One of RI's richest families roiled by new lawsuit. Did a Chace stepmom get $4.8M unjustly?

PROVIDENCE — Another volley has been thrown in the bitter dispute roiling one of Rhode Island’s most prominent families. A dozen of Malcolm “Kim” Chace III’s heirs are now challenging deathbed changes to his will that doubled his wife’s annual allowance, according to a new lawsuit brought in state Superior Court.

Malcolm G. Chace IV, his siblings and their children are alleging that the late Kim Chace was unduly influenced to alter his will just days before his death from brain cancer on June 23, 2011, and that Malcolm’s stepmother, Elizabeth Zopfi Chace, has received some $4.8 million unjustly.

They are suing Elizabeth Z. Chace, their cousin Arnold “Buff” Chace Jr.  and William Saltonstall, Kim’s stepson, as trustees of the family trust, and are asking the court to declare the changes to the will invalid and void. They argue that Kim Chace was unable to communicate at the time, slipping in and out of consciousness, and lacked the capacity at the time of execution.

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Second lawsuit in two years over $70-million trust

The lawsuit is the second to drop in two years, alleging misdealings in the handling of the $70-plus-million trust that “Kim” Chace left his heirs upon his death.

Malcolm Chace IV, his siblings and their children sued in 2021 to have Buff Chace removed as trustee. Malcolm IV’s faction cited a climate of animus and distrust in requesting Buff’s removal. They say they have been spurned for more than a decade in their attempts to get an accounting of how the trust has been managed. They accuse Buff of breaching their trust and his duties by engaging in self-dealing and using the fund for his own enrichment.

Buff Chace and co-trustee Saltonstall shot back in court documents that any charges of animus and distrust are a “manufactured pretext” for Malcolm IV to enrich himself and that they come in retaliation for Malcolm IV's father not naming him trustee. They accuse Malcolm IV, who goes by Malcolm Jr., of wanting to manage the trust to extract fees for himself and his own investment firm, Canton Hathaway LLC.

The trustees say they have operated in good faith at all times and without conflict in their administration of the trust, in keeping with Kim’s wishes. Malcolm IV’s stepmother, Elizabeth Zopfi Chace, echoed the trustees. Allegations of distrust and animus, she said, are “merely a facade” for the other 12 beneficiaries’ own “avarice and self-interested desire to gain control” of the trust. She alleges the claims are at odds with the terms of the trust and her late husband’s wishes.

Through Michael Burke, of DarrowEverett LLP, Zopfi Chace denied all the allegations.

"My client Liz Chace denies Malcolm’s latest allegations that there was any wrongdoing in connection with the execution of the Second Codicil to Kim Chace’s Will, which the plaintiffs have been aware of since 2011 but failed to object to or raise issue with until the filing of this meritless lawsuit," Burke said in an email Wednesday. "These lawsuits between the Chace family are motivated entirely by Malcolm’s greed and personal animus towards Liz and the other defendants and are wasting the court’s resources.  We are confident that the court will agree and that our clients will prevail in all respects."

The case is being heard by Judge Brian P. Stern.

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What are the latest allegations?

According to the new lawsuit filed Monday in Superior Court, Kim’s father, Malcolm Chace Jr., named him a beneficiary of a trust created in 1937 in Rhode Island with a limited testamentary power of appointment.

Kim created his own will and testament in 2007, with a first codicil written in 2010 and a second on June 14, 2011, days before his death. He created a trust referred to in the court documents as M2K and named Buff and Saltonstall as trustees.

Initially, the will dictated that Zopfi Chace was entitled to $400,000 annually from the trust for as long as she lived. The second, however, raised the allotment to $800,000 a year.

But, according to the claims, Kim was hospitalized in Florida at the time for brain surgery as he battled glioblastoma. On June 14, 2011, he was recovering, in extreme pain, heavily medicated and was generally disoriented, leaving him unable to communicate or even lift his arms.

The second codicil “purports” to be signed by Robert G. Petix Jr., at Kim’s direction, with Petix also acting as the witness along with Doris Licht, according to the suit written by Michael S. Marino and Richard G. Fallago, lawyers representing Malcolm's camp with former U.S. Attorney Robert Clark Corrente.

Kim died nine days later, after failing to rebound from surgery.

Malcolm and his siblings argue that Kim was unduly influenced and lacked the capacity to make the changes that raised Zopfi Chace’s annual income. They alleged the second codicil was not properly executed because it was not witnessed by two independent witnesses.

They argue, too, that as a result, Zopfi Chace has been the recipient of $4.8 million in unjust enrichment from the M2K trust. They ask the court to declare the codicil void and bar the trustees from distributing $800,000 annually to their stepmother. They accuse Zopfi Chace, Buff and Saltonstall of breaching their fiduciary duties by unfairly and unlawfully diminishing the family trust.

"My clients firmly deny the allegation that there was any impropriety regarding the changes made to Kim Chace’s will through the Second Codicil," Buff Chace and Saltonshall's lawyer, Matthew T. Oliverio, said Wednesday in an email.

He said Malcolm's camp "have been well aware of the Second Codicil since shortly after Kim Chace’s passing over a decade ago and never once raised an objection or any concern when Mr. Chace’s will was probated in 2011 in the Florida Probate Court."

"Their decision to raise this issue now through another meritless lawsuit only highlights their greed and personal animus toward the defendants. These lawsuits are becoming a waste of court and public resources. We are confident that the court will agree and that our clients will prevail in all respects," Oliverio said.

Corrente could not be reached for comment immediately Wednesday.

How the Chace family made its fortune

The storied Chace family made its fortune operating a string of textile mills that spun a quarter of the country’s fine cotton in the 1930s and later merged to form Berkshire Hathaway. Their ancestors were renowned activists in the anti-slavery, women's-rights and prison-reform movements.

Kim Chace ranked as one of the state’s wealthiest businessmen and philanthropists. He served for years on the Berkshire Hathaway board, forming a close alliance with billionaire Warren Buffett.

The family's ownership of textile mills, ties with Berkshire Hathaway and other investments landed Kim on Forbes' annual list of wealthiest Americans, placing him at 271 in 1999 and at 236 in 2001, with wealth estimated at more than $900 million. In 1996, he founded BankRI.

This article originally appeared on The Providence Journal: Chace family roiled by new lawsuit alleging unjust enrichment