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Brining v. Donovan

Superior Court of Massachusetts, Suffolk, Business Litigation Session

February 26, 2018

Jennifer BRINING, Individually and as Trustee of the Jennifer Brining Living Trust and for the Benefit of Sendlater, Inc. in a Derivative Capacity
v.
John J. DONOVAN et al.

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANT’S MOTION TO DISSOLVE PLAINTIFF’S TRUSTEE PROCESS ATTACHMENT

          Mitchell H. Kaplan, Justice of the Superior Court

         INTRODUCTION

         This case is before the Court on the trustee process defendants, William T. Hurley, Jr. ("Hurley") and Miranda P. Gooding, Esq. ("Gooding"), motion to dissolve plaintiff’s attachments on trustee process. On December 13, 2016, this court entered orders authorizing $1 million attachments on trustee process against both William T. Hurley, as Trustee of the Trust One JJD, and Miranda Gooding, as Trustee with respect to an escrow account held by her law firm, Glovsky & Glovsky, LLC (the Escrow and, collectively the Attachments and the Trustees). The Attachments attached any goods, effects or credits of the defendant John J. Donovan, Sr. (Donovan, Sr.) held by each Trustee to secure a judgment that the plaintiff Jennifer Brining sought to recover against John J. Donovan, Sr. in this litigation.[1] In the principal action, Brining now asserts claims derivatively on behalf of Sendlater, Inc. for approximately $2.5 million which she maintains Donovan, Sr. misappropriated from Sendlater during the period that he controlled its accounts and operations. See Motion to Dismiss Decision. After Donovan, Sr.’s motion to dismiss was denied, the Trustees filed this motion to vacate the Attachments (Motion to Vacate).

         This Motion to Vacate turns on the issue of whether the assets attached in Trust One JJD and the Escrow are "due absolutely and without contingency" to Donovan, Sr. and, therefore, subject to attachment under G.L.c. 246, § 20. As will be apparent. neither of the Trustees possess credits absolutely due and owing to Donovan, Sr. and therefore the Motion to Vacate must be ALLOWED.

         STATEMENT OF FACTS

         As noted above, there are two attachments on trustee process at issue: one attaching assets in Trust One JJD, where Hurley is trustee, and the other attaching credits held in the Escrow by Glovsky & Glovsky, LLC, where Gooding is the Escrow Agent (for simplicity, also referred to as a Trustee).

         Trust One JJD

         Trust One JJD was created as part of a court approved settlement agreement ("Final Settlement Agreement") between Donovan, Sr. and his children that resolved two civil litigations between them, one of which is still pending in this court for the purpose of confirming orders entered in arbitrations that have been convened, on and off, over a period of thirteen years under the terms of the settlements. See Rebecca M. Brown & others v. Linda Donovan, Suffolk Superior Court CA No. 03-4247 and No. 06-4149.[2] The Final Settlement Agreement is dated March 3, 2007. Pursuant to its terms, former United States District Court Judge John S. Martin, Jr. ("Judge Martin") was appointed as arbitrator to resolve continuing disputes between the parties. The Final Settlement Agreement also established Trust One JJD in which real property and other assets that were the subject of the parties’ disputes was deposited. Trust One JJD was initially intended to restrict Donovan, Sr.’s ability to control the trust assets for a period of ten years (until 2017), after which, Donovan, Sr. would have had "full power, authority and discretion to manage and administer [Trust One JJD]." Final Settlement Agreement § 2.1. During that ten-year period, the Trustee was prohibited from making "any distributions of Trust principal to any beneficiary" without Judge Martin’s approval. Trust One JJD Agreement, ¶ 2.1. The Final Settlement Agreement only permitted Trust assets to be used to pay real estate taxes and municipal assessments. Sullivan Aff., ¶ 31.

         In December 2014, Donovan, Sr. and his children amended the Final Settlement Agreement, and on January 13, 2015, Judge Martin approved the amendment. The amendment extended the term of the restricted period during which no distributions could be made from the Trust from ten years to Donovan, Sr.’s lifetime or his incapacity, effectively preventing any distribution to Donovan, Sr. of principal from the Trust during his life. More specifically, the Amendment provided that the Trustee "shall not, without [Judge Martin’s] express prior approval, disburse, expand, transfer, convey, or alienate any Trust One JJD’s assets." January 13, 2015 Order, ¶ 2-3. The court intuits that the reason for the extension was the assertion of additional claims against Donovan, Sr. for alleged wrong doing.[3] It is the court’s understanding that there are presently still claims asserted against Donovan, Sr. by his children that, if allowed by Judge Martin, would be paid from the corpus of the Trust or result in other disposition of Trust assets.

         Trust One JJD also contains a "spendthrift provision" that prevents Donovan, Sr. from alienating his beneficial interest to creditors: "The interest of a beneficiary in their Trust shall not be subject to [or] be taken by his creditors by any process." Trust One JJD Trust Agreement § 4.3.

         Glovsky & Glovsky, LLC

         Gooding is a lawyer with Glovsky & Glovsky, LLC. That firm is holding proceeds from real estate transactions in the Escrow pursuant to an order issued by Judge Martin on November 29, 2016 and agreements between Donovan, Sr. and his children. The real estate transactions involved the sale of undeveloped land owned by Donovan Conservation and the Essex Land Realty Trust. Sullivan Aff., ¶ 44. Glovsky & Glovsky, LLC apparently provided legal services in connection with these transactions. Under the terms of the Escrow funds are to be "used to pay all other reasonable fees and expenses incurred [in connection with the transaction]." Gooding Answer, ¶ 14. The remainder is to be donated to a mutually agreed upon charity. Amendment of Agreement Regarding Essex Land Realty Trust Mortgage, ¶ 3. Donovan, Sr. submitted a list of expenses owed or paid to vendors to Gooding to be paid from part of the balance of the real estate transaction proceeds. Gooding Answer, ¶ 16. Gooding objected to the list of expenses. Judge Martin ordered the proceeds to be retained in the Escrow pending the resolution of the objections. Gooding Answer, ¶ 18.

         DISCUSSION

         Legal ...


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