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Whittaker v. Whittaker

United States District Court, D. Massachusetts

January 7, 2019

BENJAMIN H. WHITTAKER III, In his individual capacity and in his capacities as the Administrator of the Estate of Benjamin H. Whittaker, Deceased; the Administrator of the Estate of Mary S. Whittaker, Deceased; Co-Successor Trustee of the Benjamin H. Whittaker Trust u/a May 1, 1992; and Co-Successor Trustee of the Mary S. Whittaker Trust u/a May 1, 1992, and JOAN MUMMERY, In her individual capacity and in her capacities as the Co-Successor Trustee of the Benjamin H. Whittaker Trust u/a May 1, 1992; and Co-Successor Trustee of the Mary S. Whittaker Trust u/a May 1, 1992, Plaintiffs,



         The magistrate judge to whom this matter was referred filed a Report and Recommendation (“R&R”) recommending that the Plaintiffs' Motion for Partial Summary Judgment (dkt. no. 73) be denied, and that the Defendant's Motion for Summary Judgment (dkt. no. 78) be granted. The plaintiffs timely filed an objection to the R&R, and the defendant filed an opposition to the objection. Having reviewed de novo the objected-to portions of the R&R, the plaintiffs' objections are overruled and the R&R is adopted for the reasons articulated by the magistrate judge.

         Accordingly, the defendant's motion for summary judgment (dkt. no. 78) is GRANTED and the plaintiffs' motion for partial summary judgment (dkt. no. 73) is DENIED.

         Judgment shall enter for the defendant.

         It is SO ORDERED.


         I. Introduction.

         This is an action to void certain allegedly fraudulent monetary transfers. Plaintiff Benjamin H. Whittaker, III (Ben)[1] is the administrator of the estates of his deceased parents, Benjamin H. Whittaker (Benjamin) and Mary S. Whittaker (Mary). Ben and his sister, plaintiff Joan Mummery (Joan), are co-successor trustees and beneficiaries of Benjamin and Mary's inter vivos trusts (the trusts). Defendant Susan B. Whittaker (Susan) is married to Ben and Joan's brother, James B. Whittaker (Jay). Jay was trustee of his parents' trusts before Ben and Joan succeeded him. This case arises out of allegedly fraudulent transfers of funds from Benjamin and Mary's trusts by Jay, when he was trustee, to Susan, his wife.

         Plaintiffs moved for partial summary judgment (#73)[2] and defendant also filed a summary judgment motion (#78). The dispositive motions have been fully briefed (##74-75, 78-79, 82, 84-87, 96-97).

         II. Facts.

         The facts set out below are undisputed except as indicated. On October 3, 2006, Jay became the trustee of his parents' trusts when his sister, Carol R. Bell (Carol), resigned from the position. (#82-1, Exh. C, D.) At the same time, Benjamin and Mary signed durable powers of attorney to Jay. (#77 ¶ 4.) Jay consolidated the trusts' portfolio from three brokerages into a single account at Fidelity Investments. (#77 ¶ 6.) In October 2006, the value of the Fidelity account was slightly over one million dollars. Id. Over a period of years, Jay departed from a previously successful investment strategy by changing the investments primarily to options; the account suffered devastating losses. (#77 ¶¶ 7-8.) By September 2011, the balance of the account had diminished to $29.21. (#77 ¶ 8.)

         Benjamin died in January 2011, and Mary died in June 2012. (#77 ¶¶ 9, 10.) On the weekend of his mother's funeral services, Jay advised his siblings about the investment losses. (#77 ¶ 10; #78-2, Field Aff. ¶ 4, Tab 2 ¶¶ 59-60.) On about November 5, 2012, Jay stepped down as trustee; Ben and Joan became successor co-trustees of the trusts. (#77 ¶ 11; 78-2, Field Aff. ¶ 4, Tab 2 ¶ 74.)[3]

         In June 2012, the statements for the Fidelity account for 2008 through 2011 were delivered to Joan through Jay's counsel. (#77 ¶ 12; #78-2, Field Aff. ¶ 4, Tab 2 ¶ 38.) Between June 2012 and June 21, 2013, plaintiffs sent lists to Jay questioning certain items from the Fidelity account. (#77 ¶ 13.) One such list or spread sheet, titled as Estate of Benjamin H. Whittaker, Fidelity Withdrawals/Checks - Unknown Payees, was sent from Ben's Ohio counsel[4] to Jay's Ohio counsel no later than June 21, 2013. Id. The spread sheet listed seven checks totaling $149, 500.00 that were identified by check number, amount, and date clearing account. Id.; #78-1, Sontitch Aff. ¶ 3, Tab 3(ii), p. 2.

         That same figure, $149, 500.00, had been identified in plaintiffs' complaint filed against Jay in Ohio state court on February 15, 2013. (#77 ¶ 14.) In the Ohio complaint, [5] it was alleged that “the remaining $149, 500 in withdrawals from the Fidelity accounts (sic) remains unaccounted for but, upon information and belief, were used by Jay and/or transferred to Defendants John Doe, Jane Doe and ABC Corp. for purposes that were not in keeping with the intentions of” Benjamin and Mary. Id.; #78-2, Field Aff. ¶ 4, Tab 2 ¶ 38. Under a section titled “Jay's Transfer of Assets, ” plaintiffs named Susan as engaging in actions with Jay to encumber their residence and protect it from attachment should Jay lose that lawsuit. (#78-2, Field Aff. ¶ 4, Tab 2 ¶¶ 63-67, 69-73.) During that litigation, on June 21 and July 24, 2013, plaintiffs were presented with financial records showing the transfers and investments made by Jay. (#78-1, Sontitch Aff. ¶ 3, Tab 3(ii), 3(iii), 3(v), 3(vi).) These documents included personal checks, deposit records to a TradeStation account and bank accounts, mortgage applications and an accounting of transfers from the trust fund account. Id. The checks were made out to either a TradeStation account or to Jay, and each was dated between April 27, 2009 and February 10, 2010. Id. Susan's name appeared as a joint owner of the TradeStation account, as well as a co-borrower on the mortgage loan application.[6] Id.

         By letter dated June 24, 2013, after having received some of the TradeStation statements with defendant Susan Whittaker listed as co-owner, plaintiffs' Ohio attorney wrote to Jay's Ohio lawyer: “A partially-redacted copy of the personal income tax would provide information as to Jay Whittaker's reports of his income and expenses, but with the deposit of his parents' assets into a joint account owned by Mr. and Mrs. Whittaker (Jay and Susan), Susan Whittaker's joint liability with her husband is an open question.” (#78-1, Sontitch Aff. ¶ 3, Tab 3(iii).)

         On September 5, 2013, Jay filed a Voluntary Petition for relief pursuant to Chapter 7 of Title 11 of the U.S. Code. (#78-2, Field Aff. ¶ 6, Tab 4 ¶ 1.) In plaintiffs' adversary proceeding in Jay's bankruptcy action, the same total figure from improper withdrawals, $149, 500.00, was alleged in the complaint filed on January 21, 2014. (#77 ¶ 15; #78-2, Field Aff. ¶ 6, Tab 4 ¶ 46.) In their complaint objecting to dischargeability in Jay's bankruptcy, plaintiffs contended that Jay transferred the proceeds of the mortgage refinances he and Susan had made on their home in Wellesley, Massachusetts, to protect them from claims by plaintiffs “or otherwise benefit personally from the transfers by funding the down payment for the purchase of a timeshare in Mexico.” (#78-2, Field Aff. ¶ 6, Tab 4 ¶ 79.) They alleged that Susan knew that “the Parents' account at Fidelity had an asset value of less than $10, 000” when she and Jay entered into the first mortgage agreement with Rockland Trust. Id. ¶ 77. The following specific allegation was advanced: “To the extent that the Defendant [Jay] commingled, misused, misappropriated, concealed, or otherwise diverted Trust Assets for his own benefit or for the benefit of his spouse, the Defendant did so knowingly and willfully and with the intent to shield his own assets.” (#78-2, Field Aff. ¶ 6, Tab 4 ¶ 140.) (emphasis added.)

         In the present action, plaintiffs allege that $107, 500.00 of unauthorized trust transfers were used to purchase a timeshare in Mexico owned by Jay and defendant, and that the money has never been paid back to the trust. (#1 ¶¶ 30-32, 34.) Plaintiffs further allege that $48, 000.00 was diverted from the trusts and transferred to a TradeStation account jointly owned by Jay and Susan. (#1 ¶¶ 36-37, 39.) These transferred funds were also never repaid to the trust. (#1 ¶ 38.) The total of the amount alleged to have been fraudulently transferred, providing for certain corrected calculations, [7]is the same as the amount alleged in the Ohio civil action and the bankruptcy adversary action. (#77 ¶ 16.)

         III. Summary Judgment Standard.

         The purpose of summary judgment is “to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required.” Rojas-Ithier v. Sociedad Espanola de Auxilio Mutuo y Beneficiencia de Puerto Rico, 394 F.3d 40, 42 (1st Cir. 2005) (internal quotation and citation omitted). When considering a motion for summary judgment, “a court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden of averring the absence of a genuine issue of material fact and “support[ing] that assertion by affidavits, admissions, or other materials of evidentiary quality.” Mulvihill v. Top-Flite Golf Co., 335 F.3d 15, 19 (1st Cir. 2003) (citations omitted). Once the moving party asserts the absence of genuine issues of material fact, the non-movant must demonstrate the existence of a factual dispute with requisite sufficiency to proceed to trial. Fontánez-Núñez v. Janssen Ortho LLC, 447 F.3d 50, 54-55 (1st Cir. 2006). However, “. . . improbable inferences, conclusory allegations, or rank speculation . . .” cannot alone defeat summary judgment. Ingram v. Brinks, Inc., 44 F.3d 222, 229 (1st Cir. 2005).

         In determining whether summary judgment is proper, the record must be viewed in the light most favorable to the non-moving party and all reasonable inferences must be drawn in the non-movant's favor. Clifford v. Barnhart, 449 F.3d 276, 280 (1st Cir. 2006).

Where, as here, both parties have moved for summary judgment, the standard is the same. The court must rule on each party's motion on an individual and separate basis. Bienkowski v. Ne. Univ., 285 F.3d 138, 140 (1st Cir. 2002). For each claim, summary judgment is warranted if the record, viewed in the light most favorable to the non-moving party, discloses no genuine issue of material fact. Kunelius v. Town of Stow, 588 F.3d 1, 8-9 (1st Cir. 2009).

Hutchins v. McKay, 285 F.Supp.3d 420, 422 (D. Mass. 2018).

         Upon a party's motion, Rule 56 requires the entry of summary judgment where a party fails to establish the existence of any one essential element on which that party will bear the final burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “‘Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.'” Scott v. Harris, 550 U.S. 372, 380 (2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (further internal quotation marks omitted)).

         IV. Discussion.

         A. Defendant's Motion ...

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