Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Drake v. McNair

April 29, 2010

SHERRY MILES ST. CLAIRE DRAKE, APPELLANT
v.
JAMES MCNAIR, ET AL., APPELLEES



Appeal from the Superior Court of the District of Columbia (CAB-4003-05) (Hon. Gerald I. Fisher, Trial Judge).

The opinion of the court was delivered by: Terry, Senior Judge

Argued July 16, 2008

Before WASHINGTON, Chief Judge, BLACKBURNE-RIGSBY, Associate Judge, and TERRY, Senior Judge.

Appellant, Sherry Miles St. Claire Drake, appeals from the trial court's order dismissing her fraud and negligent misrepresentation claims against appellees, James McNair, Tyrone Thompson, and Necia Drake, each of whom has served or currently serves as personal representative and/or trustee for the estate and trusts of Sherry Drake's deceased husband, Carthur Drake. Sherry Drake's claims arise from the purchase of a piece of property on behalf of Carthur Drake shortly before his death. Mrs. Drake contends that the purchase of the property by a fictitious company and the subsequent transfer of ownership of the property to a company that is a beneficiary of Mr. Drake's trusts improperly converted an estate asset into a trust asset, thereby depriving her of her spousal interest in Mr. Drake's estate.

The trial court granted appellees' motion to dismiss, holding that Sherry Drake was on notice of any potentially fraudulent conduct and that her claims were therefore barred by the relevant statute of limitations. The court also held that a prior Settlement Agreement between Sherry Drake and appellees, which contained both an incorporation clause and a release clause, foreclosed her claims. Finally, the court held that the doctrine of res judicata, based on prior proceedings before the Probate Division, barred at least some of the claims. Sherry Drake argues on appeal (1) that the trial court made factual findings based on matters outside the complaint, thereby requiring the court to treat appellees' motion to dismiss under Super. Ct. Civ. R. 12 (b)(6) as a motion for summary judgment under Super. Ct. Civ. R. 56, which would give her an opportunity to conduct additional discovery; (2) that her claims were not barred by the statute of limitations; (3) that her claims were not barred by the Settlement Agreement; and (4) that her claims were not barred by res judicata. We reject the first three arguments. Since our decision on those three points necessarily resolves the entire case, we affirm the judgment without reaching the fourth.

I.*fn1

At the time the Drakes were married in 1993, Mr. Drake had three daughters from previous relationships: Alvitra Drake, Leaph Drake, and Necia Drake. Mr. Drake died on July 29, 1995, of complications from acquired immune deficiency syndrome (AIDS), a disease which he had previously transmitted to Mrs. Drake. Although estranged, Mr. and Mrs. Drake remained legally married until Mr. Drake's death. At the time of his death, Mr. Drake owed significant amounts of money to the Internal Revenue Service (IRS).

A. Mr. Drake's Will and Trusts

On July 21, 1995, just a few days before his death, Mr. Drake executed a Last Will and Testament and created two trusts: the Carthur L.M. Drake Trust and the Carthur L.M. Drake 1995 Family Trust (collectively, "the Drake Trusts"). In his will Mr. Drake bequeathed $250,000 to Mrs. Drake, but he did not name her as a trustee or a beneficiary of either trust. Instead he named his sister, Azalea Royster, and his attorney, James McNair, as co-trustees of both trusts, as well as co-personal representatives of his estate. Mr. McNair renounced and waived his rights to serve as co-personal representative of the estate on October 5, 1995. Ms. Royster chose to remain as personal representative of the estate but resigned as co-trustee of the trusts. Necia Drake currently serves as a successor co-trustee of the trusts; Tyrone Thompson, Necia Drake's husband, serves as the other successor co-trustee.

B. The Q Street Property

On June 29, 1995, Mr. Drake instructed Mr. Thompson to purchase a piece of property located at 1204 Q Street, N.W. ("the Q Street property"), at a foreclosure sale. Thompson was the Chief Executive Officer of various businesses previously owned by Mr. Drake and designated as assets of the Drake Trusts, including Designmark Building Services, Inc., Designmark Food Services, Inc., and Designmark Development Corporation (collectively "Designmark"). Mr. Thompson purchased the Q Street property on behalf of a fictitious company named Taurus Investments Company ("Taurus")*fn2 and paid $155,000 for it with a cashier's check issued by Crestar Bank on behalf of Taurus; however, the purchase money for the cashier's check was provided by Designmark. On July 28, the day before Mr. Drake's death, the relevant parties executed a Substitute Trustee's Deed which stated that Taurus had purchased the Q Street property. The Substitute Trustee's Deed was recorded at the office of the District of Columbia Recorder of Deeds on August 24, 1995.

On August 18, about three weeks after Mr. Drake's death, Mr. Thompson was advised by Daniel Hodin, Designmark's attorney, a member of the law firm of Ginsburg, Feldman, and Bress, that the Substitute Trustee's Deed was invalid. Mr. Hodin informed Mr. McNair that without a change in title from Taurus to Designmark, the Q Street property could not be sold to satisfy Mr. Drake's outstanding IRS liabilities. He recommended to Mr. McNair that certain steps be taken to correct the deed. Richard Wise, counsel to the Substitute Trustee, required an affidavit from Mr. Thompson to effectuate the change in the deed. Hodin and Wise discussed the affidavit, and McNair spoke with Thompson about what it should say and later reviewed a draft of the affidavit. Mr. Thompson executed the affidavit ("Thompson Affidavit") on November 3.

A Confirmatory Substitute Trustee's Deed was then executed on November 20, 1995, to change the title of the Q Street property from Taurus to Designmark. This deed stated that (1) the original Substitute Trustee's Deed mistakenly named Taurus as the purchaser of the property, (2) Taurus was not incorporated or registered under the laws of any state or the District of Columbia, and (3) Designmark provided the purchase money for the Q Street property. The Confirmatory Substitute Trustee's Deed was recorded at the office of the Recorder of Deeds on January 16, 1996. Designmark later sold the Q Street Property for approximately $126,000, but the IRS attached the proceeds of the sale to satisfy some of Mr. Drake's business-related tax liabilities.

On August 21, 1995, three months before the Confirmatory Substitute Trustee's Deed was executed, Ms. Royster and Mr. McNair, in their capacities as co-trustees and co-personal representatives, wrote to Smith Barney, an asset management firm handling the Q Street property account. In their letter Royster and McNair agreed to indemnify Smith Barney against any and all claims or liabilities resulting from the retitling of its Taurus Investments account to a Drake Trusts account. On August 28, a week later, approximately $202,000 was transferred from Taurus to the Drake Trusts account.

C. Probate Proceedings

On November 20, 1995, a petition for probate of Mr. Drake's estate was filed in the Probate Division of the District of Columbia Superior Court. Mr. Drake's will was admitted to probate on December 5, 1995. The probate court valued the estate at $53,000 and found that the estate was insolvent because its debts exceeded its assets.

On April 29, 1996, Mrs. Drake filed suit in the Probate Division against Ms. Royster and Mr. McNair, challenging the validity of Mr. Drake's will and trust documents. In her complaint as later amended,*fn3 she alleged (1) that Mr. Drake lacked the requisite testamentary and mental competency to execute the will and create the trusts, (2) that Mr. McNair had exerted undue influence on Mr. Drake, and (3) that her statutory right of spousal election was circumvented by the creation of the Drake Trusts and the transfer of estate assets to those trusts.*fn4 During discovery, Mrs. Drake deposed Mr. McNair. In his deposition Mr. McNair said that Designmark had purchased the Q Street property at the foreclosure sale, denied any involvement in the foreclosure, and stated that Mr. Hodin was involved only in pre-death matters for Mr. Drake.

On April 8, 1998, the parties in the probate litigation entered into a Settlement Agreement, which provided that Mrs. Drake would receive $450,000 and the title to a piece of property located at 1336 W Street, N.W.*fn5 The payment of all but $75,000 of that amount was conditioned on the resolution of significant IRS claims against the estate and the trusts. Since that date Mrs. Drake has received $75,000 but has not received any of the remaining $375,000 because of Mr. Drake's outstanding IRS liabilities.

D. Proceedings before the Special Master

On March 25, 2003, the Probate Division removed Ms. Royster as personal representative of Mr. Drake's estate and appointed a Special Master to investigate certain allegations about her handling of the estate. Three months later, on June 25, the Special Master issued a Preliminary Report to the probate court, in the course of which he invited interested parties to state their objections to the inventory and statements of account previously filed by Ms. Royster. Mrs. Drake filed exceptions to the Special Master's Preliminary Report on July 24, asserting that numerous marital assets had been wrongfully diverted into the trusts. On May 10, 2004, the Special Master issued a Final Report and Recommendation, concluding that Mrs. Drake could not substantiate her claims of any impropriety on the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.