R. Michael DeGroat v. Lucinda A. Papa ( 2020 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
In the matter of the Estate of RICHARD )
L. DEGROAT, deceased. )
)
R. MICHAEL DEGROAT, Individually )
and as Executor of the Estate of Richard L. )
DeGroat, )
)
Plaintiff, )
)
and )
)
CARROLL IACOVETTI and JAN ) C.A. No. 12738-VCZ
DEGROAT, )
)
Plaintiff-Intervenors, )
)
v. )
)
LUCINDA A. PAPA a/k/a LUCINDA M. )
PAPA a/k/a LUCINDA P. DEGROAT )
a/k/a LUCINDA A. ZIATYK and )
MICHAEL ZIATYK, )
)
Defendants.
MEMORANDUM OPINION
Date Submitted: January 14, 2020
Date Decided: April 30, 2020
David J. Ferry, Jr. and Brian J. Ferry, FERRY JOSEPH, P.A., Wilmington,
Delaware, Attorneys for Plaintiff and Plaintiff-Intervenors R. Michael DeGroat,
Carroll Iacovetti, and Jan DeGroat.
Jason C. Powell, THE POWELL FIRM, LLC, Wilmington, Delaware, Attorney for
Defendants Lucinda A. Papa and Michael Ziatyk.
ZURN, Vice Chancellor.
The children and first ex-wife of Richard DeGroat, who is deceased, contend
that his second ex-wife, Lucinda Papa, misappropriated his assets during his life
and upon his death.1 In his final years, and years after their divorce, Richard
willingly sought Lucinda’s help with his affairs and her companionship. Although
the two had not been in touch for a number of years, the role seemed fitting, as
Lucinda has substantial business experience and Richard was not close to his
family. Instead of honoring this relationship and the trust Richard instilled in her,
Lucinda took advantage of the opportunity to take his assets. This post-trial
opinion concludes that Richard needed and accepted Lucinda’s help with his
finances, but that Richard did not intend to give all of his assets to Lucinda.
Rather, Lucinda used her access to Richard’s assets to improperly take them for
herself.
I. BACKGROUND
Richard was a very intelligent and well-read man who followed financial
news and was active in managing his assets.2 He was stubborn and not easily
1
In this family dispute, I use the parties’ first names in pursuit of clarity. I intend no
familiarity or disrespect. Citations in the form of “[Name] Tr. ––” refer to witness
testimony from the trial transcripts. Citations in the form of “[Name] Dep. ––” refer to
deposition transcripts in the record. Citations in the form of “PTO ¶ ––” refer to
stipulated facts in the pre-trial order. See Docket Item (“D.I.”) 218. Citations in the form
of “JX –– at ––” refer to a trial exhibit.
2
Papa Tr. 810:7–10; Tavani Tr. 192:21–193:5, R. M. DeGroat 463:7–14; A. J. DeGroat
578:5–9; G. R. Spritz 327:13–17.
1
persuaded.3 Lucinda is also very intelligent, with a keen mind for business and
entrepreneurship. She holds a bachelor’s degree in economics, has worked in audit
management, and has practiced as a certified public accountant.4 Lucinda, too, is
stubborn: she wanted more of Richard’s assets than she received out of her
divorce, and engaged in a persistent course of conduct to obtain them. Lucinda’s
testimony concerning the financial agreements she and Richard purportedly
reached, and the manner in which she managed Richard’s affairs, is contradictory
and unsubstantiated by any contemporaneous evidence. Lucinda’s credibility
leaves much to be desired.
A. Richard’s Two Marriages, Children, And Two Divorces.
Richard married plaintiff Jan DeGroat in 1954, had five children with her,
and divorced her in 1978.5 Richard and Jan’s children are plaintiff R. Michael
DeGroat, Thomas DeGroat, plaintiff Carroll Iacovetti, Brian DeGroat, and Andrew
DeGroat.6 In that divorce, Richard was represented by counsel, and the couple
executed a written divorce agreement.7
3
Papa Tr. 961:7–10; Iacovetti Tr. 747:15–17.
4
Papa Tr. 807:13–808:9, 943:18–20.
5
PTO ¶ 2 at 1–3.
6
J. DeGroat Tr. 771:8–13.
7
J. DeGroat Tr. 771:21–773:14.
2
On September 9, 1978, Richard married defendant Lucinda Papa, who was
twenty-one years his junior.8 When they married, Richard’s earning potential was
declining, while Lucinda’s was rising.9 In fact, Richard stopped working
altogether, while Lucinda worked hard and grew a successful women’s clothing
company.10 During their marriage, Lucinda and Richard agreed that Lucinda
would fund all of their expenditures and taxable savings with her earnings, while
their retirements would be funded by Richard’s growing tax-deferred savings.11 In
2001, Lucinda and Richard purchased 3 Somerset Lane, Newark, Delaware 19711
(the “Property”) as tenants by the entirety.12 Lucinda’s relationships with
Richard’s children were cordial and positive.13
In both of his marriages, Richard was stubborn and abusive.14 Richard and
Lucinda separated in 2000, reconciled, and separated again in 2004.15 Richard and
Lucinda divorced on July 25, 2008.16 There is no written divorce agreement or
8
PTO ¶ 2 at 4–5.
9
Papa Tr. 812:9–813:21, 819:3–13.
10
Papa Tr. 813:22–814:16, 818:2–10, 819:3–4.
11
Papa Tr. 817:4–22.
12
Papa Tr. 827:13–18.
13
Papa Tr. 834:2–835:19.
14
J. DeGroat Tr. 771:23–772:1; Papa Tr. 821:13–20, 823:22–826:18, 845:8–14.
15
R. M. DeGroat Tr. 375:16–18, 376:18–21; Papa Tr. 823:22–826:18, 828:6–20.
16
PTO ¶ 2 at 6.
3
property division from their divorce.17 According to Lucinda, she and Richard
maintained their marital financial agreement, by which Richard would retain her as
the beneficiary of his retirement assets, after the divorce.18 This agreement was not
documented, and I do not believe it existed.19 The evidence shows that at the time
of their divorce, Richard and Lucinda agreed to remove each other as beneficiaries
on their Vanguard accounts.20 Richard also removed Lucinda as the beneficiary to
his Penn Mutual and Lincoln Financial Group life insurance policies in 2007.21
Richard made Jan the primary beneficiary on his Vanguard Individual Retirement
17
Papa Tr. 955:21–957:20.
18
Papa Tr. 817:4–22, 830:10–18, 886:12–887:3.
19
See JX 35; Papa Tr. 955:21–957:20. The only evidence Lucinda offers to support her
purported agreement with Richard is his December 15, 2011, call with Vanguard. That
evidence refutes the terms of the purported agreement. In that call, Richard was
attempting to remove Lucinda’s name from his accounts, and he references their 2007
divorce. JX 18 at 77 (“And it’s mentioned in the divorce papers that the – there was no
money amount transferred or one with the divorce, but the divorce papers indicate that
the – that the financial arrangements were all not part of the divorce. The divorce says
that they were agreed upon by the parties in the divorce. So that’s – that’s all I – that’s
all I have. But, see, nothing does me any good if I can’t locate the party that’s on the –
you know, the account. And I’m afraid she’s – I’m afraid, if her name is here, she can
withdraw anything that’s in that account.”). This call does not evidence the terms of any
divorce agreement, and indeed, Richard was trying to remove Lucinda from his accounts,
counter to the terms of the agreement Lucinda seeks to prove. And in 2012, Richard
continued to try to protect his assets from Lucinda, again while referencing his divorce.
JX 23 at 138–39 (“And I’m trying to remove a person -- an ex-wife, really. And make
sure that she has no way of getting her hands on any money that’s in those funds. We’re
divorced and we had an agreement -- not part of the divorce, but a -- the divorce mentions
a -- that we have -- we being my ex-wife and myself. A financial agreement, which we
do. But now I’m trying to make sure that there’s no way she can go back and grab
money in any of these funds.”).
20
See JX 2; JX 3; JX 4; JX 18 at 77; JX 23 at 138–39.
21
JX 6; JX 7.
4
Accounts (“IRA”), and made Carroll the secondary.22 Later, Richard made
Carroll, rather than Jan, the primary and sole beneficiary on the Vanguard IRAs.23
At the time of his divorce, Richard transferred approximately $720,000 to
Lucinda.24 He also paid her $42,000, representing the value of Exxon stock that
Richard held.25
Lucinda further contends that in 2013, she and Richard renewed or restated
their purported divorce agreement in a “verbal reallocation agreement” (the “2013
Verbal Agreement”).26 Lucinda testified that she and Richard entered into this
agreement during dinner on the night of January 29, the same day Lucinda and
Richard executed a new deed for the Property.27 Lucinda testified that Richard
expressed his belief that their 2008 divorce agreement was not equitable and that
she should receive an additional $300,000 payment from his taxable assets.28
Lucinda explained that to implement the 2013 Verbal Agreement, Richard would
transfer money to their joint account from his individual accounts and IRAs as a
22
JX 1 at VGI 1356, 11358, 1360, 1362, 1371; JX 11 at 5–8.
23
JX 1 at VGI 1364, 1373; JX 17 at 62–65. Richard later mentioned wanting to remove
Carroll as a beneficiary to this account, but he wished to do so because he was going to
give her money under his will. JX 21 at 97–98 (“I’m going to take her off there and
switch her over to the new terms of the will, which will give her more money.).
24
JX 3; JX 4; JX 18 at 77; JX 23 at 138–39.
25
JX 3; JX 4 at VGI 0995.
26
Papa Tr. 1026:5–1030:23.
27
Papa Tr. 1026:5–1030:23.
28
Papa Tr. 902:16–904:15, 988:1–4, 1026:5–1030:23.
5
signal that Lucinda could take money from the account for her own use.29 This
testimony is refuted by documents showing Lucinda transferred funds into the joint
account herself, as well as the fact that such purported signaling transfers
continued after Richard was hospitalized.30 Lucinda has failed to prove that she
and Richard agreed, either at the time of their divorce or in the 2013 Verbal
Agreement, that she would receive all of his retirement accounts and an additional
payment after their divorce and his death.
According to Lucinda, in late 2004, she and Richard began discussing
whether Richard should move to an apartment in an independent living
community, at which time they would sell the Property and split the proceeds.31
Lucinda testified that Richard placed a deposit on an apartment at Maris Grove, a
retirement community, and that the couple then agreed to sell the Property and split
the proceeds.32 In fact, even though Richard had put down a deposit for the
29
Papa Tr. 903:19–904:16, 1041:4–10 (“From [the joint account], I will take checks,
which I may write at any time I wish, for whatever I wish.”).
30
D.I. 272 at VGI 4876, 4878, 4880, 4882, 4886, 4890. In a call to Vanguard in March
2013, Lucinda was surprised to find out that Richard had not closed their Vanguard Joint
Account. JX44 at 246-247. This evidence is contrary to her testimony that the Vanguard
Joint Account would be used as part of the 2013 Verbal Agreement, which was agreed to
in January 2013. Papa Tr. 903:19–904:16.
31
Papa Tr. 828:6–20, 868:20–869:15, 971:10-972:19, 990:9–18, 1132:5–17.
32
Papa Tr. 828:6–20, 868:20–869:15, 971:10-972:19, 990:9–18, 1132:5–17. Lucinda
testified that the Property was appraised in late 2005 or early 2006 at $525,000. Based on
the alleged agreement to split the Property sale proceeds, Lucinda believed she and
Richard would each receive $250,000. JX 113 at 6. Lucinda has failed to prove this
agreement existed.
6
apartment at Maris Grove, Richard continued to live alone at the Property.33 The
divorce caused Lucinda and Richard’s interests in the Property to shift to a tenancy
in common, such that neither party had a right of survivorship.34 The house
deteriorated and lost value under Richard’s sole management.35
As adults, Richard’s children were not particularly close to him, even though
they all lived within an hour’s drive; phone calls and visits were sporadic or
nonexistent.36 Michael was the child closest to Richard and only saw him two to
three times a year.37 Richard did not discuss his divorce from Lucinda, any
property division terms, or his assets and estate plan with his children. 38 Richard
and Jan did not frequently speak.39
33
Papa Tr. 828:6–20.
34
Real Estate of Dillard M. v. Elva Wells, 2007 WL 2493688, at *1 (Del. Ch. Aug. 15,
2007) (providing that upon divorce, “by operation of law the former tenancy by the
entireties devolved into a tenancy in common”).
35
Tavani Tr. 138:15–17; R. M. DeGroat Tr. 391:4–6, 402:6–11.
36
Iacovetti Tr. 743:9–745:16; A. J. DeGroat Tr. 602:24–604:21; Eastburn Tr. 1200:9–
1201:3; Papa Tr. 820:22–821:2; R. M. DeGroat Tr. 448:12–452:20.
37
R. M. DeGroat Tr. 448:12–452:20.
38
R. M. DeGroat Tr. 376:22–377:22, 404:20–405:13, 464:22–465:3, 471:17–19; A. J.
DeGroat Tr. 580:8–21, 603:3–6; Iacovetti Tr. 734:16–19, 742:4–743:8, 752:1–24.
39
J. DeGroat Tr. 787:2–6, 788:24–789:4, 793:1–794:6, 799:11–14; Iacovetti Tr. 745:5–
755:1; Papa Tr. 1145:8–22.
7
B. Richard And Lucinda Move On.
In May 2009, Lucinda married Michael Ziatyk.40 She did not inform
Richard.41 After marrying, Lucinda and Ziatyk initially split time between
Ziatyk’s apartment in Tuxedo Park, New York, and Lucinda’s apartment in
Wilmington.42 On March 9, 2012, Lucinda and Ziatyk paid $560,000 in cash for a
historic house in Massachusetts.43 Ziatyk renovated the property, and the couple
sold it for $1,050,000 on June 3, 2018.44 Lucinda and Ziatyk now live in Landrum,
South Carolina.45
As of late 2011, Richard was suspicious that Lucinda was going to try to
obtain more money from him.46 He began attempting to remove her as the
beneficiary of his Vanguard Transfer on Death Accounts (“Vanguard TODs”),47
and to remove her as an owner on their Prime Money Market Fund joint account
40
PTO ¶ 2 at 7.
41
R. M. DeGroat Tr. 382:4–11.
42
Papa Tr. 835:22–836:6.
43
Papa Tr. 836:9–837:16.
44
Papa Tr. 837:1–11, 839:1–7.
45
Papa Tr. 839:8–11.
46
JX 23 at 138–140, 146; R. M. DeGroat Tr. 378:2–379:11, 380:15–23, 383:2–5; JX 22;
JX 27. Lucinda admits to contacting Richard in 2011 via a note. She testified, “I thought
he was going to be selling the house, so I carried his telephone on the company business
up until MCI went bankrupt... I sent him a note and said ‘Call Verizon. You’ll need to
have this billed to your address because of the phone.’” Papa Tr. 840:14–22.
47
These accounts included two individual accounts, a Prime Money Market Fund
account, and a GNMA Fund Investor account. See JX 1 at VGI 1355.
8
(“Vanguard Joint Account”).48 Richard did not have a computer,49 so he called
Vanguard to discuss his accounts and the changes he would like made to them.50
Richard frequently called Vanguard from 2010 through 2012, resulting in a trial
record containing over fifteen audio recordings, many of which were played at trial
and transcribed.51 These recordings evidence Richard’s desire to remove Lucinda
from any Vanguard account she still had access to, or any account she had a right
to receive after his death.52 The recordings also demonstrate Richard’s progressive
mental deterioration.53
Richard’s 2010 request to remove Lucinda from the Vanguard TODs was
not properly processed, so he called Vanguard multiple times in both 2011 and
2012 attempting to finalize the removal.54 He was unsuccessful: as explained via
order on summary judgment, Lucinda consistently remained the beneficiary on
Richard’s Vanguard TODs.55 She likewise remained an owner of the Vanguard
48
JX 11 at 5–8; JX 17 at 55–60; JX 18 at 74–75; JX 22 at 11–128; JX 23 at 138–140.
49
JX 34 at Papa 20 (Lucinda: “and your father does not even have a computer…”); JX 22
at 112; JX 50 at 15; JX 51 at 38; JX 52 at 45; JX 53 at 50-51; R. M. DeGroat Tr. 397:5–
13, 482:17–19; A. J. DeGroat 586:7–14; Iacovetti 729:19–730:1; J. DeGroat Tr. 778:18–
20.
50
JX 11 at 5–8; JX 17 at 55–60; JX 18 at 74–75; JX 22 at 114–128; JX 23 at 138–140.
51
JX 11 at 5–8; JX 17 at 55–60; JX 18 at 74–75; JX 22 at 114–128; JX 23 at 138–140.
52
JX 11 at 5–8; JX 17 at 55–60; JX 18 at 74–75; JX 22 at 114–128; JX 23 at 138–140.
53
JX 13 at 36–44; JX 50 at 9–21; JX 51 at 27–28.
54
JX 11 at 5–8; JX 17 at 55–60; JX 18 at 74–75; JX 22 at 114–128; JX 23 at 138–140.
55
D.I. 196 ¶¶ 9, 14.
9
Joint Account. After realizing there was only $7.91 in the Vanguard Joint Account
Richard lost interest closing it.56 Richard could not unilaterally remove her in any
event.57 She also remained the beneficiary of Richard’s Fidelity IRAs until those
funds were closed and transferred to the Vanguard IRAs in November 2013.58
In 2011, continuing his attempt to divest Lucinda of his assets, Richard hired
Gary Spritz, Esquire, to create an estate plan that excluded Lucinda.59 Michael and
Andrew had been encouraging Richard to create a will, because they “d[idn]’t want
to get stuck dealing with the state or whoever they have to deal with every year.” 60
Richard thought this was a “reasonable request on their part.”61 There is no
evidence that Michael and Andrew pressured Richard to execute a will with any
particular terms. Richard told Mr. Spritz that he trusted Michael.62
Represented by Mr. Spritz, Richard executed a Last Will and Testament on
January 11, 2012 (the “Will”).63 The Will made a specific bequest of a piece of
personal property to one of Richard’s granddaughters, and left the rest of his estate
56
JX 18 at 74–78; Papa Tr. 1101:7–13.
57
JX 18 at 74–78.
58
JX 12 at DeGroat 1472, Papa 1086; R. M. DeGroat Tr. 540:12–543:16; Papa Tr.
877:7–13, 878:6–22, 885:17–886:11, 899:14–22.
59
Spritz Tr. 326:4–7, 339:7–24.
60
JX 18 at 81.
61
JX 18 at 81–82.
62
Spritz Tr. 327:17–328:13.
63
PTO ¶ 2 at 8; JX 19.
10
to his five children.64 The Will named Michael as executor, and specifically
instructed him to sell all real estate and sever any interests with Lucinda.65 Richard
also executed a power of attorney (the “2012 POA”) and advance health care
directive appointing Michael as his agent.66 The 2012 POA did not give Michael
the power to change Richard’s beneficiaries.67 Richard lost these documents and
executed new versions in June 2012.68 Mr. Spritz recommended that Richard file a
petition for partition to sever his interest in the Property from Lucinda’s interest,
but Richard did not do so.69
Richard was competent and free from undue influence when he signed his
Will.70 Even so, in 2010, Richard began experiencing memory problems. 71 In
August 2011, he told his podiatrist that he did not have any short-term memory and
that he had woken up at a rest stop in another state in his pajamas. 72 In March
64
JX 19; Spritz Tr. 335:3–9.
65
JX 19; Spritz Tr. 335:11–18.
66
JX 28; JX 29; Spritz Tr. 331:4–23.
67
JX 28.
68
PTO ¶ 2 at 9, 10; JX 28; JX 29; Spritz Tr. 331:4–23.
69
JX 20 at DeGroat 3–4, 45; Spritz Tr. 341:2–14.
70
JX 19; Spritz Tr. 327:14–328:4.
71
JX 34 at Papa 17 (Lucinda acknowledging Richard is “an old, sick man”), at Papa 20
(Michael acknowledging Richard’s “story telling and lack of memory is a problem”), at
Papa 21 (Lucinda: “Also I will be charitable and say that your father’s memory is bad,
and it is true he does not remember everything correctly.”); JX 13 at 36–44 (Richard:
“my mind is going bad, too, but – I can’t remember one day to the next”); JX 117 at 21.
72
JX 15; Nippert Dep. Ex. B at 3092.
11
2012, Richard called Vanguard because he needed help depositing three checks.73
He told Vanguard, “I have somewhat of a memory problem. I can’t tell you what I
had for breakfast yesterday morning . . . I live alone and I don’t have any body to
guide me through these normal day-to-day activities, because I can’t remember one
day to the next.”74 None of Richard’s children were helping him. Richard still
retained his executive functioning.75
C. Lucinda Reenters Richard’s Life.
In early 2012, Lucinda began contacting Richard’s family.76 In 2012,
Richard learned through one or both of his sons that Lucinda had remarried and
that she and Ziatyk had bought a home earlier that same year. 77 Lucinda was
displeased that Richard had found out about her new marriage and home.78 On
February 28, 2012, Richard called Lucinda’s family’s restaurant and asked for
73
JX 24 at 152–156.
74
Id. at 155–156.
75
Id.76
JX 23 at 138–140, 146; JX 27; R. M. DeGroat Tr. 378:2–379:11, 380:15–23, 383:2–5.
77
R. M. DeGroat Tr. 377:4–16, 380:24–381:23, 479:14–487:22; A. J. DeGroat Tr.
619:20–620:21. Lucinda had inadvertently emailed a photograph of her new house to
Michael DeGroat, rather than Michael Ziatyk, and Michael confirmed the purchase
through internet research. Among the DeGroat family, there was some initial confusion
as to Michael Ziatyk’s identity due to an architect with the same name living on Long
Island, New York. Papa Tr. 844:13–23, 989:17–21.
78
R. M. DeGroat Tr. 382:4–11.
12
Lucinda to call him.79 Lucinda and Richard reconnected in the spring of 2012:
Lucinda visited Richard several times in Delaware to assist him with cleaning and
repairing the Property, and she emailed Michael repeatedly about Richard’s
affairs.80 Michael had known Richard’s affairs were somewhat in chaos, but had
not helped his father.81 Michael appreciated Lucinda’s assistance to Richard
related to the Property.82
Lucinda was very concerned about the Property’s depreciation in value and
became focused on repairing the house.83 Lucinda framed the Property’s issues as
concerning “the money which was unquestionably [hers],” and portrayed Richard
as irrational and delusional.84 Lucinda was unable to improve the Property’s
condition, either on her own or with Michael or Richard. So by August 2012,
Lucinda concluded she was “going to have to see an attorney to find out what
should be done to salvage the situation.”85
79
JX 25 at Papa 3.
80
JX 27; JX 30.
81
JX 25 at Papa 3; JX 27 at Papa 3.
82
JX 34 at Papa 12.
83
JX 27.
84
Id. at Papa 2.
85
JX 30 at Papa 8. Lucinda complained to Michael that because the Property had not
been sold, she “could not buy a decent house in which to move all my things.” Id. But
she and Ziatyk had purchased a home for $560,000 five months earlier.
13
Richard’s affairs continued to deteriorate, and in November 2012 he wrote
Lucinda a letter:
I’m in need of a facilitator to assist in correcting several problems. I
sure could use your help as the problems are rapidly growing worse.
xoxo* R
If coming bring a phone + computer86
Lucinda increased her assistance to Richard.
In December 2012, Lucinda engaged Thomas Ferry, Esquire, to convert the
Property’s ownership from tenancy in common to joint tenancy with a right of
survivorship.87 In his notes, Mr. Ferry stated their mission as: “Will try to get ex
to sign deed to JTWROS  either by son who may have POA or get doctor’s
note.”88 Mr. Ferry raised the issue of Richard’s competence, and Lucinda assured
him Richard was competent.89 Richard initially rejected signing a new deed and
sought advice from Mr. Spritz.90 Mr. Spritz recommended against Richard signing
the deed.91
On December 12, Lucinda asked Michael to sign a letter confirming
Richard’s competency, leaving it “up to [Michael]” if he wanted to give Richard a
86
JX 32. Lucinda testified that “xoxo*” was Richard’s preferred signature line during
their marriage. Papa Tr. 850:15–19.
87
JX 33 at Papa 1629, 1635–1637.
88
JX 35 at Papa 1639.
89
JX 33 at Papa 1633.
90
JX 33 at Papa 1631.
91
Spritz Tr. 344:13–19.
14
copy; she explained that it was easier for Michael to sign it than to obtain a
competency statement from Richard’s doctor.92 Michael did not substantively
respond to Lucinda as quickly as she expected. On December 17, Michael told
Lucinda that on first discussing the letter with Richard, Richard said it was “fine
for [Michael] to sign it,” but that Richard was confused as to Lucinda’s intent and
would continue to seek the advice of counsel.93 Michael also raised the issue of
Richard’s competency.94 Lucinda then discussed the issue with Richard directly.95
In a letter dated December 17, Lucinda articulated how much money Richard had
and offered Richard her share of the house for $200,000.96
Lucinda’s next tactic was for Mr. Ferry to threaten Richard, individually,
with a sale, which she suggested to Mr. Ferry on December 19.97 But Mr. Ferry
told Lucinda that he could not approach Richard directly because Richard was
represented by Mr. Spritz.98 Two days later, Lucinda told Mr. Ferry that Richard
had fired Mr. Spritz.99 At trial, Mr. Spritz testified this was untrue.100 Richard
92
JX 34 at Papa 19.
93
JX 34 at Papa 17; R. M. DeGroat Tr. 516:3–12; 520:2–13.
94
JX 34 at Papa 20.
95
JX 34 at Papa 17.
96
JX 36 at Papa 772 (“I saw that you have in excess of $400K in fidelity, and I estimate
you have somewhere between $150-200K in Vanguard.”).
97
JX 33 at Papa 1632.
98
JX 33 at Papa 1631.
99
JX 33 at Papa 1623.
15
never contacted Mr. Spritz again after December, but Richard did not formally fire
Mr. Spritz.101
On December 24, Lucinda wrote Richard and Michael, asking them both to
attend a deed signing at Mr. Ferry’s office.102 That night, Michael and his siblings
expected Richard to drive himself to Michael’s house for Christmas Eve. Richard
got lost and arrived in the middle of the night.103 Richard explained simply that
“he got lost driving to the house.”104 The drive from the Property to Michael’s
house is approximately one hour, but that night, it took Richard twelve to thirteen
hours.105
Lucinda approached Richard directly again via letter dated January 5,
2013.106 The letter references Richard’s requests for help with his affairs,
including the Property’s HVAC. Lucinda wrote:
I will come to help with the HVAC on Friday, the 11th, only if we also
take care of the house issue the same time. We can either sign
documents to correct the title or you can buy me out. . . . You seem to
think nothing of asking me to inconvenience myself to help you with
all sorts of problems, yet you will not correct an egregiously wrong
situation for me. . . . Have you even told Michael, as your executor,
100
Spritz Tr. 350:8–351:1.
101
Spritz Tr. 350:8–351:1.
102
JX 34 at Papa 24.
103
R. M. DeGroat Tr. 385:3–389:8.
104
R. M. DeGroat Tr. 385:24–386:6.
105
R. M. DeGroat Tr. 386:10–21.
106
JX 40.
16
that the house is mine and he should have it turned over to me if you
die? Last I knew, he was planning to take half for your family.107
On January 10, Richard asked his primary care physician, Dr. Matthew
O’Brien, for a note about his competence, as protection to make his own decisions;
Dr. O’Brien did not know the note was specifically in support of executing a deed;
Richard had told him “people were after his money.”108 Dr. O’Brien wrote, “Mr.
DeGroat has mild memory impairment, not significant enough to affect incite [sic]
or judgment.”109 Dr. O’Brien based the note on his experience as Richard’s
primary care physician, his experience treating geriatric patients, and Richard’s
interactions with Dr. O’Brien and performance on a mini-mental exam.110 Dr.
O’Brien testified that he believed his note would have supported Richard being
competent to execute a will.111 At this time, Michael, too, believed Richard was
“handling his affairs just fine.”112
On January 11, Lucinda notified Richard of a January 29 appointment to sign
the deed, and pleasantly increased her efforts to assist Richard with his affairs.113
On January 29, Richard and Lucinda executed a deed retitling their interests in the
107
JX 40 at Papa 774.
108
Tavani Tr. 36:8–37:13; O’Brien Dep. 74:9–16, 85:8–15.
109
JX 16 at DeGroat 1197.
110
O’Brien Dep. 20:22–21:13, 73:18–74:8, 75:3–24, 76:11–13.
111
O’Brien Dep. 81:6–82:18.
112
Tavani Tr. 179:14–24.
113
JX 40 at Papa 212–214.
17
Property to a joint tenancy with right of survivorship.114 Michael declined to
attend the signing, but discussed the proposed deed with Richard and understood
his father approved it.115 Mr. Ferry oversaw the execution, and saw no signs of
undue influence or a lack of competence.116 Following the deed signing, Lucinda
contends she and Richard had dinner and entered into the 2013 Verbal
Agreement.117 Richard signed an acknowledgement of the deed on March 4.118
There is no documentation for the 2013 Verbal Agreement.
D. Lucinda Takes Over Richard’s Financial Affairs, And Takes
His Funds.
Having obtained the right of survivorship she sought, Lucinda cheerfully and
warmly dove into managing Richard’s affairs. She completed Richard’s tax
returns, paid his bills, drove him to his doctor’s appointments, helped repair and
maintain the Property, and provided Richard with companionship.119 She
frequently drove from Massachusetts to help Richard, as well as her ailing mother
who was also in the area.120 Richard’s family was grateful to Lucinda for this
114
PTO ¶ 2 at 11; JX 42.
115
Papa 857:2–15; R. M. DeGroat 516:3–12, 520:2-13; JX 34 at Papa 24.
116
Ferry Dep. 87:14–89:3.
117
Papa Tr. 1026:5–1030:23.
118
Ferry Dep. 89:11–90:14.
119
JX 48 at VGI 4506, Papa 216; JX 41 at Papa 488; JX 54 at Papa 219.
120
Papa Tr. 867:7–21, 907:1–4; JX 41 at Papa 215, 488; JX 54 at Papa 222.
18
assistance.121 She assured Richard, “I will make sure all money & bills are taken
care of – do not worry about that.”122 Richard confirmed to Vanguard that Lucinda
was assisting: “I’m pulling together information for a CPA.”123 He also informed
Vanguard that Lucinda was “appointed to help me with a lot of financial problems
that I’m having trouble with . . . I have quite a lot of memory difficulty and my
records get totally screwed up without this lady’s help.”124
But Lucinda also began helping herself to some of Richard’s assets. Richard
had forgotten to take his 2012 required minimum distribution (“RMD”) from his
IRA. In March 2013, Lucinda rectified that omission with Richard’s permission—
he referred to her as “my tax expert”—but she deposited at least some of the funds
in her own account.125
At some point in the past, Richard had placed a block on Lucinda’s email
address at Vanguard.126 In June of 2013, Lucinda called Vanguard and obtained
121
JX 71 at Papa 32, 33.
122
JX 54 at Papa 219.
123
JX 43 at 3.
124
JX 47 at 274.
125
JX 44 at 223–26, 238; JX 48 at VGI 4512. Lucinda told Vanguard that Richard forgot
to take his 2012 distribution because he was having memory problems and she had a
doctor’s note as proof. JX 44 at 226, 238.
126
JX 53.
19
online access to Richard’s accounts at both Vanguard and Fidelity. 127 Richard did
not understand the purpose of these calls.128
After obtaining online access, Lucinda reviewed the beneficiary page for the
Fidelity account.129 In July, Lucinda completed paperwork with Richard’s
notarized signature to become the power of attorney on Richard’s Vanguard TODs,
IRAs, and Joint Account.130 As Lucinda admitted, she updated the mailing address
to the Property for the Vanguard Joint Account online on July 15.131
Lucinda got to work. She made herself the primary beneficiary of the
Vanguard IRAs on July 12, 2013.132 On July 26, Lucinda seeded the Vanguard
Joint Account with $55,000 from Richard’s solely owned Vanguard account.133 In
August, she wrote herself a $50,000 check from the Vanguard Joint Account with
127
JX 53; JX 52.
128
JX 53 at 50 (Richard: “I’m not sure exactly what she’s trying to do.”); JX 52 at 45
(Richard: “I’m not really sure the reason of my call. I’ll put the lady back on the phone,
maybe she can explain it to me because. . .”).
129
JX 55.
130
Papa Tr. 893:3–894:9; JX 130 at Papa 789–95.
131
JX 56 at VGI 1311; Papa Tr. 1040:17–21. The mailing address for Richard’s
Vanguard TODs and IRAs was also changed to the Property on July 9. JX 56 at VGI
VGI 1305, 1307. Lucinda makes much of the fact that statements showing Lucinda was
the primary beneficiary of Richard’s Vanguard accounts went to his home, where he
could have seen them, and yet Richard did not raise any alarm. D.I. 259 at 16 (citing JX
1 at VGI 1365, 1366, 1367; JX 56 at VGI 1375; JX 62 at VGI 1315; JX 67 at VGI 1317,
1379). Richard’s affairs were chaotic, and he needed assistance to organize them. I do
not infer that Richard received notice of Lucinda’s actions from the fact that statements
were mailed to his home.
132
JX 56 at VGI 1375–1376; R. M. DeGroat 544:12–18.
133
JX 56 at VGI 686.
20
the memo line “Partial House Adj. Settlement Transfer.”134 And in September, she
gave herself another $5,000 from the Vanguard Joint Account for “rent.”135
In April 2013, Lucinda started suggesting Richard move his Fidelity IRAs to
Vanguard for better returns.136 In November, after Lucinda made herself the
Vanguard IRAs’ beneficiary, she closed Richard’s Fidelity IRAs and transferred
approximately $439,000 into the Vanguard IRAs.137 During this time, Lucinda
reassured Richard that she was handling his bills.138
At trial, Lucinda testified for the first time that Richard made all of the
changes to his Vanguard accounts himself, using a computer.139 But Richard did
134
JX 58 at VGI 4838.
135
JX 60 at VGI 4839.
136
Papa Tr. 899:14–22. At trial, Lucinda claimed that she only learned that Richard had
named Jan and Carroll as beneficiaries to his Vanguard IRAs after he died, as a result of
this litigation. Papa Tr. 887:4–891:1; JX 116 at 68–72. But Lucinda made herself
beneficiary of the Vanguard IRAs in July 2013, thereby learning – if she did not know
already – that she had not previously been the beneficiary. And in January 2014, she
ensured she was the beneficiary. See infra, n. 171. Lucinda’s testimony on this point is
not credible.
She also argues that her April 2013 suggestion that Richard move his Fidelity
assets to his Vanguard IRAs is evidence she did not know she had been removed as the
Vanguard IRA beneficiary, because if she had known that fact she would not have
advocated moving money from the Fidelity IRAs (for which she was the beneficiary) to
the Vanguard IRAs (for which she was not). This argument is betrayed by the facts:
Lucinda transferred the Fidelity IRAs to Vanguard after making herself the Vanguard
IRAs’ beneficiary.
137
Papa Tr. 877:7–13, 878:6-22, 885:17–886:11.
138
JX 59 at Papa 229.
139
Papa Tr. 884:8–885:10.
21
not know how to use a computer or how to electronically access his accounts. 140
Richard was not technologically savvy, and several witnesses testified that he did
not own a computer.141 Between them, only Lucinda knew how to operate a
computer.142 Lucinda has admitted to making a few online transactions, namely
updating the mailing address for the Vanguard Joint Account and making Michael
the secondary beneficiary on the Vanguard TODs and IRAs. 143 I find Lucinda, not
Richard, completed all of the online actions; none of Lucinda’s testimony proves
otherwise.144
During 2013, Richard’s memory continued to deteriorate. On his calls with
Vanguard, Richard was able to keep up social banter, but he also told rambling,
140
JX 34 at Papa 20 (Lucinda: “and your father does not even have a computer…”); JX
22 at 112; JX 50 at 15; JX 51 at 38; JX 52 at 45; JX 53 at 50-51; R. M. DeGroat Tr.
397:5–13, 482:17–19; A. J. DeGroat 586:7–14; Iacovetti 729:19–730:1; J. DeGroat Tr.
778:18–20.
141
JX 34 at Papa 20 (Lucinda: “and your father does not even have a computer…”); JX
22 at 112; JX 50 at 15; JX 51 at 38; JX 52 at 45; JX 53 at 50-51; R. M. DeGroat Tr.
397:5–13, 482:17–19; A. J. DeGroat 586:7–14; Iacovetti 729:19–730:1; J. DeGroat Tr.
778:18–20.
142
JX 34 at Papa 20 (Lucinda: “and your father does not even have a computer…”); JX
22 at 112; JX 50 at 15; JX 51 at 38; JX 52 at 45; JX 53 at 50-51; R. M. DeGroat Tr.
397:5–13, 482:17–19; A. J. DeGroat 586:7–14; Iacovetti 729:19–730:1; J. DeGroat Tr.
778:18–20; Papa Tr. 884:15–17, 956:5–10.
143
JX 56 at VGI 1311; Papa Tr. 1040:17–21; JX 85 at VGI 1381–1382; JX 86 at Papa
494.
144
Papa Tr. 884:8–885:10, 1004:3–1007:1. Lucinda points to a call she made to
Vanguard in 2016 in which she mentioned her own ignorance on Richard having made
changes. JX 116 at 68–69. In view of substantial evidence to the contrary, I conclude
this call was feigned in view of this dispute and give it no weight. Richard never knew
how to operate a computer.
22
bizarre stories, and was unable to accomplish the reasons for his call.145 He
authorized Lucinda to help him with his Vanguard affairs.146 Richard told
Vanguard he did not want to use a computer.147 Richard still retained some
executive function: his medical records from this time do not reflect any lack of
competence, and he was able to meet with service providers and express his
preferences.148
In early 2013, Lucinda reignited discussions with Richard regarding Maris
Grove, the independent apartment complex where Richard had left a deposit in
2005.149 After Richard left his deposit, Maris Grove entered bankruptcy and
emerged with new owners.150 Richard was not certain he still wanted to live there
under the new ownership.151 Throughout 2013, Lucinda and Richard discussed
senior living facilities with friends.152
145
JX 43 at 4–5; JX 47 at 273–74; JX 50 at 9–21.
146
JX 44 at 228–229; JX 47 at 274.
147
JX 51 at 38.
148
O’Brien Dep. 30:7–16, 74:22–76:5; Nippert Dep. Ex. B at 3092; Eastburn Tr. 1199:7–
20, 1208:14–23.
149
Papa Tr. 828:6–20, 868:20–869:15.
150
Papa Tr. 868:20–869:15.
151
Papa Tr. 868:20–869:15.
152
Papa Tr. 868:20–869:15.
23
On July 8, Lucinda contacted Forwood Manor to ask about an independent
living apartment for Richard.153 Lucinda informed Forwood Manor that she was
“taking care of [her] ex-husband who is 80 years old.”154 Through July, Lucinda
discussed the possibility of Richard’s move with Rose Murowany at Forwood;
Lucinda told Murowany that she was “having a tough time convincing [Richard] to
visit FM.”155 On August 21, Richard and Lucinda toured Forwood Manor.156 They
came back on September 17, and Richard focused on the garages and food.157
Murowany testified that she did not witness any disorientation, frustration,
hesitation, or confusion in Richard while he was finalizing his decision to move to
Forwood.158
On November 13, Lucinda purchased and downloaded a power of attorney
form.159 The power of attorney did not permit Lucinda to make gifts to herself or
to take any action in satisfaction of a legal obligation of Richard’s agent.160 On
December 2, she drove Richard to Artisans’ Bank, where Richard signed the power
153
JX 57 at Papa 951.
154
JX 57 at Papa 949.
155
JX 57 at Papa 951.
156
JX 57 at Papa 951; Murowany Tr. 1226:2–5.
157
JX 57 at Papa 951.
158
Murowany Tr. 1226:13–19.
159
JX 66.
160
JX 68.
24
of attorney form (the “2013 POA”).161 Richard and a witness signed it in the
presence of a notary who documented, and later testified, that Richard did so as a
free and voluntary act.162 Michael, too, believed Richard was capable of signing
the 2013 POA of his own free will.163 That same day, as Richard’s power of
attorney, Lucinda filled out registration forms for Forwood Manor.164 Three days
later, Lucinda wrote herself a check for $30,000 out of Richard’s Vanguard TODs
with the memo line “Happy 60th + House.”165
On Christmas Eve 2013, Richard once again attempted to drive to Michael’s
house in New Jersey for the family celebration. He never made it: he accidentally
drove south into Virginia. Richard’s family was unable to locate him until
December 26.166 Richard signed up for Forwood Manor that same day, and moved
in on December 27.167 Michael had no concerns about this move and believed
161
PTO ¶ 2 at 12; JX 68 at Papa 246; Beers Dep. 14:3–15:18, 37:17–30:3.
162
PTO ¶ 2 at 12; JX 68 at Papa 246; Beers Dep. 29:9–31:5, 42:4–11, 53:8–57:23.
163
Michael first became aware of the 2013 POA a few months later at a family function.
At that time, Michael did not express concerns that the execution of the 2013 POA was a
result of Lucinda’s undue influence. Michael was instead relieved he no longer had the
stress of being his father’s power of attorney. R. M. DeGroat Tr. 525:1–527:22.
Michael testified that when he became aware of the 2013 POA he was surprised, but he
“wasn’t going to question my father because we were happy that he was in a safe place.”
R. M. DeGroat Tr. 417:23–418:4. Michael also testified that he is not seeking to have the
2013 POA invalidated. R. M. DeGroat Tr. 575:20–576:2.
164
JX 57 at Papa 1003.
165
JX 69 at VGI 4526.
166
R. M. DeGroat Tr. 388:1–389:8.
167
JX 57 at Papa 958–84; R. M. DeGroat Tr. 414:5–8.
25
moving to Forwood was Richard’s decision.168 Once again, Richard’s family was
grateful to Lucinda for her assistance to Richard.169
But Lucinda continued to divert Richard’s assets for her own benefit. The
week after Richard moved to Forwood, Lucinda used Richard’s credit card
multiple times in New Jersey and Massachusetts.170 The following week, on two
separate occasions, Lucinda ensured she was the beneficiary of the Vanguard IRAs
and that the transfer of the Fidelity IRAs was properly processed.171 On January
10, 2014, Lucinda transferred funds from Richard’s IRAs to the Vanguard Joint
Account.172 On January 21, Lucinda transferred $41,000 to herself from the
Vanguard Joint Account.173 She transferred another $7,300 from that account to
herself in April,174 and transferred another $19,500 to herself from that account in
May.175 In August, she made Michael the secondary beneficiary for the Vanguard
168
R. M. DeGroat Tr. 529:25–30:21.
169
JX 71 at Papa 32–33.
170
JX 118 at DeGroat 1579–1581; Papa Tr. 917:19–918:3.
171
JX 75; JX 76.
172
D.I. 272 at VGI 4876. This was the first of many similar transactions during this time
frame. See also D.I. 272 at 4878, 4880, 4882, 4886, 4890.
173
JX 74 at VGI 4840.
174
JX 78 at VGI 4846.
175
JX 82 at VGI 4844, 4847.
26
IRAs and TODs, and informed him she had made this decision and that she was
the primary beneficiary.176
In January 2014, after Richard moved out of the Property, Lucinda and
Ziatyk moved in to renovate it. Repairs totaling $65,000 were paid for out of the
Vanguard Joint Account, seeded by Richard’s solely owned funds.177 While
Lucinda claims to have paid $118,000 in cash to moonlighting laborers, this
testimony is not credible and is not supported by any contemporaneous records; I
do not believe Lucinda paid for any renovations with her funds or funds that she
borrowed.178
176
JX 85 at VGI 1381–1382; JX 86 at Papa 494.
177
R. M. DeGroat Tr. 424:23–425:2; Kane Tr. 654:1–7; D.I. 273; JX 119.
178
At her deposition and at trial, Lucinda contended she paid an additional approximately
$118,000 in cash to renovate the Property’s foundation, paid to subcontractors
moonlighting aside from their work for Lucinda’s contractor, TC Builders. Papa Tr.
1109:5–1120:7; R. M. DeGroat Tr. 425:21–427:2. Lucinda claims to have borrowed the
cash from the safe at her family’s restaurant, which is why she later paid the restaurant
with the proceeds from selling the Property. Papa Tr. 915:17–20, 922:12–23; JX 91. But
no evidence corroborates her testimony, and the only person she states witnessed the
withdrawals from the restaurant’s safe is Richard. Papa Tr. 916:4–8, 1115:20–22,
1118:16–18. Lucinda claims her brother Tim Papa approved the loan, but he did not
testify to confirm this allegation. Papa Tr. 1123:5–1124:18 (“Q: Why isn’t Tim Papa
here? He’s your brother. Why haven’t you called him to explain these things? Papa A: I
don’t know the answer to that question”). I conclude Lucinda did not borrow cash from
the restaurant to pay for renovations on the Property.
I also conclude Lucinda did not pay cash to any moonlighting laborers. Lucinda
identified the principal subcontractor only by the name “Carlos,” testifying that he was of
Hispanic descent and that she repeatedly felt unsafe when meeting Carlos alone to pay
him with bags of cash. Papa Tr. 1109:5–18, 1112:11–13, 1118:7–10. At trial, the owner
of TC Builders, Tom Cekine, confirmed that no subcontractor or employee named Carlos
existed, that no foundation repairs were completed, and that TC Builders was never paid
27
Lucinda prepared the Property for sale, telling the realtor that she was
working with Michael and communicating with him throughout the price
negotiations, when, in fact, she was not.179 On disclosures, Lucinda noted that the
Property was “to be sold as divorce settlement.”180 The Property was sold in
October 2014 under Lucinda’s authority as Richard’s power of attorney.181 Even
though she jointly owned the Property with Richard, Lucinda wired all $402,000 in
proceeds to herself; Richard received nothing.182 Michael did not learn Lucinda
sold the house until months later.183
in cash. Cekine Tr. 704:17–707:2. Additionally, Ziatyk, who was specifically tasked
with protecting Lucinda from dishonest contractors, admitted that he had zero knowledge
of Carlos and the alleged cash payments. Ziatyk Tr. 1270:3–1271:7.
At trial, Lucinda modified her deposition story and identified a new contractor, a
plumber from Pennsylvania, who also demanded to be paid in cash. Papa Tr. 1109:5–
1110:23. She also stated that she paid some of the money not to Carlos, but to “crews”
of diggers. Papa Tr. 1111:4–22. Lucinda testified that a written ledger existed to prove
that she paid $118,000 in cash to these contractors, but that it has been lost. Papa Tr.
1118:11–1119:12. She was also confident that at one time she had “all the receipts” for
the repairs, but apparently Richard had lost them. Papa Tr. 947:15–20. Contradictorily,
she also claims to have given all of the receipts to the new homeowners. Papa Tr. 949:2–
951:8. Lucinda has not asked those homeowners for the receipts during this litigation
and did not believe that to be necessary. Papa Tr. 949:2–951:8. Lucinda’s testimony
about cash payments is not credible.
179
JX 83 at DeGroat 3369, 3372.
180
JX 79 at DeGroat 3176.
181
PTO ¶ 2 at 13; JX 90 at DeGroat 532; JX 68.
182
JX 90 at DeGroat 532, 3678, 3872.
183
R. M. DeGroat Tr. 427:3–23.
28
Lucinda continued to assist Richard while he lived in in Forwood Manor.184
Richard’s mental condition continued to deteriorate, although he retained good
insight and judgment, and the ability to converse on a variety of topics.185 Lucinda
also continued to transfer Richard’s assets to herself. In December 2014, Lucinda
completed paperwork to make herself the primary beneficiary of Richard’s Penn
Mutual and Lincoln Financial policies.186 In April 2015, Lucinda submitted
surrender requests for Richard’s Lincoln Financial policies and liquidated the
funds.187 In July 2015, Lucinda took the maximum loan against Richard’s Penn
Mutual policies, kept the proceeds of $44,182.18, and used the funds to pay her
and Ziatyk’s mortgage.188
That same month, Richard signed forms authorizing Lucinda to be a
signatory on his Artisans’ Bank checking account.189 The clerk who witnessed that
signing did not see anything amiss.190
184
See, e.g., Papa Tr. 916:4–22, 924:9-20.
185
JX 16 at Degroat 1119, 1201; O’Brien Dep. 36:8–10, 36:20–37:22, 38:22–41:8,
41:20-22, 77:18-22; Eastburn Tr. 1196:17–1200:24.
186
JX 94; JX 95; JX 100.
187
JX 100.
188
JX 103; JX 104; Papa Tr. 1064:18–1066:18.
189
JX 126; Sedlicek Tr. 1180:5–1184:18.
190
JX 126; Sedlicek Tr. 1180:5–1184:18.
29
E. Richard Dies, And Litigation Ensues.
In September 2015, Richard fell in his Forwood Manor apartment and was
severely injured.191 He was hospitalized, and hospital records reflect that both
Richard’s doctors and Lucinda believed he had dementia.192 These events led
Carroll to conclude for the first time that Richard was incapacitated.193 Lucinda
continued to assist with Richard’s care through his transition from the hospital, to
ManorCare, and to Sunrise of Dresher, until his death on June 14, 2016.194 Again,
Richard’s family was grateful.195
But Lucinda continued to take Richard’s assets for herself. While he was in
the hospital, she transferred $48,025 to herself from the Vanguard Joint Account,
with misleading and false check memo lines.196 The night before Richard died,
Michael and Andrew began to ask Lucinda about Richard’s finances and reached
out to gather information about their father’s estate.197 Lucinda told Michael that
191
PTO ¶ 2 at 14; JX 106 at DeGroat 1290; Eastburn Tr. 1201:7–1202:14.
192
JX 106 at DeGroat 1298–1299, 1301.
193
Iacovetti Tr. 754:16–24. Previously, she had concerns regarding his driving, but was
unaware of his incapacitation. Id.194
Papa Tr. 926:4–928:4, 929:13–930:5; R. M. DeGroat 564: 8–11, 587:3–10; Iacovetti
755:4–8; PTO ¶ 2 at 15. Richard was transferred from Manor Care in Delaware to
Sunrise of Dresher in Pennsylvania to be closer to Michael because Michael was the
primary agent for his father’s advanced healthcare directive. Papa Tr. 926:4–14; PTO ¶ 2
at 10; JX 29.
195
JX 105 at Papa 81; JX 111 at Papa 172, 174.
196
JX 108; JX 109; Papa Tr. 1067:7–1077:18.
197
R. M. DeGroat Tr. 565:2–566:15; JX 111 at Papa 176.
30
she would handle everything because “Pop made [her] his POA surviving death”
and that she was the beneficiary of all of his accounts.198 Richard passed away on
June 14, 2016.199
Michael and Lucinda retained attorneys.200 In August 2016, Lucinda’s
counsel gave Michael’s counsel a summary of Richard’s assets with “detailed
background information” that Lucinda prepared.201 At this time, Richard’s
remaining assets included Richard’s Vanguard accounts, a bank account at
Artisans’ Bank containing a couple hundred dollars, and two life insurance policies
through Penn Mutual worth approximately $10,000.202 Richard’s estate comprised
the remaining funds from the Penn Mutual policies, which Lucinda had previously
drained by taking a maximum loan against the policies for $44,000, and the
minimal assets in the Artisans’ Bank account.203
Richard’s Vanguard accounts, which passed by beneficiary designation,
were without question the most significant remaining asset. On September 6,
Vanguard notified Lucinda that it was placing a freeze on Richard’s accounts due
198
JX 111 at Papa 178.
199
PTO ¶ 2 at 15.
200
R. M. DeGroat Tr. 566:24–570:10; Papa Tr. 1094:2–4.
201
JX 113; Papa Tr. 1094:2–4.
202
JX 113.
203
JX 103; JX 104; JX 113; R. M. DeGroat Tr. 441:24–442:19; Papa Tr. 1064:18–
1066:18.
31
to competing claims over the accounts’ proper beneficiaries.204 The freeze was
lifted the following month, after Vanguard did not receive adequate documentation
of the dispute.205 The next day, Lucinda sold all of her Vanguard assets, including
her individual assets and the assets she received as a beneficiary to Richard’s
accounts.206
On September 9, Michael filed a Verified Complaint to Invalidate Transfer
of Property and/or Re-Titling of Assets, for Accounting, and for Constructive Trust
(the “Complaint”).207 The Complaint asserts five counts seeking: (i) an
invalidation of transfers of property and/or retitling of assets by Lucinda from 2013
through 2016, (ii) an accounting of Lucinda’s actions under the Durable Personal
Powers of Attorney Act (the “POA Act”), (iii) the imposition of a constructive
trust, (iv) a declaration of unjust enrichment, and (v) a declaration of undue
influence.208 On November 11, Lucinda filed an Answer and Counterclaim.209
The Counterclaim asserts breach of the alleged divorce agreement; promissory
estoppel in the alternative of a breach of contract; tortious interference of the
204
JX 130 at Papa 233–234.
205
JX 125.
206
Lucinda incurred a $47,438.70 loss on this transaction. Papa Tr. 934:11–17, 1140:12–
1141:6.
207
D.I. 1.
208
D.I. 1.
209
D.I. 8.
32
alleged divorce agreement; damages resulting from Plaintiffs’ alleged freezing of
all of Richard’s Vanguard accounts, excluding the Vanguard Joint Account; and an
award of fees for bad faith litigation.
On August 16, 2018, a Complaint in Intervention was filed, adding Jan and
Carroll as plaintiffs (together with Michael, “Plaintiffs”), and Ziatyk as a defendant
(together with Lucinda, “Defendants”) to the constructive trust and unjust
enrichment claim.210
Defendants moved for summary judgment on September 25, 2018, and the
Court heard argument on that motion on January 8, 2019.211 On February 19, the
Court issued an order granting the motion as to the Vanguard TODs and denying
summary judgment on all other grounds.212
I held a four-day trial in this matter on June 18, July 1, July 2, and July 3,
2019.213 The parties presented over 130 joint exhibits and presented fifteen
witnesses including Michael, Carroll, Andrew, Jan, Lucinda, and Ziatyk, as well as
Cekine, Murowany, and Mr. Spritz. Each side presented an expert witness on the
issue of Richard’s competence and susceptibility. Michael and his relatives
presented Dr. Carol Tavani, who opined that Richard suffered from moderate to
210
D.I. 170.
211
D.I. 177, 195, 196, 238.
212
D.I. 196.
213
D.I. 245, 249, 250, 251, 252.
33
severe dementia and lacked testamentary capacity since 2013,214 while Lucinda
presented Dr. Sam Romirowsky, who opined that Richard was not a susceptible
testator and did not have a weakened intellect between 2012 and 2015.215
On January 14, 2020, I heard post-trial argument and took the decision under
advisement.216 This is my post-trial memorandum opinion.
II. ANALYSIS
Richard was alone and dependent on Lucinda from 2013 through his death,
but he knowingly and willingly accepted her help. Richard’s relatives consistently
testified he would not have done something he did not want to do. Problems arose
when Lucinda, as Richard’s common law fiduciary, and later his fiduciary under
the POA Act, took his assets for herself. As Richard’s fiduciary, Lucinda bears the
burden to establish that all self-interested transactions she completed on Richard’s
behalf are fair. Lucinda has failed to carry this burden.
Richard did not intend for Lucinda to have the assets she took from him.
Lucinda took Richard’s share of the Property, at least part of his 2012 RMD, liquid
funds transferred through the Joint Account and Richard’s credit card, and funds
out of his life insurance policies. After his passing, Lucinda retained Richard’s
retirement accounts. Lucinda argues, but has failed to prove, that she and Richard
214
JX 117; Tavani Tr. 140:19–24.
215
JX 120; Romirowsky Tr. 264:10–265:9.
216
D.I. 274, 275.
34
had verbally agreed that she was to receive these assets. The only agreement
supported by credible evidence is their agreement to divorce, at which time
Richard paid Lucinda $742,000 and each removed the other as beneficiary.
Lucinda and Ziatyk have been unjustly enriched by Lucinda’s self-interested
transactions conducted as Richard’s fiduciary. Lucinda and Ziatyk’s enrichment
was not justified. As a result of the breaches of fiduciary duty and unjust
enrichment, Plaintiffs are entitled to (i) an invalidation of all of Lucinda’s transfers
of Richard’s assets and the re-titling of his accounts from 2013 until Richard’s
death, excluding the Vanguard TODs and Fidelity IRAs; (ii) a declaration that
Lucinda’s past accounting was incomplete; and (iii) a new accounting to properly
assess damages.
A. Lucinda Breached Her Fiduciary Duties Under Common Law
And the POA Act.
Lucinda became Richard’s common law fiduciary in January 2013. She also
retained fiduciary duties under the POA Act after execution of the 2013 POA on
December 2, 2013. Lucinda breached her common law fiduciary duties and her
fiduciary duties under the POA Act. Although the new deed and 2013 POA were
valid, Lucinda’s actions with Richard’s assets including retaining the proceeds
from the sale of the Property, executing beneficiary changes to his Vanguard
accounts, liquidating his life insurance policies, and charging his credit card were
self-interested. These actions were completed without Richard’s knowledge or
35
consent and were not fair to Richard. Lucinda has clearly breached her fiduciary
duties to Richard under both common law and statue.
1. Lucinda Became Richard’s Common Law
Fiduciary In January 2013; Richard Then
Signed The Valid 2013 POA.
The parties dispute whether Lucinda became Richard’s common law
fiduciary before Richard signed the 2013 POA.217 Fiduciary relationships do not
require the execution of a power of attorney or another formal document. Based
on the preponderance of the evidence, I conclude that, as of January 2013, Lucinda
assumed the role of Richard’s fiduciary under common law fiduciary principles,
and later formalized her role as fiduciary by the 2013 POA, which was a valid
legal instrument governed by the POA Act.
217
As an initial matter, Lucinda contests whether Plaintiffs pled a breach of common law
fiduciary duty, or only a violation of the POA Act. Before trial, this Court decided
several times that Plaintiffs pled a common law claim. See, e.g., D.I. 91 at 15–19
(Master’s Final Report recommending (i) the Court grant a motion to compel discovery
into Lucinda’s actions in late 2012 and early 2013 regarding the new deed, specifically,
her communications with Thomas Ferry, Esq., and (ii) the Court deny Lucinda’s motion
to dismiss claims regarding those actions until all parties have the opportunity to present
discovery); D.I. 144 at 28–29, 34–36 (In the Matter of the Estate of Richard L. DeGroat,
a deceased person, C.A. No. 12738-VCZ (Del. Ch. Nov. 28, 2017) (TRANSCRIPT));
D.I. 174 at 89 (In the Matter of the Estate of Richard L. DeGroat, a deceased person,
C.A. No. 12738-VCZ (Del. Ch. Aug. 10, 2018) (TRANSCRIPT)); D.I. 276 at 21-22 (In
the Matter of the Estate of Richard L. DeGroat, a deceased person, C.A. No. 12738-VCZ
(Del. Ch. June 10, 2019) (granting in part a motion in limine to permit the expert
testimony of William Kane and his report including transactions that predate the
execution of the 2013 POA)). This issue need not be readjudicated through the lens of
Court of Chancery Rule 15(b).
36
“Even outside a formally recognized fiduciary relationship, a relationship
predicated on particular confidence or reliance may give rise to fiduciary
obligations. Eschewing a formalistic approach, Delaware courts have declined to
establish set bounds for such relationships, in favor of a pragmatic, fact-driven
inquiry.”218 In Sloan v. Segal, our Supreme Court stated,
“[a] confidential relationship exists where ‘circumstances make it
certain the parties do not deal on equal terms but on one side there is
an overmastering influence or on the other weakness, dependence or
trust, justifiably reposed.’” This court has often found that a
confidential relationship existed where, as here, an adult child was
taking care of an aging or infirm parent. In those cases, the court took
into consideration whether the testators’ relationships with their non-
caretaker children were strained and whether the caretaking children
were acting with power of attorney for their parents. These
circumstances lend themselves to the creation of a confidential
relationship because the parent must rely on a trusted child for
physical, emotional, or decisional support.219
“Generally, a fiduciary relationship is a situation where one person reposes special
trust in another or where a special duty exists on the part of one person to protect
218
Mitchell v. Reynolds, 2009 WL 132881, at *9 (Del. Ch. Jan. 6, 2009).
219
See Sloan v. Segal (Sloan I), 2009 WL 1204494, at *13 (Del. Ch. Apr. 24, 2009),
(footnotes omitted) (quoting In re Will of Wiltbank, 2005 WL 2810725, at *6 (Del. Ch.
Oct. 18, 2005)), aff’d, 996 A.2d 794 (Del. 2010) (TABLE); see also Mitchell, 2009 WL
132881, at *9 (“This Court has frequently looked to the transferor’s extensive or
exclusive reliance on another for physical, emotional, or decisional support, a query
informed by the transferor’s disposition and mental and physical capabilities, as well as
the existence of any additional support network.”).
37
the interests of another.”220 In particular, being permitted access to a principal’s
bank account imposes fiduciary duties on an individual.221
Richard asked Lucinda to help as a facilitator for his financial affairs in
November 2012.222 In January 2013, Lucinda offered to assist Richard with his
affairs, conditioned on Richard’s agreement to sign a deed granting Lucinda a right
of survivorship in the Property.223 Richard accepted and signed the deed, and
Lucinda confirmed that she would “make sure all money & bills are taken care of –
do not worry about that.”224 That month, long before execution of the 2013 POA,
Lucinda obtained access to Richard’s bank accounts for tax purposes.225 Lucinda
testified that Richard gave her “full agency over [all] the Vanguard accounts to
220
Mitchell, 2009 WL 132881, at *9 (quoting Wal-Mart Stores, Inc. v. AIG Life Ins. Co.,
901 A.2d 106, 113 (Del. 2006)).
221
See In Matter of Estate of Dougherty, 2016 WL 4130812, at *12 (Del. Ch. July 22,
2016) (“Patricia acted as a fiduciary to her parents when they allowed her to access the
joint bank account and the line of credit to make expenditures on their behalf.”); see also
Seiden v. Kaneko, 2015 WL 7289338, at *11 (Del. Ch. Nov. 3, 2015) (finding a director
remained a fiduciary of the company after resigning due to his continued access to and
use of bank accounts); In re Estate of Dean, 2014 WL 4628584, at *2 (Del. Ch. Sept. 17,
2014) (holding that a person designated as signatory on bank accounts for the account-
holder’s convenience acted as a common-law fiduciary).
222
JX 32.
223
JX 40 at Papa 774.
224
JX 54 at Papa 219.
225
JX 41 at Papa 488; JX 44 at 246–247; JX 52; JX 53; JX 55 at Papa 1504.
38
manage them and execute everything for investment purposes. And [she] could do
anything [she] wanted with that account [i.e. the Vanguard IRAs].”226
Lucinda likened her relationship with Richard in 2013 to that of “an old
married couple.”227 By February, Lucinda had substantial knowledge of Richard’s
bank accounts, including his tax forms, account numbers, and the physical location
of his records.228 By March, Lucinda was actively transacting on Richard’s
Vanguard accounts and handling his financial affairs.229 In April, Richard
informed Vanguard that Lucinda was “appointed to help me with a lot of financial
problems that I’m having trouble with . . . I have quite a lot of memory difficulty
and my records get totally screwed up without this lady’s help,” and authorized
Lucinda to complete his RMD for him.230 Richard referred to her as “my tax
expert.”231 By June 2013, Lucinda was fully handling Richard’s financial affairs.
Lucinda formalized her role as Richard’s fiduciary in the summer and final
months of 2013. In July, Lucinda obtained power of attorney on the Vanguard
TODs, IRAs, and Joint Account via a form that required Richard’s notarized
226
Papa Tr. 893:18–24.
227
Papa Tr. 897:14–18.
228
JX 41 at Papa 488.
229
JX 44 at 246–247.
230
JX 47 at 274; Romirowsky Tr. 276:17–277:4 (noting Richard references Lucinda Papa
as “his tax expert, his assistant, the person he relies on to make financial transactions.”).
231
JX 44 at 223–226.
39
signature.232 She changed the mailing address for all of the Vanguard accounts to
the Property, and made herself the primary beneficiary on the Vanguard IRAs.233
On November 13, Lucinda purchased and downloaded a more comprehensive
power of attorney form.234 On December 2, she drove Richard to Artisans’ Bank,
where Richard signed the 2013 POA.235
The POA is a valid legal instrument under the POA Act.236 The
preponderance of the evidence, and in particular Michael’s testimony, establishes
that Richard executed this document of his own free will. Delaware law presumes
testamentary capacity, and “the party attacking testamentary capacity bears the burden
of proof.”237 The standard is low: an individual must “be capable of exercising
thought, reflection and judgment, and must know what he or she is doing and how he or
she is disposing of his or her property.238 “The person must also possess sufficient
232
Papa Tr. 893:3–894:3; JX 130 at Papa 789–795. Defendants do not challenge this
power of attorney, and present no grounds on which to invalidate it.
233
JX 56 at VGI 1305, 1311, 1375.
234
JX 66.
235
PTO ¶ 2 at 12; JX 68; Beers Dep. 14:3-13.
236
See 12 Del. C. §§ 49A-119, 49A-120; PTO ¶ 2 at 12; JX 68.
237
In re West, 522 A.2d 1256, 1263 (Del. 1987); see Matter of Kittila, 2015 WL
688868, at *11 (Del. Ch. Feb. 18, 2015) (measuring testamentary capacity at the time a
document is executed); In Matter of Rick, 1994 WL 148268, at *5 (Del. Ch. Mar. 23,
1994), aff'd sub nom. 659 A.2d 228 (Del. 1995) (evaluating the validity of a power of
attorney under the testamentary capacity standard).
238
In re West, 522 A.2d at 1263; In re Purported Last Will and Testament of Wiltbank,
2005 WL 2810725, at *7 (Del. Ch. Oct. 18, 2005) (“Only a modest level of competence
is required, however, for an individual to possess the testamentary capacity to execute a
40
memory and understanding to comprehend the nature and character of the act.
Thus, the law requires [the testator] to have known that [he or] she was disposing
of [his or] her estate by will, and to whom.”239
The evidence shows that while Richard had memory problems, could not
handle his more complex financial and residential affairs, and was losing the ability to
drive, he retained testamentary capacity.
Michael testified that he became aware of the 2013 POA a few months after
it was executed, that he did not have concerns about the document, and that he was
not seeking to invalidate it.240 Michael became aware of the 2013 POA after both
Christmas incidents, but still did not express concerns that Richard unwillingly
executed the POA.241 Rather, Michael was relieved he would no longer have the
responsibility of being his father’s power of attorney.242
Michael’s contemporaneous beliefs are consistent with the rest of the
evidence surrounding Richard’s execution of the 2013 POA. Richard signed the
will. Courts have long held there is a low standard for testamentary capacity.” (internal
citations omitted)); Matter of Purported Last Will and Testament of Macklin, 1991 WL
9981, at *2 (Del. Ch. Jan. 23, 1991) (finding that age-related deterioration reflected in
driving deficiencies, memory problems, a “shambles” of a home, and shortcomings in
personal grooming does not “establish[] that degree of deterioration that deprives one of
testamentary capacity”).
239
In re West, 522 A.2d at 1263.
240
R. M. DeGroat Tr. 417:22–418:4, 525:1–527:22, 575:20–576:2.
241
R. M. DeGroat Tr. 385:3–389:8, 525:1–527:22.
242
R. M. DeGroat Tr. 525:1–527:22; A. J. DeGroat Tr. 614:23–615:9.
41
2013 POA in the presence of a witness and notary, the latter of whom documented,
and later testified, that Richard did so as a free and voluntary act.243 The same
month that he signed the POA, Richard undisputedly moved to Forwood Manor of
his own free will, after careful consideration. Dr. O’Brien’s January 2013 note
also supports Richard’s competency.244 Dr. O’Brien testified that he believed his
note would have supported Richard being competent to execute a will. 245 To
Richard, Lucinda was a natural choice to be his formal agent: she was more
involved than Michael in Richard’s life, and appeared to be helping him.
Lucinda has asserted she and Richard had many agreements. The terms of
their 2007 divorce and the 2013 Verbal Agreement are not as she said they were.
But with regard to the 2013 deed and 2013 POA, I conclude Richard and Lucinda
had an agreement. Richard reached out to Lucinda to ask for her assistance; as his
family testified, Richard would not have done something he did not want to do.246
Upon Lucinda reentering Richard’s life, they agreed that Richard would execute
243
PTO ¶ 2 at 12; JX 68 at Papa 246; Beers Dep. 29:9–31:5, 42:4–11, 53:8–57:23.
244
JX 16 at DeGroat 1197.f
245
JX 16 at DeGroat 1197; O’Brien Dep. 36:8–10, 36:20–37:22, 38:22–41:8, 41:20-22,
77:18-22. While Plaintiffs attack Dr. O’Brien’s note as unsupported and as given without
context, I find Dr. O’Brien, as Richard’s primary care physician, had an adequate basis
for his opinion and knew that he was writing the note to support Richard’s ability to make
his own decisions.
246
JX 32; Papa Tr. 850:15–19, 961:7–10; Iacovetti Tr. 747:15–17.
42
the new deed in exchange for Lucinda assisting him with his affairs.247 Lucinda
made herself indispensable in 2013, and by the end of that year, Richard
documented her role by signing the 2013 POA.
Although Richard’s memory and ability to drive were deteriorating in 2013,
Richard’s mental state in December 2013 meets the low standards for testamentary
capacity.248 Richard was capable of exercising thought, reflection, and
judgment.249 The preponderance of the evidence, including testimony about
Richard’s capacity and Michael’s contemporaneous acceptance of the document,
establishes the 2013 POA as valid.250
Thus, Lucinda owed fiduciary duties to Richard starting on January 1, 2013,
when she became his common law fiduciary, through execution of the 2013 POA,
until his death.
2. Lucinda Has Failed To Show Her Self-
Dealing Transfers Were Fair.
247
JX 32; JX 40 at Papa 212–214; JX 42; JX47 at 274.
248
See In re West, 522 A.2d at 1263.
249
See id.250
Neither Dr. Carol Tavani nor Dr. Sam Romirowsky are cited to establish Richard’s
capacity since both of these experts’ opinions had significant flaws, including failing to
consider all of the relevant evidence. Both experts selectively molded a narrative of
Richard’s decline that suits their clients’ litigation position and the experts’ areas of
expertise. I rely only on contemporaneous accounts and evidence of Richard’s mental
state at the time he executed both the 2013 POA and the new deed for the Property.
43
As Richard’s fiduciary, Lucinda owed him a duty of loyalty obligating her to
act in his best interests.251 Plaintiffs assert she breached that duty. Lucinda bears
the burden of proving her self-dealing transactions were fair, and has failed to do
so.
“An attorney-in-fact who uses the power given to him by the principal to
transfer assets to himself has committed improper self-dealing, absent the
voluntary and knowing consent of the principal.”252 “A self-dealing transfer of the
principal’s property to the attorney-in-fact is voidable in equity unless the attorney-
in-fact can show that the principal voluntarily consented to the interested
transaction after full disclosure. A self-dealing transfer is voidable.”253 Selling a
principal’s real estate and placing the proceeds into the agent’s bank account is
considered self-dealing.254 The burden of proof is on the agent to prove that a self-
interested transaction involving the principal is valid.255 The agent’s burden of
establishing the fairness of the transaction “increases significantly” if the principal
receives no consideration.256
251
Coleman v. Newborn, 948 A.2d 422, 429 (Del. Ch. 2007).
252
Pennewill v. Harris, 2011 WL 691618, at *3 (Del. Ch. Feb. 4, 2011).
253
Coleman, 948 A.2d at 429.
254
Pennewill, 2011 WL 691618, at *4.
255
Id. at *3.
256
Coleman, 948 A.2d at 432.
44
Lucinda contends she was the rightful beneficiary of Richard’s retirement
accounts and more liquid funds under her undocumented agreements with Richard
at the time of their divorce and in 2013. As explained, the preponderance of
credible evidence does not support a finding that either agreement existed.
Lucinda cannot look to these agreements to validate her self-dealing.
Lucinda did not produce any documentation or witnesses to justify or
explain any of her self-dealing financial transactions.257 This Court has disavowed
arguments that a fiduciary cannot account for her actions because she has given
away the receipts: “she made no effort to obtain bank records or copies of receipts
or bills from the relevant entities or individuals. She offered no other evidence,
such as affidavits from persons she claims to have paid in cash.” 258 Lucinda also
has failed to demonstrate that she had Richard’s consent for any of these
transactions or that she disclosed these transactions to Richard.259 Lucinda’s bare
explanations do not suffice to fulfill her fiduciary evidentiary burden for either the
Property’s proceeds or Richard’s funds.
i. The Property
257
Papa Tr. 949:2–952:1; Kane Tr. 655:17–656:5.
258
In Matter of Estate of Dougherty, 2016 WL 4130812, at *12.
259
Supra n. 131.
45
Lucinda’s retention of the Property’s proceeds was not fair. Lucinda sold
the Property in October 2014 under her authority as Richard’s power of attorney.260
Lucinda prepared the Property for sale, telling the realtor that she was working
with Michael and communicating with him throughout the price negotiations,
when, in fact, she was not.261 The 2013 deed giving Lucinda the right of
survivorship was valid,262 but Lucinda’s handling of the proceeds while Richard
was still alive constitutes self-dealing that Lucinda has not shown to be fair.
The preponderance of the evidence establishes the 2013 deed was a valid
legal document. As explained, Richard agreed to execute it in exchange for
Lucinda’s help. Michael was aware of the new deed, had the opportunity to
participate in the execution of the deed, and communicated with his father about
the deed.263 While Michael raised the spectre that Richard may not be
competent,264 Michael was intimately aware of Richard’s thoughts about the deed
during Richard’s negotiations with Lucinda and ultimately did not object to the
deed’s execution.265 In view of the rest of the evidence, I believe Michael raised
260
PTO ¶ 2 at 13; JX 90 at DeGroat 532; JX 68.
261
JX 83 at DeGroat 3369, 3372.
262
PTO ¶ 2 at 11.
263
JX 34 at Papa 17, 19, 24; Tavani Tr. 179:14–180:22; Papa Tr. 857:2–15; R. M.
DeGroat Tr. 512:13–21, 516:3–12, 520:2–13.
264
JX 34 at Papa 20.
265
JX 34 at Papa 17, 19, 24; Tavani Tr. 179:14–180:22; Papa Tr. 857:2–15; R. M.
DeGroat Tr. 512:13–21, 516:3–12, 520:2–13.
46
the issue of Richard’s competence to caution Lucinda and in response to her
inflammatory descriptions of Richard’s attitude. Further, as discussed, Dr.
O’Brien wrote a note supporting Richard’s competency at that time and testified
that he believed his note would have supported Richard being competent to
execute a will.266 Mr. Ferry oversaw the execution, and also saw no signs of undue
influence or a lack of competence.267 The 2013 deed is valid.
Lucinda owned the Property jointly with Richard, and $65,000 in repairs
were paid for out of the Vanguard Joint Account as funded from Richard’s solely
owned accounts. But Lucinda wired all $402,000 in proceeds to herself and
reimbursed her creditors, but not Richard.268 Lucinda transferred the proceeds to
eight bank accounts she owned individually and jointly, and gave Richard nothing.
Her transfers included a $95,000 transfer to a family account she shared with her
siblings to pay back the purported cash loan from her family’s restaurant.269 As
266
JX 16 at DeGroat 1197; O’Brien Dep. 36:8–10, 36:20–37:22, 38:22–41:8, 41:20-22,
77:18-22.
267
Ferry Dep. 87:14–89:3.
268
JX 90 at DeGroat 531–532, 3678, 3972; D.I. 273; JX 119 at 1; Kane Tr. 653:22–23.
269
JX 91 at DeGroat 2073; Papa Tr. 922:12–23. Lucinda also testified she paid an
additional $23,000 to her family after this initial transfer of $95,000. Papa Tr.922:20–23.
(“And then over the next month or so I got cash enough of $23,000 to replenish that into
the safe, because every restaurant in the world has to have a cash reserve.”). As I do not
believe Lucinda took out a cash loan to pay for Property renovations, I need not evaluate
the credibility of this testimony.
47
explained, Lucinda has failed to prove that she contributed $118,000 to
renovations, much less that she did so through a loan from her family’s business.
Lucinda also transferred $200,000 to her joint account with Ziatyk at
Baycoast Bank,270 which they used to pay off their Massachusetts property’s home
equity line of credit;271 and $20,000 to a TD Bank account owned by Webasyst
LLC, an entity for which Lucinda is the registered agent,272 from which a transfer
was immediately redirected to three accounts owned by Russian citizens.273
Lucinda contends she and Richard agreed a few years before their divorce that she
should receive approximately $250,000 from the Property proceeds, but failed to
prove such an agreement.274 Finally, Lucinda stated that $32,000 of the remaining
proceeds were “to fund a payment against the [2013 Verbal Agreement],” which
she has failed to prove existed.275
270
JX 90 at BCB 49.
271
Papa Tr. 1130:6–23.
272
The Court takes judicial notice of the State of Delaware’s website, particularly the
Division of Corporations’ online entity search database. See In reBaxter Int’l, Inc.
S’holders Litig., 654 A.2d 1268, 1270 (Del. Ch. 1995); State of Delaware, The Official
Website of the First State, Department of State: Division of Corporations,
https://icis.corp.delaware.gov/ecorp/entitysearch/namesearch.aspx (last visited Apr. 24,
2020).
273
JX 90 at DeGroat 2883–2889.
274
JX 113 at 6; Papa Tr. 828:6–20, 868:20–869:15, 990:9–18, 1132:5–17.
275
Papa Tr. 1132:13–1133:4.
48
Lucinda has failed to show that her actions were fair in keeping the total sale
proceeds from the Property transaction and reimbursing her creditors, to the
exclusion of Richard. In selling the Property as Richard’s fiduciary, Lucinda had a
duty to ensure Richard received his share of the proceeds according to his joint
ownership. But she kept the funds for herself, epitomizing an invalid self-
interested transaction.
ii. Richard’s Funds
Lucinda has also failed to show that her self-dealing transfers from
Richard’s accounts were fair.276 After obtaining power of attorney over Richard’s
276
This analysis excludes the Vanguard TODs and the Fidelity IRAs. On February 19,
the Court issued an order granting Defendant’s motion for summary judgment as to the
Vanguard TODs for which Lucinda was always the fiduciary. D.I. 196 at ¶¶ 9, 14.
Additionally, Lucinda remained the beneficiary of the Fidelity IRAs at all times until
those funds were transferred to Vanguard in November 2013. JX 12; R. M. DeGroat Tr.
540:12–543:16; Papa Tr. 877:7–13, 878:6–22, 885:17–886:11.
Lucinda transferred the Fidelity IRAs to Vanguard only after she gained online
access to Richard’s Vanguard accounts to view his beneficiary statements, completed
paperwork to become the power of attorney on all of his Vanguard accounts, changed the
mailing address to the Property for all of his Vanguard accounts, and made herself the
primary beneficiary of the Vanguard IRAs. JX 52; JX 53; JX 56 at VGI 1305, 1311,
1375; JX 130 at Papa 789–95; Papa Tr. 893:3–894:9; R. M. DeGroat 544:12–18. As
explained herein, Lucinda breached her fiduciary duties by making herself the beneficiary
to the Vanguard IRAs. But the transfer of the Fidelity funds to Vanguard was not a
breach. And because Lucinda had always been the beneficiary of the Fidelity IRAs, the
transfer of those funds to the Vanguard IRAs did not result in an unjustified enrichment
for Defendants or an impoverishment for Plaintiffs.
The transfer from Fidelity to Vanguard illustrates the extent of Lucinda’s control
over Richard’s financial affairs. Lucinda had previously suggested Richard move the
Fidelity IRAs to his Vanguard IRAs for better returns, but the change did not occur until
Lucinda was in the driver’s seat. Papa Tr. 899:14–22. Lucinda’s actions in this regard
were not befitting of an ideal fiduciary, but at bottom, she was always the beneficiary of
49
Vanguard TODs, IRAs, and the Joint Account, and making herself the beneficiary
of the IRAs, Lucinda helped herself to approximately $65,000 to repair the
Property, thousands of dollars for “rent” that Richard did not owe, and over
$200,000 for miscellaneous and undocumented reasons, including checks written
with memo lines as undescriptive as “Transfer.”277 Lucinda continued with these
self-interested transactions after Richard entered the hospital in 2015, transferring
herself another $48,000 from the Vanguard Joint Account.278
Although Lucinda was a co-owner of the Vanguard Joint Account, entitling
her to withdraw from this account, her self-dealing transactions began by
transferring money out of Richard’s individual accounts and IRAs, without his
knowledge or consent, into the Vanguard Joint Account.279 These originating
transfers and her self-interested use of Richard’s solely owned funds demonstrate
her breaches of fiduciary duty.280 Lucinda is only entitled to the funds that were in
the Vanguard Joint Account prior to the first transaction she completed from
the Fidelity IRAs. She was entitled to those funds after Richard’s death. The Court will
not take those funds from her based on her mere movement of Richard’s funds to a
different bank where that move did not harm Richard and has not harmed Plaintiffs.
277
JX 56 at VGI 686; JX 58 at VGI 4838; JX 60 at VGI 4839; JX 74 at VGI 4840; JX 78
at VGI 4846; JX 82 at VGI 4844, 4847; D.I. 273; JX 119.
278
JX 108; JX 109; Papa Tr. 1067:7–1077:18.
279
The evidence demonstrates Lucinda transferred funds into the Vanguard Joint Account
herself and that these transactions continued after Richard was hospitalized. D.I. 272 at
VGI 4876, 4878, 4880, 4882, 4886, 4890.
280
Pennewill v. Harris, 2011 WL 691618, at *3–5 (Del. Ch. Feb. 4, 2011).
50
Richard’s individual accounts and IRAs, in July 2013.281 It appears there was only
$7.91 in the Vanguard Joint Account before Lucinda seeded it from Richard’s
solely owned accounts.282 During this time, Lucinda reassured Richard that she
was handling his bills; instead, she was using her status as a fiduciary to loot
Richard’s assets.283
Lucinda also engaged in self-dealing transactions from Richard’s Penn
Mutual and Lincoln accounts. Richard purposefully removed her from these
accounts in 2007,284 but Lucinda used the 2013 POA to renew her access.285
Lucinda liquidated the assets in the Penn Mutual and Lincoln accounts for her own
use. She has offered no explanation as to why these transactions are fair to
Richard, aside from stating it was Richard’s idea to liquidate the accounts.286
Lucinda also used Richard’s Chase credit card for numerous self-dealing
transactions. Between 2013 and 2016, she completed hundreds of purchases on
281
JX 56 at VGI 686; see also D.I. 272 at VGI 4876, 4878, 4880, 4882, 4886, 4890.
282
JX 18 at 74–78; Papa Tr. 1101:7–13. The accounting ordered by the Court will
accurately document these amounts.
283
JX 59 at Papa 229.
284
JX 6; JX 7.
285
JX 94; JX 95.
286
Papa Tr. 919:5–921:3. The liquidations did not occur until April and July 2015, a few
months before Richard’s fall, which led to his hospitalization, at which time he was
suffering from dementia. JX 100; JX 103; JX 106 at DeGroat 1298–1299, 1301. Richard
did not have the ability to make these types of financial decisions at that time. JX 16 at
Degroat 1119, 1201; O’Brien Dep. 44–45; JX 117; Tavani Tr. 140:19–24; JX 120;
Romirowsky Tr. 264:10–265:9.
51
that card totaling approximately $70,000. The Chase credit card statements show
thousands of dollars spent at women’s clothing stores, florists, and liquor stores.287
There are dozens of expenses incurred in New York, New Jersey, and
Massachusetts. There are numerous expensive dinners at restaurants in New
Jersey, Massachusetts, and Pennsylvania, including multiple charges to Lucinda’s
family restaurant in Jenkintown, PA.288 There are airline purchases to Florida on
Richard’s credit card, made contemporaneously with Lucinda flying to Florida for
her wedding anniversary with Ziatyk.289 There are thousands of dollars charged for
rental cars for Lucinda renting cars for extended amounts of time.290
Lucinda admits that she possessed Richard’s credit card, but offers almost
no explanation for the expenses aside from stating Richard gave it to her to use for
“expenses to come see him. . . and if [she] would buy things for the house” and
that he was in control of the credit card because the statements were delivered to
the Property.291 Lucinda has failed to meet her onerous burden of showing these
transactions were fair, or made with Richard’s knowledge or consent.
287
JX 118.
288
JX 118.
289
JX 118; see also Ziatyk Tr. 1278:2–16.
290
JX 118.
291
Papa Tr. 917:19–918:10. As with the Vanguard statements, I do not infer that
Richard received notice of Lucinda’s actions from the fact that statements were mailed to
his home.
52
Finally, Lucinda made herself the beneficiary of Richard’s Vanguard
accounts in contravention of his intent. In 2010 and 2011, Richard tried to remove
Lucinda as the beneficiary from all of his accounts. Lucinda benefits where
Richard did not succeed: she remained the beneficiary of the Fidelity IRAs and
Vanguard TODs.
But where Richard did succeed, he intended his assets to flow to Jan and
Carroll. Lucinda contravened those wishes by making herself the beneficiary of
the Vanguard IRAs in a self-dealing transaction.292 While Lucinda denies making
herself the primary beneficiary,293 the preponderance of the evidence shows she
did. Lucinda admitted to updating the mailing address for the Vanguard Joint
Account accounts online three days later.294 The following summer, Lucinda also
informed Michael that she added him as the secondary beneficiary for the
Vanguard IRAs and TODs.295 As explained, Lucinda, not Richard, made all the
online transactions. Richard did not consent to her actions. In fact, Lucinda
directly contradicted Richard’s wishes in this self-dealing transaction. Other than
292
JX 56 at VGI 1375–1376. Lucinda also admits to adding Michael as the secondary
beneficiary to Richard’s Vanguard accounts in August 2014. JX 85 at VGI 1381–1382;
JX 86 at Papa 494.
293
Papa Tr. 887:11–16, 892:12–18, 893:3–894:3.
294
JX 1 at VGI 1375; Papa Tr. 1040:17–21.
295
JX 85 at VGI 1381–1382; JX 86 at Papa 494.
53
her unsubstantiated denial, Lucinda has offered no explanation as to why doing so
would have been fair to Richard.
When Lucinda became Richard’s fiduciary, she assumed the obligation to
act in his best interest. Lucinda instead acted in her own self-interest, and has
breached her fiduciary duty of loyalty. Lucinda cannot prove the self-dealing
transactions she completed with Richard’s funds from January 2013 through his
death were fair. Without Richard’s knowledge or consent, she retained his 2012
RMD; kept or paid debts with the entire sale proceeds from the Property
transaction; repeatedly seeded the Vanguard Joint Account from Richard’s solely-
owned accounts and then transferred those funds to herself; liquidated his Penn
Mutual and Lincoln life insurance policies; used Richard’s Chase credit card at her
discretion without justification; and overrode his wishes by making herself the
beneficiary of the Vanguard IRAs. On every front, Lucinda has failed to
demonstrate that Richard consented to these transactions or that they were
otherwise fair. She has breached her common law fiduciary duties.296
3. After The 2013 POA Was Executed,
Lucinda Breached Her Duties Under The
POA Act.
Plaintiffs have proven Lucinda breached her common law fiduciary duties
for January 2013 through Richard’s death. By logical extension, Plaintiffs have
296
Pennewill, 2011 WL 691618, at *3–5; Coleman, 948 A.2d at 429–432.
54
also proven that Lucinda violated her statutory duties under the POA Act after the
2013 POA was executed.
Lucinda’s actions prior to the December 2, 2013 execution of the 2013 POA
do not fall within the scope of the POA Act. “The POA Act regulates the conduct
of an agent who has undertaken to act on behalf of the principal pursuant to an
executed durable personal power of attorney. It does not regulate the conduct of an
individual who has not been appointed as an agent under such a document, even if
that individual is otherwise an agent of the principal.”297 Therefore, no Plaintiff
has standing under the POA Act to pursue judicial relief for transactions that
occurred prior to December 2013 including, but not limited to, Lucinda’s July
2013 substitution of herself and the removal of Carroll as beneficiary on the
Vanguard IRAs.
As Richard’s personal representative and beneficiary of his estate, Michael
has standing to assert Lucinda breached her duties under the POA Act.298 Carroll
also has standing as a beneficiary.299 Plaintiffs’ viable claims under the POA Act
are limited to injuries to Richard’s estate, Michael as beneficiary, and Carroll as
beneficiary by Lucinda’s acts after the 2013 POA’s December 2 execution.
297
In re Corbett v. Corbett, 2019 WL 6841432, at *7 (Del. Ch. Dec. 12, 2019) (ORDER);
see also 12 Del. C. §§ 49A-102(1), 49A-114.
298
JX 19; In re Corbett, 2019 WL 6841432, at *7.
299
JX 19; In re Corbett, 2019 WL 6841432, at *7.
55
Specifically, the sale of the Property, the expenditures and transactions from the
Vanguard Joint Account, and the expenditures on Richard’s Chase credit card are
at issue under the POA Act.
So bracketed, the facts that underpin Lucinda’s common law fiduciary duty
breaches prove she also breached the POA Act. Lucinda abused her position as
Richard’s agent.300 She did not act in good faith, nor did she act loyally for
Richard’s benefit.301 She failed to act with “the care, competence, and diligence
ordinarily exercised by agents in similar circumstances” and failed to “keep a
record of all receipts, disbursements, and transactions made on behalf” of
Richard.302 She also failed to “not act in a manner inconsistent with [Richard’s]
testamentary plan.”303 Lucinda breached her duties under the POA Act for the
transactions that injured Richard’s estate, as well as Michael and Carroll as
beneficiaries.
B. Lucinda And Ziatyk Were Unjustly Enriched.
Delaware courts have recognized that unjust enrichment claims may be
nearly duplicative of fiduciary claims, but that Delaware law does not bar both
300
12 Del. C. § 49A-114.
301
Id. at § 49A-114(a)(2), (b)(1).
302
Id. at § 49A-114(b)(3)–(4).
303
Id. at § 49A-114(b)(6).
56
claims from proceeding.304 When an unjust enrichment claim relies upon a breach
of fiduciary duty, a successfully pled breach of fiduciary duty claim likely supports
a well-pled claim for unjust enrichment.305 Plaintiffs’ claim for unjust enrichment
hinges on the same self-interested transactions that underpin Lucinda’s breaches of
fiduciary duty. Plaintiffs have successfully proven breaches of fiduciary duty, and
as analyzed below, have correspondingly proven a claim for unjust enrichment. To
make perfectly plain that Lucinda has done wrong, this post-trial opinion considers
both the breach of fiduciary duty and unjust enrichment claims, even though
Plaintiffs are entitled to only one recovery.306
Lucinda’s management of Richard’s financial affairs from 2013 through
2016 unjustly enriched her and Ziatyk. “Unjust enrichment is the unjust retention
304
Dubroff v. Wren Hldgs., LLC, 2011 WL 5137175, at *11 (Del. Ch. Oct. 28, 2011)
(“Plaintiffs’ claims against NSC’s Control Group for direct equity dilution and unjust
enrichment appear to be duplicative, and both parties appear to recognize this fact.
Nonetheless, Delaware law does not appear to bar bringing both claims.”); Tornetta v.
Musk, 2019 WL 4566943, at *15 (Del. Ch. Sept. 20, 2019) (providing Delaware law does
not bar bringing both claims “factual circumstances [might exist] in which the proofs for
a breach of fiduciary duty claim and an unjust enrichment claim are not identical”).
305
See MCG Capital Corp. v. Maginn, 2010 WL 1782271, at *25 n.147 (Del. Ch. May 5,
2010) (“If MCG is able to prove Maginn breached his duty of loyalty in Count Five then
it will also be successful in proving unjust enrichment in Count Six. Both claims hinge
on whether Maginn was disloyal to Jenzabar by the manner in which he procured the
2002 Bonus.”); see also Monroe Cty. Employees’ Ret. Sys. v. Carlson, 2010 WL
2376890, at *2 (Del. Ch. June 7, 2010) (noting the unjust enrichment claim must be
dismissed because it “depends on the success of the breach of fiduciary duty claim,”
which was unsuccessfully pled).
306
See MCG Capital Corp., 2010 WL 1782271, at *25 n.147; Dubroff, 2011 WL
5137175, at *11.
57
of a benefit to the loss of another, or the retention of money or property of another
against the fundamental principles of justice or equity and good conscience. The
elements of unjust enrichment are: (1) an enrichment, (2) an impoverishment, (3) a
relation between the enrichment and impoverishment, (4) the absence of
justification, and (5) the absence of a remedy provided by law.”307 I will take each
element in turn.
Lucinda and Ziatyk were enriched by approximately $830,000. Lucinda
received the following approximate amounts, subject to an accounting: Richard’s
half of $402,000 from the sale of the Property;308 at least half of the $65,000 from
the Vanguard Joint Account for Property renovations;309 at least $18,000 of
Richard’s 2012 RMD;310 $252,000 in checks written from Richard’s individual
Vanguard accounts, IRAs and the Joint Account, subject to any funds Lucinda is
entitled to as a joint owner of the Vanguard Joint Account as discussed above;311
$50,000 from cashing in or borrowing against Richard’s insurance policies;312
307
Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010).
308
JX 90 at DeGroat 531–532, 3678, 3872; D.I. 273; JX 119 at 1.
309
R. M. DeGroat Tr. 424:23–425:2; Kane Tr. 654:1–7; D.I. 273; JX 119 at 1. The funds
for the renovation originated from Richard’s solely owned accounts, and the renovation
began after Richard moved to Forwood. Whether Richard rightly paid for half of the
renovations remains an open question, to be resolved after the accounting.
310
JX 48 at VGI 4512.
311
JX 119 at 3.
312
JX 94; JX 95; JX 100; JX 103; Papa Tr. 1065:4–1066:18.
58
$69,000 in expenses on Richard’s credit card;313 and approximately $207,000
transferred after Richard’s death in accordance with improper beneficiary
designations.314 As a direct result, Richard’s estate and his rightful beneficiaries
experienced an impoverishment.
Lucinda and Ziatyk lack justification for their enrichment. Lucinda argues
that she is justified in keeping Richard’s assets for a variety of reasons including:
(i) a claim that Richard was legally obligated to leave all of his money to Lucinda
due to the verbal divorce agreement, as allegedly restated in 2013; (ii) that Richard
voluntarily transferred the assets to her; (iii) that Lucinda obtained and paid
substantial amounts of cash to unknown and undocumented contractors, and so
should be reimbursed; and (iv) a claim that Richard would change his beneficiary
designations when he was mad at Lucinda throughout the years, but restored her
status in his final years because he reignited his relationship with her while his
relationships with Jan and Carroll continued to decline. None of these reasons are
supported in fact, and none justify Lucinda’s retention of Richard’s assets. Rather,
as explained, Lucinda took the assets without Richard’s authorization and against
his intent.
313
JX 118.
314
JX 112; JX 124. This number, $207,000, is the result of subtracting the $439,000 that
was transferred from the Fidelity IRAs to the Vanguard IRAs in November 2013 from the
total amount in the Vanguard IRAs at Richard’s death, which was approximately
$646,000. Papa Tr. 877:7–13, 878:6–22, 885:17–886:11.
59
Plaintiffs have also demonstrated an absence of justification for Ziatyk’s
enrichment flowing from Lucinda’s transfers of Richard’s funds. Ziatyk admits
that he has benefitted from approximately $329,000 from Richard’s assets, which
Lucinda transferred directly to their joint home equity line of credit.315 “Restitution
is permitted even when the defendant retaining the benefit is not a wrongdoer.”316
Lucinda and Ziatyk were unjustly enriched and are not entitled to retain this
enrichment. Plaintiffs do not have an adequate remedy at law; no contract governs
their relationship with Defendants.317
Both the breach of fiduciary duty claims and the unjust enrichment claim
hinge on Lucinda’s self-interested transactions with Richard’s assets. Lucinda
cannot demonstrate the transactions at issue were entirely fair, nor can she and
Ziatyk substantiate any justification for those transactions. Plaintiffs are entitled to
one recovery.318
C. Plaintiffs Are Entitled To An Accounting And A Constructive
Trust.
An accounting “is an equitable remedy that consists of the adjustment of
accounts between parties and a rendering of judgment for the amount ascertained
315
Ziatyk Tr. 1286:6–13.
316
Schock v. Nash, 732 A.2d 217, 232 (Del. 1999).
317
MetCap Secs. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *5 (Del.Ch. May
16, 2007).
318
See MCG Capital Corp., 2010 WL 1782271, at *25 n.147; Dubroff, 2011 WL
5137175, at *11.
60
to be due to either as a result.”319 As such, an accounting is dependent on other
substantive claims: it is not a stand-alone cause of action.320 “An accounting. . . is
a means of measuring the benefits bestowed on an unjustly enriched defendant.”321
Lucinda’s breaches of her fiduciary duties to Richard also give rise to an
accounting as a matter of law.322 Plaintiffs are entitled to an accounting to remedy
Lucinda’s breach of fiduciary duty, violation of the POA Act, and her unjust
enrichment together with Ziatyk.
In holding that a fiduciary must account for her actions, the Court has stated,
“[r]egardless of the source of the fiduciary authority,” i.e. through a formal power
of attorney or common law fiduciary duties, a fiduciary is “still required. . . to use
his principal’s property for her benefit only and to act scrupulously in her
regard.”323 The POA Act permits “upon the death of the principal” a “personal
319
Albert v. Alex Brown Mgmt. Servs., Inc., 2005 WL 2130607, at *11 (Del. Ch. Aug. 26,
2005).
320
Rhodes v. Silkroad Equity, LLC, 2007 WL 2058736, at *11 (Del. Ch. Jul. 17,
2007) (“An accounting is not so much a cause of action as it is a form of relief ...
inherently dependent on. . . [other] claims.”); Stevanov v. O’Connor, 2009 WL 1059640,
at *15 (Del. Ch. Apr. 21, 2009) (“A claim for an accounting in the Court of Chancery
generally reflects a request for a particular type of remedy, rather than an equitable claim
in and of itself.”).
321
Fleer Corp. v. Topps Chewing Gum, Inc., 539 A.2d 1060, 1063 (Del. 1988); see also
Prospect St. Energy, LLC v. Bhargava, 2016 WL 446202, at *8 (Del. Super. Ct. Jan. 27,
2016).
322
In Matter of Estate of Dougherty, 2016 WL 4130812, at *12; Matter of Lomax, 2019
WL 4955315, at *5 (Del. Ch. Oct. 9, 2019).
323
IMO Estate of Dean, 2014 WL 4628584, at *2.
61
representative or successor in interest of the principal’s estate” to request an
accounting.324 “If so requested the agent shall comply with the request within a
reasonable period of time.”325 The Court may also order an accounting under the
POA Act for all transactions completed on the principal’s behalf after execution of
a POA.326 The Court has not permitted fiduciaries to excuse themselves of this
obligation with informal or incomplete accountings: “[a fiduciary] cannot excuse
her own failure to maintain records in a safe place, nor can she rely on a narrative
and answers to deposition questions as a substitute for a formal accounting. [A
fiduciary] is required to provide a formal accounting.”327
Lucinda’s 2016 summary328 and excuses for lack of documentation are not
satisfactory.329 As a fiduciary and an individual unjustly enriched, Lucinda is
required to provide an accurate accounting from the time she was a common law
fiduciary. Plaintiffs are entitled to a declaration that Lucinda’s past accounting
was incomplete, and to a new accounting to properly assess damages.330
324
12 Del. C. § 49A-114(g).
325
Id.
326
Id.
327
In Matter of Estate of Dougherty, 2016 WL 4130812, at *12.
328
JX 113.
329
Papa Tr. 949:2–952:1; Kane Tr. 655:17–656:5.
330
D.I. 275 at 59:2–7 (B. Ferry: “A request as specified in our post-trial briefing is no
longer for an accounting. We are indicating that Lucinda Papa has accounted and that her
62
Plaintiffs failed to pursue a constructive trust or equitable lien in post-trial
briefing.331 Irrespective of this misstep, this Court has the discretion and duty to
fashion the most equitable remedy. Lucinda, “by virtue of fraudulent, unfair or
unconscionable conduct, is enriched at the expense of another to whom … she
owe[d] some duty.”332 Accordingly, I conclude that a constructive trust over the
misappropriated funds, including those paid to Defendants’ creditors, is
necessary.333 The constructive trust will be applied retroactively dating back to
each wrongful act.334 Where a dispute exists as to the location or existence of
particular funds, the aforementioned accounting will assist in identifying funds that
have been dispersed and paid to creditors. Where funds have been dissipated, the
Court remains able to impose a surcharge, compensatory damages, or a personal
judgment.335
accounting has failed and, therefore, we are requesting a judgment for the amount which
is unaccountable.”).
331
D.I. 1 at 14, 170 at 17, 260 at 73.
332
Hogg v. Walker, 622 A.2d 648, 652 (Del. 1993).
333
Id. at 652 (“The doctrine of constructive trust effectuates the principle of equity that
one who would be unjustly enriched, if permitted to retain property, is under an equitable
duty to convey it to the rightful owner. It is an equitable remedy of great flexibility and
generality, and is viewed as ‘a remedial [and] not a substantive’ institution.”); id. at 654(“[T]he fact that the res of the trust was dissipated does not foreclose an equitable remedy
to make [plaintiff] whole.).
334
Id. at 652 (noting “the duty to transfer the property relates back to the date of the
wrongful act that created the constructive trust”).
335
Id. at 654.
63
D. Lucinda Did Not Unduly Influence Richard; She Simply Took
His Assets.
This litigation turns on Lucinda’s self-dealing as a fiduciary and unjust
enrichment. On these claims alone, Plaintiffs are granted the relief they desire.
But, Plaintiffs also contend that Richard lost testamentary capacity by 2013 at the
latest, and that Lucinda exercised undue influence over Richard such that the
following should be voided: the 2013 deed; 2013 POA; changes to the Vanguard
IRA, Penn Mutual, and Lincoln Financial beneficiary designations; the hundreds of
thousands of dollars transferred out of Richard’s Vanguard accounts into the
Vanguard Joint Account, and subsequently, Lucinda’s pocket; and the Chase credit
card transactions.
The elements of undue influence are: “(1) a susceptible testator; (2) the
opportunity to exert influence; (3) a disposition to do so for an improper purpose;
(4) the actual exertion of such influence; and (5) a result demonstrating its
effect.”336 “Undue influence occurs when a party exerts immoderate influence
under the circumstances that overcomes the transferor’s free will, resulting in a
transfer that is not of her own choice and mind.” 337 For influence to be undue, it
must rise to the level as to “subjugate [the actor’s] mind to the will of another, to
overcome his free agency and independent volition, and to compel him to make a
336
See Sloan v. Segal (Sloan II), 2010 WL 2169496, at *7 (Del. 2010) (TABLE).
337
Mitchell, 2009 WL 132881, at *8.
64
[document or transfer] that speaks the mind of another and not his own.” 338 The
party claiming a document or transfer was the product of undue influence “must
show that the testator’s mind was overcome by the influencer.”339
The evidence, as analyzed in Section II(A)(2)(i), proves that Michael was
aware of the new deed, had the opportunity to participate in the execution of the
deed, and communicated with his father about the deed.340 The preponderance of
the evidence, including Michael’s contemporaneous belief that Richard executed
the deed voluntarily, precludes a finding that Lucinda unduly influenced Richard to
execute the new deed. Plaintiffs have failed to establish the actual exertion of
undue influence for this transaction.
The evidence, as analyzed in Section II(A)(1), further establishes that
Lucinda did not unduly influence Richard to execute the 2013 POA. Michael
testified that he is no longer challenging the 2013 POA.341 To the extent Plaintiffs
continue to assert that the 2013 POA was executed as a result of Lucinda’s undue
338
Sloan II, 2010 WL 2169496, at *7 (quoting In re Estate of West, 522 A.2d at 1263).
339
Will of Nicholson, 1998 WL 118203, at *3 (Del. Ch. Mar. 9, 1998); see Sloan v. Segal
(Sloan I), 2009 WL 1204494, at *13 (Del. Ch. Apr. 24, 2009) (noting challenging party
bears the burden of proving undue influence absent special circumstances), aff’d, 996
A.2d 794 (Del. 2010) (TABLE). This burden shifts “under factual situations that lack
implicit ethical safeguards.” Sloan I, 2009 WL 1204494 at *13 (internal quotation marks
omitted) (quoting In re Will of Melson, 711 A.2d 783, 787 (Del. 1998)).
340
JX 34 at Papa 17, 19, 24; Tavani Tr. 179:14–180:22; Papa Tr. 857:2–15; R. M.
DeGroat Tr. 512:13–21, 516:3–12, 520:2–13.
341
R. M. DeGroat Tr. 575:20–576:2.
65
influence on Richard, they have failed to prove that by a preponderance of the
evidence. Lucinda used her power as Richard’s agent in her self-interest,
breaching her fiduciary duties, but Lucinda did not unduly influence Richard to
execute the deed or 2013 POA.
After the execution of the new deed and the 2013 POA, even assuming
Richard lost capacity, Lucinda administered Richard’s financial affairs without his
involvement. Lucinda, not Richard, changed the Vanguard IRA, Penn Mutual, and
Lincoln Financial beneficiary designations; transferred hundreds of thousands of
dollars out of Richard’s Vanguard accounts into the Vanguard Joint Account, and
subsequently, her pocket; and completed numerous Chase credit card transactions
for her own personal expenses. Lucinda did not act through Richard by subjecting
his will to her own: she simply did what she wanted with his funds.
Assuming Richard was susceptible, that Lucinda had the opportunity to exert
influence over him, and that she had the disposition to do so for an improper
purpose, Lucinda effectuated the transactions at issue not by subjugating Richard’s
mind to her will, but by simply taking what she wanted without his knowledge or
consent. Although Lucinda’s conduct resulted in breaches of fiduciary duty and
Defendants’ unjust enrichment, the evidence is inconsistent with a claim of undue
influence. The claim for undue influence is denied.
66
E. Plaintiffs Are Not Estopped From Making Claims To The
Vanguard IRA.
Lucinda has argued Plaintiffs are estopped from making claims to the
Vanguard IRA because of Lucinda’s marital financial agreement with Richard.
This argument is legally and factually flawed. “In order to establish a claim for
promissory estoppel, plaintiff must show by clear and convincing evidence that:
(i) a promise was made; (ii) it was the reasonable expectation of the promisor to
induce action or forbearance on the part of the promisee; (iii) the promisee
reasonably relied on the promise and took action to his detriment; and (iv) such
promise is binding because injustice can be avoided only by enforcement of the
promise.”342
Lucinda has not alleged that Plaintiffs made any promise to her or Richard;
indeed, they made none. Instead, she contends that Richard’s alleged promises to
her, i.e. the marital financial agreement and 2013 Verbal Agreement, forecloses
Plaintiffs’ ability to make claims on the Vanguard IRA. Without evidence that
Plaintiffs made a promise, promissory estoppel cannot preclude their claims.
Plaintiffs cannot have had the “reasonable expectation. . . to induce action or
342
CSH Theatres, LLC v. Nederlander of S.F. Assocs., 2015 WL 1839684, at *20 (Del.
Ch. Apr. 21, 2015) (emphasis in original) (quoting Lord v. Souder, 748 A.2d 393, 399
(Del. 2000)).
67
forbearance” on Lucinda’s part without making her a promise.343 Plaintiffs are not
estopped from making claims on the Vanguard IRA.
Further, as explained, Lucinda has failed to establish that the marital
financial agreement or 2013 Verbal Agreement existed.344 “The failure to prove a
real promise is fatal to [a claim for promissory estoppel]. . . the doctrine of
promissory estoppel can never operate unless a real promise is in existence.”345
“Promissory estoppel ‘requires a real promise, not just mere expressions of
expectation, opinion, or assumption.’”346 Lucinda has failed to prove any promise,
much less one by Plaintiffs, that would support a defense of promissory estoppel.
343
CSH Theatres, LLC, 2015 WL 1839684, at *20 (emphasis in original) (quoting Lord v.
Souder, 748 A.2d 393, 399 (Del. 2000)).
344
JX 18 at 77 (“And it’s mentioned in the divorce papers that the – there was no money
amount transferred or one with the divorce, but the divorce papers indicate that the – that
the financial arrangements were all not part of the divorce. The divorce says that they
were agreed upon by the parties in the divorce. So that’s – that’s all I – that’s all I have.
But, see, nothing does me any good if I can’t locate the party that’s on the – you know,
the account. And I’m afraid she’s – I’m afraid, if her name is here, she can withdraw
anything that’s in that account.”); JX 23 at 138–139 (“And I’m trying to remove a person
-- an ex-wife, really. . . And make sure that she has no way of getting her hands on any
money that's in those funds. . . We’re divorced and we had an agreement -- not part of
the divorce, but a -- the divorce mentions a -- that we have -- we being my ex-wife and
myself. . . A financial agreement, which we do. . . But now I’m trying to make sure that
there's no way she can go back and grab money in any of these funds.”).
345
Metro. Convoy Corp. v. Chrysler Corp., 208 A.2d 519, 521 (Del. 1965).
346
James Cable, LLC v. Millennium Dig. Media Sys., L.L.C., 2009 WL 1638634, at *5
(Del. Ch. June 11, 2009) (quoting Addy v. Piedmonte, 2009 WL 707641 (Del. Ch. Mar.
18, 2009)).
68
F. Lucinda Waived Some Of Her Counterclaims By Failing To
Present Evidence On Them At Trial And Has Failed To Prove
The Others.
Lucinda asserts a variety of claims in her Counterclaim, but has failed to
present evidence on many of these claims and has failed to prove all of them. 347
Lucinda asserts that in 2008, she and Richard agreed that his assets, including all
of his Vanguard accounts, Penn Mutual insurance proceeds, his Artisan Bank
account, his AETNA Insurance proceeds, his Connecticut General Life proceeds,
and the Property, would devise to her upon his death.348 As explained, Lucinda has
failed to prove the existence or terms of this agreement. Further, Lucinda’s
testimony about this agreement is inconsistent with her allegations.349 She testified
that the Lincoln Financial accounts were not a part of this agreement, 350 and
evidence proves that she was never named as a beneficiary to the Artisan Bank
account.351 Moreover, the AETNA and Connecticut General accounts no longer
exist.352 Lucinda has failed to prove that the marital financial agreement existed
either in 2008 or at any other time. Her counterclaim seeking the enforcement of
this agreement is denied.
347
D.I. 200.
348
D.I. 200 ¶1.
349
Papa Tr. 971:10–972:19, 1027:18–1028:20.
350
Papa Tr. 982:9–12.
351
JX 126.
352
Papa Tr. 919:5–920:4; R. M. DeGroat Tr. 410:7–8.
69
Likewise, Lucinda’s counterclaim that Richard breached the divorce
agreement by not naming her as a beneficiary and/or co-owner of the
aforementioned assets also fails.353 Lucinda did not present evidence on this claim
at trial and only references the claim briefly in post-trial briefing.354 Thus, this
claim was waived.355 In addition, I have found the divorce agreement did not exist.
Lucinda has also failed to prove her counterclaim for promissory estoppel by
Richard by not presenting any evidence on this claim. 356 Lucinda argued that in
the alternative of a breach of the divorce agreement, Richard would be estopped
from retitling or changing beneficiary designations of the aforementioned assets to
anyone other than Lucinda.357 Lucinda has not established that any such promises
existed to support an estoppel claim.
Lucinda’s “claim against the estate” and tortious interference claims are also
unsuccessful.358 In the alternative to her breach of contract and promissory
estoppel claims, Lucinda pled that she should be entitled to a claim against
353
D.I. 200 ¶ 3.
354
D.I. 259 at 14–15.
355
See In re Shawe & Elting LLC, 2015 WL 4874733, at *35 (Del. Ch. Aug. 13,
2015), aff’d sub nom. 157 A.3d 152 (Del. 2017); Owen v. Cannon, 2015 WL 3819204, at
*32 (Del. Ch. June 17, 2015); In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2015 WL
1815846, at *14 (Del. Ch. Apr. 20, 2015).
356
See In re Shawe & Elting LLC, 2015 WL 4874733, at *35; Owen, 2015 WL 3819204,
at *32; In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2015 WL 1815846, at *14.
357
D.I. 200 ¶ 4.
358
D.I. 200 ¶¶ 6–7.
70
Richard’s estate for the repairs and time she expended on the Property, and all the
care she provided for Richard.359 She also argued that Plaintiffs became aware of
the marital financial agreement and tortiously interfered with this longstanding
agreement.360 Lucinda failed to successfully prove either of these claims. The
marital financial agreement was never proven to exist, and Lucinda failed to
establish any entitlement to Richard’s estate for the care she offered him or her
time working on the Property. Lucinda presented little to no evidence on these
claims at trial.361
Lastly, the counterclaim asserting damages for Plaintiffs’ alleged freezing of
all of Richard’s Vanguard accounts (excluding the Vanguard Joint Account) and
all of Lucinda’s personal accounts is meritless to the point of being frivolous
(“Vanguard Account Counterclaim”).362 Lucinda alleges that she has suffered
$47,438.70 in damages as a result of Plaintiffs freezing Richard’s Vanguard
accounts after he died.363 But Plaintiffs did not freeze the accounts, and the
damages did not flow from the freeze; Lucinda knew both of those facts.
359
D.I. 200 ¶ 6.
360
D.I. 200 ¶ 7.
361
See In re Shawe & Elting LLC, 2015 WL 4874733, at *35; Owen, 2015 WL 3819204,
at *32; In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2015 WL 1815846, at *14.
362
D.I. 200 ¶¶ 12–14; JX 130 at Papa 233–234.
363
D.I. 200 ¶ 14; Papa Tr. 934:11–17.
71
Vanguard froze the accounts, stating, “Given the competing claims,
Vanguard has placed a freeze on the Assets pending receipt of evidence that these
competing claims regarding the proper beneficiaries of the Assets are being
pursued. . . .”364 Lucinda was aware of this fact, having called Vanguard a few
days after the accounts were frozen.365 Vanguard told Lucinda, “The assets for Mr.
DeGroat that you took into your own account are being disputed. We have to
freeze them. Legally we have to freeze them. You don’t have access to them.” 366
Lucinda also knew that Plaintiffs were willing to unfreeze Lucinda’s accounts, but
that Vanguard declined the request due to the dispute over the accounts.367
The damages Lucinda contends flowed from the freeze are also
disingenuous. The purported damages are the capital losses Lucinda incurred in
liquidating her all of her Vanguard investments, including her individual accounts,
on October 3, 2016.368 Lucinda voluntarily incurred these losses when she sold her
Vanguard investments, including the recently unfrozen assets, one day after the
freeze was lifted from her accounts.369 Lucinda mischaracterizes these losses as
damages from the freeze while fully knowing they were incurred by her
364
JX 130 at Papa 233–234.
365
JX 122.
366
JX 122 at 74.
367
JX 122 at 73.
368
D.I. 272 at VGI 3656.
369
D.I. 272 at VGI 3658, 3659, 3662–3665.
72
subsequent decision to move the unfrozen funds out of Vanguard.370 The
Vanguard Account Counterclaim is denied.
Plaintiffs seek attorneys’ fees from defending against this claim, classifying
the claim as frivolous bad faith litigation. As examined below, Plaintiffs have
carried their burden to establish the Vanguard Account Counterclaim is frivolous.
G. Plaintiffs’ Fees Defending The Vanguard Account
Counterclaim Are Shifted; Defendants Will Bear Their Own
Fees.
Delaware courts generally follow the American Rule, which holds litigants
responsible for their own costs and fees.371 “Under the American Rule and
Delaware law, litigants are normally responsible for paying their own litigation
costs.”372 The Court recognizes an exception to this rule where a party has acted in
bad faith.373 “Delaware courts have previously awarded attorneys’ fees where (for
example) parties have unnecessarily prolonged or delayed litigation, falsified
370
Papa Tr. 934:11–17; 1138:22–1141:14 (Q: And how are the plaintiffs responsible for
you deciding to liquidate the account to get money out of there after Vanguard released
the freeze that they put on the account? Papa: Because I wouldn’t have had to get that
money out that way except that you had frozen it. And the only way for me to get it out
of there and get it safe was to take -- liquidate the account. And yes, there was margin in
it, but I would not normally have had to do that except for you.”).
371
See, e.g., Mahani v. Edix Media Gp., Inc., 935 A.2d 242, 245 (Del. 2007).
372
Id.373
Marra v. Brandywine Sch. Dist., 2012 WL 4847083, at *4 (Del. Ch. Sept. 28, 2012);
see also Estate of Carpenter v. Dinneen, 2008 WL 859309, at *17 (Del. Ch. Mar. 6,
2008).
73
records or knowingly asserted frivolous claims.”374 “Ultimately, the bad faith
exception is applied in extraordinary circumstances primarily to deter abusive
litigation and protect the integrity of the judicial process.”375 Delaware courts
“have been vigorous in scrutinizing such fee requests, shifting fees only where bad
faith is manifest, as where the litigation appears clearly vexatious or without a
good-faith belief that the complaint or defense could reasonably be vindicated
before our Courts, or where a fraud is worked on a litigant or the Court.”376
“Although there is no single definition of bad faith conduct, courts have found bad
faith where parties have unnecessarily prolonged or delayed litigation, falsified
records or knowingly asserted frivolous claims.”377
Plaintiffs seek attorneys’ fees from defending the Vanguard Account
Counterclaim, classifying the claim as frivolous bad faith litigation. Plaintiffs have
carried their burden in proving that Lucinda knowingly asserted a frivolous claim
that “utterly lacked any legal or factual bases.”378 Lucinda continued to assert the
374
Montgomery Cellular Hldg. Co. v. Dobler, 880 A.2d 206, 227 (Del. 2005) (internal
quotation marks omitted) (quoting Johnston v. Arbitrium (Cayman Is.) Handels AG, 720
A.2d 542, 546 (Del. 1998)).
375
Nichols v. Chrysler Gp., LLC, 2010 WL 5549048, at *3 (Del. Ch. Dec. 29, 2010).
376
Horsey v. Horsey & Sons, Inc., 2016 WL 1274021, at *1 (Del. Ch. Mar. 21, 2016).
377
Johnston, 720 A.2d at 546.
378
Martin v. Med-Dev Corp., 2015 WL 6472597, at *21 (Del. Ch. Oct. 27, 2015),
judgment entered 2015 WL 6508769, (Del. Ch. Oct. 27, 2015); see also Nagy v.
Bistricer, 770 A.2d 43, 65 (Del. Ch. 2000) (“In this case, I conclude that several of the
74
Vanguard Account Counterclaim, and testified at trial to her position that Plaintiffs
froze the Vanguard accounts, even though she knew that was not true.379 Lucinda
knew that Plaintiffs were willing to unfreeze the accounts, but that Vanguard, as a
matter of policy, would not do so.380 Additionally, although Lucinda testified at
trial that the $47,438.70 loss was a result of her voluntary decision to liquidate all
of her Vanguard accounts, including her individual accounts, after the accounts
were unfrozen, she continued to assert the $47,438.70 as damages.381 As discovery
developed and it became clear, including to Lucinda, that the Vanguard Account
Counterclaim was not as Lucinda alleged and Lucinda continued to adamantly
assert that Plaintiffs froze the accounts and that she suffered $47,438.70 in
defendants' arguments were advanced with no reasoned basis in law or logic and
therefore frivolously and in bad faith.”).
379
JX 122 at 73–74; JX 130 at Papa 233–234; Papa Tr. 1139:2–1140:10 (“Q: Do you
know that Vanguard made the decision to freeze your accounts and only they had the
authority to do that after Richard passed away? A: They did it on your demand, Mr.
Ferry. Q: And that's something you’re speculating about. A: No, they told me. They
told me that they did it because – Q: Is there someone here from Vanguard to say that?. . .
Q: I suspect that we’d find that Vanguard has told you that they made the decision, it was
not me or anyone else, it was their decision to freeze the account. A: Based on the
demand from you… Q: Do you have any proof of that here that somebody other than
Vanguard made the decision to freeze your accounts. . . Do you have anybody who can
testify to that? A: No.”).
380
JX 122 at 73.
381
Papa Tr. 1140:12–1141:6 (“Q: What does that $47,438 represent? How do you arrive
at that number? A: Vanguard sent me that amount on my October statement when they
released the freeze on the assets. In order for me to get the money out of the account, I
incurred 47,200-odd dollars of losses. Q: That was a margin loan transaction. Correct?
A: No, it was not a margin loan transaction. It was to liquidate -- I had to liquidate the
account to get the money out of there…. the only way for me to get it out of there and
get it safe was to take -- liquidate the account.”).
75
damages as a result. This is bad faith litigation.382 Plaintiffs’ attorneys’ fees
incurred in defending against the Vanguard counterclaim are shifted to Lucinda.
For her part, Lucinda accuses Plaintiffs of bad faith litigation based on the
disparities between their initial allegations and the evidence that was presented at
trial.383 In particular, Lucinda contends that Plaintiffs falsely alleged that (i)
Lucinda “moved” Richard out of the house, together with false descriptions of
Forwood, (ii) Lucinda changed all of Richard’s beneficiaries, (iii) Lucinda changed
Richard’s mailing address, and (iv) Lucinda initiated contact with Richard. 384 The
fact that Plaintiffs’ allegations were proven otherwise over the course of discovery
does not prove the bad faith requisite to justify fee-shifting. These were factual
disputes, not “clearly vexatious” or fraudulent acts by Plaintiffs. The allegation
that Plaintiffs falsely claimed disinterested witnesses could testify about Lucinda’s
relationship with Richard is also insufficient to establish bad faith litigation.385
382
See Martin, 2015 WL 6472597, at *21; see also Nagy, 770 A.2d at 65 (“In this case, I
conclude that several of the defendants’ arguments were advanced with no reasoned basis
in law or logic and therefore frivolously and in bad faith.”).
383
D.I. 200 ¶¶ 8–12 (“Plaintiff and Plaintiff-Intervenors when faced with undermining
facts and legal arguments have engaged in a pattern of ever changing their legal claims
and allegations to suit their needs, without basis, which, in turn, has caused the
Defendants to incur significant legal fees and costs.”).
384
See, e.g., D.I. 259 at 50–59.
385
Cf. Ensing v. Ensing, 2017 WL 880884, at *12 (Del. Ch. Mar. 6, 2017) (shifting fees
due to bad faith litigation based on the presentation of sham documents).
76
In contrast to Lucinda, who continued to assert the Vanguard Account
Counterclaim throughout trial, Plaintiffs appropriately adjusted their positions as
discovery developed. Lucinda also has not shown that Plaintiffs knew that their
pleadings were untrue. These crucial distinctions separate the competing
allegations of bad faith litigation. The heart of Plaintiffs’ claims was well-
founded. Their claims were not frivolous or alleged in bad faith. And where
Plaintiffs’ allegations proved inaccurate, they backed away from them as the case
unfolded. Lucinda has failed to carry her burden in proving that Plaintiffs engaged
in bad faith litigation. Both parties will bear their own fees.
H. Plaintiffs’ Motion To Amend The Case Caption Is Granted.
Plaintiffs have moved to amend the case caption to name Defendant Lucinda
A. Papa as “Lucinda A. Papa a/k/a Lucinda A. DeGroat a/k/a Lucinda A.
Ziatyk.”386 Plaintiffs’ motion to amend the case caption is granted.
Rule 15(a) “reflects the modern philosophy that cases are to be tried on their
merits, not on the pleadings.”387 “Rule 15(a) provides that leave to amend a
pleading shall be freely given when justice so requires.”388 “Leave to amend
should not be granted where there is evidence of bad faith, undue delay, dilatory
386
D.I. 246 at 2.
387
Apogee Invs., Inc. v. Summit Equities LLC, 2017 WL 4269013, at *2 (Del. Ch. Sept.
22, 2017) (quoting NACCO Indus., Inc. v. Applica, Inc., 2008 WL 2082145, at *1 (Del.
Ch. May 7, 2008)).
388
Id. (quoting Ct. Ch. R. 15(a)).
77
motive, undue prejudice or futility of amendment.”389 A motion seeking to amend
a case caption is considered under Rule 15(a).390
The proposed amendment does not change the parties named in the
litigation, nor does it raise any due process concerns.391 The proposed amendment
seeks to alter the case caption to include names Lucinda may use to hold assets and
may have used in managing Richard’s financial affairs. Plaintiffs have established
that Lucinda has used the name Lucinda A. Ziatyk socially, was listed under that
name in her father’s obituary, and has cashed checks made out to her in that
name.392 The evidence also establishes that Lucinda was known as Lucinda P.
DeGroat during the time she was married to Richard and was, at a minimum, listed
as the beneficiary to one of Richard’s accounts under that name at one time.393
389
Id. (quoting N.S.N. Int'l Indus., N.V. v. E.I. DuPont De Nemours & Co., 1994 WL
148271, at *8 (Del. Ch. Mar. 31, 1994)).
390
Villa v. Coburn, 2019 WL 3769406 (Del. Ch. Aug. 9, 2019) (ORDER); see also
Doe No. 2 v. Milford Sch. Dist., 2011 WL 7063187, at *2 (Del. Super. Ct. Dec. 20, 2011);
Delaware Dep’t of Transp. v. Mactec Eng’g & Consulting, Inc., 2011 WL 6400285, at *1
(Del. Super. Ct. Dec. 14, 2011).
391
Cf. Villa, 2019 WL 3769406.
392
D.I. 253, Exs. A & D.
393
Plaintiffs seek to amend the case caption to include “a/k/a Lucinda A. DeGroat.”
When married to Richard, Lucinda went by the name Lucinda P. DeGroat, not Lucinda
A. DeGroat. See D.I. 248 at 2; see also JX 17 at 50–55; Tavani Tr. 77–79. In the interest
of justice, Plaintiffs’ proposed amendment will be corrected to include Lucinda P.
DeGroat, not Lucinda A. DeGroat. In addition, Richard’s November 8, 2011 call with
Vanguard establishes that Lucinda was listed as Lucinda M. Papa on a joint account with
Richard at Vanguard. JX 17 at 51–52. That name will also be included in the caption.
78
Defendants have failed to prove they will face undue prejudice from the
amendment or that it is sought in bad faith. Their argument that Plaintiffs’ motion
“is a veiled character attack on Defendant Papa wanting to portray her as an
individual with numerous aliases” is unfounded.394 The names Plaintiffs seek to
add to the case caption are the two married names Lucinda has used throughout her
life, not aliases associated with cons or other criminal activity. I have not drawn
any adverse inferences about Lucinda’s character from her use of several names
over the course of her adult life.
Justice requires an amendment to the case caption. Without an amendment,
Plaintiffs may be unable to obtain an accurate accounting, and may be unable to
collect a full judgment against Lucinda. Denying the proposed amendment would
allow for the possibility that Lucinda may not account for financial assets she has
transferred to herself or that were transferred to her under the names Lucinda M.
Papa, Lucinda P. DeGroat, or Lucinda A. Ziatyk. Such a result would be
inequitable and could hinder the collection of a judgment. Defendants’ argument
that the motion suffers from undue delay and is untimely is outweighed by the lack
of prejudice, and by the effects denying the motion could have on an accurate
accounting and collection of judgment.
394
D.I. 248 at 4.
79
Plaintiffs’ motion to amend the case caption is granted with modification.
The case caption is amended to name Defendant Lucinda A. Papa as “Lucinda A.
Papa a/k/a Lucinda M. Papa a/k/a Lucinda P. DeGroat a/k/a Lucinda A. Ziatyk.”
III. CONCLUSION
For the foregoing reasons, judgment is entered in favor of Plaintiffs on all
counts and counterclaims.
All transfers of Richard’s assets and the re-titling of his accounts made by
Lucinda from 2013 until Richard’s death, with the exception of transactions related
to the Vanguard TODs and Fidelity IRAs, are invalidated.
Lucinda’s past accounting is declared incomplete. To assess damages,
Lucinda shall provide a new accounting of all the transactions she completed from
2013 until Richard’s death as Richard’s fiduciary. Ziatyk shall also participate in
the accounting to the extent he was unjustly enriched. A constructive trust is
imposed over the funds Lucinda misappropriated.
Plaintiffs’ fees associated with defending the Vanguard Account
Counterclaim are shifted to Defendants. Defendants shall bear their own fees.
Plaintiffs shall submit an affidavit documenting the relevant fees with the
stipulated implementing order. The parties shall submit a stipulated implementing
order within twenty days.
80