012 withdrawal of $400.00, a June 27, 2013 check for $600.00 to The Appraiser Guy, and a March 1, 2013 check for $6,000.00 made out to Cash.
[Note 15] Plaintiff also estimates that an additional $26,786.42 might have been spent by Defendant between August of 1999 and October of 2006, but there is no proof of these alleged expenses. Plaintiff complains that Defendant failed to produce Trust Account records pertaining to the period prior to November of 2006, and argues that [a] negative inference is warranted, but Plaintiff not only failed to move to compel discovery, there is also no representation by Plaintiff that she attempted to subpoena the bank to obtain these records and was unable to do so. Unless the parties are able to reach an agreement among themselves as to this issue, Plaintiff is stuck with the proof she has adduced through her apparently limited efforts in discovery.
[Note 16] As discussed below, a recurring theme of this litigation is the parties failure to provide a complete evidentiary record, as a result of which further proceedings in this case may be necessary. Clearly, the parties are not on equal footing in terms of their share of the blame for the non-disclosure of information. Plaintiff, for her part, was not in a position to have most of the missing documents. However, although she complained about Defendants incomplete production of Belknap Trust records, she never moved to compel production of any documents, nor does it appear that she ever subpoenaed the custodian of such records. Defendant, on the other hand, was in a position to have the missing documents and had a fiduciary duty to maintain them, but failed to do so; like Plaintiff, Defendant also does not appear to have attempted to obtain the missing documents via subpoena -- which would have been the reasonable course of action when it appeared that she would be unable to produce numerous documents relative to the Belknap Trust. The court specifically recalls Defendant commenting at a February 19, 2013 status conference that she worked for the Internal Revenue Service and that, therefore, her practice was to discard financial records after three years. Irrespective of whether this practice is recommendable for tax purposes, it is plainly improper for purposes of carrying out the fiduciary duties of a trustee.
As a result of the gaps in the evidentiary record, the court is not presently able to issue specific Dollar-amount rulings on several issues relating to Defendants financial malfeasance -- namely: the issue of how much is due from Defendant as a consequence of the Post-1996 Mortgages, and the amount of the tax benefits Defendant must disgorge. These issues should be determined by the parties between themselves (subject to the courts general holdings in this Decision) when they arrange for Plaintiffs buyout of Defendants interest in Locus. Doing so will require either the parties to come to some agreement, or production of such further evidentiary proof and expert analysis as to enable the court to rule specifically on these issues.
The court specifically cautions the parties that, if they are unable to reach an agreement on these issues and require further court intervention to resolve their dispute, the extent to which the court will permit the record to be supplemented will be very narrowly confined to these issues. Thus, where the parties have already had ample opportunity to prove their own cases (specifically: Plaintiffs pre-2006 contributions to the Trust Account, the rents received for the Lower Unit prior to June of 2002, Defendants improper usage of Trust Account funds prior to 2006, and Defendants out of pocket expenses incurred for the benefit of the Belknap Trust), but simply failed to adduce sufficient proof, supplementation of the evidentiary record will not be permitted.
[Note 17] In addition to this technical defect, the February 1999 Document purported to convey Plaintiffs beneficial interest to Defendant in her capacity as trustee of the Belknap Trust, so her claim that I was the sole beneficiary of the trust is technically incorrect; in fact, there were still two equal beneficiaries: Defendant personally and herself as trustee. On the other hand, if Defendant had become, by the February 1999 Document, the sole beneficiary of the Belknap Trust, it should then technically have been dissolved pursuant to the doctrine of merger. See RESTATEMENT (THIRD) OF TRUSTS § 69 (2003); Cunningham v. Bright, 228 Mass. 385 , 389 (1917) (One cannot at the same instant be both the single trustee and the sole beneficiary of the same estate.). Because Defendant transferred title to Locus back to herself and Plaintiff as joint tenants and the parties now intend to wind up the Belknap Trust, the court need not delve into these murky waters.
[Note 18] Plaintiff testified as follows: Ive never seen [the February 1999 Document] until today . . . And I have a very clear memory of February 1st, 1999. . . . [Walsh], who was my godmother, who was like a second mother to me, died. So I cant even imagine or fathom going anywhere and signing anything and having it notarized on the day my aunt died. . . . I have no recollection of [executing the February 1999 Document] at all.
[Note 19] Plaintiff also testified that, on several occasions, she permitted Defendant to execute documents in her name. She denied agreeing to have title to Locus transferred solely to Defendant, but she also testified that she and Defendant discussed possible inheritance issues relating to Plaintiffs husbands children from another marriage, stating that Defendant told her dont worry about it. Well take care of you. Defendants testimony confirmed that the parties had such discussions; she further alleged that she took title to Locus, at least in part, out of a motivation to protect Plaintiffs interests. If this is true, then Defendant (who purportedly received Plaintiffs interest in the Belknap Trust pursuant to the February 1999 Document in her capacity as trustee of the Belknap Trust) had an ongoing fiduciaryduty to Plaintiff to hold Plaintiffs interest in the Belknap Trust for Plaintiffs sole benefit.
[Note 20] Defendant specifically testified that in [her] mind [Plaintiff] still owned 50 percent of the house and that Defendant at no time [tried] to dispossess [Plaintiff] of that interest. She also admitted never explicitly telling Plaintiff [t]hat I wanted her to deed [Locus] to me outright. Plaintiff confirmed this understanding: I thought I was a half owner and [ ] everything was [ ] good. Defendants testimony suggests that her intent was simply to create the mere impression that she was the sole of Locus so her lender would allow her to refinance the 1996 Mortgage. Notably, she also admitted to forging Plaintiffs signature on what would appear to amount to a sham lease in order to induce the 2005 mortgage. Whether these actions taken by Defendant to induce lenders to enter into mortgages constituted fraud is beyond the scope of this courts ruling.
[Note 21] Because the 1999 Mortgage and 2002 Mortgage have been discharged, the issue of their validity is moot.
[Note 22] Obviously, these mortgagees had a duty to perform the usual due diligence investigation associated with the closing of a mortgage, which would have included a routine title search. Such a search would have revealed only that Defendant held title to Locus individually, having conveyed such title to herself in her capacity as trustee of the Belknap Trust pursuant to the March 1999 Deed, which, as noted above, not only appears, on its face, to be valid and enforceable, but was also supported by a recorded trustees certificate. Moreover, at the time of the Post-1996 Mortgages, there was no lis pendens over Locus, so these mortgagees would have had no reason to suspect any irregularity as to the title of Locus. Under such circumstances, the court concludes that these mortgagees properly complied with their obligation to perform due diligence in connection with the Post-1996 Mortgage. As such, reformation of the 2005 Mortgage, which will have the effect of preserving the mortgagees interest thereunder, is warranted.
[Note 23] An exact calculation of the amount of the reduction of Defendants share in connection with the Post-1996 Mortgages is not possible based upon the evidence. Specifically, because Defendant failed to produce the settlement statement or the note for the 1999 Mortgage (or any records of the Trust Account prior to 2006), it is not known how much was outstanding on the 1996 Mortgage when it was refinanced or how much the monthly payments under the 1996 Mortgage were. Likewise, the parties have not produced evidence of the current amount outstanding on the current mortgage. As such, the parties will have to make a calculation themselves of the exact amount due from Defendant to the Belknap Trust when they arrange for Plaintiffs buyout of Defendants interest in Locus. Defendants liability shall be equal to the sum of the increased amounts due under the Post-1996 Mortgages (as compared with what would have been due under the 1996 Mortgage) for each of the months commencing after the 1999 Mortgage through what would have been the end of the term of the 1996 Mortgage. There is no way of knowing whether the adjustable interest rate on the 1996 Mortgage would have fluctuated, so the parties calculation shall assume that it would have remained fixed at 8%.
Notwithstanding the foregoing, the court notes that while Defendants actions were plainly improper, it is possible that refinancing the 1996 Mortgage generated certain benefits for the Belknap Trust; most obviously, the Post-1996 Mortgages had more favorable interest rates, and the 2005 Mortgage has a much shorter term. Byreducing Defendants share in Locus by the amount of increased indebtedness undertaken in the Post-1996 Mortgages over that in the 1996 Mortgage, Defendant will get credit for any such ancillary benefits achieved through her improper conduct.
The issue of the amount of restitution due from Defendant, plus that of what damages should be imposed as a consequence of Defendants malfeasance, must be determined by the parties in connection with Plaintiffs buyout of Defendants interest in Locus. As an alternative, it may be easier for the parties to negotiate a settlement of this matter between themselves.
[Note 24] The court is not able to determine the exact amount of tax benefits that Defendant will be required to disgorge because Defendant has not produced her tax records for each of the years in question. A determination of the amount Defendant must disgorge will require that her income tax returns are recalculated without factoring in the tax treatment Defendant took by virtue of her holding title to Locus from the date of the March 1999 Deed through the date of the 2012 Deed.
For example, if Defendant took tax deductions based upon depreciation of Locus or for interest paid on the Post- 1996 Mortgages, those deductions would have to be removed from the calculation of her net taxable income. Likewise, any homeowner tax credits received would also have to be removed. With such deductions and/or credits removed, the income tax due on Defendants adjusted taxable income would then have to be recalculated. The court is cognizant that this process could feasibly result in Defendant moving into a higher tax bracket, and that it will therefore likely require the expert assistance of an independent accountant. The court takes no position as to whether Defendant will be required to amend her tax returns for any of the tax years in which she held title to Locus.
As stated previously with respect to the parties calculation of Defendants liability with respect to the Post-1996 Mortgages, it may be easier for the parties to settle this matter between themselves.
[Note 25] Plaintiff also estimates that an additional $26,786.42 might have been spent by Defendant between August of 1999 and October of 2006. The court cannot award such speculative damages. See White Spot Const. Corp., 344 Mass at 634. Plaintiff complains that Defendant failed to produce Trust Account records pertaining to the period prior to November of 2006, and argues that [a] negative inference is warranted, but there is no representation by Plaintiff that she attempted to subpoena the bank to obtain these records and was unable to do so. Unless the parties can reach some kind of agreement among themselves when they arrange for Plaintiffs buyout of Defendants interest in Locus, Plaintiff is stuck with the proof she has adduced through her apparently limited efforts in discovery.
[Note 26] In addition, Plaintiffs allegation includes the June 22, 2010 charge of $92.13 at 99 Restaurant that, as discussed below, she in fact made. This amount is thus reduced from the total Defendant owes in the courts final calculations.
[Note 27] Defendant also incurred an unreimbursed out of pocket expense of $2,998.32 in connection with the closing of the 1996 Mortgage, which Plaintiff did not dispute.
[Note 28] This may seem an inequitable result, given that the parties agree that Defendant and her husband did, in fact, incur some out of pocket expenses when theyrenovated Locus. Defendant, however, has simply not given the court sufficient evidence upon which to award compensation for them, and Plaintiff had no duty to prove Defendants case for her. Given Defendants role as trustee of the Belknap Trust, it is simply unreasonable for her not to have in her possession (or available to her by request) all documents relative to the Trust Account since its creation, as well as the settlement statement for the 1999 Mortgage. Moreover, anysuch documents not in her possession and not available upon a routine request could have been subpoenaed. Nonetheless, in the interest of fairness, the court strongly encourages the parties to come to an agreement among themselves when they arrange for Plaintiffs buyout of Defendants interest in Locus as to how much Defendant deserves to be compensated for these expenses, since such expenses improved the value of Locus.
[Note 29] This, of course, assumes that the fair market rental value of the Upper Unit is comparable to that of the Lower Unit, something that Defendant appeared to suggest; Plaintiff seemed to disagree, noting unspecifically that the Upper Unit is not in condition to be rented out. Neither party adduced any evidence on this point. Notably, while the Lower Unit appears to have been renovated more recently, the Upper Unit appears to be larger. In the courts opinion, these factors cancel themselves out. Thus, in the absence of any appraisal or agreement by the parties to the contrary, the courts analysis will assume that the two apartments have an equal fair market rental value.
[Note 30] In addition to this amount, Plaintiff estimated that $76,950.00 in rent payments for the Lower Unit were paid to the Belknap Trust between April of 1997 and April of 2002. However, Defendant did not produce any Trust Account records for this period. Therefore, once again, Defendant, has simply not given the court sufficient evidence upon which to award compensation. See White Spot Const. Corp., 344 Mass. at 634. The documents necessary to do so should have been in Defendants possession (or available to her by request), and any that were not could have been subpoenaed. The court, again, encourages the parties to come to an agreement among themselves when they arrange Plaintiffs buyout of Defendants interest in Locus as to how much Defendant deserves to be compensated for rent on the Lower Unit from 1997 - 2002.
[Note 31] Plaintiff also requests credit for estimated deposits of $7,670.33 per year prior to 2007, based on the average contributions made from 2007 - 2013. This is unduly speculative. For instance, Plaintiff admitted that there was a period in 2000, after her son was born, in which she made no payments to the Trust Account at all. Thus, Plaintiffs estimation is insufficient as a basis upon which the court can award Plaintiff credit for payments allegedly made. See White Spot Const. Corp., 344 Mass at 634. This, again, must be settled by the parties among themselves when they arrange for Plaintiffs buyout of Defendants interest in Locus.
[Note 32] Since these room and board payments are being credited back to Plaintiff in the courts final accounting of the Belknap Trusts assets, there is no need to distinguish the portion of these payments that the parties considered to be credits to Plaintiff for her fathers food, as opposed to the portion identified as rent.
[Note 33] Although Plaintiff herself seemed to reject the idea that the personal contributions she was making to the Trust Account were rent payments, they are clearly characterizable as such. When seen in this light, it is clear that, while Plaintiff was not paying a regular, set amount to pay for the benefit of residing in the Upper Unit, her frequent contributions to the Trust Account clearly reflect that she was not receiving this benefit entirely for free.
[Note 34] As noted above, the courts analysis here will assume that the two apartments have an equal fair market rental value.
[Note 35] As noted above, this amount does not include the $76,950.00 estimated rent payments for the period of April of 1997 through April of 2002. The court, again, encourages the parties to settle this issue between themselves.
[Note 36] Just as Defendant was entitled to 100% of the rent for and/or use of the Lower Unit, Plaintiff is entitled to the same with respect to the Upper Unit, which means she is entitled to 100% of the amount that her father paid for room and board for the Upper Unit. With respect to Plaintiffs personal contributions to the Trust Account, Plaintiff would simply be entitled to immediate reimbursement of same from the Trust Account, but, to the best of the courts knowledge, the Trust Account does not contain sufficient funds to cover them. Because Plaintiff is entitled to 100% of these funds, in order to effect a reimbursement of same out of the Trust Account, Defendant would have to deposit those amounts into the Trust Account in order for the Trust Account to cover them. A much simpler solution would be to simply take the funds out of Defendants share of Locus. In effect, then, the court views Plaintiffs contributions as pre-payments towards the eventual sale price of Defendants interest in Locus.
[Note 37] To the extent that Defendant has already paid any of her attorneys fees and/or legal costs incurred in connection with the litigation of this dispute out of the Trust Account, she shall be required to repay any such amounts to the Trust Account.
[Note 38] More specifically, Plaintiff will be required to produce line-item invoices describing the services rendered by her attorneys, the amounts billed for such services, and the time spent in performing them. Plaintiff must establish the admissibility of such evidence, and Defendant will have the opportunity to challenge both its admissibility and the reasonableness of the legal fees incurred.
[Note 39] Because the 1999 Mortgage and the 2002 Mortgage have been discharged, the issue of the validity of these mortgages is moot. Having reformed the 2005 Mortgage and restored the Trust Deed as the deed of record to Locus, upon the entry and recording of this Decision, title to Locus will be held by the Belknap Trust, subject to the 2005 Mortgage (as well as any other encumbrances of record not at issue herein).
[Note 40] To illustrate, hypothetically, how this process would work, first, Defendant is required to immediately pay into the Trust Account the $21,035.78 that she owes, which funds should be used to pay to Plaintiff the $16,969.19 she is due, leaving $4,066.59 in the Trust Account (plus whatever assets are already there). Next, the parties would arrange for the sale of Defendants interest in Locus to Plaintiff. If the fair market value of Locus is assumed to be equal to the current assessed value of Locus ($590,300.00), the amount due to Defendant to payfor her 50% interest in Locus would come out to $295,150. That amount would be increased by $198,187.50 (Lower Unit rents), but reduced by $39,975.00 (the parties fathers room and board payments) and $55,192.32 (Plaintiffs contributions to the Trust Account). Further, if Defendant were to be found liable for payment of, for example, an additional $100,000.00 (in connection with the Post-1996 Mortgages, her tax benefits relative to Locus, and Plaintiffs legal fees and costs), those amounts would also come out of the amount due to Defendant. When these adjustments are taken into account, the net purchase price of Defendants interest in Locus would come out to $295,170.18. Finally, after the sale of Defendants interest in Locus is completed, the Belknap Trust can be terminated, upon which any funds remaining in the Trust Account would be split evenly between the parties.