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Hanna v. Williams

Superior Court of Massachusetts, Suffolk, Business Litigation Session

January 6, 2017

Stephen Hanna, as Personal Representative of the Estate of Nathalie Rothblatt
v.
Matthew Williams et al No. 136802

          Filed January 9, 2017

          MEMORANDUM AND ORDER ON MOTIONS TO DISMISS (CORRECTED VERSION)

          Edward P. Leibensperger, Justice of the Superior Court.

         Alleged misconduct by lawyers and a financial advisor to cause a 91-year-old, infirm woman to execute a new will six days before she died resulted in disputes over the distribution of her $12 million estate. The disputes among the possible heirs were, ultimately, settled by a compromise agreement. The probate court approved that agreement by a Decree and Order of Compromise. Now three of the heirs, who were parties to the compromise agreement, sue the lawyers and the financial advisor for intentionally and tortiously interfering with their expected inheritance (Civil Action No. 2016-0724). The three heirs claim they would have received a much larger inheritance than what they obtained through the compromise agreement but for the conduct of defendants. Also, the personal representative of the estate sues the same defendants to recover the legal fees paid by the estate on behalf of all the heirs, incurred as a result of the litigation, allegedly caused by defendants' conduct, over the distribution of the estate (Civil Action No. 2016-0722).

         Defendants move to dismiss all claims contending that (a) this court lacks subject matter jurisdiction over plaintiffs' claims as a result of the proceedings in the probate court, and (b) the complaints fail to state a claim upon which relief may be granted.[1]

         BACKGROUND

         The following facts are taken from the complaints. For the purposes of these motions, the factual allegations, and reasonable inferences therefrom, are taken as true. Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676, 940 N.E.2d 413 (2011).

         Events Surrounding Execution of Will and Trust

         In 2013, Natalie Rothblatt was a 91-year-old widow. On March 7, 2013, Rothblatt fell and broke her hip. She was taken to Beverly Hospital. At that time she suffered various other ailments such as chronic congestive heart failure, kidney failure and low blood pressure. She suffered from severe pain from the broken hip, as well as dizziness and difficulty concentrating. She was placed on medication including morphine and dopamine that affected her cognition. During her hospitalization she suffered bouts of disorientation, delusions, and confusion. She did not recover. On March 20, 2013, she died.

         Rothblatt did not have children. She was predeceased by her husband, William Rothblatt, and her brother Sidney Berkowitz. She was survived by her brother, Henry Berkowitz. In addition, her family consisted of the children of Sidney Berkowitz, plaintiffs in this case, Elliot, Steven, and Esther Berkowitz (the " Berkowitz Siblings"). She was also survived by her first cousin, Ralph Edelstein, and his wife, Eileen Edelstein.

         The following events occurred during Rothblatt's two-week hospitalization prior to her death. Ralph and Eileen Edelstein visited Rothblatt. They observed that her prognosis was poor. Ralph Edelstein contacted defendant, Matthew Williams, a financial adviser employed by defendant, RBC Capital Markets, LLC (" RBC"). RBC had acted as a financial adviser to Rothblatt for several years, although Williams had only recently become the person responsible for her account. At the time of her death, Rothblatt possessed assets worth approximately $12 million. Her account at RBC was worth approximately $9 million. Her account was Williams' largest account for which he was responsible.

         Williams visited Rothblatt at the hospital on March 12, 2013. He commenced a discussion with her about her estate planning. Williams knew that Rothblatt did not want to leave any portion of her estate to her surviving brother, Henry Berkowitz. At the hospital in March 2013, Williams told Rothblatt that she needed to execute a new estate plan because if she did not her estate would go to Henry Berkowitz. The complaint alleges that Williams' statement was false and was made recklessly or intentionally to induce Rothblatt to agree to a hastily constructed estate plan, orchestrated by Williams.

         According to Williams, Rothblatt told him that she wanted to execute a new will that would include as legatees Ralph and Eileen Edelstein, and two of the three Berkowitz Siblings, Steven and Elliot. According to Williams, Rothblatt also stated that she wanted to give a large portion of her estate to him, Williams. Williams then selected a friend, defendant Bradley Cook, an attorney at defendant Taylor Ganson & Perrin, LLP (" Taylor Ganson"), to draft a new will and trust. Rothblatt had no previous association with Cook or with the law firm.

         Based on what Williams told Cook, a new will and trust were drafted. Cook was assisted in the drafting of the new will and trust by defendant, Michael Starr. Without ever having met or conversed with Rothblatt, Cook and Starr drafted the estate plan and then went to Rothblatt's hospital room, accompanied by Williams, on March 14, 2013. At that time, Rothblatt executed the documents. The estate planning documents drafted by Cook and Starr included a devise to Williams and his family of assets worth over $2 million. In addition, the documents provided that Taylor Ganson act as trustee of a well-funded trust. The trust was drafted such that it would have a very long life, which would generate significant fees for the trustee law firm.

         The execution of the documents at the hospital occurred without the presence of anyone from Rothblatt's family, or any other independent person. No evaluation of Rothblatt's competence to execute the documents was performed, even though it was allegedly obvious that she was impaired. Neither Cook nor Starr had any conversation with Rothblatt to ascertain her intentions. Rothblatt signed the documents without reading them. Concerned that Rothblatt would die before they could complete the estate plan, Williams, Cook and Starr took extraordinary steps to make sure the documents were executed that day, before Rothblatt was scheduled for major surgery. The complaint alleges that Rothblatt lacked the capacity to create a new estate plan and that fact was known or should have been known to defendants.

         According to the complaint, Cook took the executed documents back to his office in Boston. There, he pressured an employee of the law firm to notarize Rothblatt's signature on the documents, although the notary had not been present at the hospital and did not, in fact, witness Rothblatt's signature.

         The Prior Will

         In 1961, Ralph Edelstein's law firm prepared a will for Rothblatt. Rothblatt executed the will on December 29, 1961. The will left her household furniture and tangible personal property to Ralph Edelstein. All the rest and residue of her estate was devised to her brother, Sidney Berkowitz, and if he predeceased her (as he did) to his issue, per stirpes. Those issue are the plaintiffs, the Berkowitz Siblings. Rothblatt's other brother, Henry Berkowitz, was not named as a legatee of her will. Ralph Edelstein was named as the executor of this 1961 will.

         Litigation After Rothblatt's Death

         When the family members of Rothblatt learned, after her death, of the hastily arranged new will and trust, they were shocked and upset. When they complained to RBC and Taylor Ganson, both firms quickly determined that their employees and the firms must disclaim their beneficial interests in the will and withdraw from representation. Williams formally waived his rights under the will. The law firm resigned as trustee. The validity of the new will and trust, however, remained clouded by defendants' conduct. Disputes between and among family members based upon the validity of the 1961 will and the allegedly tainted 2013 will ensued. Each of the family members retained separate legal counsel.

         A Petition for Probate of the 2013 will was filed in the Probate and Family Court in Essex County. Plaintiff, Stephen Hanna, was appointed personal representative of the Estate of Nathalie Rothblatt (The " Estate"). Extensive litigation took place regarding the validity of the 1961 and the 2013 wills. In 2014, the parties reached a settlement. Pursuant to the settlement, the Berkowitz Siblings received 71 percent of the estate rather than the 100 percent they otherwise would have received under the 1961 will. The Berkowitz Siblings also allege that they suffered significant emotional distress from the experience of the dispute and litigation.

         Pursuant to the settlement, Stephen Hanna obtained the approval of the probate court to pay the legal fees and costs incurred by all the litigants in the probate court litigation out of the Estate assets. The amount of legal fees paid by the Estate as a result of the litigation was approximately $1, 240, 000.

         The following are additional facts in the record provided by the Affidavit of Debra Squires-Lee. The Affidavit submits " true and accurate" copies of documents from the Probate and Family Court in the matter of the Estate of Nathalie Rothblatt, Docket No. ES13P1055EA. The probate court documents are submitted in support of defendants' motions to dismiss on the premise that (a) upon a motion to dismiss for lack of jurisdiction the court may consider materials outside the complaint, Audoire v. Clients' Security Board, 450 Mass. 388, 390 n.4, 879 N.E.2d 52 (2008), and (b) this court may take judicial notice of public documents from another court. Plaintiffs do not contest or object to the consideration of the documents from the probate court.

         In the probate court, Edelstein petitioned for probate of the 2013 will. The Berkowitz Siblings objected and challenged the 2013 will in favor of the 1961 will. Henry Berkowitz objected to both wills. The objectors to the 2013 will alleged that the will was procured by undue influence over Rothblatt and that Rothblatt did not understand or comprehend the implications of what she was doing by signing the 2013 documents. After a significant amount of litigation activity, the parties to the probate court proceeding entered into a settlement. A Compromise Agreement, dated August 5, 2014, was submitted to the court.

         The Compromise Agreement references the disputes regarding the 1961 will and the 2013 will, but does not state a conclusion as to which is the valid will. The Agreement provides for a compromise whereby each of the contestants receives a percentage of the residue of Rothblatt's estate. Thus, Ralph and Eileen Edelstein received 19 percent, Steven Berkowitz received 24 percent, Elliot Berkowitz received 29 percent, Esther Berkowitz received 18 percent, and Henry Berkowitz received 10 percent of the estate. The Compromise Agreement also attaches and incorporates a " Compromise Last Will and Testament of Nathalie Rothblatt" to describe the settlement agreement.

         The parties submitted the Compromise Agreement and the Compromise Last Will and Testament of Nathalie Rothblatt to the probate court for approval. On August 7, 2014, the court entered a Decree and Order of Compromise. The Decree approved the Compromise Agreement. No finding was made in the Compromise Agreement or in the Decree regarding the validity or invalidity of the 1961 will or the 2013 will. Also, on August 7, 2014, the court entered a Decree and Order of Petition for Formal Adjudication. In that Decree, the probate court formally " admitted to Probate" the Compromise Last Will and Testament of Nathalie Rothblatt.

         The Compromise Agreement also provides that the Estate shall pay the costs of litigation and attorneys fees incurred by each party in connection with the subject matter of the Compromise Agreement. The parties agreed to the amounts of costs and attorneys fees submitted by each party to Hanna and directed Hanna to pay those costs. The probate court approved the Compromise Agreement.

         Finally, the Compromise Agreement provides, in paragraph 11, that " Stephen J. Hanna, after consultation with the Parties' attorneys, will consider what actions, if any, are to be taken with respect to any claims that the Estate of Nathalie Rothblatt may have against (i) Taylor Ganson & Perrin, LLP, Bradley R. Cook, Michael J. Starr, and any other attorneys or employees; and (ii) RBC Capital Markets, RBC Wealth Management, Matthew R. Williams, and any other employees, ...


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