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Mendes v. Alfred Factor and Kirshenbaum & Kirshenbaum Inc.

Superior Court of Rhode Island

September 20, 2016


         Providence County Superior Court

          For Plaintiff: Ambrose C. Mendes, Jr., pro se.

          For Defendant: Joseph F. Penza, Jr., Esq.

          For Intervenors and Amicus: Bernard R. Jackvony, Esq.; Patrick John McBurney, Esq.


          LICHT, J.

         This matter is before the Court on Defendants Alfred Factor and Kirshenbaum & Kirshenbaum, Inc.'s (jointly Defendants) Motion for Partial Summary Judgment. Defendants contend that two counts alleged in the Amended Reasons for Appeal are barred by res judicata. The Court heard oral arguments on the motion on June 21, 2016. Additionally, before the Court is a Motion to Intervene by Madonna and Victor Mendes, in which oral arguments were held on June 20, 2016. For the reasons stated herein, the Court denies Defendants' Motion for Partial Summary Judgment and grants the Motion to Intervene.


         Facts and Travel[1]

         Plaintiffs' father, Ambrose C. Mendes, Sr., executed a Last Will and Testament on February 3, 1976. Mendes v. Factor, 41 A.3d 994, 997 (R.I. 2012). Under the terms of the will, Rufino Mauricio[2] (Mr. Mauricio) and Alfred Factor (Mr. Factor) were appointed as co-executors, and Isidore Kirshenbaum (Mr. Kirshenbaum) of Kirshenbaum & Kirshenbaum, Attorneys at Law, Inc. (K&K) was the successor co-executor. Id. Except for his personal residence, the will transferred all of Mr. Mendes' property in trust, to be managed by the trustee. Id. The trust was established for the benefit of Mr. Mendes' three children[3]-Ambrose, Madonna, and Victor- with all the income to be distributed equally between the children, and when the youngest child reached age thirty, it would terminate and the trust property would be distributed to the children in equal shares.

         Mr. Mendes died on September 30, 1976, and his estate was opened in the Providence Probate Court the same year. Id. At the time of his death, Mr. Mendes was the principal of Intersection Realty Inc. (Intersection Realty), which owned twenty-three parcels of real estate, including the Mendes Funeral Home located at 70 Camp Street in Providence. Id. Plaintiffs allege in their Verified Complaint that prior to his death Mr. Mendes instructed Mr. Factor and K&K to transfer his ownership of both Intersection Realty and the Mendes Funeral Home to his three children. Although the documents of ownership prepared by Mr. Factor and notarized by Mr. Mauricio were to be submitted to the Office of the Secretary of State for validation, the task was never completed. Id. Further, Plaintiffs aver that on May 27, 1977, without notifying the Mendes children, Mr. Mauricio and Mr. Factor conducted a meeting at which they appointed Mr. Factor as president, treasurer, and secretary of Intersection Realty. Id. On December 4, 1979, the co-executors filed a first accounting with the Court listing fifty-five shares of Intersection Realty with a value of $276, 148 and a "received to date" amount of $570, 404.58, payouts in the amount of $293, 198.61, and a remaining balance of $277, 205.97. Id. This first accounting was approved by the Probate Court on September 8, 1981. Id. at 997-98.

         Plaintiffs also contend that the Defendants sold the land and building on which the Mendes Funeral Home sat, but not the actual business. Id. at 998. Plaintiffs further allege that between February 3, 1976 and May 1987, Defendants sold many of Intersection Realty's properties below fair market value, failed to maintain insurance on the properties, and failed to pay taxes on many of the properties-resulting in the government selling the properties at tax sales. Id.

         No docket entries were recorded at Providence Probate Court regarding the estate from June 2, 1987 until September 8, 2008. On September 8, 2008, Mr. Factor filed an amended[4]second accounting and also a third and final accounting. Id. On September 18, 2008, the three Mendes children objected to the entry of these accountings and petitioned for a hearing before the Probate Court to challenge the validity of the accountings. Id. As a result of this objection, on March 3, 2009 the Probate Court entered a Consent Order pursuant to G.L. 1956 § 33-23- 1(f). Id.

         In the Consent Order, the parties stipulated to an appeal to the Superior Court, submitted an agreed statement of facts and issues, and agreed that on appeal the parties would be allowed to raise additional claims and defenses. Id. The issues as stated in the Consent Order are as follows:

"a) Whether the fiduciary breached his duties to the beneficiaries of the estate;
"b) Whether the second and third accountings were properly allowed by the [P]robate [C]ourt;
"c) Whether the executors had the authority to sell any assets of Intersection Realty Inc.;
"d) If the executors did have the authority to sell the assets of Intersection Realty Inc., what monies, if any have not been accounted for in the Estate of Ambrose Mendes." Id.

         Also, on March 3, 2009, a claim of appeal was filed with the Probate Court, signed only by Ambrose. Id. at 999.

On March 31, 2009, the three Mendes children also filed a Verified Complaint in the Superior Court alleging breach of fiduciary duty for failing to follow the trust document and negligence for breaching the duty of care owed to the Plaintiffs to carry out the trust document. Id. The Supreme Court summarized the allegations in the Verified Complaint stating:

"Specifically, the breach-of-fiduciary-duty claim alleged that defendants 'breached said duty by failing to transfer [decedent's] interests in Intersection Realty' to plaintiffs 'at any time prior to or after [their father's] death.' The complaint further contended that defendants failed to collect rents from the real estate properties, to account for rents that had been collected, to pay taxes that became due, or to 'otherwise manage the said real estate property.' The complaint also alleged that defendants failed 'to sell the properties properly or in a commercially reasonable manner, or for their fair value, ' 'to pay the operating expenses of the assets, ' which allowed those properties "to become tax delinquent" and be subject to tax sales, and 'to properly account for and/or disburse to the [p]laintiffs for any and all money received.' The negligence claims listed in the verified complaint alleged that defendants breached a duty of care owed to plaintiffs by allowing the previously mentioned acts to occur." Mendes, 41 A.3d at 999.

         Defendants filed a motion to dismiss the probate appeal contending Plaintiffs failed to perfect their appeal. Also, Defendants filed a second motion to dismiss the Verified Complaint averring the statute of limitations barred the claims. Id. The motions to dismiss were heard on January 5, 2010 and on January 15, 2010; a hearing justice dismissed both the probate appeal and Verified Complaint. Id. Plaintiffs subsequently appealed to the Rhode Island Supreme Court on February 5, 2010. Id. at 999-1000. Plaintiffs challenged the hearing justice's findings that the probate appeal was not perfected and that the Reasons for Appeal were not properly filed. Id. at 1000. Further, Plaintiffs challenged the motion justice's determination that the statute of limitations expired barring the claims in the Verified Complaint. Id.

         The Supreme Court first ruled that the hearing judge properly concluded that Victor and Madonna failed to perfect their appeals because their signatures were not included on the claim of appeal. Id. at 1001. Therefore, only Ambrose's appeal was perfected. Id. Furthermore, the Court found that Ambrose correctly filed the Reasons of Appeal by including them within the Consent Order. Id. at 1003.

         Moreover, the Court also reviewed the dismissal of the Verified Complaint. The hearing justice held that Plaintiffs' claim for breach of fiduciary duty was barred by the ten-year statute of limitations and the negligence was barred by the three-year limitation for legal malpractice. Id. Plaintiffs contend that the statutes of limitations were tolled due to the continuing course of conduct theory and continuing representation ...

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