ESTATE OF EDYTHE L. DONATELLI and CRAIG E. DONATELLI, INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF EDYTHE L. DONATELLI
BERKSHIRE PLACE, LTD. and BERKSHIRE PLACE ASSOCIATES, LP
Providence County Superior Court
For Plaintiff: Thomas A. Tarro, III, Esq.
For Defendant: Armando E. Batastini, Esq.
Before the Court is a Motion for Summary Judgment filed by Defendants Berkshire Place, Ltd. (Berkshire Place or the Corporation) and Berkshire Place Associates, LP (BPA or the Limited Partnership) (collectively, the Defendants or the Berkshire Entities) in connection with their counterclaim against Plaintiffs Estate of Edythe L. Donatelli and Craig E. Donatelli, Individually and as Executor of the Estate of Edythe L. Donatelli (collectively, the Estate). The Defendants seek an order requiring the Estate to offer its ownership interests in Berkshire Place and BPA back to those respective entities or the other owners of those entities.
I Facts and Travel
At the center of this dispute are Edythe L. Donatelli's (Donatelli) ownership interests in two closely related business entities. At the time of her death on December 10, 2005, Donatelli owned 19.8% of the shares of Berkshire Place, a Rhode Island corporation that manages and operates a nursing home facility in Providence. (Aff. of J. Rotella, ¶¶ 2, 3, 5.) In addition, at the time of her death, Donatelli held a 39% limited partnership interest in BPA, a Rhode Island limited partnership that owns the realty at which the Berkshire Place facility is located. Id. at 3. Donatelli's estate was opened in the Town of North Providence Probate Court on July 17, 2006, and remains open to this day. Id., Ex. C. The Berkshire Place By-laws (the By-laws) contain a section dealing with "preemptive rights, " which requires any shareholder to offer to sell his or her shares to the corporation or the corporation's other shareholders before transferring the shares in question to a third party. In addition, the BPA Agreement and Certificate of Limited Partnership (the Partnership Agreement) contains a section requiring that no interest of a general or limited partner may be assigned or devised until first offered to the other partners at current market value.
On June 16, 2011, the Estate filed its Complaint in this civil action, seeking access to various books and records withheld by the Berkshire Entities, claiming that those records are necessary for purposes related to the administration of Donatelli's estate. On July 11, 2011, the Berkshire Entities filed an Answer and Counterclaim. The Berkshire Entities' Counterclaim alleges that the Estate is in breach of the By-laws and the Partnership Agreement because the Estate has not offered to sell its interests in Berkshire Place or BPA back to the corporation, shareholders, or other partners, respectively. The parties agree that the 19.8% interest in shares of Berkshire Place, held by the Estate, has a fair market value of $337, 000. In addition, the parties do not agree as to the value of Donatelli's 39% partnership interest in BPA held by the Estate.
In the time period since the Estate's opening, it is undisputed that the Estate has not attempted to sell or transfer Donatelli's interests in the Berkshire Entities to a third party. However, the Berkshire Entities contend that "the Estate's intention is to pass [its interests] to other Donatelli family members without consideration through the probate process." In addition, the parties disagree about whether the Estate has made any offer to sell its interests back to the Berkshire Entities that would satisfy the relevant provisions of the By-laws or the Partnership Agreement. The Berkshire Entities contend that the Estate has made no offer to sell back Donatelli's interests in Berkshire Place or BPA that would subsequently permit the Estate to sell or transfer Donatelli's interests to a third party. The Estate claims that it made an offer to sell back Donatelli's interests in Berkshire Place and BPA on at least two occasions. First, the Estate claims that its offer to sell back Donatelli's combined interest in Berkshire Place and BPA for $2, 000, 000 was memorialized in a letter dated October 28, 2008 between counsel for the Estate and counsel for the Berkshire Entities. The Estate also claims that it made a subsequent offer to sell its combined interests back to the Berkshire Entities for $800, 000, via a letter dated May 21, 2009. The Estate claims the Berkshire Entities rejected both of these offers, instead making a counteroffer to the Estate for $225, 000. In their memoranda, the Berkshire Entities describe these communications not as "offers" or "counteroffers, " but as part of settlement negotiations. In addition, the Berkshire Entities argue that the Estate's purported offers do not satisfy the preemptive rights section of the By-laws or the corresponding section of the Partnership Agreement because they do not distinguish between the Berkshire Entities, but instead offer both of the entities for sale as a single package.
In their instant motion, the Berkshire Entities request an order from this Court directing the Estate to offer to sell Donatelli's interest in Berkshire Place, back to Berkshire Place, for $337, 000. In addition, the Berkshire Entities request an order directing the Estate to transfer Donatelli's partnership shares in BPA to BPA's surviving partners.
II Standard of Review
When considering a motion for summary judgment, the Court "does not pass upon the weight and credibility of the evidence, but must consider the affidavits and other pleadings in a light most favorable to the party opposing the motion." Weaver v. Am. Power Conversion Corp., 863 A.2d 193, 200 (R.I. 2004). "[T]he trial justice must look for factual issues, not determine them." Steinberg v. State, 427 A.2d 338, 340 (R.I. 1981). Summary judgment is proper when "no genuine issue of material fact is evident from the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, and the motion justice finds that the moving party is entitled to prevail as a matter of law." Smiler v. Napolitano, 911 A.2d 1035, 1038 (R.I. 2006) (quoting Rule 56(c)). Conversely, "if the record evinces a genuine issue of material fact, summary judgment is improper." Shelter Harbor Conservation Soc'y, Inc. v. Rogers, 21 A.3d 337, 343 (R.I. 2011) (citations omitted). "'Summary judgment is an extreme remedy that should be applied cautiously."' Hill v. Nat'l Grid, 11 A.3d 110, 113 (R.I. 2011) (quoting Plainfield Pike Gas & Convenience, LLC v. 1889 Plainfield Pike Realty Corp., 994 A.2d 54, 57 (R.I. 2010)).
This Court must also tread cautiously when entertaining disputes over property still subject to the jurisdiction of the Probate Court. See, e.g., Dugdale v. Chase, 52 R.I. 63, 64, 157 A. 430, 431 (1931) ("The probate court has exclusive original jurisdiction in matters relating to the probating of wills."); Donato v. BankBoston, N.A., 110 F.Supp. 2d. 42, 45 (D.R.I. 2000) (citations omitted) (finding that under Rhode Island law, "claims regarding the handling of a will and/or estate . . . were subject to the exclusive jurisdiction of the Probate Court"). "Rhode Island courts of general jurisdiction–such as this Court–have been largely precluded from adjudicating cases even tangentially concerning the administration of a probate estate." Burt v. Rhode Island Hosp. Trust Nat'l Bank, 2006 WL 2089254, at *5 (R.I. Super. Ct. July 26, 2006) (Savage, J.). The analogous "probate exception" to federal jurisdiction states that a federal court lacks jurisdiction over cases involving probate matters even when the requirements of federal diversity jurisdiction have been met. Lepard v. NBD Bank, 384 F.3d 232, 237 (6th Cir. 2004). The United States Supreme Court has held that "the probate exception reserves to state probate courts the probate or annulment of a will and the administration of a decedent's estate; [and] precludes federal courts from endeavoring to dispose of property that is in the custody of a ...