Aiello v. Hyland

Joseph DeLuca established a trust holding title to the commercial real estate property on which the family business, DeLuca’s Market, was operated. The trust beneficiaries were DeLuca’s four relatives, Virgil Aiello (plaintiff), Robert Aiello (plaintiff), Joy Aiello (defendant), and Gerald Aiello (defendant). The trust stated that it terminated upon DeLuca’s death and directed that the trust corpus be distributed to the four beneficiaries after the payment of estate taxes. Robert was named successor co-trustee after DeLuca’s death. Robert was also an officer of DeLuca’s Market and held an equity interest as a shareholder in the business. DeLuca’s Market had been operating on the trust property for decades without a written lease. After DeLuca’s death, Robert, as co-trustee, was required to raise funds to pay the trust’s share of the estate taxes. Robert failed to mortgage the property, despite having a cooperating lender, and turned down several market-value offers from interested third-party buyers. Instead, Robert sold the property to Virgil at a discount. Joy then sought a declaratory judgment voiding Robert’s actions as a co-trustee, including the contract of sale between Robert and Virgil. Joy argued that Robert had a conflict of interest because he was simultaneously a co-trustee, a beneficiary, and a shareholder of DeLuca’s Market with a personal financial interest in the sale and lease of the trust property on which DeLuca’s Market was operated. The probate court held that Robert had a conflict of interest and ordered his removal as co-trustee. Robert appealed, arguing that the probate court abused its discretion by removing him as co-trustee.