July 2020

Ralph Paul Deputy v. Jay Christian Deputy, C.A. No. 10874-VCZ (March 2, 2020)

          This case dealt with Paul and Jay Deputy, who are brothers. The Court noted that “strife has existed between them for decades, in part due to the fact that Paul is adopted, and in part due to Jay’s difficulty in doing what is right. Jay is, in fact, his brother’s keeper: he is the trustee of two family trusts, of which both Jay and Paul are beneficiaries. Paul placed his full confidence in Jay and relied on him to keep what was Paul’s and act in Paul’s best interest. But sin crouched at Jay’s door, and he failed to rule over it.”

          There were two trusts at issue. Purportedly acting under the authority of a durable power of attorney, Jay drafted and executed an amendment to each trust that included a no-contest provision. The Court found that “[b]oth amendments granted Jay, as trustee, the authority to revoke the beneficiary status of any trust beneficiary when Jay concluded the beneficiary had contested the trust or related documents. Jay never provided Paul with a copy of either amendment, failed to promptly inform Paul that he had amended the trusts, and did not explain the amendments’ material effects on Paul’s interests.”

          The Court found that neither of the “amendments” were valid. “Each amendment was a departure from each settlor’s estate plan. Jay executed these amendments in the shadows while each settlor’s well-being hung in the balance. Knowing that each settlor would have likely protested his efforts, Jay did so in order to take control of the trusts and secure their benefits for himself.”

          Jay thereafter acted as though both amendments were legally operative. The Court explained that much suggests “that Jay keenly awaited the moment at which he could exercise his revocation powers to excise Paul from both trusts. Eventually, Paul asked enough questions that Jay pounced and told Paul that his interests were revoked under the amendments. Jay’s ‘revocations,’ if valid, would have the effect of transferring 100% of the interest in each trust to Jay.”

          But Jay didn’t unequivocally explain to Paul that his interests were revoked. Thus, for a number of years, Paul was unaware of what had truly occurred, despite a number of red flags to the contrary, such as not receiving distributions or information about the trusts.

          But, over ten years after all of this started, Paul filed a case contending that Jay, as trustee, breached his fiduciary duties to inform, of loyalty, and of care, and was unjustly enriched by those alleged breaches. Paul sought inventories and accountings for the trusts, damages, removal of Jay as trustee of the trusts, and attorneys’ fees.

          In response, Jay contended that Paul’s claims were barred by the equitable doctrine of laches. The Court concluded that based on the preponderance of the evidence presented at trial, Paul prevailed.

          The Court explained that its “findings of fact [stated in its opinion are] of biblical proportions due to the complexity and extent of Jay’s sins.”

          The Court thereafter ordered that Jay is removed as trustee of both trusts and replaced by Paul and that Jay provide Paul and this Court with an inventory and accounting of both trusts. Further, the Court ordered that Jay disgorge his ill-gotten gains, and also pay Paul’s attorneys’ fees as a result of his bad faith.

          It also worth noting that the Court denied Jay’s laches defense because Jay was unable to demonstrate unfair prejudice from the delay.