Day v. Seblatnigg

          Argued September 6, 2018

         Procedural History

         Action for a judgment declaring, inter alia, a certain trust void ab initio and unenforceable, and for other relief, brought to the Superior Court in the judicial district of Stamford, where the court, Heller, J., granted the plaintiff's motion for summary judgment and rendered judgment thereon, from which the defendant First State Fiduciaries, LLC, appealed to this court. Affirmed.

          James G. Green, Jr., with whom were Jeffrey A. Dorman and, on the brief, Robert J. Mauceri, for the appellant (defendant First State Fiduciaries, LLC).

          Bridgitte E. Mott, with whom was Richard E. Castig-lioni, for the appellee (plaintiff).

          DiPentima, C. J., and Prescott and Flynn, Js.

          OPINION

          FLYNN, J.

         The principal issue in this case is whether a settlor of a revocable trust who is later under a voluntary conservatorship may, while under conservatorship, acting on her own behalf, convert the trust to an irrevocable trust without action by her conservator and without her conservator obtaining Probate Court approval. The defendant, First State Fiduciaries, LLC, ^[1] appeals from the judgment of the Superior Court granting the motion of the plaintiff, Margaret E. Day, coconservator of the estate of Susan D. Elia, for summary judgment and declaring that the Susan D. Elia Irrevocable Trust dated September 15, 2011 (Delaware irrevocable trust) was void ab initio and unenforceable, and that all transfers of assets from Elia's conservatorship estate to the Delaware irrevocable trust or its wholly owned limited liability company, Peace at Last, LLC, were unauthorized and improper and ordering that the assets from Elia's conservatorship estate that were transferred to the Delaware irrevocable trust to Peace at Last, LLC, ^[2]shall be immediately returned to Elia's conservatorship estate.

         On appeal, the defendant claims that the court erred in granting the plaintiff's motion for summary judgment in the absence of an indispensable party, Bryn Mawr Trust Company of Delaware (Bryn Mawr).^[3] We conclude that the court properly determined that Elia could not lawfully replace the Connecticut revocable trust with the Delaware irrevocable trust while under a conservatorship. We also conclude that the court properly determined that the former conservator of Elia's estate, Renee F. Seblatnigg, could not transfer the assets of the conservatorship estate to the Delaware irrevocable trust and that this transfer was void ab initio. Finally, we conclude that Bryn Mawr was not an indispensable party. We affirm the judgment of the trial court.

         On January 18, 2014, the plaintiff initiated the present action in which she sought a declaratory judgment that (1) the Delaware irrevocable trust was void ab initio and unenforceable; and (2) any and all assets transferred from Elia's estate to the Delaware Irrevocable Trust or to an entity owned by the Delaware Irrevocable Trust be returned to the estate.^[4] The following procedural history relates to the issues now on appeal. On February 26, 2015, the plaintiff moved for summary judgment.

         In its memorandum of decision, the Superior Court set forth the following undisputed material facts. ‘‘Elia is seventy-one years old. She suffers from advanced Parkinson's disease and lung cancer. In June, 2011, Elia applied to the Greenwich Probate Court for the voluntary appointment of a conservator of her person and her estate. Following a June 28, 2011 hearing in the Greenwich Probate Court, at which the court, Hopper, J., saw Elia in person, heard her reason for seeking voluntary representation, and explained to her that appointing a conservator as requested would subject her and her property to the authority of the conservator, the court found that Elia resided or had domicile in the Greenwich Probate District, that the court had jurisdiction, that Elia had requested the appointment of a conservator of the person and the estate, and that the proposed conservators had accepted the position of trust. The Greenwich Probate Court accordingly granted Elia's application for voluntary representation. By decree issued on June 28, 2011 . . . the court appointed Seblatnigg the conservator of Elia's estate and Richard DiPaola . . . the conservator of Elia's person.

         ‘‘The June 28, 2011 decree provided that Seblatnigg, as the conservator of Elia's estate, had the power to manage the estate, to apply estate funds to support Elia, to pay her debts, and to collect debts due to her. At the time of Seblatnigg's appointment as conservator of Elia's estate, Elia owned or held an equitable interest in cash and securities valued in excess of $6, 000, 000, including those held in the Susan D. Elia Revocable Trust, a 2007 revocable trust governed by Connecticut law (the Connecticut revocable trust).

         ‘‘In September, 2011, Seblatnigg consulted with the managers of First State Fiduciaries, [Attorney] Robert Mauceri . . . and [Attorney] James Holder . . . regarding the creation of an asset protection plan for Elia. They recommended to Seblatnigg that Elia establish and fund a self-settled irrevocable Delaware asset protection trust and a limited liability company, to be owned by the trust, to hold her assets.

         ‘‘Seblatnigg, as conservator of Elia's estate, entered into an asset protection services agreement on Elia's behalf with First State Facilitators, LLC (First State Facilitators), an affiliate of First State Fiduciaries, on September 15, 2011. Seblatnigg, as conservator, also signed a legal representation agreement on behalf of Elia with Mauceri. On the same day, Seblatnigg met with Elia and supervised her execution of the instrument that created the Delaware irrevocable trust. The trust instrument named Seblatnigg and Salvatore Mulia . . . as the independent trustees of the Delaware irrevocable trust and named First State Fiduciaries as the protector of the Delaware irrevocable trust. Seblatnigg did not seek or obtain the approval of the Greenwich Probate Court to establish the Delaware irrevocable trust or to advise Elia to execute the trust instrument.

         ‘‘A Delaware limited liability company, Peace at Last . . . wholly owned by the Delaware irrevocable trust, was formed on September 15, 2011, to hold Elia's assets. Beginning on September 20, 2011, Seblatnigg directed the transfer of more than $6, 000, 000 in cash and securities from Elia's conservatorship estate and the Connecticut revocable trust to the Delaware irrevocable trust or to Peace at Last. Seblatnigg did not seek or obtain the approval of the Greenwich Probate Court before she transferred the assets to the [Susan D. Elia Irrevocable Trust dated September 15, 2011 (Delaware irrevocable trust)] . . . or to Peace at Last.

         ‘‘Seblatnigg resigned as the conservator of Elia's estate on April 5, 2013. The Greenwich Probate Court accepted Seblatnigg's resignation on May 21, 2013, subject to the allowance of her final account, and appointed Mulia the successor conservator of Elia's estate.

         ‘‘The Greenwich Probate Court appointed the plaintiff the coconservator of Elia's person on May 23, 2013. On January 9, 2014, at Elia's request, the Greenwich Probate Court issued a decree . . . naming the plaintiff the coconservator of Elia's estate for the limited purpose of any matters relating to Elia's interest in the Delaware irrevocable trust, because Mulia had a possible conflict of interest.

         ‘‘In March 2014, shortly after the plaintiff commenced this declaratory judgment action, First State Fiduciaries filed a petition in the Delaware Court of Chancery (Delaware action) in which it sought an order compelling Morgan Stanley Smith Barney, LLC (Morgan Stanley), which held the assets of the Delaware irrevocable trust, to transfer the trust assets to the purported new sole trustee, the Bryn Mawr Trust Company of Delaware . . . . Morgan Stanley filed an answer and counterpetition in the nature of an interpleader, in which it maintained that it had no interest in the trust assets, on May 19, 2014.

         ‘‘On May 16, 2014, the plaintiff moved to intervene in the Delaware action. The motion to intervene was granted on June 10, 2014. The plaintiff filed a response, counterclaim, and third-party complaint in the Delaware action that day. On January 29, 2015, the plaintiff moved for a protective order and to stay discovery in the Delaware action. Morgan Stanley joined in the plaintiff's motion to stay the Delaware action.

         ‘‘On February 13, 2015, a special master in the Delaware action recommended that the court deny First State Fiduciaries' motion to compel and grant the plaintiff's motion for a protective order and a stay of any discovery. In a letter to counsel dated August 4, 2015, the special master indicated that she was recommending that the court stay the Delaware action in its entirety.'' (Footnotes omitted.)

         The court granted the plaintiff's motion for summary judgment. The court determined that ‘‘[n]o genuine issue of material fact exists as to whether Elia was under a voluntary conservatorship at the time she executed the instrument creating the Delaware irrevocable trust. While Seblatnigg, as conservator, could have created and funded the Delaware irrevocable trust with the Greenwich Probate Court's approval, she chose instead to do so without the court's authorization'' in violation of General Statutes § 45a-655 (e).^[5] The court ruled that ‘‘[u]ntil such time [as Elia sought and obtained release from the conservatorship pursuant to General Statutes § 45a-647] . . . the conservator, as the agent of the Probate Court [had] the exclusive authority to manage the affairs of the conserved person.'' The court concluded that the Delaware irrevocable trust was void ab ...