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Estate of Gardner

Court of Chancery of Delaware

July 31, 2013

Estate of Robert N. Gardner

Neal J. Levitsky, Esquire Fox Rothschild, LLP.

Mary Ann Plankinton, Esquire MacElree Harvey, Ltd.

Dear Counsel:

In the Master's Final Report dated October 24, 2012, [1] I ordered Respondent Nancy Jennifer Haywood ("Nancy") to provide the Court with a formal accounting of her handling of Robert N. Gardner's funds. The formal accounting was to be supported by bank statements, receipts, invoices, cancelled checks and other relevant documents, to give Nancy an opportunity to demonstrate that some of her expenditures had been incurred for the benefit of Mr. Gardner. Thus, Nancy might be able to reduce the amount of money that she would otherwise be required to compensate the Estate of Robert N. Gardner for her self-dealing transactions and misuse of Mr. Gardner's property.

The Master's Final Report was approved and the findings of fact therein were adopted in a Final Order of this Court dated December 5, 2012, [2] after Nancy's exceptions to the Master's Final Report had been withdrawn.[3] Thereafter, by Order dated January 23, 2013, [4]1 gave Nancy until March 5, 2013 to submit a formal accounting of her expenditures of Mr. Gardner's property beginning February 27, 2006 until Mr. Gardner's death on May 15, 2010. The deadline passed and on April 3, 2013, [5]1 directed Nancy to file her formal accounting within 30 days or else I would issue Rule to Show Cause against her. On April 25, 2013, 1 received a letter from Nancy's counsel indicating that he had been instructed to submit the paperwork on which she had relied at trial to serve as her formal account.[6] Attached to the letter were documents that had appeared as part of Nancy's trial exhibits at Tabs 7-13.

Nancy has failed to provide the Court with a formal accounting. Her submission, that might have been provided as supporting documentation to a formal accounting, consists of 148 pages of copies of receipts, handwritten notes and receipts, invoices, bank statements, credit card statements, investment account statements, EZ pass statements, utility bills, store receipts, and checks. Many of these pages include numerous items on each page. Some of the copies are so faded as to be illegible.

The record of this case shows that Nancy wrote checks on Mr. Gardner's account to her husband Michael Hayward from February 20, 2006 to September 19, 2007, in amounts that totaled $35, 000.00.[7] Nancy also wrote checks on Mr. Gardner's account to herself from September 15, 2005 through October 5, 2009, in amounts that totaled $243, 447.20. Nancy also obtained a credit card in her own name on Mr. Gardner's American Express account, on which she charged $42, 167.85 in goods and services for herself starting in December 2006. These self-dealing transactions come to a grand total $321, 115.05. It is not the responsibility of this Court to wade through these documents in an attempt to determine whether Mr. Gardner's funds were used for Mr. Gardner's benefit. Since Nancy has failed to demonstrate through a formal accounting that $304, 485.05[8] of Mr. Gardner's funds was expended for Mr. Gardner's benefit, it is my recommendation in this Final Report that a personal judgment in the amount of $304, 485.05 be entered against Nancy. See Hogg v. Walker, 622 A.2d 648, 654 (Del. 1993) ("For a failure to account as required by court order, the constructive trustee may be surcharged or be required to pay compensatory damages. .. Another possible remedy includes a personal judgment against [the constructive trustee]." (citations omitted)).

Sincerely,

KIM E. AYVAZIAN, Master in Chancery.


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