    IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE


Margaret C. Ughetta,                            )
                  Petitioner                    )    C.A. No. 7885-MA
                                                )
             v.                                 )
                                                )
Mary Harding Cist, individually, as             )
Executrix of the Estate of John David           )
Cist, and as Trustee of the Supplemental        )
Trust Agreement of John David Cist,             )
                    Respondent                  )

                               MASTER’S REPORT

                          Date Submitted: January 7, 2015
                          Draft Report:
                          Final Report: May 29, 2015

      One of four beneficiaries of a now-irrevocable trust contends that the

successor trustee should be removed for alleged breaches of fiduciary duty. The

successor trustee denies these claims and, in turn, seeks to forfeit 50 percent of this

beneficiary’s trust share under the no-contest provision of the trust agreement.

      The four beneficiaries, one of whom is the successor trustee, are the

surviving children of a married couple, each of whom settled a trust for the benefit

of themselves and their children. The beneficiaries’ mother predeceased their

father, and upon the father’s death two years later, his successor trustee was

directed by the provisions of the father’s trust agreement to equalize the couple’s

lifetime and post-mortem gifts to their four children. Petitioner has questioned the


                                      Page 1 of 46
successor trustee’s administration of the father’s trust.         In 2011, after the

beneficiaries all participated in a distribution the trust’s tangible personal property

(hereinafter “TPP”), petitioner refused to sign a receipt and release agreement. As

a result, her TPP remains in storage controlled by the father’s trust while her three

siblings have taken possession of their TPP. Likewise, petitioner is dissatisfied

with the process undertaken to equalize the beneficiaries’ shares of their parents’

lifetime and post-mortem gifts. Petitioner now contends that the equalization

process was inconsistent with the terms of the father’s trust agreement.

           For the reasons that follow, I conclude that the successor trustee properly

exercised her discretion in distributing the TPP and in following the equalization

process established originally by the trustor during his lifetime. However, I also

conclude that the beneficiary has not challenged the disposition or validity of the

trust, but instead sought only to ensure its proper administration. As a result, she

has not triggered the no-contest provision of the trust agreement. In order not to

prolong this litigation, I am waiving a draft report and issuing this as my final

report.

      I.        FACTUAL BACKGROUND

      The trustor, John David Cist (hereinafter “Mr. Cist”) and his wife Mary S.

Cist (hereinafter “Mrs. Cist”) were the parents of four children: Dorothea Cist,

Margaret C. Ughetta, David Cist, and Mary Harding Cist. During their lifetimes,

                                        Page 2 of 46
Mr. and Mrs. Cist were financially comfortable as a result of their own investments

and family inheritances.1     They accumulated possessions, including family

heirlooms, and were reluctant to dispose of anything. At the same time, however,

Mr. and Mrs. Cist were generous parents. They provided each of their children

with a private college education and a credit card on the parents’ account, and also

paid some of the private school tuition of their grandchildren, among other gifts.

Dorothea and Mary Harding apparently never married and have no children.2

Margaret and her husband have four children who were in high school and college

when Margaret filed her petition for an accounting and to remove Mary Harding as

successor trustee. David and his wife have two younger children.

      On May 21, 1991, Mr. and Mrs. Cist executed wills3 and entered into trust

agreements in their respective capacities as trustor of his and her own trust and as

co-trustees of both trusts.4 The provisions of Mr. Cist’s trust agreement included

the division of the trust fund upon his death, if his wife survived him, into a

Unified Credit Generation Skipping Transfer (“GST”) Trust, a Marital GST Trust,

a Marital Trust and, possibly, a Resulting Trust. On June 30, 1993, Mr. Cist


1
  Respondent Mary Harding Cist’s Single Compilation of Appendices (hereinafter
“Mary Harding Compilation”) at 2 (Affidavit of Mary Harding Cist).
2
  I use first names here for the sake of clarity, and intend no disrespect.
3
  Mary Harding Compilation at 130-156 (Wills of John David Cist and Mary S.
Cist).
4
  Id. at 10-54 (Trust Agreement between John David Cist, Trustor and John David
Cist and Mary S. Cist, Trustees).
                                     Page 3 of 46
executed a Supplemental Trust Agreement, in which he modified two sections that

are not relevant here.5     Mrs. Cist’s trust agreement and supplemental trust

agreement contained reciprocal provisions for the benefit of her husband, and

identical provisions for her children.6

      A. Fairness Concerns

      In 2006, David became aware that Margaret was receiving from her parents

more gifts of family heirlooms than her siblings.7 In a letter to his parents, David

expressed his concern that jewelry, silverware, china, paintings, and furnishings

“were leaking away” “by gift or eminent domain,” giving rise to the appearance of

favoritism.8 In his letter, David stated that he was not concerned about monetary

matters because he predicted that his parents’ assets after taxes could be equalized

without much difficulty despite the large sums of money or assets that already had

been given to their four children.9 However, David implored his parents to be fair


5
  Id. at 55-62 (Supplemental Trust Agreement between John David Cist, Trustor
and John David Cist and Mary S. Cist, Trustee).
6
  Id. at 175 (Supplemental Trust Agreement between Mary S. Cist, Trustor, and
Mary S. Cist and John David Cist, Trustees Dated December 20, 2006). Although
the record does not include Mrs. Cist’s pre-2006 trust documents, the similarity of
the couple’s 2006 Supplemental Trust Agreements and the coordinated history of
their estate planning leads me to believe this was the case.
7
  Id. at 425 (Deposition of David B. Cist).
8
  Id. at 502-503 (letter from David dated about October 2008).
9
  Id. at 502. The large blocks to which David was referring in his letter were gifts
of a house to David, a house to Mary Harding, financial assistance to Dorothea,
and tuition payments for Margaret’s children.
                                          Page 4 of 46
to the rest of their children when it came to the distribution of “historically

important family artifacts.”10

      David’s letter may have prompted Mr. and Mrs. Cist to reconsider their

estate plans because on December 20, 2006, Mr. Cist executed another

Supplemental Trust Agreement, in which he modified his previous trust agreement

by restating it completely.11    Mr. Cist’s 2006 Supplemental Trust Agreement

provided for the distribution of the trust fund, upon Mr. Cist’s death, into: (1) a

Generation-Skipping Transfer Tax Exemption Trust (hereinafter “GST”); (2) a

Marital Trust in the event that Mrs. Cist survived her husband; and (3) a Residuary

Trust. The provisions of the Marital Trust were complex and allowed Mrs. Cist to

occupy the family residence in Wilmington, Delaware, for the rest of her life and,

upon Mrs. Cist’s death, provided for the transfer of this residence to Mary Harding,

outright and free from trust.12 The remaining Marital Trust was to be divided in

equal shares for his children, with the following provisos: (1) the amount of


10
  Id. at 503.
11
  Id. at 63-116 (Supplemental Trust Agreement between John David Cist, Trustor,
and John David Cist and Mary S. Cist, Trustees dated December 20, 2006). Mr.
Cist also executed a new will on December 20, 2006, a first codicil to that will on
July 17, 2009, and a second codicil to that will on January 6, 2010. Id. at 157-161.
The codicil provisions are similar to the amendments to the Supplemental Trust
Agreement, i.e., Mary Harding was named executor of Mr. Cist’s estate, a no-
contest provision was added to the will, and a provision concerning the TPP was
added to the will. Since most of Mr. Cist’s property was held by the Trust,
including the TPP, id. at 129 (Transfer of Tangible Personal Property, dated
January 6, 2010), I will refer solely to the Trust throughout this discussion.
                                     Page 5 of 46
$250,000 was to be treated as an advancement to Dorothea to reduce the value of

the share set aside for her and to increase correspondingly the shares set aside for

the other children of Mr. Cist; (2) the amount of $1,250,000 was to be treated as an

advancement to David as above; and (3) if Mary Harding received the Wilmington

residence, then the amount of $900,000 was to be treated as an advancement to

Mary Harding as above.13 On December 20, 2006, Mrs. Cist executed a reciprocal

2006 Supplemental Trust Agreement, giving her husband the right to occupy the

Wilmington residence for the rest of his life, and upon his death, for that residence

to be transferred to Mary Harding outright and free of trust, with the same

provisions regarding monetary reductions for advancements made to Dorothea,

David, and Mary Harding.14 Only Margaret’s shares of Mr. and Mrs. Cist’s trusts

were not subject to any reduction.

       Mrs. Cist passed away on February 10, 2008.15 In August 2008, while Mrs.

Cist’s estate and trust were being administered, Mr. Cist sought the assistance of a

different law firm to help him address the issue of prior gifts that had been made to




12
   Id. at 79, 83.
13
   Id. at 83-85. Section II, Paragraph B (2)(m)(4) of Mr. Cist’s 2006 Supplemental
Trust Agreement directed the Trustee to reduce these amounts to take into account
any other amounts to be treated as advancements for each child in his wife’s trust.
Id. at 85.
14
   Id. at 172-226.
15
   Id. at 1 (Affidavit of Mary Harding Cist)..
                                     Page 6 of 46
his children, and achieve his goal of treating his children equally and fairly.16

Mary Harding made the initial phone call,17 and Dorothea accompanied her father

to the office of Joanna Reiver, Esquire. During the course of this representation,

Mr. Cist authorized Reiver and her associate, P. Kristen Bennett, Esquire, to speak

with Mary Harding, Dorothea, or David at different times, but never with

Margaret.18 In January 2009, after reviewing: (1) the most recent numbers for

cumulative transfers/gifts made prior to Mrs. Cist’s death, which had been

prepared by Mr. Cist, Mary Harding and David; (2) Mr. Cist’s December 2008

transfers for tuition and equalizing gifts totaling more than $900,000; and (3) draft

Form 706 for Mrs. Cist’s trust, Reiver recommended that Mr. Cist make equalizing

distributions to his children “via lifetimes gifts to trusts” that Mr. Cist would

establish for each of his children.19 At this time, some of Mr. Cist’s children and

his attorneys were concerned that Mr. Cist’s continued gift-giving and transfers

were depleting his estate and would make equalization impossible unless Mr. Cist

made a complete distribution of his estate during his lifetime. 20 In July 2009, Mr.

Cist authorized Reiver to prepare an irrevocable GST trust for each of his children.

However, the issue of funding these trusts was very complex, given the character


16
   Id. at 472 (Deposition of Joanna Reiver, Esq.).
17
   Id. at 471-472.
18
   Id. at 473.
19
   Id. at 440-442 (Letter dated January 21, 2009, from Reiver to Mr. Cist).
20
   Id. at 443 (email from P. Kristen Bennett, Esq. to Reiver dated July 20, 2009).
                                      Page 7 of 46
of some of the assets and in light of expected changes in the federal transfer tax

regime.21 Because of the uncertainty of the tax law and the exact amount of assets

needed for each trust, Reiver recommended that Mr. Cist wait until September

2010 to proceed with the funding.22 Although the four documents were signed by

Mr. Cist,23 the irrevocable GST trusts were never funded because Mr. Cist

unexpectedly died on June 24, 2010, at the age of 90 years.24

      B. Amendments to Mr. Cist’s Trust

      On July 19, 2009, Mr. Cist executed a First Amendment to 2006

Supplemental Trust Agreement of John David Cist,25 which was intended by




21
   Id. at 443-444.
22
   Id. at 488 (Reiver Deposition).
23
   Mr. Cist, accompanied by one or more children, was expected to sign documents
drafted by his attorney on January 4, 2010, but the family questioned whether the
gifts should be made in 2009 or 2010. Anticipating a lower gift tax rate in 2010,
the attorneys were inclined for the GST transfers to occur in 2010. Moreover, they
had just received revised figures from David reflecting what he described as “the
tally of cash and liquid assets transferred to each child as far back as we have
records.” The “big change,” as David put it, was due to his “request to Dad that he
allow the Cape Cod property to be assessed at its present value, rather than at its
date of gift value.” Id. at 483-484. (Exhibit Reiver 10 – E-mail correspondence
beginning December 29, 2009 from David to Reiver and ending December 30,
2009 from Reiver to Bennett).
24
   Id. at 465 (Deposition of P. Kristen Bennett, Esq.).
25
   Id. at 117-124. (First Amendment to Supplemental Trust Agreement of John
David Cist).
                                     Page 8 of 46
Reiver as a “stopgap” measure pending an entire trust restatement.26               The

background for this instrument was stated in Paragraph D of the First Amendment:

                    D. This amendment is intended to express my goal that, insofar
           as possible, the combined estates of my late wife, Mary S. Cist, and me
           shall be divided into equal shares – one share for each child of ours
           living at the time of my death, and one share for each child of ours
           deceased at such time but with issue then surviving. For the purposes
           of this division:
                            1. The trustee shall add to the value of my wife’s and
           my combined estates the cumulative value of transfers to our children
           (including transfers to, or for the benefit of, issue of a child as transfers
           to that child, and including payments made on behalf of a child or issue
           even if such payments were not deemed transfers under IRC Section
           2503(e) for gift tax purposes) made by my wife and/or made by me
           during our lifetimes, as well as made upon death pursuant to my wife’s
           will and/or trust and/or pursuant to my will and/or trust, as well as by
           beneficiary designation. These gifts shall be included at their date-of-
           gift (i.e., transfer) values.
                            2. After calculating the aggregate amount to which each
           child (or issue of a child) has received and is entitled to receive from all
           sources as provided above, the trustee shall modify (i.e., reduce or
           increase) the shares for my children (or issue of a child) under this
           Agreement as necessary so that the aggregate amount received by such
           child (or issue of a child) from all such sources is equal to the
           aggregate amounts received by each other child (or issue of a child) of
           mine from all such sources.
                            3. Such equal shares shall be further modified (i.e.,
           reduced or increased) if required pursuant to the No-Contest Provision
           included below.
                            4. Although I intend to amend this Agreement by
           complete restatement to provide detailed instructions for such
           equalizing distributions, I execute this interim amendment to my
           Agreement to express my intent, and I direct that my trustee take all


26
  Id. at 438-439 (email from Reiver to Reiver dated November 18, 2008); Id. at
443-444 (email from Bennett to Reiver dated July 20, 2009); Id. at 464 (Bennett
Deposition).
                                      Page 9 of 46
              necessary steps upon my death to distribute my estate and trust to
              achieve my intent as nearly as possible.27

       Mr. Cist then modified his 2006 Supplemental Trust Agreement, first by

modifying Section II, Paragraph B by deleting it in its entirety and substituting a

new Paragraph B-3, as follows in pertinent part:

                       3.     Residuary Trust.

                    Trustee shall hold and administer all of the remainder of the trust
                  fund that is not disposed of by the previous provisions of this
                  Agreement (hereinafter referred to as the “Residuary Trust”) in
                  accordance with the provisions of this Paragraph 3 of this
                  Subsection B.

                       (a) The trustee shall distribute the trust’s entire interest in [the
                          Wilmington residence] to Trustor’s daughter, Mary Harding
                          Cist …. Such distribution shall be added to such child’s trust
                          share as provided in subparagraph (b) and described in
                          subparagraph (c) below, as an addition to such child’s trust
                          share.

                       (b) After the distribution provided in the preceding
                          subparagraph, the trustee shall then divided the then-
                          remaining amount of principal into shares for the benefit of
                          each child of mine who survives me, …, to effectuate my
                          intent as described in Paragraph D of this First Amendment to
                          Supplemental Trust Agreement, above. …..28


       Mr. Cist’s second modification was to add a new Paragraph C to Section II,
as follows:


                       C- No-Contest Provision

27
     Id. at 117-118.
28
     Id. at 118.
                                          Page 10 of 46
                      If any beneficiary under this instrument files an action in any
                   court seeking to set aside any aspect of the document, or to
                   challenge any aspect of the disposition provided herein, the
                   bequest to such beneficiary shall be partially ineffective and void,
                   and the bequest such beneficiary would have received, but for such
                   challenge, shall be reduced by one-half (i.e., fifty percent). The
                   contestant’s share shall also bear the costs of attorneys’ fees and
                   costs incurred by the contestant as well as attorneys’ fees and costs
                   incurred by my fiduciaries in defending the action. The portion by
                   which such contesting beneficiary’s bequest is reduced shall be
                   distributed in equal shares to the non-contesting beneficiaries. The
                   provisions of this provision shall also apply to specific takers in
                   default, if any provided in such bequest hereunder. This provision
                   shall apply in the case of challenges based on fraud, mistake,
                   undue influence, or incapacity, or upon any other basis.29

A third modification, not relevant here, was followed by a fourth modification

appointing Mary Harding as successor trustee in the event of Mr. Cist’s incapacity

or death and, if Mary Harding was unable to serve, then David was to be appointed

in her stead.

         On January 6, 2010, Mr. Cist modified his 2006 Supplement Trust

Agreement a second time.           The Second Amendment to Supplement Trust

Agreement of John David Cist included Paragraph D, subsections 1 through 3 as

recited above, but changed subsection 4 to state:

                       4. I intend to make substantial equalizing transfers during my
                   lifetime after the execution of this supplemental trust agreement.
                   Such lifetime equalizing transfers reflect my intent to devise my
                   one-half interest in the [Wilmington residence] to my daughter
                   Mary Harding Cist upon my death, by reducing my lifetime
                   transfers to such daughter. The trustee shall take such transfers

29
     Id. at 121.
                                        Page 11 of 46
               into account in making distribution hereunder to achieve my intent
               as nearly as possible, so that if such equalizing transfers were
               completed during my lifetime, upon my death my one-half interest
               in the [Wilmington residence] will be distributed to Mary Harding
               Cist, and the balance of my remaining estate and trust assets shall
               be divided equally among my children, …. 30


Mr. Cist further modified his trust by adding a new Paragraph B-1 as follows:

                   B-1: Tangible Personal Property:

                   After my death, tangible personal property coming into the
                   hands of the trustee shall be distributed as follows:

                   A. I anticipate that I may leave with my personal papers a
                      memorandum expressing my desires concerning the
                      disposition of certain items of tangible personal property.
                      To the extent such memoranda are inconsistent, the last
                      dated such memorandum shall control.
                   B. To the extent not disposed of by memorandum, I give all of
                      my tangible personal property, together with all policies of
                      insurance on that property, to those of my children who
                      survive me, in equal (or as nearly equal as possible) shares.
                      If my children are unable to agree upon a method of
                      distribution among themselves, distribution will be by
                      alternating selection in an order to be determined by the
                      drawing of lots.
                   C. If the provisions regarding disposition of such property
                      under this trust conflict with the disposition of such property
                      under my will, the provisions of this trust shall determine the
                      disposition of such property.
                   D. The cost of delivering tangible personal property to the
                      residences of the beneficiaries shall be paid from my estate
                      or trust as my executor determines to be appropriate in the
                      circumstances, as an expense of administration.31

30
   Id. at 126. (Second Amendment to Supplemental Trust Agreement of John David
Cist).
31
   Id.
                                     Page 12 of 46
      During the process of revising his own estate and trust plans, Mr. Cist was

assisted primarily by David, whom Mr. Cist had asked to help calculate the gifts

that had been given to each child over the years.32 David also worked with his

father’s attorneys and Victor Pelillo,33 a certified public accountant who had been

hired by Mr. Cist and David in October 2009 to review the list of gifts to the

various children and grandchildren that they had compiled in connection with

establishing irrevocable GST trusts for Mr. Cist’s children.34       When Pelillo

questioned whether certain of the reported items should be counted as gifts, David

responded directly to Pelillo after consulting with Mr. Cist.35     David gave a

preliminary report of the allocations to Mary Harding.36 He gave Margaret and

Dorothea copies of their preliminary tallies, and discussed Margaret’s tally with

her in person.37

          C. Trust Administration

      Shortly after Mr. Cist passed away, Margaret, who had retained her own

attorney, received copies of Mr. Cist’s recent supplemental trust agreements and


32
   Id. at 426-428 (Deposition of David B. Cist).
33
   Id. at 426.
34
   Appendix to Petitioner Margaret C. Ughetta’s Answering Brief in Response to
Respondent’s Motion for Summary Judgment (hereinafter “Ughetta’s Appendix”)
at 136-137. Mary Harding Compilation at 288 (Affidavit of Victor Pelillo).
35
   Mary Harding Compilation at 429 (David’s Deposition), 454-457 (letter dated
October 22, 2009 from Pelillo to Mr. Cist and David); at 460 (email dated October
25, 2009 from David to Pelillo).
36
   Id. at 6 (Mary Harding Affidavit).
                                    Page 13 of 46
codicils to his will.38 Margaret was surprised by the changes that had been made,

and by the fact that Mary Harding was the sole executrix.39 In early August 2010,

Margaret attended a meeting of the beneficiaries and was informed, among other

things, that movers were waiting at the Wilmington residence for her to remove her

personal items from this residence.40     Thereafter, during a conference call on

August 24, 2010, the beneficiaries were invited to suggest ways of distributing the

TPP.41 Margaret asked for an inventory of the TPP to be prepared, but Mary

Harding decided against doing an inventory in light of the numerous items of

TPP.42 During the summer of 2010 there was some discussion about setting a date

for distributing the TPP, but Margaret’s attorney objected to setting an artificial

deadline, and requested instead that any agreement on a method of distribution

await the preparation of an appraisal of the TPP.43 It had been Mary Harding’s

hope that the TPP selection would take place with all beneficiaries being present,

but she abandoned this idea after she received a letter in March 2011 from another




37
   Id.
38
   Id. at 422 (Deposition of Margaret C. Ughetta).
39
   Id. at 422-423.
40
   Id. at 423.
41
   Ughetta’s Appendix at 105 (Mary Harding Deposition).
42
   Id. at 107-108 (Mary Harding Deposition).
43
   Mary Harding Compilation at 546-548 (letter dated September 24, 2010, from
Richard A. Popper, Esq. to Reiver).
                                    Page 14 of 46
attorney recently retained by Margaret, who appeared to be threatening litigation.44

Mary Harding subsequently hired Jeffrey Gibson, a paralegal for 30 years, who

had experience in the distribution of several large estates with numerous items of

TPP among multiple heirs,45 as an independent overseer of the TPP distribution

process.


           D. TPP Distribution

      Gibson suggested a process for selecting and distributing the TPP in the J.

David Cist Estate and Trust, and worked collaboratively with Mary Harding to

finalize the process.46 In a letter to the beneficiaries dated April 14, 2011, Gibson

outlined the process whereby a week before the TPP division, the beneficiaries

would have opportunities to visit the Wilmington residence and a few nearby

storage facilities to view the TPP and add items to their selection list.47 Each

viewing would be by appointment, each appointment would consist of a three-hour

block of time, and each beneficiary could have a total of three appointments during

the six-day “viewing week.”48 After the viewing, each beneficiary was to create a

list of items of TPP he or she wished to receive, and to rank these items in order of


44
   Ughetta Appendix at 108-109 (Mary Harding Deposition); at 260-261 (Letter
dated March 15, 2011 from David J. Ferry, Jr., Esquire to Reiver).
45
   Mary Harding Compilation at 272-273 (Affidavit of Jeffrey S. Gibson).
46
   Ughetta Appendix at 127-128 (Deposition of Jeffrey S. Gibson).
47
   Mary Harding Compilation at 277-281 (Letter dated April 14, 2011, from
Gibson to four beneficiaries).
                                     Page 15 of 46
preference. Each beneficiary was to submit his or her priority order list to Gibson

by a certain date, and the lists would remain completely confidential.49 A selection

order was to be determined at random by picking the names of the four

beneficiaries out of a hat. Then Gibson was to follow the selection rotation

(1,2,3,4/4,3,2,1/1,2,3,4) agreed upon by the beneficiaries in awarding items from

their lists. If the item in that rank on a beneficiary’s list had been taken by a prior

bidder, the next ranking item would be advanced to that round. This process

would be repeated until all lists had been completely exhausted, and then the

beneficiaries would be notified of the items they had won. Since everything had

already been appraised, the dollar sum of all items of TPP selected by each

beneficiary would be totaled for equalization in the future. Movers were reserved

to move the TPP to the out-of-state homes of Dorothea, Margaret, and David by

the end of business on May 5, 2011,50 and the beneficiaries were required to sign a

release documenting that they had received all of their items. Any TPP remaining

would belong to the Estate, to be disposed of in a manner determined by the Estate


48
   Id.
49
   Not all of the TPP was available for selection; thousands of unsorted textiles,
family papers, unframed family photos, negatives, and home movies were among
the sentimental items not to be divided during this process. Gibson’s letter stated:
“[these] categories of items should most logically be divided with the four of you
sitting together and going through ….” Id.
50
    During this time period, Dorothea resided in California, David resided in
Massachusetts, Margaret resided in New York, and Mary Harding resided in
Delaware..
                                      Page 16 of 46
      Although Margaret had suggested the selection rotation order that ultimately

was used,51 she was unhappy with other aspects of the TPP viewing and division

process. Margaret complained about many aspects of the process, including: (1)

not having received an inventory and photographs of the TPP52; (2) not having

enough time to view the TPP;53 (3) not being allowed to bring her attorney and

mother-in-law with her to view the TPP; (4) not having additional time to prepare

and submit her priority order list; and (5) the process was more elaborate than the

“drawing of lots” dictated in the second codicil of Mr. Cist’s will.54 Nevertheless,

she participated in the process, and even attended the two auctions that took place

during October 2011, where some of the remaining TPP was sold.55


      E. Equalization Process

      In November 2011, Mary Harding, in her capacity as executrix of the Estate

of J. David Cist and successor trustee of the J. David Cist Supplemental Trust

Agreement,56 retained Pelillo to collect information and compute “the total for


51
   Ughetta Appendix at 289-290 (email from Bennett to Ferry sent April 30, 2011).
52
   Id. at 107-108 (Mary Harding Deposition); Mary Harding Compilation at 534
(Margaret deposition).
53
   Ughetta Appendix at 125.1-125.3 (Margaret Deposition)
54
   Id. at 280-282 (letter dated April 22, 2011, from Ferry to Reiver); at 287-288
(letter dated April 29, 2011, from Ferry to Reiver); at 290.1-290.3 (letter dated July
7, 2011, from Ferry to Reiver).
55
   Mary Harding Compilation at 286-287 (letter dated August 15, 2011, from
Gibson to beneficiaries).
56
   Mary Harding Compilation at 301-302 (November 1, 2011 engagement letter).
                                     Page 17 of 46
lifetime transfers made by J. David Cist and Mary S. Cist [including] lifetime

transfers made to each of their four children including transfers to or for the benefit

of the child’s issue.”57 Mary Harding sought to continue the equalization process

her father had begun.58 Her attorney described the scope of the project to Pelillo

as follows:

                           For purposes of your calculations, please list transfers
                    made by either or both parents beginning on July 1 of the year
                    of each child’s college graduation until the death of J. David
                    Cist on June 24, 2010. (The years of graduation will be
                    provided by Mary Harding Cist.) Transfers to a child include
                    transfers to or for the benefit of the child’s issue. Tuition
                    payments directly to a school are to be considered transfers to a
                    child, even though not considered transfers for gift tax
                    purposes. Likewise, payments clearly made for the benefit of a
                    specific child should be included even if the payments might be
                    deemed support in some other context, because all the children
                    were emancipated after college graduation.           Include all
                    transfers, no matter how small. My understanding is that many
                    of the checks and other contemporaneous records have
                    notations made by J. David Cist and/or Mary S. Cist identifying
                    the child who received the benefit. In addition, we have all gift
                    tax returns filed by Mary S. Cist and J. David Cist, and will add
                    those gifts to your calculations. Transfers are included at their
                    date-of-transfer values.59

        By letter dated November 16, 2011, Pelillo informed the four beneficiaries

that he had been retained to review their parents’ financial records and “to compute

the lifetime gifts and other transfers your parents made to you and/or your children,



57
     Id. at 301.
58
     Ughetta Appendix at 120 (Mary Harding deposition).
                                      Page 18 of 46
in accordance with your father’s trust terms.”60 Pelillo outlined the records he had

reviewed, the procedures he had followed, and provided the preliminary tallies of

the lifetime gifts/transfers he had prepared for each beneficiary. He then described

the inspection process whereby each beneficiary could make an appointment to

inspect the records that he had reviewed in preparing the tallies, and the procedure

the beneficiaries must follow to request changes or corrections to their tallies.

Finally, Pelillo set forth a timetable for the inspection and review process,

transmission of completed tallies, and last day (January 12, 2012) for additional

corrections, warning the beneficiaries that no extensions would be permitted

because January 17, 2012 was the deadline for the Estate to file IRS Form 8939

(“Allocation of Increase in Basis of Property Acquired From a Decedent”).

      Margaret objected to the “unreasonable deadlines” of the equalization

process,61 but ultimately cooperated with Pelillo’s deadlines.62      Nevertheless,

Margaret reserved her right to challenge her tally and the distribution process.63

The beneficiaries were informed of the outcome of the equalization process by




59
    Mary Harding Compilation at 298-299 (letter dated October 28, 2011, from
Reiver to Pelillo).
60
   Id. at 304-309 (letter dated November 16, 2011, from Pelillo to beneficiaries).
61
   Ughetta Appendix at 305 (letter dated December 2, 2011, from Ferry to Reiver).
62
   Id. at 307-308 (letter dated January 10, 2012, from Thomas R. Riggs, Esq. to
Reiver and Bennett).
63
   Id.
                                     Page 19 of 46
letter dated April 13, 2012,64 which set forth the amounts each beneficiary had

received in “lifetime gifts” and from Mrs. Cist’s trust, the amount of Mary

Harding’s half-interest in the Wilmington residence, the total values of the TPP

items each beneficiary had been awarded, and the amount of cash that was to be

distributed to equalize each beneficiary’s share of their parents’ lifetime and post-

mortem gifts. David, who had received the smallest distribution from Mrs. Cist’s

trust, was allocated nearly two-thirds of the equalizing cash that was to be

distributed by Mr. Cist’s trust.     Mary Harding and Dorothea were to receive

unequal shares of the remaining cash to be distributed by Mr. Cist’s trust.

Margaret, who had received the largest amount (in monetary terms) of lifetime

gifts from her parents and the largest distribution from Mrs. Cist’s trust, was to

receive no cash at all from Mr. Cist’s trust.65

      II.    PROCEDURAL BACKGROUND

      On September 21, 2012, Margaret filed a petition in this Court to compel an

accounting, remove the trustee, and for other similar relief.       In her petition,

Margaret alleges that Mary Harding breached her fiduciary duties to the

beneficiaries by violating the provisions of the second amendment of the trust

regarding alternating selections of TPP to be determined by the drawing of lots,



64
   Mary Harding Compilation at 555-557 (letter dated April 13, 2012, from Bennett
to beneficiaries).
                                      Page 20 of 46
and by refusing to answer Margaret’s numerous requests for (a) information

regarding the administration of the decedent’s estate; (b) reconsideration of the

onerous TPP distribution process; (c) modification or elimination of the release

requirement to obtain her personal property; (d) information regarding the location

and valuation of family history items and precious metals, and (e) reconsideration

of the unreasonable and burdensome equalization procedure. The petition also

alleges that Mary Harding has shown palpable hostility toward Margaret, which

casts grave doubts on Mary Harding’s ability to equitably administer the estate and

trust and impairs the administration of the trust. On October 22, 2012, Mary

Harding responded to the petition, denying the allegations, and counterclaiming

that Margaret’s petition violated the no-contest provision of the Trust.

Accordingly, Mary Harding seeks an order reducing Margaret’s bequest by half

and holding Margaret’s reduced bequest responsible for paying attorney’s fees and

costs incurred by both parties.

      On July 16, 2013, Margaret moved to compel responses to discovery from

Mary Harding; in particular, Margaret sought to compel the production of the TPP

lists of the four beneficiaries, which she alleged were “relevant in determining

whether the Equalization Process was carried out fairly and properly, and whether



65
   Margaret and her siblings also received equal in-kind distributions of shares of
stock and precious metals from Mr. Cist’s trust. Id.
                                    Page 21 of 46
each beneficiary’s distributions were truly equal.”66 Six days later, on July 22,

2013, Mary Harding filed a Motion for Summary Judgment and opening brief in

support of her motion.67 In response, Margaret filed a Motion to Allow Discovery

under Court of Chancery Rule 56(f) on July 31, 2013.68 While briefing was being

completed on the above three motions, Margaret filed a Motion for Interim Relief

on September 6, 2013, seeking an order directing the trustee not to sell or distribute

some newly-discovered items of TPP and allowing Margaret unrestricted rights to

view the property for as long as necessary, accompanied by experts and other

agents in order to view, photograph and appraise the items. 69 Oral argument on the

pending motions was scheduled for September 30, 2013, but shortly before it could

take place, the judicial officer assigned to this case discovered that she had a

conflict that prevented her from hearing the matter.70 The case was reassigned to

me on October 1, 2013.71 Following oral argument on the pending motions on

November 12, 2013,72 I issued a draft report on November 25, 2013, in which I

recommended that the three motions be granted.73 The successor trustee took


66
   Ughetta’s Motion to Compel, at ¶ 29. Docket Item (hereinafter “DI”) 16.
67
   DI 17 & 18.
68
   DI 22.
69
   DI31.
70
   DI 38.
71
   DI 39.
72
   DI 45.
73
   Ughetta v. Cist, Del. Ch., C.A. No. 7885-MA (Nov. 25, 2013 (Master’s Draft
Report). DI 48.
                                     Page 22 of 46
exception to the draft report.74 After briefing, I slightly modified my draft report to

reflect that the issue of whether the trust required equal (or as nearly equal as

possible) appraised values of TPP to be received by each beneficiary had not yet

been determined.75

      On March 1, 2014, Margaret filed a second Motion for Interim Relief to

prevent her videotaped deposition from being circulated publicly, which was

granted,76 and a Motion to Compel the production of a letter from the successor

trustee documenting Mr. and Mrs. Cist’s gift of a valuable autograph collection to

David when he was eight years old.77 During a teleconference on Jun 13, 2014,78 I

asked the parties to submit legal memoranda on the issue of whether certain

language in the trust was ambiguous, requiring the Court to consider extrinsic

evidence to determine the trustor’s intent.79 While the parties were submitting

their legal memoranda, Margaret moved to compel the deposition testimony of W.

Donald Sparks, II, Esquire, who had drafted Mr. and Mrs. Cist’s wills and original

supplemental trust agreements,80 because David, in his capacity as co-personal

representative of Mrs. Cist’s estate, had asserted the attorney-client privilege for all


74
   DI 49.
75
   Ughetta v. Cist, Del. Ch., C.A. No. 7885-MA (April 30, 2014) (Master’s Final
Report). DI 81.
76
   DI 61 & 72.
77
   DI 62.
78
   DI 93.
79
   DI 96.
                                      Page 23 of 46
communications between and among Sparks and Mr. and Mrs. Cist. 81 On October

23, 2014, following oral argument on the pending motions, I issued an oral draft

report in which I found that the phrase “during our lifetimes” was unambiguous,

but that the phrase “the value of [our] … transfers to our children (including

transfers to, or for the benefit of, issue of a child as transfers to that child …” was

capable of having more than one meaning and was ambiguous. I recommended

that extrinsic evidence should be examined to determine the trustor’s intent as to

the latter phrase, but not as to the former one.82 I also recommended that Sparks’

deposition go forward provided the questions were limited to the subject of

trustor’s intent as to the meaning of the transfer phrase.83 Since more than four

years had elapsed since the death of Mr. Cist, the parties were anxious to move this

matter along and agreed to a stay of the period of time of taking exceptions to my

oral draft report.84   On December 15, 2014, Margaret filed her Answering Brief in




80
   DI 100.
81
   In a related matter, Margaret’s husband, William C. Ughetta, Jr., as co-trustee of
the Mary S. Cist GST Trust, is seeking a declaratory judgment against David, in
his capacity as the other co-trustee of the Mary S. Cist GST Trust. Ughetta v. Cist,
C.A. No. 9416-MA.
82
   Transcript of Oral Argument on October 23, 2014, at 39-41. DI 121.
83
   Id. at 41-42.
84
   Id. at 76.
                                      Page 24 of 46
response to Mary Harding’s Motion for Summary Judgment,85 and Mary Harding’s

Reply Brief was filed on January 7, 2015.86

     III.    ANALYSIS

      A motion for summary judgment may be granted if no genuine issue of

material fact is in dispute and the moving party is entitled to judgment as a matter

of law.87 The burden is on the moving party to establish that there are no issues of

material fact,88 and the court must review all evidence in the light most favorable

to the non-moving party.89 Once the moving party has met its burden to show no

material facts exist, the nonmoving party must submit “specific facts showing that

there is a genuine issue for trial to survive a motion for summary judgment.”90

      Mary Harding claims that she is entitled to summary judgment because

Margaret has failed demonstrate that the successor trustee breached her fiduciary

duty to any beneficiary in distributing the TPP or in calculating the equalization

tallies. Mary Harding argues that since Margaret actively participated in the TPP

distribution process, Margaret cannot now object to the process after the TPP has

been packaged and shipped to Dorothea and David. Similarly, Mary Harding




85
   DI 125.
86
   DI 127.
87
   Ct. Ch. R. 56.
88
   Scureman v. Judge, 626 A.2d 5, 10 (Del.Ch. 1992).
89
   Id. at 10-11.
                                     Page 25 of 46
argues that since she merely followed the equalization process established by Mr.

Cist before his death, there can be no dispute that Margaret was treated fairly.

Finally, Mary Harding claims that because Margaret has challenged the TPP

distribution and equalization processes, her share of the trust should be reduced by

50 percent under the terms of the no-contest provision of the trust.

      In response, Margaret argues that there is a factual dispute regarding what

Mr. Cist intended to include as a “transfer” during his and Mrs. Cist’s lifetimes,

which presents a genuine issue of material fact. Margaret also argues that there are

other material facts at issue, i.e., whether Mary Harding adhered to the language of

the trust in allowing the beneficiaries to determine a method of distributing the

TPP, whether Gibson’s complex process of distributing the TPP was in keeping

with the language of the trust, and whether Mary Harding’s decision to start the

equalization process calculation one month after each beneficiary graduated

college was not only arbitrary, but also in direct conflict with the express language

of the trust. Finally, Margaret responds that she has not triggered the no-contest

provision because she has not challenged the validity of the trust or any of its

dispositions.   Instead, Margaret claims that she is challenging whether the

successor trustee breached her fiduciary duty by failing to carry out the terms of


90
  In re Novell, Inc. S’holder Litig., 2014 WL 6686785, at *6 (Del.Ch. Nov. 25,
2014) (quoting Goodwin Live Entm’t, Inc., 1999 WL 642565, at *5 (Del.Ch. Jan.
25, 1999), aff’d, 741 A.2d 16 (Del. 1999)).
                                     Page 26 of 46
the trust document and by acting hostilely toward one beneficiary. According to

Margaret, summary judgment would be inappropriate because the Court should

hear testimony to judge the demeanor and credibility of the parties and witnesses.

      A. The TPP Distribution Was Consistent with the Language of Mr.

         Cist’s Trust.

      While represented by counsel and aware of the terms of Mr. Cist’s estate

planning documents, Margaret participated in the TPP distribution. Mary Harding

now argues that because Margaret actively joined in the process, she should be

required to accept it and the results of the process. According to Mary Harding,

Margaret stood by while the TPP items selected by Dorothea and David were

transported to their respective residences at trust expense.91 Nor did Margaret

object to the use of the TPP values in the equalization process.         Therefore,

according to Mary Harding, it is too late for Margaret to object. Margaret argues

that her participation in the TPP distribution was not an indication of consent or

acquiescence because she had no other option but to participate in the process or

else risk receiving nothing. She also argues that the process used to divide the TPP


91
  The petition was filed on September 21. 2012, DI 1, more than a year after the
TPP had been shipped to David and Dorothea’s respective residences in
Massachusetts and California in May 2011. Mary Harding Compilation at 280
(Gibson letter to beneficiaries dated April 14, 2011). Under the trust agreement,
the successor trustee was directed to pay the cost of shipping the TPP as an
administration expense. Id. at 126 (Section II, Paragraph B-1(c), Second
Amendment to Supplemental Trust Agreement of John David Cist).
                                     Page 27 of 46
was not consistent with the express terms of her father’s trust.       As a result,

Margaret argues that she is not estopped from challenging the trustee’s actions by

virtue of having participated in the TPP distribution, citing 76 Am.Jur.2d, Trusts §

327.

       The general rule is that she “who participates in or acquiesces in an action

has no standing in a court of equity to complain against it.”92 For the defense of

acquiescence to apply, the claimant must have had full knowledge of her rights and

the material facts and (1) remained inactive for a considerable time or (2) freely

did what amounts to recognition of the complained of act, or (3) acted in a manner

inconsistent with the subsequent repudiation, which led the other party to believe

that the act had been approved.93 Margaret appears to be suggesting that she was

coerced into participating or else she might not have received any items of TPP.

That the TPP is important to Margaret is evidenced by the fact that she filed this

action in part to compel the successor trustee to release and ship to Margaret the

items of TPP she had selected.94

       The undisputed record shows that on numerous occasions before, during,

and after the TPP distribution, Margaret voiced objections to and frustrated the


92
   Gottlieb v. McKee, 107 A.2d 240, 244 (Del.Ch. 1954); Trounstine v. Remington
Rand, Inc. 194 A. 95, 99 (Del.Ch. 1937).
93
   Klaasen v. Allegro Development Corp., 106 A.3d 1035, 1047 (Del. 2014) (citing
Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 582 (Del.Ch. 1998)).
94
   Petition to Compel Accounting, DI 1.
                                     Page 28 of 46
successor trustee’s efforts to distribute the TPP.         Discussions among the

beneficiaries about the method of TPP distribution began on August 6, 2010.

Margaret refused to agree to the standard selection rotation (1,2,3,4,/1,2,3,4/etc.)

that the family had used in three previous TPP distributions, and she also refused to

agree to a selection ordered to be determined by lots.95 She would not agree with

the other beneficiaries on a date for the distribution and, since Margaret’s attorney

wanted to wait until the creditor claims period ended, the TPP distribution was

postponed until after February 24, 2011.96 Meanwhile, Margaret objected to the

appraiser Mary Harding had retained, so Mary Harding hired another appraiser to

start the appraisal process anew.97 A proposed distribution date of March 15, 2011,

was changed, upon Margaret’s request for a later date, to April 30, 2011.98 By

letter dated March 15, 2011, Margaret’s new co-counsel contacted the trust’s

attorney with questions about several aspects of the estate and trust, including the


95
   Mary Harding Compilation at 2-3 (Mary Harding Affidavit).
96
   Id. at 3 (Mary Harding Affidavit).
97
    The successor trustee sent each beneficiary a copy of the complete appraisal
report as soon as it was received. Id. at 3-4 (Mary Harding Affidavit). According
to a letter from her counsel, partial appraisals were sent to the beneficiaries on
March 22nd, April 14th, and April 22nd). Id. at 164-165. (letter dated April 22,
2011 from Reiver to Ferry). Margaret’s counsel, however, claimed that the first
time that he received any appraisal was April 14th. Ughetta Appendix at 280 (letter
dated April 22, 2011 from Ferry to Reiver).
98
   In a letter to the trust’s attorney, however, Margaret’s co-counsel stated: “It is
my understanding that your client Mary Harding Cist, has established a deadline
date of April 9, 2011, to address the disposition of the tangible personal property.”
Ughetta Appendix at 260 (Letter dated March 15, 2011, from Ferry to Reiver).
                                     Page 29 of 46
TPP and the equalization tallies. Co-counsel wanted to see the TPP appraisal, and

demanded “clear photos of every item and, for the rare books, a clear photo of each

frontis page.”99 The March 15th letter concluded as follows:

      The above are just some of the initial things that require answers before we
      proceed. There may be additional questions later. I hope you are able to
      convince your client that she must provide this information and do so
      promptly. My client does want to bring this matter to closure promptly and
      hopes that information she has requested can be provided promptly in order
      to do so. However, if your client is unwilling to allow you to answer these
      questions and provide this information, I have told my client that litigation
      may be the only way to resolve this matter and, if necessary, that litigation
      will be filed.100

      As a result of this letter, the successor trustee hired Gibson to oversee the

TPP process. Gibson participated in a conference call with the successor trustee,

her counsel, and Margaret’s new co-counsel so that Gibson could explain his

background and experience in TPP distribution, describe the upcoming process for

this TPP distribution, and answer the questions of Margaret’s attorney.101

Nevertheless, Margaret continued to complain about the process. By letter dated

April 22, 2011, Margaret complained that she: (1) had insufficient time to review

the appraisals; (2) had not been provided photographs of the TPP, especially the

frontis pages of the books; (3) had been denied prior access to the house to view

the items; (4) had been denied the opportunity to have legal counsel and her


99
   Id. at 261.
100
    Id.
101
    Mary Harding Compilation at 273 (Gibson’s Affidavit).
                                    Page 30 of 46
mother-in-law during the viewing periods; (5) had been denied a meeting with the

successor trustee and her counsel; (6) had not been allowed to see the TPP lists of

the other beneficiaries; (7) had been denied the opportunity to select items that

might be left over after the other beneficiaries had made their selections; and (8)

been refused a copy of the letter allegedly signed by Mr. and Mrs. Cist gifting the

autograph collection to David in 1970.102 In response to Margaret’s complaints,

Mary Harding and David changed their schedules to accommodate Margaret, and

David even offered Margaret one of his TPP viewing time slots, which she

declined.103 Margaret also wanted to submit her priority selection list two days

after the deadline of April 30th,104 and on May 3rd, Margaret e-mailed Gibson to ask

if she could add more items to her TPP list.105 None of her requests was granted by

Gibson because it would have given Margaret preferential treatment over the other

beneficiaries. After the TPP was selected, all the beneficiaries except Margaret

signed the receipt and release agreement drafted by the trust’s attorney. Gibson

therefore arranged for the storage of Margaret’s items until such time as Margaret




102
     Ughetta Appendix at 280-282 (letter dated April 22, 2011 from Ferry to
Reiver).
103
    Mary Harding Compilation at 273 (Gibson’s Affidavit); Id. at 167 (email dated
April 30, 2011 from Bennett to Ferry).
104
    Id. at 273 (Gibson’s Affidavit).
105
    Id. at 274.
                                     Page 31 of 46
signed the agreement.106 Negotiations to resolve this particular dispute failed after

Margaret refused to sign a revised form of receipt and release agreement.107

      It is not necessary for me to reach the issue of acquiescence. Regardless of

whether Margaret freely participated in the TPP process or not, she has failed to

demonstrate the existence of a genuine issue of material fact regarding the

successor trustee’s impartiality in distributing the TPP. Mr. Cist’s trust stated: “If

my children are unable to agree upon a method of distribution among themselves,

distributions will be by alternating selection in order to be determined by the

drawing of lots.”108 That is what occurred here. On August 6, 2010, when the

beneficiaries first met to discuss the TPP distribution, the successor trustee tried to

get the beneficiaries to agree upon a method of distribution. Margaret refused to

agree with the other beneficiaries on a selection order to be determined by lots

during this meeting and on a subsequent conference call.109 Since Mr. Cist’s

children were unable to agree upon a method of distribution, the successor trustee

turned to the default provision above – “distributions will be by alternating

selection in order to be determined by the drawing of lots.”           Moreover, the

successor trustee did not breach her fiduciary obligations to the beneficiaries when


106
    Id.
107
    Id. at 5 (Mary Harding Affidavit); id. at 169-171 (email dated May 26, 2011
from Reiver to Ferry).
108
    Id. at 126. (Second Amendment to Supplement Trust Agreement of John David
Cist).
                                      Page 32 of 46
she retained an experienced estate administrator who used a process of alternating

selections of items of TPP in an order that was determined by the random drawing

of the beneficiaries’ names out of a hat. Each beneficiary was treated impartially

by the administrator. Each beneficiary was given the same opportunity to view the

TPP and make a priority selection list, and each beneficiary had the same chance of

being awarded his or her selected items through a selection order that had been

previously determined at random.

         After the TPP distribution took place, Margaret sought and obtained a court

order compelling the production of the other beneficiaries’ TPP selection lists.

Despite having obtained this information concerning her siblings’ priority

selections, Margaret has been unable to point to any specific evidence of unfairness

or lack of impartiality during the TPP distribution process. Since Margaret has

failed to demonstrate the existence of a genuine issue of material fact, the Court

should grant summary judgment in favor of Mary Harding regarding her

administration of the TPP distribution.

         B. The Successor Trustee Did Not Act in Bad Faith or Exceed her

            Discretion in Following the Equalization Process Established Mr.

            Cist During His Lifetime.




109
      Id. at 3 (Mary Harding Affidavit).
                                        Page 33 of 46
      Mary Harding argues that there is no dispute that Mr. Cist intended to make

equalizing transfers, that he told his lawyers, his son, and his accountant what he

intended, and there can be no doubt as to what he tried to achieve in the months

before he passed away. According to Mary Harding, the language of Mr. Cist’s

trust requires the successor trustee to take into account Mr. Cist’s pre-death

decisions on what lifetime transfers to include in the equalization process.

Margaret, on the other hand, argues that the phrase “during our lifetimes” is

unambiguous, and that the successor trustee failed to follow the express provisions

of the trust agreement. By recreating Mr. Cist’s course of conduct before his

death, her argument goes, the successor trustee exceeded the bounds of her

discretion.

      Delaware law is clear that when construing a trust instrument, “the Court

attempts to discern the settlor’s intent as expressed by the instrument, read as a

whole, in light of the circumstances surrounding its creation.”110 The words used

in the instrument will be “given their ordinary meaning and the Court will not

consider extrinsic evidence to vary or contradict express provisions of a trust

instrument that are clear, unambiguous and susceptible of only one



110
   Wilm. Trust Co. v. Annan, 531 A.2d 1209, 1211 (Del.Ch. 1987) (citing Dutra de
Amorim v. Norment, 460 A.2d 511, 514 (Del. 1983)), aff’d Annan v. Wilm. Trust.
Co., 559 A.2d 1289, 12982 (Del. 1989)). See also In re Pierls Family Inter Vivos
Trusts, 77 A.3d 249, 263 (Del. 2013).
                                    Page 34 of 46
interpretation.”111   An ambiguity may exist if the terms are reasonably or fairly

susceptible to different interpretations or may have two or more different

meanings.112

      I previously issued a draft bench report finding that the phrase “during our

lifetimes” found in Paragraph D(1) of both the First Amendment and the Second

Amendment of the Supplemental Trust Agreement of John David Cist was

unambiguous.113 Upon further review of the trust instruments, I have decided sua

sponte to modify my draft report after concluding that the phrase “during our

lifetimes” is ambiguous when read in conjunction with Paragraph D(4) of the

Second Amendment of the Supplemental Trust Agreement of John David Cist.

      Paragraph D(4) states:

               4.     I intend to make substantial equalizing transfers during my
               lifetime after the execution of this supplemental trust agreement.
               Such lifetime equalizing transfers reflect my intent to devise my one-
               half interest in [the Wilmington residence] to my daughter Mary
               Harding Cist upon my death, by reducing my lifetime transfers to such
               daughter. The trustee shall take such transfers into account in making
               distribution hereunder to achieve my intent as nearly as possible, so
               that if such equalizing transfers were completed during my lifetime,
               upon my death my one-half interest in the [Wilmington residence]
               will be distributed to Mary Harding Cist, and the balance of my


111
     DiSabatino v. DiFerdinando, 2002 WL 2005743, at *2 (Del. Ch. Aug. 13,
2002) (quoting Wilm. Trust Co. v. Annan, 531 A.2d 1209, 1211 (Del. Ch. 1987)).
112
    Id. at *2 n. 8 (citing ABB Flakt, Inc. v. Nat’l Union Fire Ins. Co., 731 A.2d 811,
816 (Del. 1999)).
113
    Ughetta Appendix at 205 (Transcript of Oral Argument on October 23, 2014, at
40).
                                      Page 35 of 46
             remaining estate and trust assets shall be divided equally among my
             children, … .114


The third sentence of Paragraph (D)(4), which requires the trustee to “take such

transfers into account in making distribution hereunder to achieve my intent as

nearly as possible, so that if such equalizing transfers were completed during my

lifetime …,” is ambiguous. It is unclear whether the phrase “such transfers” refers

to Mr. Cist’s intended lifetime transfers to Mary Harding in the second sentence or

to his intended “substantial equalizing transfers” in the first sentence of Paragraph

D(4). In either case, it is unclear why the direction to the successor trustee is not

predicated on the actual completion of his lifetime equalizing transfers.

       When I issued my draft report on the parties’ legal memoranda, I

disregarded the language in Paragraph D(4) altogether because Mr. Cist had died

prior to making the lifetime equalizing transfers.115 In doing so, I ignored a basic

rule of construction that a court will prefer an interpretation that gives effect to

each term of an agreement and avoids rendering language superfluous or uselessly

repetitive.116 Upon closer reading, the third sentence of Paragraph (D)(4) only

makes sense as providing direction to the successor trustee -- in the event that Mr.



114
    Mary Harding Compilation at 126.
115
    Ughetta Appendix at 205.
116
    Peierls Family Inter Vivos Trusts, 77 A.2d at 265 (citing O’Brien v. Progressive
N. Ins. Co. 785 A.2d 281, 287 (Del. 2001).
                                     Page 36 of 46
Cist died before he completed the substantial equalizing transfers117 -- in order to

achieve his goal of having each child receive an equal share of Mr. and Mrs. Cist’s

combined estates and lifetime gifts.         If Mr. Cist had made the “substantial

equalizing transfers” during his lifetime, his trust agreement would have been

completely restated since there would have been no need for the successor trustee

to have undertaken the equalization process set forth in Paragraphs D(1) and

(D)(2). All that would have remained in Mr. Cist’s estate and trust, after his one-

half interest in the Wilmington residence had been distributed to Mary Harding,

would have been divided into four equal shares.         If Paragraph D(4) is not to be

treated as superfluous, it must be read together with Paragraphs (D)(1) and (D)(2),

and the resulting ambiguity warrants an examination of the extrinsic evidence

concerning Mr. Cist’s intent in making those lifetime transfers.

      The record shows that in preparing to fund the four irrevocable GST trusts,

Mr. Cist did not calculate the lifetime gifts to his children in a literal sense, i.e., he

did not attempt to add up all the gifts and transfers to his children made over the

course of his and Mrs. Cist’s lives. Instead, he wanted to include only those gifts

and transfers that had been made in the years following the children’s graduation

from college.118    According to his attorney, Mr. Cist considered starting the


117
    The Second Amendment was executed on January 6, 2010, and Mr. Cist died a
few months later on June 24, 2010.
118
    Mary Harding Compilation at 474 (Reiver Deposition).
                                       Page 37 of 46
calculations after the youngest child, Mary Harding, had graduated from college,

but he concluded that it would be unfair to the three youngest children. Instead, he

opted for a staggered beginning point, i.e., the calculation was to begin after each

child graduated from college.119 Many of the earlier records dating back to 1980

when Dorothea graduated from college were unavailable to Mr. Cist,120 so he

began with records from 1985.121 Pelillo subsequently reviewed the lists of gifts

and transfers that Mr. Cist and David had compiled.122 Included on these lists was

a large monetary gift to Margaret’s husband on December 1, 2007,123 which was

allocated to Margaret, and a large monetary gift to David’s wife on December 31,

2007, which was allocated to David.124        After Pelillo was hired by Mr. Cist’s

estate and trust to prepare the equalization tallies, Reiver instructed Pelillo to

attribute any gifts to Margaret’s husband to Margaret’s tally.125 However, this

instruction was not exclusively directed at Margaret.           The tallies Pelillo


119
    Id. at 463 (Bennett Deposition).
120
    Id. at 463; id at 310-311 (“Overview” of Mr. Cist’s Estate prepared by Mary
Harding).
121
    Id. at 464 (Bennett Deposition).
122
    Id. at 137 (Deposition of Victor Pelillo).
123
    Id. at 148. In his deposition, Pelillo stated that the amount of this gift was
$20,000. Exhibit A attached to Pelillo’s letter dated October 29, 2009, to Mr. Cist
and David, id. at 291-294, is the list that had been prepared by Mr. Cist and David.
Id. at 295-296. It includes a gift of $20,000 to “William” and a gift of $24,000 to
“Bill” on December 1, 2007; both gifts were included in Margaret’s tally and,
presumably, represent separate gifts to Margaret’s husband and son, both of whom
are named William. Id. at 296.
124
    Id. at 295.
                                     Page 38 of 46
subsequently prepared for Margaret and David included gifts and transfers to and

for the benefit of both Margaret’s and David’s respective spouses and children.126

      Margaret argues that the express trust provisions do not include transfers to

spouses and the successor trustee’s decision to start the equalization process one

month after each beneficiary graduated college was not only arbitrary, but also

directly and unfairly benefited David by shielding his autograph collections from

being included in the process. The extrinsic evidence reveals, however, that the

decisions to include gifts to spouses and to begin the calculation after each of Mr.

Cist’s children graduated from college had been made by Mr. Cist himself. The

successor trustee’s instructions to Pelillo were based on the information and

records that Mr. Cist previously had provided to Pelillo. The successor trustee,

therefore, was merely following the parameters that had been established by the

trustor,127 and did not breach her fiduciary duty when she completed the

equalization process that had been started by Mr. Cist.

       The record shows that Mr. Cist did not intend to include any gifts or

transfers to his children before they graduated college, but he did intend to include

gifts and transfers to his children after they had graduated from college, in addition

to gifts and transfers to and for the benefit of his children’s spouses and his


125
    Id. at 150, 154 (Pelillo Deposition).
126
    Id. at 327-339 (Margaret Final Tally); id. at 494-501 (David Tally).
127
    Id. at 120 (Mary Harding Deposition).
                                     Page 39 of 46
grandchildren.   Margaret has pointed to no specific evidence of Mr. Cist having

had a contrary intent that would create a genuine issue of material fact in dispute.

Therefore, I recommend that summary judgment be granted in Mary Harding’s

favor regarding her administration of the equalization process.

      C. There Is No Cause for Removal or for Compelling the Successor

         Trustee to Provide an Accounting.

      Margaret argues that there are genuine issues of material whether she is

entitled to an accounting and the removal of the successor trustee, and she

buttresses hers argument by recapitulating all of her previous complaints against

the successor trustee. Margaret accuses the successor trustee of being hostile

towards her, and contends that there are legitimate questions whether the successor

trustee acted with impartiality toward all the beneficiaries and whether or not she

should be removed as trustee. Finally, Margaret claims that she is entitled to a

complete accounting of all assets, receipts, income, expenses and debts of the

estate and trust because her repeated requests for an accounting have been denied.

      The record shows that the successor trustee put in place TPP distribution and

equalization processes that were applied equally to the four beneficiaries. Each

beneficiary was given the same amount of time to: (1) view the TPP and (2)

prepare and submit a priority selection list. The selection process itself was done

by rotation (as agreed upon by the four beneficiaries) in an order determined by the


                                     Page 40 of 46
random drawing of names out a hat. Similarly, each beneficiary was given the

same amount of time to: (1) review the documents that provided the basis for

Pelillo’s initial equalization tally and (2) make revisions or corrections to his or her

own tally provided there was supporting documentation for such revisions or

corrections.   The record shows that of the four beneficiaries, only Margaret

objected to these processes and only Margaret demanded that exceptions be made

for her. The failure to accord special treatment for Margaret does not demonstrate

hostility or lack of impartiality on the part of the successor trustee.

      Throughout the administration of this trust and estate, Margaret repeatedly

requested information, photographs, appraisals and other documents from the

successor trustee, and Margaret was provided with most, but not everything that

she had requested.128 Aside from Margaret’s own subjective dissatisfaction with

the successor trustee’s responses, Margaret points to no evidence that the successor

trustee acted hostilely or lacked impartiality when dealing with Margaret.129


128
    Id. at 231-263 (History of Questions & Responses). Ughetta Appendix at 260-
323 (correspondence between Margaret’s counsel and successor trustee’s counsel
between March 15, 2011 and July 11, 2012).
129
     One example Margaret gave to demonstrate the successor trustee’s alleged
failure to provide her with information is somewhat disingenuous. The requested
information was described as letter requesting documentation that the beneficiaries
had agreed to the TPP distribution process. Petitioner Margaret C. Ughetta’s
Answering Brief in Response to Respondent’s Motion for Summary Judgment at
37. The actual letter instead requested documentation that Margaret had agreed to
the TPP distribution process. Given Margaret’s record of complaints about the
TPP process, it is unlikely that such a document existed so the successor trustee
                                       Page 41 of 46
Similarly, Margaret has not shown cause for an accounting.130 The fact that her

repeated requests for an accounting have been denied in and of itself does not

amount to cause for the Court to compel the successor trustee provide an

accounting when the trust and estate are still in the process of being administered,

there is a significant amount of TPP yet to be distributed, and fees and costs

associated with this litigation and the storage of TPP continue to accrue.

Therefore, I recommend that summary judgment be granted in favor the successor

trustee on the issue of the trustee’s removal and the requirement of an accounting.

      D. The No Contest Provision Has Not Been Violated by Margaret’s

         Petition.

      In her counterclaim, Mary Harding alleges that Margaret’s petition violates

the no contest provision of Mr. Cist’s trust and, as a result, her bequests must be

reduced by half and must bear the cost of attorneys’ fees and costs incurred by

Margaret as well as by the trustee.     According to Mary Harding, the no contest

provision is very broad, and Margaret’s challenges to the TPP distribution and

equalization processes fall within its scope. In addition, Mary Harding describes

as “simply false” Margaret’s contentions that information was withheld from her,

and that Margaret has unjustly burdened the trust administration with her


can hardly be faulted for failing to provide it. Ughetta Appendix at 299 (Letter
dated August 3, 2011 from Ferry to Reiver).
130
    See 12 Del. C. § 3522(2). See also 1A C.J.S. Accounting § 44.
                                      Page 42 of 46
objections and numerous questions, despite all the information that had been

provided to her.131    Margaret denies that she has challenged any disposition

provided for in the trust, which would have constituted a violation of the no contest

provision. Instead, Margaret claims that she is challenging the administration of

the trust in an effort to enforce the express language of the trust, i.e., the

calculation of lifetime gifts to Mr. and Mrs. Cist’s children and grandchildren in

the equalization process, and the drawing of lots for the TPP distribution.

      Paragraph C of Section II of the 2006 Supplemental Trust Agreement of

John David Cist, as modified by the First Amendment, provides:

                    If any beneficiary under this instrument files an action in any
             court seeking to set aside any aspect of the document, or to challenge
             any aspect of the disposition provided herein, the bequest to such
             beneficiary shall be partially ineffective and void, and the bequest
             such beneficiary would have received, but for such challenge, shall be
             reduced by one-half (i.e., fifty percent). The contestant’s share shall
             also bear the costs of attorneys’ fees and costs incurred by the
             contestant as well as attorneys’ fees and costs incurred by my
             fiduciaries in defending the action. The portion by which such
             contesting beneficiary’s bequest is reduced shall be distributed in
             equal shares to the non-contesting beneficiaries. The provisions of
             this provision shall also apply to specific takers in default, if any,
             provided in such bequest hereunder. This provision shall apply in the
             case of challenges based on fraud, mistake, undue influence, or
             incapacity, or upon any other basis.132




131
    Respondent Mary Harding Cist’s Opening Brief in Support of Her Motion for
Summary Judgment, at 42.
132
    Mary Harding Compilation at 121.
                                     Page 43 of 46
      I do not include challenges to the administration of a trust within the scope

of the catchall phrase, i.e., “upon any other basis[,]” of this provision because there

is a distinction between a challenge to the propriety of a trustee’s actions and an

attack on the provisions of the trust itself.133 Margaret is not seeking to alter or

change any of the provisions of Mr. Cist’s trust.134 Instead, she is attempting to

enforce the provisions regarding the TPP distribution and the equalization process

according to their terms, as she has interpreted them. Mary Harding herself has

argued that certain terms in Mr. Cist’s trust are ambiguous.          It is, therefore,

reasonable for the parties to have advocated for different interpretations of the

language of Mr. Cist’s trust pertaining to the TPP distribution and the equalization

process. While Mary Harding views this as an indirect challenge to the trust that

has frustrated Mr. Cist’s intent and prolonged the administration of the trust, courts

do not view disputes over the interpretation of instruments as violating a no contest


133
    See In re Vogel Sr. Living Trust, 2010 WL 2136643, at * 7 (Mich. App. May
27, 2010); Labantschnig v. Bohlmann, 439 S.W.3d 269, 274 (Mo. App. E.D.
2014). .
134
    In her Reply Brief, Mary Harding argues that Margaret is trying to set aside
specific trust provisions, pointing to Margaret’s Answers to Interrogatories where
she “objects’ to being charged for her children’s tuition in the equalization process.
Respondent Mary Harding Cist’s Reply Brief in Support of Her Motion for
Summary Judgment at 23. Since Margaret has not challenged the inclusion of her
children’s tuition payments in the equalization process in either her Petition or her
Answering Brief, I need not address this argument. Similarly, a removal petition
does not challenge the trustor’s selection of a successor trustee, only the selected
trustee’s performance of her fiduciary duties. McCaslin v. England, 2013 WL
127787, at *4 (Cal.App. 4 Dist. Mar. 29, 2013).
                                      Page 44 of 46
clause.135 Even though I now disagree with Margaret’s interpretations of the

trust’s terms, I do not find that Margaret has violated the no contest provision of

Mr. Cist’s trust.

      Finally, I decline to recommend the award of costs and expenses to Mary

Harding as a matter of justice and equity.136 Other than claiming that Margaret has

unfairly prolonged this litigation and made unsupportable allegations, Mary

Harding has shown no evidence of bad faith on Margaret’s part.          Given that

Margaret does not appear to have been included in the numerous meetings,

discussions, and correspondence concerning Mr. Cist’s estate planning that

occurred between and among her siblings, her father, her father’s attorneys, and

Pelillo beginning in August 2008 until Mr. Cist’s death in June 2010, I do not find

it surprising that Margaret has repeatedly sought information about and questioned

the administration of her father’s trust. 137


135
    See Donkin v. Donkin, 58 Cal.4th 412, 433-436 (Cal. 2013) (citing statutory and
common law).
136
    12 Del. C. § 3585 provides: “In a judicial proceeding involving a trust, the
court, as justice and equity may require, may award costs and expenses, including
reasonable attorneys’ fees, to any party, to be paid by another party or from the
trust that is the subject of the controversy.”
137
    The record suggests Margaret may have been purposely excluded from these
discussions. Mary Harding Compilation at 460 (e-mail dated Oct. 25, 2009, from
David to Pelillo: “By the way, since my sister Margie is going to be with Dad this
week, I’d prefer to keep the communications only by email, or my cell …….”); id.
at 505 (e-mail dated Feb. 19, 2010, from Reiver to David: “I received a call last
week from Richard J.A. Popper, Esq. and I spoke to Richard yesterday. He is
representing your sister Margie and her husband, and wanted to talk to me about …
                                       Page 45 of 46
      CONCLUSION

      For the foregoing reasons, I recommend that the Court grant Mary Harding’s

Motion for Summary Judgment in part as to Margaret’s Petition to Compel

Accounting and Remove Trustee, and deny in part as to Mary Harding’s

counterclaim for forfeiture under the no contest provision of Mr. Cist’s trust.

Instead, I recommend that the Court grant summary judgment in favor of Margaret

as a matter of law on the counterclaim.       This is my final report and exceptions

may be taken in accordance with Rule 144.




                                               Respectfully,

                                               /s/ Kim E. Ayvazian

                                               Kim E. Ayvazian
                                               Master in Chancery

KEA/kekz
cc: David F. Ferry, Jr, Esquire
    Edward M. McNally, Esquire




your father’s planning. I told him I would discuss his phone call with my client, J.
David Cist, to determine what, if anything, I am authorized to disclose and
discuss.”); id. at 452-453 (e-mail dated Feb. 26, 2010, from Reiver to Bennett:
“Speaking of perfect storms, note that Richard Popper is representing Margaret and
William Ughetta, and will be scrutinizing our actions to the extent he knows what
we’re doing. I haven’t yet asked J. David Cist what, if anything, we are authorized
to discuss or provided Richard.”)
                                     Page 46 of 46
