Monday, July 23, 2007

Trustee of Nominee Trust Not Liable Under Lead Paint Suit

The Massachusetts Appeals Court ruled in the case of BELLEMARE vs. CLERMONT that the trustee of a nominee trust is not an "owner" of the property under the Childhood Lead Poisoning Prevention and Control Law (MGL c. 111 s. 189A et seq.).

Under a nominee trust in Massachusetts, the trustee may only act at the direction of the beneficiaries of the trust. The trustee has no independent authority. The trustee is better thought of as an agent of the beneficiary of the trust. As an agent, the trustee holds bare legal title.

In 1993, the legislature added the definition of "owner" to the Section 189A:

“Owner”, any person who alone or jointly or severally with others (i) has legal title to any premises; (ii) has charge or control of any premises as an agent who has authority to expend money for compliance with the state sanitary code, executor, administrator, trustee or guardian of the estate or the holder of legal title; (iii) is an estate or trust of which such premises is a part, or the grantor or beneficiary of such an estate or trust; or (iv) is the association of unit owners of a condominium or cooperative, which shall be considered an owner solely with respect to common areas and exterior surfaces and fixtures of such condominium or cooperative; provided, however, that the term “owner” shall not include a secured lender except to the extent provided in section one hundred and ninety-seven D.

Prior to 1993, there was no definition of owner in the statute. The plaintiffs were harmed prior to 1993.

Even though the current version of the statute would indicate that a trustee of a nominee trust could be held liable, the Court held that the definition of "owner" should "not be read out of context and employed to impose liability on one who is effectively an agent for a principal; who possesses "only the barest incidents of ownership," Morrison v. Lennett, 415 Mass. at 861; and who neither controls the property nor benefits from its ownership." The Court rejected a literal reading of the statute because it produces an absurd result.

The plaintiff should have filed suit against the trustee and the beneficiary of the trust. The trustee would be dismissed from the suit, but could be compelled to reveal the identity of the benficiary of the trust.

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