AMITAI VARDI, HAGIT VARDI, SHIRA VARDI, ORIT VARDI, TRAGASH, HAVA SHAUL, IZHAR SHAUL, NADAV SHAUL, OPHER SHAUL, YAEL SHAUL, RACHEL RIKLIS, VERED BEN ARI, MICHAL RIKLIS HAZAN, NILI RIKLIS DAYAN and TAMAR GISPAN, Plaintiffs,
URI BAR-ZEMER, in his capacity as TRUSTEE OF THE TRUST OF ERNEST WEIL, Defendant.
Providence County Superior Court
Plaintiff: Bernard A. Jacvony, Esq.; Rebecca M. Murphy, Esq.
Defendant: Neal J. McNamara, Esq.; Steven N. Richard, Esq.;
William H. Wynne, Esq.
matter is before the Court for decision following a nonjury
trial brought by Plaintiffs Amitai Vardi, Hagit Vardi, Shira
Vardi, Orit Vardi, Tragash, Hava Shaul, Izhar Shaul, Nadav
Shaul, Opher Shaul, Yael Shaul, Rachel Riklis, Vered Ben Ari,
Michal Riklis Hazan, Nili Riklis Dayan and Tamar Gispan
(collectively, Plaintiffs)- beneficiaries of the subject
Trust-against Defendant Uri Bar-Zemer (Defendant or
Bar-Zemer), the Trustee. The dispute focuses on whether
Defendant breached his fiduciary duties in the administration
of the Trust during his time as Trustee. This Court exercises
jurisdiction pursuant to G.L. 1956 §§ 8-2-14 and
Facts and Travel
Weil (Weil) created the Declaration of Trust by Ernest Weil
(the Trust) on April 16, 1985. Weil nominated himself as
Trustee, his long-time companion Birgitta Aker (Birgitta) as
beneficiary and successor Trustee upon his death, and
Defendant, his nephew, also a beneficiary, as second
successor Trustee upon Birgitta's death. Weil named
Plaintiffs-other nieces and nephews-and Birgitta's issue
as beneficiaries of the Trust upon Birgitta's death. Upon
creation of the Trust, Weil transferred assets to the Trust
including $104, 000 worth of liquid assets and a twenty-five
percent interest in Hilltowne Properties, a California
general partnership (the Partnership) formed in 1963, which
owns a fifty-eight unit apartment complex in Freemont,
died in May of 1986. Upon his death, Birgitta accepted her
role as successor Trustee and began to administer the Trust.
Birgitta's son, Eric Aker (Eric), periodically assisted
Birgitta with her administration of the Trust. He performed a
number of tasks in assisting Birgitta, such as reviewing
financial statements from the brokerage accounts and the
Trust's real estate partnership holding; assisting with
the preparation of taxes; and, later, writing checks from the
Trust account to Birgitta.
April of 2012, Plaintiff Hagit Vardi (Hagit), in an email to
Defendant, requested a loan from the Trust for the purpose of
paying for her daughter's educational expenses. Defendant
assisted in contacting Birgitta on Hagit's behalf through
Eric. Hagit's request for a loan was denied. Defendant
explained via email that he "had a quite long
conversation with Eric [regarding] an early distribution . .
. After hemming and haughing [sic] a bit he came up with a
negative answer saying that no one else enjoyed such early
distribution and that it would be inappropriate to start now.
Pls.' Ex. 5. Hagit interpreted this correspondence as an
indication that Eric was acting as Trustee in place of
Birgitta and expressed her concern to Defendant in her
response to his email. Pls.' Ex. 6.
after Birgitta's death in December 2012, Defendant
accepted his nomination as Trustee and traveled to California
to meet with Eric, as well as the Trust's portfolio and
property managers. Following his trip to California,
Defendant placed a phone call to Hagit in which he informed
her that he was now serving as Trustee and provided her with
a general description of the Trust's assets. He further
indicated that he was concerned about immediately selling the
Trust's real estate interests due to tax concerns and
inquired as to Hagit's opinion on adding Weil's niece
as a beneficiary. Following their phone conversation, Hagit
obtained an informal opinion from an attorney regarding
adding a beneficiary and the dissolution of the Trust. Hagit
later sent the opinion she received from the attorney to
Defendant and discussed her conversation with Defendant and
other beneficiaries. Pls.' Ex. 7. Defendant responded to
Hagit's message indicating that he understood that the
process of adding a beneficiary was an "ethical"
decision, as opposed to legal consideration, to be decided
among all beneficiaries. Pls.' Ex. 8. Moreover, he
reiterated his concerns about the ramifications of an
immediate sale of the real estate interest. Id.
Defendant and Hagit exchanged a series of email messages in
which each party expressed their frustrations. Pls.' Exs.
9-13. Ultimately, Defendant indicated that he was seeking the
advice of an attorney in order to navigate his responsibility
as Trustee. Pls.' Ex. 12. Hagit indicated that she
approved of Defendant's decision to employ counsel.
Pls.' Ex. 13.
also indicated that she would like to receive a detailed and
official accounting of the Trust assets. Id.
Defendant replied that he would be disseminating information
that week regarding the real estate interest as it becomes
available and regarding the liquid assets. Id. He
further stated that he would be traveling to Israel to meet
with other beneficiaries. Id.
February 4, 2013, Defendant sent an email to several-but not
all-beneficiaries informing them that the Trust was under
legal and financial review and that he would forward
information as it became available. Def.'s Ex. A. On
February 6, 2013, Defendant sent another email to several-but
not all-beneficiaries detailing approximate valuations of the
liquid assets and the real estate interest held by the Trust.
Pls.' Ex. 14. Defendant stated in this message that
"Eric, [Birgitta's] son . . . handled the trust in
her latter years . . . ." Id. On February 12,
2013, Defendant communicated via email to Hagit that counsel
was in the process of drafting a consent form for the
liquidation of the Trust's liquid assets. Pls.' Ex.
February 18, 2013, Hagit's husband, Uri Vardi, asked for
a timeline in which Hagit would receive (1) the consent form
and (2) a check for Hagit's share of the Trust. Pls.'
Ex. 16. He also requested advance copies of any documentation
that Defendant would be bringing with him to the meeting in
Israel with the other beneficiaries. Id. Defendant
responded the following day indicating that he expected the
letters of release to be delivered shortly and that no
distributions could be completed until all twenty-one
releases had been signed and returned. Pls.' Ex. 17. He
further stated that he did not have any documentation, other
than bookkeeping records, but he was working with a CPA to
analyze the tax implications of selling the Trust's real
estate interest. Pls.' Ex. 17.
March of 2013, Defendant traveled to Israel in order to meet
with three beneficiaries at the home of Plaintiff Nili Riklis
Dayan (Nili) in Beit Nir, Israel. Defendant provided the
beneficiaries with a copy of an advertisement of the
California apartment complex and described the real estate
interest, the Trust portfolio, and his plans for liquidating
and distributing the portfolio. Nili took notes of the
meeting and later sent them to Defendant to translate them
from Hebrew to English for distribution to all beneficiaries.
The notes purport to detail the expected relationship between
the Trustee and beneficiaries as well as the objectives of
the parties and indicate, inter alia, that the real
estate interest should be sold within a year, but grants
leeway in order to maximize its value. Pls.' Ex. 18. The
notes further indicate that Defendant would be paid
twenty-five percent of the yearly rental income from the real
estate interest as a Trustee fee. Id.
sent another email to some of the beneficiaries on April 30,
2013, detailing the dissolution plan relating to the liquid
assets held by the Trust. Pls.' Ex. 21. The plan notes
that each beneficiary would receive a distribution while the
Trust would retain a portion of the funds for tax-related
purposes; if residual funds remained following any
tax-related payments, a second distribution would then occur.
Id. Defendant further detailed his fee for serving
as Trustee, as previously outlined in the notes stemming from
the meeting in Israel. Id.
March to May of 2013, Hagit and Defendant remained in contact
via email. Def.'s Exs. B-E. In their exchanges they
discussed the distribution of checks from the Trust account,
including the signing and return of the release documents.
Id. Defendant also communicated with other
beneficiaries during this time period and forwarded a copy of
the release for each of the beneficiaries to sign and return.
Def.'s Ex. C. The parties communicated with some
regularity throughout 2013. Def.'s Exs. F, G, L-O, and Q.
of 2013, Nili sent an email to Hagit asking her to translate
the notes from the March meeting in Israel. Def.'s Ex. H.
Nili expressed an interest in pressing Defendant to sign the
document and capping his administration fee to $12, 500 for a
maximum of two years and adding language requiring the
delivery of regular, official reports. Id.
of 2013, Defendant sent the real estate "owner report
for 2012" to Nili. Def.'s Ex. L. In response, Nili
requested the Trust's accountant report for 2012.
Id. On January 13, 2014, Nili sent another email to
Defendant requesting official financial statements for the
Trust signed by an accountant. She further indicated that, as
previously discussed by the parties, she was serving as a
point-person for beneficiaries in Israel and has received
several requests for this information. Pls.' Ex. 22. In
his response, Defendant expressed frustration regarding the
expanding pool of beneficiaries that had been designated as
point-persons and what he described as movement toward
"trust by committee" and a team of coordinators.
Pls.' Ex. 23. On January 16, 2014, Nili again requested
from Defendant official financial statements of the Trust for