In Re: Eleanor McCarthy Lenahan Trust under agreement Dated July 12, 2001.
Mary Kathleen Lenahan, individually and in her capacity as Trustee of the Art. X(35)MKL Trust Share UAD 071201, Jean Marie Qualliu, Joan Eleanor DeMaio, and Christine Ann Lenahan, Defendants, Kathleen Suzanne Heslin and Maureen Theresa Moseley, in their capacities as Co-trustees of the Eleanor McCarthy Lenahan Trust under agreement dated July 12, 2001, Appellants, Of Whom Mary Kathleen Lenahan and Jean Marie Qualliu are Respondents. Appellate Case No. 2017-000882
Submitted June 3, 2019
From Beaufort County Carmen T. Mullen, Circuit Court Judge.
Douglas S. Delaney, of Delaney Law Firm, PA, of Bluffton, and
Sean Michael Bolchoz, of Bolchoz Law Firm, PA, of Hilton Head
Island, both for Appellants.
MacPherson Jolley and Ariail Burnside Kirk, both of Jolley
Law Group, LLC, of Columbia, for Respondents.
appeal turns on whether a trust beneficiary's filing of a
complaint with the South Carolina Office of Disciplinary
Counsel (ODC) against a lawyer for the trustees of the trust
triggers (1) the no-contest clause in the trust and (2) a
hold harmless and indemnity clause contained in a settlement
agreement arising out of a dispute over administration of the
trust. We conclude that under the circumstances here it does
not and affirm the ruling of the trial court.
McCarthy Lenahan (Settlor) set up a revocable trust in 2001.
In 2012, she amended the trust and included a
"no-contest" clause that states in part:
If any beneficiary under this Trust Agreement, singly or in
conjunction with any other person or persons, directly or
indirectly, (i) contests in any court the validity of this
Trust Agreement or, in any manner, attacks or seeks to impair
or invalidate any of its provisions; . . .; (iv) objects in
any manner to any action taken or proposed to be taken in
good faith by the Trustee; [or] (v) objects to any
construction or interpretation of this Trust Agreement, or
any provision of it, that is adopted or is proposed in good
faith by the acting Trustee . . . that person's right to
take any interest given to him or her by or under this Trust
Agreement shall be determined as it would have been
determined if the person had predeceased the execution of
this instrument without surviving issue.
named two of her daughters, Kathleen Suzanne Heslin and
Maureen Teresa Mosley (the Trustees), to succeed her as
trustee in the event of her death. Settlor died later in
2012. The trust called for the trust estate to be distributed
to Settlor's surviving children, first by way of specific
cash distributions to each child and the remainder to each
surviving child in equal shares.
Settlor's death, two of her other daughters, Mary
Kathleen Lenahan and Jean Marie Qualliu (the Beneficiaries),
began objecting to the Trustees' actions in administering
the trust. In an effort to resolve these issues, the parties
entered into a private agreement (the Settlement Agreement)
containing the following indemnity and hold harmless clause:
In the event that [one of the Trustees] or the [trust] in any
capacity is a party, or is threatened to be made a party, to
any action, claim, suit or proceeding, the [Beneficiaries]
are hereby obligated to fully and entirely indemnify and hold
harmless the [Trustees] and [the trust] from any and all
costs, expenses and all attorney fees incurred by the
[Trustees] and the [trust] with respect to such action,
claim, suit or proceeding.
after executing the Settlement Agreement, the Beneficiaries
sent letters of complaint to the ODC accusing the
Trustees' lawyer of misconduct. In response, the Trustees
brought this action for declaratory judgment and breach of
contract, alleging the Beneficiaries' ODC complaint
violated the no-contest clause of the trust and the
"proceeding" initiated by the Beneficiaries in the
ODC constituted a breach of the Settlement Agreement,
entitling the Trustees to indemnity. The trial court granted
partial summary judgment to the Beneficiaries, finding the
ODC complaint did not constitute a contest of the trust
because the ODC had no jurisdiction over trust contests or
non-attorneys, complaints to the ODC were privileged, and
complainants were immune from civil suit pursuant to Lawyer
Disciplinary Enforcement Rule 13. The trial court further
found probable cause existed for the contest and