Table of Contents
PROVIDENCE – Arnold “Buff” Chace Jr., the real-estate developer whose tax breaks from the city are under scrutiny, is asking the court to settle a bitter family dispute without a trial and allow him to remain as the administrator of a $70 million trust.
Chace is asking Superior Court Judge Brian P. Stern to rule in his favor in a lawsuit brought by his cousin Malcolm Chace IV. He argues that the case lacks merit and is motivated by an “inflated sense of entitlement, animus and greed.”
Malcolm, his siblings and their heirs sued in 2021 to have Buff Chace and William Saltonstall removed as co-trustees of a valuable family trust, citing a climate of animus and distrust.
Central to the dispute is a more than $70 million trust that Malcolm’s father, Malcolm “Kim” Chace III, left his heirs upon his death in 2011. Kim named Buff and Saltonstall, his stepson, as trustees. He allotted his wife, Elizabeth Zopfi Chace, $800,000 annually in income from the trust through a codicil signed shortly before his death at 76 from brain cancer.
Accusations of jealousy, greed
Buff and Saltonstall charge in court documents that Malcolm, as “ringleader,” is “leveling false accusations in an attempt to reverse his father’s knowing and willful decision” not to appoint him as trustee.
“This move by Malcolm Chace, IV is fueled by his extreme jealousy of his father’s relationship with his stepmother, Defendant Elizabeth Zopfi Chace … and his desperate need to control the funds in the Trust,” lawyers Matthew T. Oliverio and Gina Renzulli Lemay wrote.
They accuse Malcolm of refusing to honor his father’s wishes – in contravention to well-settled law – and cite sworn testimony from Zopfi Chace that Kim refused to appoint Malcolm as trustee because he was allegedly an alcoholic.
According to the filing, Kim did not trust Malcolm and he wanted “to guard the trusts against bad judgments.” In addition, they say Kim intended to protect Liz’s interests by naming Buff and Saltonstall as trustees due to Malcolm’s troubled relationship with his stepmother.
“Plaintiffs have chosen to pursue this litigation wherein they allege baseless claims cloaked as breaches of trust and fiduciary duty to seek removal of the current Trustees in a futile attempt to persuade this Court to undue their father’s intentions and rule in their favor simply because they are entitled,” they said.
‘A trustee must not place himself in temptation’
Malcolm’s faction hit back that the record is rife with evidence of Buff engaging in “staggering” self-dealing. They accuse Buff of using money from the trust to prop up his own development interests without informing the beneficiaries.
“Buff’s creation of vehicles solely for the purpose of perpetuating his self-dealing … alone are sufficient to permit a finding that the Trustees breached their duties and certainly demonstrate a genuine issue of material fact,” lawyer Richard Fallago wrote, adding, “A trustee must not place himself in temptation.”
They asked the court to deny Buff’s and Saltonstall’s request, arguing that genuine issues of material fact remain that should be tested at trial.
“Buff converted [trust] assets to his own personal use and Bill [Saltonstall] and Liz [Zopfi Chace] either facilitated or sat by and let it happen because it made no difference in their lives financially,” they said,
“Here, the Trustees not only failed to avoid conflicts, they knowingly and willfully created them. Not only is there evidence of situations that could affect the trustee’s best judgment, there is evidence that it did affect their best judgment,” they said.
They accused the trustees of using trust money to improve real estate owned by Buff and leveraging its assets for Buff’s personal benefit on multiple occasions.
“The most fundamental duty of a trustee is the trustee’s duty of undivided loyalty to the beneficiaries, often stated as the duty to act solely in the interests of the beneficiaries,” they said.
They argue, the court’s “paramount duty is to see that the trust is properly executed and that the beneficiaries are protected.”
Many of the properties at issue in the lawsuit are now being reviewed by the Providence City Council over controversial tax breaks they received under the previous administration.
Continuing Kim’s vision
Buff and Saltonstall counter that Kim granted them “the broadest discretionary powers of investment, reinvestment and management” over the trust.
By investing in properties in downtown Providence, the trustees were diversifying the trust’s holdings and continuing Kim’s vision for revitalizing the city, they said.
“The Trustees diligently continued the investment strategies employed by Kim during his lifetime,” they said.
Further, Buff recused himself from making investment decisions related to his properties, the filing states. Instead, Saltonstall exercised his “independent judgment and experience as a person in finance to make informed decisions.”
Buff and Saltonstall accused Malcolm of damaging their reputations.
Zopfi Chace, Buff and Saltonstall similarly have asked Stern to dismiss a separate lawsuit brought by Malcolm’s camp alleging that Kim was unduly influenced to make deathbed changes doubling Zopfi Chace’s annual allotment to $800,000.
They are asking the court to impose sanctions and award them legal fees. They accuse Malcolm of judge shopping and wasting judicial resources, since there is already ongoing litigation in probate court in Florida.
Chace family history
Kim Chace was one of Rhode Island’s wealthiest businessmen and philanthropists. He served for years on the board of the Berkshire Hathaway conglomerate, forming a close alliance with billionaire Warren Buffett.
The family’s ownership of textile mills, ties with Berkshire Hathaway and other investments even landed Kim on Forbes’ annual list of wealthiest Americans, placing him at 271 in 1999 and at 236 in 2001. His wealth was estimated at more than $900 million. In 1996, he founded BankRI.
The family acrimony traces to February 2020, when Malcolm IV and the other beneficiaries said they became aware that the trust made a $4-million investment in a Providence development that was managed by Buff Chace and based at his Cornish Associates offices at 46 Aborn St., according to the complaint filed in Superior Court.
This article originally appeared on The Providence Journal: One of RI’s richest families is fighting over a trust worth millions