Opinion
No. MMX-CV06-4005351-S
August 23, 2007
MEMORANDUM OF DECISION
This case is an appeal from the decision of the Probate Court for the district of East Haddam, Connecticut, (Buhl, J.) ordering the removal of the appellants, Donald Stanavage and Kellee Ratzer as trustees of the Mary A. Spitzschuh May 11, 2000 trust. The probate judge's decision of February 28, 2006 indicated: "This court's sole basis for removal of the trustees in its January 27, 2005 memorandum was the sale of the real estate belonging to the trust to a relative of the Trustees, Dianne LaVallee (the sister of Donald Stanavage and the first cousin of Kellee Ratzer), for that the court deemed to be in an unreasonably low price given the real estate's potential for subdivision and without any public advertising."
The protagonists in this litigation are related. Mrs. Marion Stanavage, a defendant, is the mother of Donald Stanavage and the aunt of Kellee Ratzer. Mrs. Spitzschuh who created the trust, is the mother of Mrs. Stanavage and the grandmother of Donald Stanavage and Kellee Ratzer. Ms. Spitzschuh was the sole beneficiary of the May 11, 2000 intervivos trust. Ms. Spitzschuh passed away and the balance of trust assets are to be distributed in accordance with her will. The will provides for distribution to Ms. Stanavage, the appellants, and other relatives.
The primary assets of Ms. Spitzschuh were three parcels of real estate located in East Haddam, Connecticut.
The sale of one piece of property was the basis for the removal of the appellants as trustees. Diane LaVallee, the sister of Donald Stanavage and first cousin of Kellee Ratzer who has been a real estate agent, expressed interest in purchasing one parcel of property on 59 Baker Road, East Haddam. The 59 Baker Road property consisted of a residential dwelling and 11.3 acres. The other properties owned by the estate of Ms. Spitzschuh were a 10.06-acre lot on Baker Road, and a 5-acre parcel on West Road in East Haddam. The trustees had the property appraised and sold the 59 Baker Road property to Ms. LaVallee for the appraised price of $132,500. The 59 Baker Road property was not listed for sale or marketed by the trustees.
Conn. Gen. Stat. § 45a-242 sets forth the grounds for removal of fiduciary. The statutory grounds for the court of probate's removal of fiduciary are: "(1) The fiduciary becomes incapable of executing such fiduciary's trust, neglects to perform the duties of such fiduciary's trust, wastes the estate in such fiduciary's charge, or fails to furnish any additional or substitute probate bond . . ., (2) lack of cooperation among co-fiduciaries . . ., (3) because of unfitness, unwillingness or a persistent failure of the fiduciary to administer the estate effectively, the court determines that removal of the fiduciary best serves the interests of the beneficiaries . . ."
In considering the removal issue that was raised and resolved in the Probate Court, the Superior Court hears the matter de novo. Ramsdell v. Union Trust Co., 202 Conn. 57, 65 (1987). "Removal of an executor is an extraordinary remedy designed to protect against harm caused by the continuing depletion or mismanagement of an estate . . . In the absence of continuing harm to the interests of the estate in its beneficiaries, removal is not justified merely as a punishment for a fiduciary's past misconduct." Ramsdell v. Union Trust Co., 202 Conn. 57, 66-67 (1987).
The defendant, Marion Stanavage, is the only party to appear to oppose the appellants' challenge to their removal. In her objection to their reinstatement, she has two basic arguments. 1) That the removal is necessary for the protection of the other assets of the estate particularly the two additional parcels of unapproved land (10-acre lot on Baker Road and 5-acre lot on West Street). She also notes that the successor trustee, Mr. Comer, set forth in his accounting the potential claim against the co-trustees for the sale of 59 Baker Road for allegedly less than fair market value.
"The existence of a potential conflict of interest does not, of itself, mandate removal of (a fiduciary) . . . Thus, in order to justify removing (a fiduciary), there must be evidence of a clear and continuing conflict of interest rendering the (fiduciary) unfit to perform (his) duties to the estate. The bare possibility of a cause of action on the estate's behalf against the (fiduciary), if such a claim were frivolous or speculative, would not warrant removal. Whether the (fiduciary) has a conflict of interest that renders (him) unfit to continue in the service of the estate depends, in significant part, upon whether the estate's potential claims against the (fiduciary) have sufficient substance to warrant consideration by a successor fiduciary uninfluenced by a motive to avoid litigation." (Citations omitted.) In re Andrews' Appeal from Probate, 78 Conn.App. 429, 436 (2003), Ramsdell v. Union Trust Co., supra at 66-67, also Satti v. Kozek, 58 Conn.App. 768, 776 (2000), cert. denied, 254 Conn. 928 (2000).
The court finds that there does not exist a substantial claim by the estate against the former trustees with respect to the sale of 59 Baker Road. The trustees relied on not only the real estate appraisal from a professional appraiser, but the opinion of legal counsel Attorney Wimer. The court finds that there is not a substantial claim by the estate of Ms. Spitzschuh against the appellants.
The court finds that though the grounds for removal by the East Haddam Probate Court were not established at trial, the court will not order the reinstatement of the appellants as fiduciaries of the trust. It has been over two years since the original Probate Court ordered the removal of Donald Stanavage and Kellee Ratzer as co-trustees. A disinterested professional fiduciary is available and in place. The appellants, in bringing the appeal, were primarily motivated in clearing their reputation and avoiding liability with respect to their actions as trustees. The court finds that pursuant to Conn. Gen. Stat. § 45a-242(4) that there has been a substantial change of circumstances that the removal of the fiduciary best serves the interest of the beneficiaries and is not inconsistent with the trust or will. The professional administration of the trust and estate should expedite the resolution and settling of the estate. The likelihood of further litigation between Ms. Stanavage and her son and niece will be avoided.
The court in conclusion finds that the estate of Mary Spitzschuh does not have a claim against Donald Stanavage and Kellee Ratzer with respect to the sale of 59 Baker Road property. The court, however, declines to reinstate Donald Stanavage and Kellee Ratzer as co-trustees of the Mary Spitzschuh trust.