-: SJC-13149.
Regan Stempniewicz Barbetti v. Edward Stempniewicz.
-: Okay, Attorney Tanner.
-: Good morning, your honor.
Mark Tanner, of Bacon Wilson
on behalf of Edward Stempniewicz.
This case arises from the grant of summary judgment
at the trial court level
on two separate and distinct issues.
First, the trial court granted
the plaintiffs in the underlying case
summary judgment on the issue of the formation
of a trust by Lubov Stempniewicz.
Second, after having made that decision,
the trial court then awarded the assets
that had been contributed to the Lubov Trust
to the estate by way of a constructive trust.
The third issue, which is before the court today,
is whether the trial court acted properly
in granting a separate and final judgment
relative to the previous.
-: Mr. Tanner, could we start with number three, though,
because it's a threshold issue.
And I understand that
there's thin analysis in the sense that
the judge just adopted the arguments
in the plaintiff's brief,
but here, we do have a novel issue
of public significance dealing with
an agent, or through a power of attorney,
the creation of a trust by somebody other than the settlor.
And even though that issue could possibly be mooted,
by some of the other claims,
when you look at Long versus Wickett,
isn't that enough considering
the enormous discretion judges have under 54B?
-: I'll agree that the trial court judges
have enormous discretion under rule 54, your honor.
But if you look at Long,
Long very clearly and very plainly requires
the trial court conduct an analysis
to enable our appellate courts to determine
whether or not there was an abuse of discretion.
And I suggest to you that analysis is wholly void
in the decision of the trial court.
-: Well, but we need to recognize
that sometimes judges do what what happened here.
What the judge did was said,
"No, I'm not,
"it's not that I'm not doing an analysis.
"I'm adopting everything in the plaintiff's brief
"as my analysis."
Is that not permissible?
-: That is permissible, your honor.
But if you then go back and you look
at the plaintiff's brief,
the plaintiffs don't discuss Long,
they don't discuss the Long factors,
they don't conduct any type of analysis whatsoever.
And so what that does is it leaves this court to guess
the reasons and the rationale for why the trial court acted.
And I suggest to you that on the rulings in Long,
that's an abuse of discretion.
Let's say with that issue out of the way
that the issue that I'd like to address first
is this issue as to the apportionment
of the trust's assets.
It's an issue that's very important in the case,
and it's an issue that's very important to my client.
In the plaintiff's motion for summary judgment,
they don't really raise this issue at all.
They don't argue the issue.
They don't raise the issue by way of something
in the statement of material facts.
They simply, as a request for relief,
ask that the court granted constructive trust
of the estate's assets,
which the trial court then does,
skipping the whole analysis of,
well how did those assets get into the estate?
Understanding that this issue was at least raised
in the plaintiff's motion for summary judgment,
Edward, in his affidavit, and in his opposition
to the plaintiff's motion for summary judgment,
makes a very clear and concise statement.
The assets-
-: I'm not sure the order in which you're taking
this particular argument.
It seems that we have one that should happen first,
but nonetheless, nonetheless,
their position is that your client
said just the opposite many, many times.
And that this one statement in one affidavit
is not enough to create a genuine issue of material fact
as to whose assets were in the trust.
-: So if you look at the statements
that Edward actually makes,
and I believe they're in the record appendix at 49 and 243,
what those statements very clearly say is that
"My mother knew and understood
"that her assets would be transferred into the trust.
They make no mention of joint assets.
They make no mention of Edward's assets.
They clearly and equivocally on their face
don't contradict the statement that Edward makes
in his affidavit and opposition
to the plaintiff's motion for summary judgment.
The only place that this really gets argued at all
by the plaintiffs in this case
is in a footnote to their reply memorandum
to Edward's opposition to their motion for summary judgment,
which is why they raise that argument, your honor.
I'd also just direct you,
so that I can move on to the next argument,
to the motion for reconsideration
that Edward filed in this case,
and if you look at that and you look at
the documents attached to that,
it's very clear that the accounts that are used
to fund the trust in the first instance
were joint accounts.
We give you the cover pages for those statements.
And so on the record that was before the trial court,
accepting the evidence
in the light most favorable to Edward,
the evidence that was before the judge
was that the trust was funded with Edward's money,
his mother's money, and joint money.
And therefore when the trial court
held that the trust was void from the beginning,
you then have to go through
and determine as a matter of fact
who actually contributed those assets.
-: But be that as it may,
it doesn't matter if
through a power of attorney,
this Edward, purported agent,
cannot create the trust.
-: Well, I think the issues are distinct.
Assuming that you find that Edward
didn't have the power to create the trust
through the power of attorney,
and the trust never existed,
which is what the trial court found.
-: Then you'll litigate, you're saying,
how much money each put in.
-: Exactly, and the court skipped that
and awarded it all to the estate.
I suggest to you that that, at a minimum,
should be remanded to the trial court for further hearings.
Moving to the issue of whether or not
you can delegate the intent to create a trust.
The Uniform Trust Code in Massachusetts
is absolutely silent on that issue.
And what this does is it is, in effect,
raises two separate sub-issues,
whether or not the trust could be created
on the facts of this case,
and whether in general,
it's permissible to delegate the intent to create a trust.
On the facts that were before the trial court in this case,
the record was that in 2017,
Edward had a conversation with his mother,
and they talked about things that might,
they might do in order to avoid the probate process.
Accepting Edwards representations as true,
as you have to for rules 56 purposes,
the substance of the conversation was,
let's figure out what we can do to avoid probate.
Lubov then instructed Edward to contact a lawyer
to figure out whether or not
they could create a trust and how much that would cost.
Lubov reported back,
or Edward reported back to Lubov,
indicating the amount and what would happen.
Lubov made a determination that it was too expensive,
and thereafter directed Edward to go online
as they had done with the power of attorney
in a previous will,
and see if there was a document that might work.
Edward did that- -: Along those lines,
I don't understand how you say that
the Mass Uniform Trust Code is silent on that issue.
First of all, in sections 401 and 402,
as it relates to how to create a trust,
doing it through a power of attorney isn't,
certainly isn't listed,
or having an agent do it isn't listed,
but then, interestingly and important enough,
when it comes to 602 and you're dealing with
other issues such as a revocation,
amendment, or distribution,
then you have clearly what is required,
and when, through a power of attorney,
you'd be able to be authorized to do this.
And you also have some tough commentary
in the Mass Uniform Trust Ad Hoc Committee
of the legislature,
talking about the importance of the creation of the trust,
not just being in the power of attorney,
but also in the trust document.
So, I'm a little...
I'm not sure I agree with you
that the statute is silent on this issue.
-: Well, the statute is silent
with regard to the creation of the trust,
not necessarily with changing, alter,
or amending an existing trust.
Clearly 602E deals with that issue.
And in fact, if you look at the commentary to 602E
at the uniform probate code level,
what that talks about is the fact that
people very frequently use trusts as will alternatives,
as a way of avoiding probate,
and therefore, where you have an existing trust,
which expresses an existing,
which clearly reflects the settlor's intent
as to what assets should go into the trust,
who the beneficiaries of the trust should be,
what the language of the trust to be.
In that circumstances when you're dealing with
an existing trust,
there's a very good reason that you would want
to have the express grant of authority
in order for some outsider to come in and change the trust,
which the settlor very clearly and consciously
decided to make.
That's not the case when you create a new trust,
and just circling back to the 2017 discussion
that Lubov had with his mother and the facts of this case.
In that instance, Lubov, on the record, on summary judgment,
instructed Edward to create the trust,
formed an intent to create the trust,
and thereafter, told Edward to take the trust
to the bank and sign it on her behalf
because she had arthritis at that time and couldn't sign.
There's no requirement,
there's at least no case law that I could find
that says she can't tell Edward
that he has the ability to sign the trust on her behalf.
Now, if you move to the second issue,
which is the issue we were just discussing,
that being whether or not you can delegate
the intent to create a trust.
I think it's important to note that
at the point that Massachusetts adopts the UPC,
there are several other states, I'm sorry the UTC,
there are several other states which have analyzed
and address this issue.
That being Vermont, Oregon, Virginia, and Missouri,
and where the legislators in those states
made a conscious decision that you should have
an express statement in order to delegate
the intent to form a trust,
they added that to their UPC, or to their UTC.
Massachusetts didn't do that.
Massachusetts recognized that 602E deals with
this will substitute theory,
and therefore, in order to change the express intent
that's already established,
you should have to have an express intent.
I'd suggest to you again,
that if you look at this notion of delegated intent
in the context of the power of attorney in this case,
it becomes pretty clear,
at least in my mind,
that you don't or shouldn't require
an express grant of authority.
So if you look at the POA, or the power of attorney,
that Lubov gave Edward,
which is at page 53 of the record appendix,
it gives him broad and almost complete authority
over her assets.
It gives him the power to do
anything he could do through an agent
for her stocks, her bankings, business operations,
insurance, retirement plans,
including changing beneficiaries,
and significantly it gives him the ability
to give gifts of all her assets
to almost anyone that he wanted to.
If you step back and think about trusts
in the context of a power of attorney,
a trust is really just a vehicle
to accomplish some other power,
which is expressly granted in the power of attorney.
And so it's not an end in and of itself,
like a deed, for example, would be.
So if you look at that in the context of
the gifting provision and the power of attorney
at issue in this case,
Lubov gives Edward the ability
to make broad gifts of her assets.
If you think about it,
from 10 feet away from the argument that we've been having,
there's really no good reason,
and if you look at the cases from the other states,
none of them express a good reason,
for taking away the ability of Edward to do that
through a trust as opposed to a direct gift.
If you look at our common law,
and you look at McQuade and those sorts of cases,
what they essentially say is you have to
construe the power of attorney
to ascertain the intent of the grantor,
and you can't construe it to destroy the powers
that are granted they're in.
And so if Lubov gives Edward
the ability to give away her assets,
there's really no good reason
that he can't give the assets to a trust
and have the trusts give away the assets.
If you were to, for example,
come down with a decision that says,
in order to create a trust through a power of attorney,
there has to be an express delegation of that power,
and someone, for example, put in their trust,
Mark Tanner may create a trust on my behalf.
That language in and of itself,
Mark Tanner may create a trust,
doesn't have a whole lot of meaning.
It doesn't tell you whether you
can give away my assets through a trust.
It doesn't tell you whether you can
do tax avoidance through my trust.
It doesn't tell me whether you can
own real estate through a trust.
All that it does is it says that Mark Tanner
may create a trust.
You would have to do what our common law
already tells you to do,
is go back and look at the powers that are expressly granted
in the power of attorney
and determine whether or not the attorney,
in fact, was given that ability.
For example, the gifting ability.
And if they're given the gifting ability,
there's really no sound public policy reason
why they shouldn't be able to do that through a-
-: This is a legislative interpretation case,
and in the commentary, again,
to 602,
I'm just even putting aside that 602 lays out
the process for revocation distribution,
and 401 doesn't even mentioned power of attorney
for creation,
but putting that aside for a moment,
the commentary of the ad hoc committee of the legislature
said that when a settlor's power
with respect to revocation, amendment,
or distribution of the trust
for it to be properly exercised,
an agent under a power of attorney,
not only has to have that authorization
in the power of attorney document,
but also in the trust document.
So, and we're dealing, again,
you keep on mentioning public policy, and I hear you,
but this is a legislative interpretation case.
-: And I think that that's a very interesting point,
because if you look at the model language of the UPC,
that same where Massachusetts uses the word and
with regard to the power of attorney and the trust,
the UPC uses the word or.
It has to be in one or the other of those two documents.
And I'd suggest to you that when it comes to
creating a new trust,
there's a distinction between creating a new trust
and changing, altering, or amending a settlor's intent
that they've already clearly expressed
in an existing trust.
And that's why, in that language in 602E in the commentary,
they require that that be through an express grant.
Otherwise, the use of a trust
is just a vehicle to accomplish some other objective.
I see that my time is up.
If there are no other questions,
I'll rest on our brief,
particularly with regard to the first two issues
that we discussed.
Thank you.
-: Thank you.
Attorney Stafford.
You're on mute.
-: Thank you, your honors.
May it please the court, Angelina Stafford,
on behalf of the plaintiffs Regan Stempniewicz,
Ryan Stempniewicz, and the estate of Lubov Stempniewicz.
Addressing, I'll address the orders briefly
in the order that they're raised in our briefs.
First, addressing the question as to whether
this was a proper 54B certification.
Ultimately, the court issued the requisite findings
that there was no just reason for delay,
and they did incorporate by reference
the reasoning and rationale set forth
in the estate's moving papers.
Those papers, those moving papers,
consisted of the initial motion,
as well as a supplemental brief.
This is an issue that was thoroughly briefed
by the parties on more than one occasion
and argued on more than one occasion.
And those documents on the estate's moving papers
are located in 165 through 170
and 176 through 185 on the record appendix.
They very clearly address
each of the factors set forth in Long,
noting that this is a unique question of law
that has impacts extending far beyond
the parties in this case,
that it is easily severed from the remaining claims,
because it involves the interpretation of a statute
in conjunction with a power of attorney
based on its corners,
and that it will simplify and expedite other claims,
particularly those that may have been
raised in the alternative,
which need not be pursued if judgment is affirmed,
and also alleviates the issue of hardship from a delay
with the estate being insolvent
and those cash assets remaining under Edward's control.
The estate has no ability to pay its expenses,
and there's an ongoing concern as to
the security and retention of those assets
and whether they will be misappropriated or transferred.
Ultimately, even where a case doesn't...
Strike that.
It's apparent on the face of the record
why this was entered as a separate and final judgment,
but judicial economy also warrants
addressing this issue now has been briefed by the parties.
Amici have weighed in, we are here,
and Edward Stempniewicz has represented repeatedly
that any adverse decision on this issue will be appealed.
So a remand for further findings
that does nothing other than to reiterate
what has been incorporated by reference
serves no purpose other than to
bring the parties back here in short order.
Turning to the issue of the trust,
section 105 of our trust code is clear
that the requirements for creating a trust are mandatory,
and those requirements are set forth in section 402,
and it requires that a set lore
possess the requisite capacity and intention.
It's, practically speaking, impossible for a third party
to possess that capacity and intention
on behalf of a set lore.
And that same principle was discussed
in the case of Phillip versus Till,
a Texas Appeals Court case,
which not controlling, but instructive,
the statute- -: Can I ask?
I found the Amicus brief
sort of very thoughtful on this point, though.
If the power of attorney expressly
provides for the creation of a trust,
isn't that clear enough indication of what the...
Isn't that enough?
I mean, it's indirect,
but it's express,
and we've got a lot of Amicus
who are very frightened of this power isn't allowed.
They've got all kinds of issues out there.
So why shouldn't we adopt that rule?
-: Well, your honor,
I think this is a question of statutory construction.
So the fact that the legislature took great pains
in adopting the uniform trust code
in conjunction with our probate code,
addresses this.
Whether or not certain interests-
(voices muffling) -: But it's silent.
It's silent on it, isn't it?
It doesn't address the issue.
It doesn't address the issue, right?
Either (voice cutting out).
-: (voice cutting out) It does.
I think the silence does address the issue.
The fact that the section 602 references
the one instance where an agent,
under written power of attorney, can interact,
and what is required to interact with a trust,
and that there's no comparable authority in section 402,
that that cannot be read in.
It's presumed to have been omitted
by the legislature intentionally.
And to the point that amici raises
that this would needlessly create
an ongoing requirement for conservatorships,
the probate code adequately addresses that.
Chapter 190B section 5-408
provides a mechanism to authorize the creation of trusts
without the appointment of a conservator
through a single transaction petition
or protective arrangement.
There's no requirement of finding of incapacity,
just that the security and needs of the protected person
will be adequately met.
So there are mechanisms to fill this gap
where the set lore, for one reason or another,
is not capable of exercising.
-: Section 407 does that as well
and gives the court the power to address that issue,
doesn't it?
-: Correct, your honor.
And I would suggest that the omission
of power to create by power of attorney is intentional.
-: Well, let me stop you there.
I'm sorry to interrupt Justice Lowy,
but you're suggesting that the omission is intentional,
and your brother suggested
that the failure of the legislature to not
do what the other states did in amending 602,
that we can infer that that's intentional also.
Following up on Justice Lowy's question,
how do we know that this is intentional in both instances?
And do you agree on section 602 that that was intentional?
-: I'm sorry, I'm-
-: Sorry, I shouldn't have interrupted you, Judge Lowy.
You go ahead. -: No, no, not at all.
I think it's a really important question,
if you don't mind, Ms. Stafford.
The argument is that,
and Justice Kafker made the same point as well.
All right, well, 602 lays out what we need to deal with
when we're dealing with distribution revocation,
for instance,
but we have silence on the 402 and 401,
but you actually have power of an attorney document
that allows for the creation of the trust.
Going back to Justice Cypher's question,
which way does the silence cut?
-: I think the town of Canton versus
Commissioner 455 Mass 783 addresses that,
where the legislature employees language
in one section intentionally,
but not another.
That omission in 402 is presumed to have been intentional.
And reading that plain language of the statute on its face,
it is requisite intent and capacity
personal to the set lore,
and not something that suggests that it can, in any way,
be delegated to carry out by a third party.
But to the extent that this court disagrees
and is inclined to agree with amici
that it can be delegated,
the only way to effectively delegate it
is via express language.
That's the only way in a power of attorney,
which is required to be strictly construed,
to actually delegate and express
a clear intention to create a trust via a third party.
And a number of cases outside of our jurisdiction
have addressed this question
in the context of the uniform trust code
and similar statutes, all reaching the same conclusion,
that the only way to express that clear intent,
for something that is a separate and distinct transaction
historically considered personal and nondelegable,
is to have it explicitly spelled out
in the power of attorney,
and the power of attorney- (voice muffling)
-: I'm sorry to interrupt you,
but there's an issue that you haven't addressed yet,
that Mr. Tanner raised on behalf of the defendants,
and it's really a simple, straightforward argument,
which is put aside the power of attorney,
What we have here is the defendant's mother
isn't really able, necessarily, to get around
and get down to the bank anymore,
and what she's doing is she's just authorizing
him to be her agent,
because she wants to change the trust
because now that she's moved to Massachusetts
and the circumstances have changed,
she's not comfortable with the will and the trust as it is.
And why do we even have to look at
the power of attorney or look at the trust language?
She's just, he's just an agent.
-: Well, your honor, I think record appendix page 70,
which is the signature page of the trust,
addresses this issue clearly and disposes of it.
The signature page states that Edward is signing
explicitly under power of attorney for Lubov
as set lore and as co-trustee.
It does not say that he is signing
pursuant to verbal authorization.
Because this document is notarized, chapter 222,
section 15,
would have required the notary
to take that direction from Lubov.
And to have mentioned that it was a verbal instruction
to sign on her behalf in the acknowledgement clause,
and that is not mentioned on this signature page.
It's very clearly signed under power of attorney,
which is also what his sworn statements indicate.
That then turns to the power of attorney
to determine, on its four corners,
whether or not that power is encompassed.
There is no contention that this is an unclear
or ambiguous power of attorney.
The only powers that discuss trusts
are paragraph seven and paragraph eight.
Paragraph seven
is a section that allows the attorney, in fact,
to accept or refuse assets that Lubov
may be able to receive as a beneficiary
from any number of sources,
estates, conservatorships, escrows, and trusts,
and strictly construing that,
he's authorized to receive distributions or refuse them,
but not to create a new document
that is dispositive in nature in the first instance,
or to exercise her intention do so.
And the interpretation offered by Edward
is that a plenary or broad grant,
the phrase all matters should be enough,
that has substantial implication in terms of harm.
These are documents that are used
beyond the supervision and purview of the courts.
If a conservator cannot wield the power
to create an estate plan or a trust without court authority,
it stands to reason that a plenary grant of power
and a power of attorney is not sufficient
to put the principal on notice
that they have given this power,
but that they are knowingly, voluntarily giving this power,
and that they appreciate the nature, effect,
and consequence of this action.
That's where the explicit grant comes in.
And that is also indicative of their intent
as required by section 402.
The all matters interpretation advanced by Edward
is not consistent with the balance of the power of attorney.
The second trust power in paragraph eight
deals with-
-: Counsel, can I stop you on that last statement?
Which was you said something to the effect of
the express language in the power of attorney
is indicative of intent.
Right?
And I'm wondering why we can't interpret 402's requirement
that the settlor indicates an intention to create the trust
as amici suggest, that if the power of attorney
had expressly stated,
and you, attorney in fact,
can create a trust to the extent you think
it's in my best interest,
why isn't that enough to satisfy 402's settlor's
indication of an intention to create a trust?
Because what you just said was that
her indication of intention is embodied
in the words of the power of attorney.
And to me, if the power of attorney actually said,
and I get your position that in this case it doesn't,
but if it actually said you, Mr. Power of Attorney,
Mr. Attorney, in fact, can create a trust
to the extent it's in my best interest,
why isn't that enough to satisfy 402?
Why does it have to be
her going to the bank to do the trust if she's not able?
-: I would agree with amici that if this court finds
that it is something that can be delegated
in weaving through the power of attorney statutes,
which do not preclude that,
and noting the silence in section 402,
I agree that that in that instance,
if this court believes it could be delegated,
it does in fact need to be explicit.
That is the only way to express the intent.
-: And I have a second question, which is
don't we have to send this back?
Because there's an affidavit from Edward saying,
"I put stuff in there, too.
"It's not all just the settlor.
"It's my stuff, too."
And why isn't that enough?
There's no prior statement that's directly in conflict
like the cases you cite.
This is the prior statements say, yeah,
Lubov's stuff is in there.
But now he's coming forward
that it's an actual issue on some rejudgement,
saying, hey, I got stuff in there, too.
Why isn't that enough?
-: Let's say in this case, your honor, a couple of reasons,
the first is it wasn't an isolated statement.
There were numerous sworn statements.
-: Yeah, but they're all about her assets
being in the trust.
-: Because- -: They're not saying
only her assets are in the trust
or exclusively her assets are in the trust.
It's her assets are in this trust,
and now he's saying in response to summary judgment,
yeah, her assets are in there, but there's also my stuff.
-: At the point in time that this statement is being made,
it's important to remember
the factual background of the case,
that at all points in time, Mr. Stempniewicz
was serving as a fiduciary,
either under the power of attorney or the trust.
This is a self-serving statement.
He's trying to paper over-
(voices muffling)
-: Self serving, right?
I mean, that just doesn't get you here nor there, right?
I mean, he's now put it at issue.
And at summary judgment,
the judge doesn't get to make credibility calls,
saying, ah, bah, he only gets to do that,
or he or she only gets to do that
if there's a direct conflict.
And what I'm suggesting to you is that
I've looked at the pages in
the record appendix that you cite,
and I don't see that direct conflict.
-: I would respectfully disagree.
I think there is a direct conflict
that the conversations,
that sworn statements from Mr. Stempniewicz
throughout the entire case was that
this was a trust created for Lubov's assets
for probate avoidance.
Only when faced with summary judgment
did he claim through a vague conclusory sentence
that he contributed assets.
There's no mention of what he contributed or when.
There are no documents produced.
This is all information that was within his control,
and the summary judgment standard requires
that he articulate more than just
a general vague allegation,
particularly when it's contradicting his prior statements.
There's not even any explanation in his affidavits
as to why this information wasn't included.
Just a single sentence that is self-serving
in an effort to drum up a dispute of fact.
Dalia: Thank you.
-: And your honor, I suppose,
what I would like to close with is that
the suggestion that there's no harm in allowing someone
to rely on a broad general grant is inaccurate.
This is a document that
is used outside of court supervision.
It's prone and ripe for abuse, as this case indicates,
and the absence of an explicit intention,
if this is a delegable power,
the absence of an explicit statement is problematic.
It does not confirm the intention requirements
under section 402.
And it also doesn't put any person signing
a power of attorney on notice
that they're giving someone this very important
and special power,
and that they understand the nature and consequence
of what that means to have conveyed the power
to create a trust,
an instrument which can divest them
of ownership of their assets
and impact disposition, not only during their lifetime,
but after their death.
And in this case, the instrument was used to do so
in a way that was inconsistent
with Lubov's prior estate plans.