NASHUA – A daughter of the late developer Samuel Tamposi will appeal a judge’s decision that cut her out of the family fortune and left her with millions of dollars in debt to the family trust, probate court records show.

Last month, Elizabeth “Betty” Tamposi, 55, of Gilford, lost a long, high-stakes battle with her brothers, Samuel Jr. and Stephen Tamposi, for control of her share of their family’s fortune.

Hillsborough County Probate Court Judge Gary Cassavecchia concluded that Betty Tamposi had violated the “no contest” clause of her father’s trust and would thus be disinherited. Rather than gain control of her share, Betty Tamposi could lose everything.

In addition, Cassavecchia ruled that she must pay back all the money she has received over the last two years, since she first filed the suit, and pay her brothers’ legal bills, which by their reckoning exceed $2 million.

Betty Tamposi and her lawyer, Michael Weisman, of Boston, had asked the judge to reconsider his rulings, but they withdrew their request on Aug. 31, court records show. On Sept. 17, one day before the 30-day deadline, they filed notice that they will appeal his decisions before the state Supreme Court.

It isn’t clear exactly how many millions of dollars Betty Tamposi would owe under Cassavecchia’s order – the figure could be $17 million or more – and neither side would comment on whether any post-trial settlement negotiations were under way.

Betty Tamposi declined to comment on the case by e-mail, writing that while the court case is public, “I view this as a private matter among my family.”

Her lawyer didn’t return repeated phone calls, and attorney Robert Stein, of Boston, who represents Samuel Jr. and Stephen Tamposi, declined to comment beyond a brief written statement, praising Cassavecchia for honoring the late Samuel Tamposi’s wishes.

“The court’s decision has preserved and protected the legal standing of the ‘grantor’s intent’ regarding the future management of family trust matters,” Stein wrote, adding, “Now that the court has issued its decision, the family intends to move forward in a positive and productive manner consistent with their father’s wishes.”

Several other family members also declined to comment.

The appeal and documents accounting for legal expenses to date added a 28th manila file to the Probate Court’s records of the case, each file several inches thick.

“The case before this court has been exceedingly litigious. The parties have submitted a plethora of repetitive motions, responses and supportive exhibits,” Cassavecchia wrote in his order, adding later, “If history is any indication of the future, Betty will not cease litigating as long as her interests are tethered to that of her brothers and other siblings, and her assets remain in the Tamposi Companies.”

‘In terrorem’ clause

Samuel Tamposi Sr. was, as Cassavecchia mildly put it, “a prominent real estate developer in southern New Hampshire.”

Having built a fortune in real estate and business holdings, Tamposi gathered his various and considerable assets into a single trust fund in 1992, to be managed for the benefit of himself; his wife, Barbara; their six children; and generations to come.

Tamposi created the Samuel Tamposi Trust to keep the family business intact and growing, to provide income for the children and future generations, and to keep creditors and tax collectors at bay.

The trust also was part of a broader strategy to protect the family fortune from the ravages of a rotting real-estate market and regional banking crisis, Stein wrote in court filings. Tamposi and his six children all went through bankruptcy in the early 1990s, court records show, and Tamposi and his sons negotiated with creditors to “restructure and resolve” the family’s debts.

Upon Samuel Tamposi’s death on May 25, 1995, the family held some 400 properties in New Hampshire and Florida, worth roughly $70 million. Their debts totaled roughly $50 million, however.

Tamposi directed that after he died, his trust fund would be divvied up into 12 separate but equal trusts for each of the six children: Samuel Jr., Michael, Elizabeth, Nicholas, Celina and Stephen.

Each of the six siblings got a “generation-skipping trust” and a trust in his or her own name, all managed by a single trustee who could use both the net income and principal to provide for them and their children. (Generation-skipping trusts allow people to pass assets directly to grandchildren or great-grandchildren.)

Although each trust was a separate legal entity, their assets consisted entirely of shares in the various family businesses and properties. Tamposi left his eldest and youngest sons, Samuel Jr. and Stephen, in charge of managing those assets.

Tamposi also included a “no contest” or “in terrorem” clause, a provision found more commonly in wills than in trusts, Cassavecchia wrote.

The clause states that anyone who challenges the legality of the trust or disputes its provisions will forfeit any right to benefit from the trust.

Literally, the trust states that any beneficiary who contests the trust would be treated as if he or she had died.

In asking Cassavecchia to reconsider, Weisman had argued that such provisions give trust managers too much power and too little accountability, and should be applied with caution.

“This court’s ruling, if not vacated, would have a chilling effect,” Weisman wrote. “If a beneficiary seeks to enforce the duties of a trust that contains an ‘in terrorem’ clause, the beneficiary may well be disinherited entirely.

“Good public policy counsels against arming fiduciaries with such powerful swords of Damocles.”

Samuel Tamposi Sr. gathered his children and his lawyer together in the spring of 1994 to tell them of the trust, according to court records. He told the children of his plans to have Sam Jr. and Steve run the family business for the benefit of all, and he told them that if they didn’t like it, they could lump it, witnesses testified.

Betty Tamposi objected immediately, other witnesses testified, according to court records.

“Since her father’s death … Betty Tamposi has ranted against and refused to accept the fact that her father’s will and trust mandates that her brothers, Samuel Jr. and Stephen, would manage the family’s extensive business and real estate holdings,” attorney Robert Stein wrote.

“Betty has refused to accept her father’s view that she was a spendthrift, not to be trusted, not to be placed in charge of the family’s business affairs.”

Including the six Tamposi children, there are now 32 beneficiaries of the Tamposi family trusts, according to court records.

The family’s funds have grown greatly under Samuel Jr. and Stephen Tamposi’s management, their lawyers argued. The trust’s net assets grew from around $21 million in 1995 to more than $146 million by the end of 2008, Stein wrote.

According to Stein, Betty Tamposi and her children got a total of about $9.1 million ($6.9 million after taxes) from the trusts from 2002-06. The trusts paid them $1.6 million in 2007, $3.1 million in 2008 and $1.1 million in 2009, he wrote.

‘Financial divorce’

It took five years before any dispute over the Tamposi trust reached the courts.

In 2000, Betty and her brother Nicholas objected to a proposal by their brothers to transfer assets from the sibling trusts into the generation-skipping trusts.

Both sides argued over whether the trustee, attorney Gerald Prunier, of Nashua, was required to follow orders from the investment managers (Samuel Jr. and Stephen). Betty and Nicholas got a ruling that they could argue the point without violating the “no contest” clause, but the case ultimately was settled out of court.

Less than a year later, however, Betty and Nicholas sued their brothers Samuel Jr. and Stephen, and the trustees, Prunier and David Tulley, charging misuse and misallocation of assets, improper accounting and other breaches of their duties.

They dropped the suit and withdrew their charges just two months later, and family members turned to private mediation to try to settle their disagreements.

In November 2006, the Tamposi siblings signed a settlement agreement designed to end the disputes by crafting a sort of “financial divorce,” court records show.

Betty and Nicholas Tamposi each got their own trustees, independent from the others.

Samuel Jr. and Steve Tamposi would no longer manage their investments, except for various assets held in common with other trusts. The two brothers would remain in charge of those holdings at least until or unless they were sold.

In addition to the Citrus Hills development in Florida and numerous other properties, the Tamposi family assets at the time included 50 shares of New England Sports Ventures LLC, the parent company of the Boston Red Sox and New England Sports Network, which Samuel Jr. had acquired in 2002.

Betty Tamposi filed suit in Massachusetts over the family’s Red Sox holdings in September 2007, “before the ink was even dry” on the 2006 settlement, Stein argued. She and her trustee, Julie Shelton, of Chicago, also filed suit in Hillsborough County Probate Court soon afterward, in October 2007.

Shelton had reluctantly agreed to act as trustee as a favor to Betty Tamposi, a friend of 30 years, although she had no experience in trust law, according to court records. Shelton didn’t respond to a reporter’s call seeking comment.

While simultaneously trying to arrange a meeting with the trustees and investment managers, Shelton sent a letter to Samuel Jr. and Stephen Tamposi on Sept. 7, 2007, demanding $2 million for Betty Tamposi from the family trust within one week.

One week later, not having received $2 million, Shelton demanded that the brothers sell the Red Sox shares and pay their sister her share.

Two weeks after that, Shelton and Betty Tamposi sued, first in Suffolk County (Mass.) Superior Court, and then in Hillsborough County Probate Court.

In both cases, Betty Tamposi charged her brothers with “breach of fiduciary duty.”

She complained that the brothers hadn’t kept enough of the trust funds in cash and were refusing to pay urgent family needs, such as her children’s college tuition.

In both cases, Tamposi argued that the brothers should sell her portion of the family’s NESV shares.

Her brothers countered that the trusts were providing generously, and that to sell some of the shares would effectively set a price for the others, to the disadvantage of the rest of the family.

Different rulings

Two judges in two courts reviewed essentially the same claims and reached two very different conclusions.

The Suffolk County case essentially ended in 2008, when Samuel Jr. negotiated the sale of all 50 shares of NESV. Although the various court cases held up the process, Betty Tamposi ultimately got her share, some $1.6 million, later that year.

Samuel Tamposi Jr. argued that while Betty had been pushing to sell her portion of the Red Sox shares since 2006, he was obliged to consider what was best for the whole family.

He had been contemplating a sale, but calculated that he could wrangle a better deal by waiting and negotiating a sale outside the “put option” that the family had acquired along with the shares.

The Red Sox buyback of the Tamposi family’s ownership stake rendered the Suffolk County lawsuit a moot point, but each side then argued that the other had acted in “bad faith” and should pay legal fees for the entire litigation.

Judge Thomas Connolly disagreed, and ruled that all of the Tamposis were stuck with their own legal bills.

“While the court acknowledges that certain actions on both sides could be considered frivolous or not advanced in good faith, none of these actions rise to a level warranting an award of attorney’s fees and costs,” Connolly wrote, adding later, “Both parties had legitimate goals in initiating and defending this action.”

At the same time, Connolly faulted both sides for their handling of the dispute.

“The history of this entire dispute paints a clear picture of the animosity between the parties. … The parties’ refusal to cooperate at even the most basic level during the litigation process resulted in numerous motions and hearings,” much of which “could have been avoided,” Connolly wrote on June 14.

The Probate Court case was broader in scope and lasted slightly longer.

Samuel Jr. and Stephen met their sister’s allegations with aggressive counterclaims, arguing that Betty had violated the “no contest” clause, that Shelton was inept and should be removed, and that the entire case was brought in bad faith as an attempt to take over the family trust.

In a 54-page order on Sept. 18, Cassavecchia ruled resoundingly against Betty Tamposi and in favor of her brothers.

Cassavecchia praised Samuel Jr. and Steve Tamposi both for managing the family’s fortune so as to enrich themselves and their relatives and for honoring their father’s intentions.

In short, Cassavecchia found that the two brothers had done nothing wrong and that Betty Tamposi had knowingly violated the “no contest” clause of her father’s trust by using funds from the trust to try to liquidate and take control over her share of the family business.

While Connolly had found that both sides were looking out for legitimate interests, Cassavecchia seemed largely to agree with Samuel Jr. and Steve’s arguments that their sister’s suit was a ploy to subvert her father’s intentions.

Samuel Tamposi Sr. had told his children of his intention that Samuel Jr. and Steve continue to run the family business, and that it was too bad if anyone didn’t like it, Cassavecchia ruled.

“Sally (Celina Tamposi) expressly recalled that Sam Sr. told the six siblings that this was a gift and they could take it or walk away,” Cassavecchia wrote, adding that Betty Tamposi’s denial that any such meeting took place “provokes sentiment going beyond mere disbelief.”

Cassavecchia found that lawyers acting on behalf of Betty Tamposi interfered with her brothers’ efforts to negotiate with the Red Sox during the same time that she was insisting that they sell her shares.

“It lends great confidence to Sam, Jr. and Steve’s skills, and the confidence entrusted in them by their father, that they were yet able to negotiate a sale for the price that they did,” Cassavecchia wrote.

Cassavecchia also concluded that Betty Tamposi’s claims that she was short on cash were implausible, and that her demands, through Shelton, were designed simply to fabricate a basis for the lawsuit.

In the fall of 2007, at the same time Betty Tamposi was claiming an urgent need for cash and demanding $2 million, Cassavecchia noted, she made her own Harvard Divinity School tuition payment of $6,750; put down a $7,150 deposit for a weekend retreat; made a $20,000 donation to Georgetown University; and paid more than $333,000 to a contractor renovating her home.

Cassavecchia also found that Betty Tamposi made misrepresentations about her income and other debts on a loan application for money to continue those renovations.

“By bringing this action, Elizabeth M. Tamposi has violated the ‘in terrorem’ clause of the Samuel A. Tamposi, Sr. 1992 Trust and thereby forfeits all of her right, title and interest” to the trust, Cassavecchia wrote.

“It was clearly the intent of Sam, Sr. in devising his trust strategy that the Tamposi family business would continue; that the trust assets would be managed and invested together; that his children would be treated equally; and that family bonds would be cemented as a result.

“In this litigation, the petitioners aspire to defeat these purposes by disengaging the interests of Betty and her issue from the train, taking it down an independent track where they will be free to choose their own destination and route for getting there.”

She can no longer receive any money from the trusts and must pay back whatever she has received since filing the suit in October 2007, the judge ruled.

Cassavecchia also ordered Betty Tamposi and Shelton to pay her siblings’ legal expenses.

Samuel Jr. and Stephen Tamposi’s legal bills total $2,165,049, their lawyers report, while Prunier, the trust’s lawyer, has racked up $775,737, and lawyers for two other siblings billed $489,785, court records show.

Although Cassavecchia ordered that Shelton help repay the other side’s expenses, he also ruled that she could be paid for her work as trustee. Shelton has asked she and her firm to be paid $745,123. Shelton and the various lawyers filed their expense accounts late last week.

Betty Tamposi’s children remain beneficiaries of whatever is left in her part of the trust and were obliged to choose another trustee. Their inheritance appears to be severely diminished, however, Cassavecchia’s order states.

Shelton testified during the case that Betty Tamposi’s lawsuit and a divorce case had drained so much of the trust fund that there wasn’t enough money left to provide for her three children, and a lawyer appointed to represent other beneficiaries noted that massive legal expenses have been “the largest single drain” on the trust assets over the last decade, according to Cassavecchia’s order.

Now, with an appeal under way, it appears the legal battles and expenses will continue for the foreseeable future.

Andrew Wolfe can be reached at 594-6410 or awolfe@nashuatelegraph.com.

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