In the Matter of Williams Revocable Trust

Eyler, Deborah S., J. This appeal is taken by the Donnie Williams Foundation, Inc. (“the Foundation”) from an order of the Circuit Court for Wicomico County dismissing its petition for the court to assume jurisdiction over the Donald Edwin Williams Revocable Trust (“the Trust”) and the Individual Beneficiary Trust of Linda L. Slacum (“the IBT”) and to remove Linda L. Slacum, Kevin Myers, and William Smith, Esq., as trustees of those trusts (“the Trustees”) (hereinafter “the Removal Action”). The Removal Action had been consolidated with a second action, also filed by the Foundation, asserting claims for constructive fraud, breach of fiduciary duty, negligence, an accounting, and unjust enrichment against the Trust, the IBT, and the Trustees, the appellees (hereinafter “the Damages Action”). The cases remained consolidated at the time the court dismissed the Removal Action. The Foundation presents six questions for review, which we have condensed and rephrased as two: I. Did the circuit court err by ruling that a mutual release entered into between the parties (and others) concerning other litigation barred the Foundation from raising claims arising before April 22, 2014?

II

Did the circuit court err by finding that removing the Trustees was not warranted by their making principal distributions to Slacum before funding the IBT; by their taking more than two years to fund the IBT; by the delays in distributions to the Foundation; by the delays in disclosures to the Foundation; or by their taking large commissions? As a threshold matter, the Trustees have moved to dismiss the appeal, arguing that there is not a final, appealable judgment. The Foundation has opposed that motion. For the following reasons, we shall grant the motion to dismiss the appeal.

FACTS AND PROCEEDINGS Donald E. Williams (“Williams” or “Settlor”) committed suicide on May 17, 2012, when he was 59 years old. He had been a successful real estate developer in Salisbury and died with assets valued at nearly $40 million. He was divorced and had no children. Both his mother, Loretta Williams (“Loretta”), and his father predeceased him in the year before his death.

He had two brothers. Slacum was his companion for more than a decade. a. The Estate Plan About eighteen months before his death, Williams engaged the services of an attorney to design an estate plan. On June 9, 2011, he executed his will (“Will”); established the Trust; and signed Articles of Incorporation (“Articles”) creating the Foundation.

The Will named Debra Hall, a longtime employee and friend, as Williams’s personal representative (“PR”); and, if she could not serve, it named Myers, a certified public accountant (“CPA”) who also had worked for Williams for many years, as substitute PR. After Williams’s debts and liabilities were paid, the Will was to “pour over” all of his remaining assets into the Trust. The Trust was an inter vivos revocable trust to be “managed for Settlor’s benefit during [his] lifetime and distributed to the beneficiaries ... upon [his] death.” § 1,03. As we shall discuss, the Trust beneficiaries were the Foundation and Slacum.

During Williams’s lifetime, he would serve as the Trustee unless and until he became incapacitated. He was authorized to pay himself from the net income or principal of the Trust assets, “even to the extent of exhausting principal,” for any expenses he deemed necessary or desirable. § 3.01. Upon Williams’s death, the Trustees were to “follow any directions of the [PR] ” regarding the payment of funeral expenses and other debts, § 4.02, and were authorized to pay any tax liabilities and any “other costs incurred in administering the deceased Settlor’s estate.” § 4.03. Certain motor vehicles and watercraft were to be distributed to Loretta, free of trust, but as mentioned, she predeceased Williams.

After the payment of expenses, taxes, and any other debts, and the distribution of the assets to Loretta, the Trustees were to “pay the remaining principal and undistributed income (collectively the “Residuary Assets”) as hereafter provided.” § 4.06. The Trustees were directed to set aside assets in “an amount equal to the unified credit applicable to the Settlor’s estate pursuant to Section 2010 of the Internal Revenue Code of 1986, as amended, and the state death tax credit (provided use of the state death tax credit does not require an increase in the state death taxes paid) .... ” § 4.07. These assets were denoted the “[IBT] Assets.” 1 The Trustees were to “divide the remaining [IBT] Assets ... into ... separate trusts” for the benefit of individual beneficiaries “in accordance” with certain percentage interests set forth in the Trust. § 4.11. At the time of Williams’s death, the individual beneficiaries were Slacum (80%) and Loretta (20%). 2 Each individual beneficiary of an IBT was entitled to be paid the “net income earned” by her IBT at least quarterly until the IBT terminated upon her qualifying for Medicaid or dying, whichever occurred first. § 4.13.

At the termination of the IBT, the principal balance and any remaining undistributed income was to be distributed outright and free of trust to the Foundation. § 4.15. Aside from the IBT Assets, all of the remaining Residuary Assets were to be distributed to the Foundation outright and free of trust. § 4.16. If the Foundation was no longer in existence or otherwise failed to qualify as a section 501(c)(3) organization, the Trustees were to distribute the remaining assets to other nonprofit organizations serving similar purposes as the Foundation. § 4.17. To administer the Trust, the Trustees were accorded “all powers, authorities and discretions granted by common law, statute, and under any rule of court.” § 5.01.

They further were “expressly authorized and empowered” in their “sole and absolute discretion” without prior court approval to, inter alia, invest and reinvest assets; dispose of property owned by the Trust; pay, compromise, or settle any claims or demands lodged against the Trust; and make, execute, acknowledge and deliver deeds or other transfers of property. Id. The Trustees could not be held liable for “any loss or depreciation in the value of any trust, created herein,” occasioned by investments or reinvestments of Trust assets made in good faith while exercising due care. § 5.02. Decisions concerning distributions to the individual beneficiaries who also were Trustees were to be made by the independent Trustees. § 5.03.

Pursuant to a “Spendthrift Provisions and Facility of Payments” section of the Trust, the Trustees were to “make ... payments ... directly to the beneficiary entitled to them and not to any other person” except as otherwise specified. § 6.01. The Trustees were granted the further power to make payments of any income or principal for a beneficiary (i) directly to the beneficiary; (ii) to the individual who is, in the judgment of the Trustee, in proper charge of such person, regardless of whether there is a court order to that effect; (iii) in the case of a minor, to a custodian for the minor named by the Trustee, to held [sic] as a gift under the Maryland Uniform Transfers to Minors Act, with the custodial arrangement continuing until the beneficiary reaches twenty-one (21) years of age; or (iv) by paying or applying any part or all thereof for a beneficiary’s benefit or on a beneficiary’s behalf .... § 6.02. These powers could be exercised “without any necessity of obtaining ... approval of any court, and such payments made in good faith shall be deemed proper and shall be a complete release and acquittance of the Trustee therefor.” Id, The Trustees were further empowered to “make discretionary payments of income or principal to any person after taking into consideration, or without taking into consideration, as the Trustee deems appropriate, any other income or financial resources reasonably available to said beneficiary.” § 6.03. Loretta, Hall, and Myers were named as successor co-Trustees. § 7.03.

Williams later amended the Trust to name Slacum as a successor co-Trustee in place of Hall and Loretta. See July 27, 2011 Amendment. 3 He did not name a third successor co-Trustee, but also did not delete the provision of the Trust stating that there “shall always be at least three (3) individual Trustees ....”§ 7.03. The successor Trustees were granted all the powers possessed by the Settlor as the initial Trustee. § 7.09. The Articles of Incorporation for the Foundation established it for “educational and charitable purposes.” Specifically, it was to support the schools in Wicomico, Worcester, and St. Mary’s Counties by furnishing tutoring programs, after school homework assistance, and after school activities to provide a safe environment and to encourage physical activity.

The Foundation would have as many as seven directors, but never less than three. The Articles named Williams, Hall, Myers, and four other individuals—Gregory Johnson, Mark Granger, Kimberly Granger, and Kirk Kinnamon—as the directors. b. The Administration of the Estate and the Trust At the time of his death on May 17, 2012, Williams’s estate (“the Estate”) was valued at approximately $3,500,000 in assets and his Trust held $36,000,000 in assets. The Trust assets included five properties leased to CVS stores -with complex “mezzanine financing”; two properties leased to Dollar General Stores; 130 unimproved lots; several improved residential lots; stocks; and some cash.

Much of the real property was held by LLCs. Almost immediately upon Williams’s death, Hall as PR, on the one hand, and Slacum and Myers, as Trustees, 4 on the other, became embroiled in a series of battles over the payment of expenses and debts; the distribution of assets; and the disclosure of information. One disputed issue concerned the amount of assets to be set aside to fund the IBT (which due to Loretta’s death was solely for Slacum’s benefit). As noted, section 4.07 of the Trust required that assets with value equivalent to “the unified credit applicable to the Settlor’s estate pursuant to Section 2010 of the Internal Revenue Code of 1986” be set aside to fund the IBT.

The referenced regulation did not exist when the Trust was executed, however. The Estate took the position that the IBT should be funded with just over $1 million in assets and the Trustees took the position that it should be funded with over $5 million in assets. The parties also disagreed as to whether the value of assets set aside for the IBT should be reduced by 20% to account for Loretta’s share in light of her death or whether the IBT should be fully funded. In the second half of 2013, five lawsuits concerning the Trust and the Estate were filed.

Within the probate case, the Trustees sought to have Hall removed as PR, see Linda L. Slacum et al. v. Debra W. Hall, Case No. 22-C-13-001377, and in a second suit they sued the Estate seeking declaratory relief construing the Trust provisions pertaining to the IBT funding amount, the number of Trustees, and other issues. See Linda L. Slacum, et al. v. Debra W. Hall, et al., Case No. 22-C-13-001669. The Trustees filed two appeals from decisions of the Orphans’ Court for Wicomico County in the probate case. See Linda L. Slacum, et al. v. Debra W. Hall, Case No. 22-C-13-001968; Linda L. Slacum, et al. v. Debra W. Hall, Case No. 22-C-13-002102.

Hall sued the Trust, also seeking declaratory relief pertaining to the funding of the IBT. See Debra W. Hall v. Donald Edwin Williams Revocable Trust, Case. No. 22-C-13-001496. Hall’s suit was voluntarily dismissed that same year.

The Foundation was named as an interested party in the lawsuits concerning the amount of the funding of the IBT because until the amount of the IBT set-aside was determined the Foundation could not receive any distributions of Trust assets. 5 On March 12, 2014, the Trustees, Hall, the Foundation, Slacum, and Robert Hall participated in mediation with a retired circuit court judge concerning the pending litigation. 6 As a result, on April 22, 2014, they executed a Settlement and Release Agreement and Release (“SAR”). The recitals in the SAR state that disputes [had] arisen between Ms. Hall, the Trustees and the Trust, and the Foundation with respect to, among other things, the disposition of the assets of the Estate, the disposition of the assets of the Trust, the interpretation of provisions of the Revocable Trust Agreement ..., Ms. Hall’s service as [PR], the Commissions claimed by Ms. Hall as [PR], and the compensation claimed by Ms. Hall’s attorneys [and that those disputes had given rise to the lawsuits discussed above]. The parties wished to “compromise and resolve the claims raised or which could have been raised in [those lawsuits] and any claims relating to, pertaining to or arising out of the subject matter of [those lawsuits] or the administration of the Estate.” They agreed to “finally compromise and settle all issues that have been raised or which could have been raised between them in the [lawsuits] or otherwise” in accordance with the following pertinent terms. The Foundation agreed to sign a non-disclosure agreement (“NDA”).

The Trust and the Estate agreed that, after the NDA was executed, they would furnish the Foundation with copies of federal and state estate tax returns; all fiduciary tax returns with all schedules; and “[s]uch other documents as the Foundation might reasonably require to perform its responsibilities.” In consideration for these promises, the parties entered into a “Mutual Release” agreeing to “release one another” and their agents, successors, and assigns, from and against any and all actions, causes of action, suits, ... controversies, ... counterclaims, claims, and demands whatsoever, whether known or unknown, that relate to the subject matter of this Agreement, the Estate and/or [the lawsuits] and/or that were or could have been asserted in the Estate and/or [the lawsuits], [excepting claims that could be brought against the drafters of the Will, the Trust, and the Articles.] Numerous exhibits were attached to the SAR, including a “Joint Stipulation as to Interpretation of Trust Agreement.” As pertinent, the parties stipulated that the IBT should be funded in the “maximum amount that could pass free of federal estate taxes,” which was determined to be $5,120,000, and that Loretta’s 20% share of those assets “was not intended to remain a part of the Residuary Assets to be distributed to the Foundation.” After the SAR was fully executed, the Trustees liquidated numerous assets held by the Trust, including the five CVS stores and many unimproved lots. They paid themselves commissions arising from the sales totaling just under $2 million. On June 3, 2014, the Foundation secured its section 501(c)(3) status. In September 2014, the Foundation executed the NDA required under the terms of the SAR and, in November 2014, it further clarified its interpretation of that agreement. 7 Thereafter, the Trustees provided the Foundation an accounting that comprised more than 11,000 indexed pages.

On March 31, 2015, the Trustees distributed to the Foundation a $20,237 money market account and three hedge fund accounts containing illiquid assets totaling $7,678,346, which had been purchased with Trust assets after Williams’s death. On April 23, 2015, the Trustees funded the IBT with assets valued at $4,270,942.79. They arrived at that amount by deducting $849,057.21 from the $5,120,000 stipulated funding amount. That deduction offset distributions of principal made to Slacum beginning shortly after Williams’s death and continuing through April 2015, one of which was for Slacum to purchase a home in Salisbury.

Further distributions were made from the Trust to the Foundation on April 29, 2015, totaling $2,648,189, and on May 6, 2015, totaling $10,055,765. In total, $20,402,537 in distributions were made to the Foundation. The assets not distributed by the Trust to the Foundation covered taxes, fees, commissions paid to the Trustees, and monies reserved by the Trustees to cover anticipated attorneys’ fees. On July 28, 2015, the IRS completed its audit of the Estate’s tax return.

The IRS’s closing letter, dated August 15, 2015, advised that the Estate owed no federal estate taxes. c. The Removal Action and the Damages Action On September 16, 2015, the Foundation filed the Removal Action, stating two counts. In Count I, it asked the court to assume jurisdiction over the Trust and the IBT pursuant to Md. Code (1974, 2001 Repl. Vol., 2015 Supp.), section 14.5-201 of the Estates and Trust Article (“E & T”) and Rule 10-501; to order an audit by a private auditor; to direct the Trustees to render an inventory and information report; and to appoint a special fiduciary to take possession of all property then held by the Trust and the IBT.

In Count II, it asked the court to remove the Trustees; appoint a temporary trustee to administer the Trust and the IBT and take possession of the property held by them; and to direct the Trustees to file an accounting. In support of both counts, the Foundation alleged that the Trustees had breached their fiduciary duties by: • Failing to fund the IBT within a reasonable period of time following the Settlor’s death. • Failing to timely distribute to the Foundation the remaining residuary assets. • Making principal distributions to Slacum. • Selling Trust assets and then investing the proceeds in “risky ... Hedge Funds” rather than distributing the proceeds directly to the Foundation. • Filing misleading and/or incomplete Fiduciary Income Tax Returns (“Form 1041”). • Paying themselves commissions based upon the value of Trust property that should have been distributed to the Foundation and that exceeded that allowed by Maryland law. • Paying themselves fees on the sales of assets that were improperly held and/or sold by them. • Selling assets for amounts substantially below market value and otherwise making unauthorized and financially reckless decisions. • Paying themselves expenses that were not authorized and/or reasonable. • Failing to reasonably make financial reports to the Foundation. • Instituting and maintaining frivolous lawsuits against the Estate. The Removal Action named as “Interested Parties” the Trustees, the IBT, the Foundation, Hall, and an investment bank that held numerous Trust assets.

That same day, the Foundation filed the Damages Action, stating six counts. The defendants were the Trust, the IBT, and the Trustees, individually and in their capacity as Trustees. Counts I, II, and III asserted claims against the Trustees for constructive fraud, breach of fiduciary duty, and negligence in the performance of duties owed based upon the exact same eleven alleged breaches set forth, supra, and sought damages in excess of $75,000. Count IV alleged that the Trustees had failed to render an annual accounting upon request of the Foundation and asked the court to order an accounting and to enter judgment in favor of the Foundation for any “sums found to be due” after that accounting.

Count V asserted a claim for unjust enrichment against the Trustees for commissions, fees, and other distributions unjustly retained by them. Count VI requested that the court impose a constructive trust and order all monies owed to the Foundation paid to it. On September 23, 2015, in the Removal Action, the court issued a show cause order. It directed the Trustees to file answers by October 26, 2015, and scheduled a hearing for November 12, 2015, to determine whether the court should assume jurisdiction over the Trust and/or the IBT and whether it should remove the Trustees.

On October 26, 2015, the Trustees moved (in both cases) to consolidate the Removal Action and the Damages Action; to shorten the time to respond to the motion to consolidate; to specially assign the cases; and to continue the November 12, 2015 show cause hearing. That same date, the Trustees filed an answer and a motion to dismiss or for summary judgment in the Removal Action. They argued in the motion that the claims against them were barred by the mutual release in the SAR and by res judicata and/or collateral estoppel arising from the earlier lawsuits. They also argued that the Foundation had failed to state a claim for which relief could be granted.

The Trustees asked the court to dismiss the Removal Action or, in the alternative, if the court denied the motion to dismiss, to set a discovery schedule before holding a show cause hearing. Two days later, in the Damages Action, the Trustees filed a motion to dismiss or for summary judgment on the same grounds they raised in the Removal Action. In both actions, the Foundation opposed the motions to dismiss or for summary judgment. In the Removal Action, it maintained that the court had broad equitable authority to assume jurisdiction over the Trust that was not affected by the SAR.

In both actions, the Foundation argued that the release in the SAR was a special release, not a general release, and did not bar the claims raised by the Foundation; that the SAR was procured in breach of the Trustees’ duties of candor to the Foundation, as the Trust’s beneficiary, and therefore was unenforceable against it; that the SAR may not act as a bar to claims that the Trustees engaged in fraud; and that summary judgment was not otherwise warranted in light of the genuine disputes of material facts. The hearing scheduled for November 12, 2015, was continued until January 7, 2016, and was consolidated with a hearing on the pending motions in the Removal Action and the Damages Action. On that date, the court heard argument and granted the motion to consolidate the two actions. It signed an order stating that the Removal Action and the Damages Action were “consolidated for all purposes, and further, except that the show cause hearing [in the Removal Action] be held on March 21, 22, & 23, 2016.” 8 (Emphasis added.) It further directed that “all pleadings, papers and orders shall be ... filed in [the Damages Action only].” Also at the January 7, 2016 hearing, the court granted partial summary judgment in favor of the Trustees in the Damages Action.

Its order, entered the same day, stated that partial summary judgment was granted as to “all claims, causes of action and bases for removal that could have been asserted as of April 22, 2014 in [the Damages Action]” but that the court would “reserve[] on its ruling” “with respect to [the Removal Action].” The italicized portions all were handwritten by the court on a form order supplied by the Trustees. The court struck out language that stated “judgment be and hereby is entered” with respect to all of those claims. Five days later, on January 12, 2016, the court entered a Memorandum Opinion and Order pertaining to the show cause hearing in the Removal Action. It explained, preliminarily, that it already had ruled that the SAR was “binding on the parties in ... the ... [Djamages [Action].” With respect to the Removal Action, it stated that, although the SAR did not “affectt ] the Court’s equitable powers,” because the SAR was “procured as the direct result of mediation conducted by a retired circuit court judge and ... [was] clear and unambiguous in its terms and because it has been signed by all the necessary parties with notice to legal counsel,” the court would “decline[ ] to receive any testimony [at the show cause hearing] as to events or other proceedings which occurred prior to 22 April 2014.” In other words, the court limited the evidence it would take at the show cause hearing. 9 The Foundation filed a motion to alter or amend the January 12, 2016 Order, which the court denied.

The evidentiary portion of the show cause hearing took place on March 21 and 22, 2016. The major issues at the hearing concerned the distributions of principal to Slacum; alleged delays in funding the IBT and the Foundation; and the payment of commissions to the Trustees. The Foundation called three witnesses: Albert Young, an attorney who was accepted as an expert in interpreting and administering trusts; Robert L. Stephens, a CPA who was engaged by the Estate as its tax preparer; and Mark Granger, the president of the Foundation. In the Trustees’ case, they also called three witnesses: Smith; Raymond Peroutka, a lawyer and CPA who was accepted as an expert in forensic accounting, account reconciliations, and interpretation of financial records and recordkeeping systems; and Allan Gibber, Esq., an attorney who was accepted as an expert in estate and trust administration, charitable foundation creation and regulations, estate tax, and fiduciary income tax returns.

At the close of the evidence, the court directed the parties to submit proposed findings of fact and conclusions of law. On August 11, 2016, after it had received those submissions, the court reconvened to hear closing arguments. On August 26, 2016, the court entered a memorandum opinion and order adopting the Trustees’ proposed findings of fact and conclusions of law in toto and dismissing the Removal Action with prejudice. The court set out the grounds for the mandatory or permissive removal of trustees pursuant to ET section 15-112.

As pertinent, that statute provides that the court “shall remove a fiduciary” who has “[bjreached his duty of good faith or loyalty in the management of property of the fiduciary estate” and the court may remove a fiduciary who has “[flailed to perform any of his duties as fiduciary, or to competently administer the fiduciary estate.” ET § 15-112(a). Ultimately, the court concluded that there was no basis— mandatory or permissive—to remove the Trustees. We summarize the court’s pertinent findings and conclusions: • The Trustees “committed no breach of trust with respect to the funding of the IBT ... that has any bearing on the Foundation’s interests” and the “delay in funding the IBT ... was not the cause for the delay in funding the Foundation.” Rather, the delay in funding the Foundation “stemmed from ... the Foundation’s need to obtain 501(c)(3) status, the Trustees’ need to liquidate assets, and the Trustees’ concerns regarding open tax issues.” Further, “mere delay in fulfilling a trustee’s duties is not sufficient grounds for removal of a trustee absent evidence that the delay results from the trustee’s lack of diligence.” (Citing Miller v. Rosewick Road Development, LLC, 214 Md.App. 275 , 76 A.3d 422 (2013)). “Accordingly ... the Trustees’ actions in funding the IBT ... [did not] satisfy the grounds for either mandatory or permissive removal.” • The Trustees did not breach their fiduciary duties by their distribution of assets to the Foundation. The Trust did not require the immediate distribution of all the Residuary Assets to the Foundation but made distributions contingent upon satisfaction of certain conditions and granted the Trustees discretion to take other actions prior to making distributions.

One condition precedent to distribution was that the Foundation qualify as a section 501(c)(3) charity. That condition was not satisfied until June 3, 2014. The Trustees also correctly perceived that certain assets held by the Trust, such as the CVS stores that “were financed with mezzanine loans, or negative amortization loans designed to offset phantom income,” were not of the type that can be held by a section 501(c)(3) charity and that distribution of those assets to the Foundation “would have jeopardized [its] charitable standing.” In the exercise of their discretion, the Trustees determined that those assets (and others) were not suitable for distribution to the Foundation; marketed them for sale; sold them; and distributed the net proceeds to the Foundation. Even if the Foundation was willing to “assume th[e] risk[ of holding those assets], it was well within the Trustees’ discretion to decline” to make distributions for that reason, particularly because the Trust explicitly authorized the Trustees to liquidate assets before distribution. • The Trustees’ delay in funding the Foundation also was justified by their concerns about tax exposure for the Estate.

The Trustees were obligated to pay all taxes owed by the Estate from the Residuary Assets and reasonably maintained a reserve in the Trust until July 28, 2015, when the IRS closing letter was received. • Some of the delays in distributing assets to the Foundation also were caused by the Foundation’s lack of diligence in securing signatures to facilitate the transfers. Moreover, the Foundation’s refusal to sign a release and indemnity agreement proposed by the Trustees to protect the Trustees’ from personal liability for any further taxes owed by the Estate also delayed the distribution. For all these reasons, the Trustees had discretion to delay funding the Foundation until conditions precedent to distribution had been met; until they had liquidated certain assets and until the “uncertain, contingent tax liabilities” were resolved; and they did not abuse that discretion by their conduct in making distributions to the Foundation. • The Trustees were authorized by sections 4.12, 6.02, and 6.03 of the Trust to make principal