The May 2016 death of Michael Allen Lasiter, who owned Redstone Construction Group Inc. of Little Rock, has led to litigation over the handling of his trust, which is expected to be worth more than $10 million after estate taxes are paid.
His widow, Caroline Lasiter of Little Rock, and his sisters, Paula Christy L. Schmidt and Holly L. Woprice, both of Cincinnati, have filed separate lawsuits over the trust.
In August, Caroline Lasiter sued Little Rock attorney J. Richard Newland Jr. and his Newland & Associates law firm, alleging that malpractice in the administration of the trust cost her millions of dollars. Her lawsuit, filed in August in Pulaski County Circuit Court, alleges that Newland either canceled Michael Lasiter’s $2.5 million life insurance policy or let it lapse in April 2015, 11 months before her husband’s death from cancer at the age of 50.
She alleges that Newland didn’t notify her of the changes in the policy, even though she was Newland’s client. Caroline Lasiter said Newland, who is also a CPA and member of FCA Certified Public Accountants of Little Rock, was serving as attorney, accountant, financial adviser and insurance salesman for both her and her husband.
Her lawsuit also alleges that Newland sold or helped sell Redstone Construction to its employees in September 2016 for a price that was “well below” market value, costing her millions of dollars. The lawsuit didn’t specify the company’s price, its market value or how she determined that value.
Caroline Lasiter’s attorney, Danny Crabtree of Little Rock, didn’t return messages last week. Newland’s lawyer, Robert “Skip” Henry III of Little Rock, denied the allegations of wrongdoing.
“I can tell you that Mr. Lasiter, prior to his death, very explicitly prepared instruments and wills and trusts exactly the way he wanted them prepared,” Henry told Arkansas Business. “And the transactions described in the complaint filed by Mrs. Lasiter deal with things that were specifically Mr. Lasiter’s express instructions as far as how things were to be done. Everything that the Newland law firm did, they did it exactly the way Mr. Lasiter wanted it done.”
Nevertheless, in May, Caroline Lasiter went to the Pulaski County Circuit Court’s Probate Division to have Newland & Associates removed as the executor of her husband’s estate and made some of the same complaints that are in her malpractice lawsuit. In response, Newland’s firm declined to be executor. Relyance Bank of Pine Bluff was named as executor last month.
Sisters Allege Fraud
Caroline Lasiter isn’t the only family member who claims to have discovered problems with the Michael Allen Lasiter Trust after his death. On Oct. 25, Michael Lasiter’s sisters sued Newland in his role as trustee and accused their late brother of fraud and breach of fiduciary duty.
The sisters’ attorney, Richard Hatfield of Little Rock, said last week that he will amend his suit to remove Newland’s name as the trustee and replace it with Relyance Bank.
The sisters, Schmidt and Woprice, claim that they discovered after their brother’s death that he had “fraudulently concealed” from them transactions related to the stock of the Redstone Group, which was founded by their father, Mannie Lasiter.
The sisters alleged that Michael Lasiter had transferred shares of the company’s stock into his trust but never paid for them. The sisters said they should have been paid for those shares, most of which were later sold. The financial damage that the women claim had not been quantified as of last week.
The sisters said that Redstone and Michael Lasiter, who was the CEO and its primary owner, “greatly benefitted from Michael’s failure to pay for the Stock … from 2004 to 2016,” the lawsuit said.
Mannie Lasiter incorporated Lasiter Construction Inc. in 1985 and built it into a “viable going concern as an asphalt paving and maintenance subcontractor operating in Central Arkansas,” according to his employment contract in 2000, which was filed as part of an exhibit in the lawsuit by the sisters.
Michael Lasiter started working at his father’s “small asphalt repair company” as a youth, according to a December 2016 news release in which the University of Arkansas at Little Rock announced a scholarship in Michael Lasiter’s name. “He eventually built that business into Redstone Construction, one of the largest highway and asphalt construction companies in the state,” the news release said.
Mannie Lasiter was Redstone Construction Group’s chief operating officer until 2000, when Michael Lasiter began running the daily operations of the company. At the time, Mannie Lasiter owned 82.4 percent of the company and his son owned the balance.
In September 2000, the father and son entered into a succession agreement to transfer Mannie Lasiter’s stock. The agreement called for Michael Lasiter to pay for some of his father’s shares of the company, but also for some shares to be given to Michael Lasiter.
The company seemed to do well under Michael Lasiter’s leadership. Its services include excavation work and concrete repair. Its portfolio of high-profile projects includes shopping centers, hospitals, Clinton National Airport and Dickey-Stephens Park in North Little Rock. In 2011, Redstone bought a quarry, which helped the company open asphalt plants and allowed it to go after larger highway projects, according to the UA Little Rock news release. In 2015, it had more than 200 employees, according to an article in Arkansas Business Profiles. Court filings, however, don’t specify the private company’s revenue.
Mannie Lasiter’s Death
After getting a diagnosis of lung cancer, Mannie Lasiter died on June 28, 2004, and was survived by his three children.
Michael Lasiter then began serving as trustee of Mannie Lasiter’s trust, which was created in 2002. Michael Lasiter also became executor of his father’s will.
In the summer of 2004, Mannie Lasiter’s daughters contacted Newland, the attorney who represented Redstone and the Lasiters. They quizzed Newland about aspects of their father’s will and trust.
Newland told Holly Woprice in a July 19, 2004, email that he was there to help and protect “all beneficiaries of the trust.
“I am prohibited from doing anything against any of your interests with respect to Mannie’s estate,” Newland said in the email, which was attached as an exhibit to the lawsuit.
He also reminded them that Mannie Lasiter was his client. Mannie Lasiter “told me what he wanted, and it is my job to carry that out,” Newland said in the email.
Later in July 2004, the sisters asked Newland over the phone if it was a conflict for him to assist them, “and he was adamant it was not,” the suit said. “He always held this position on this issue.”
The sisters thought they could rely on Newland’s advice in connection with their father’s estate plan “and for that reason, did not get another attorney,” the lawsuit said.
They would regret the move, according to the lawsuit.
Michael Lasiter married Caroline in Lonoke County in March 2003, about a year before Mannie Lasiter’s death.
They had a prenuptial agreement, but it would be dissolved during the marriage and remain dissolved — or so Caroline Lasiter thought, according to her lawsuit.
Michael and Caroline Lasiter used Newland as an attorney for a number of transactions over the years, and he served as their accountant, life insurance salesman and financial adviser.
Caroline Lasiter said that in September 2014, Newland “prepared or caused to be prepared” an amendment to her husband’s revocable trust that reactivated the prenuptial agreement. She alleged that Newland didn’t notify her about the change, which she said was a breach of fiduciary duty, because he represented her at the time.
“Newland’s conduct in representing and advising one client (Michael Lasiter) in a course of action that was adverse to his other client (Caroline Lasiter) constitutes a breach of fiduciary duty,” the suit said.
She also alleged malpractice in connection with the handling of Michael Lasiter’s life insurance policy.
“Mrs. Lasiter received a substantial sum of money and received the funds that she was supposed to receive under Mr. Lasiter’s estate plan,” said Henry, Newland’s lawyer. “We have no idea why Mrs. Lasiter filed this claim.”
No court date has been set.
Michael Lasiter’s Death
Michael Lasiter’s sisters learned only after their brother’s death that he had transferred all his property, including the Redstone shares, into his personal trust in February 2016, their lawsuit said. After his death, Michael Lasiter’s trust was divided into three trusts — one for Caroline Lasiter, a tax-free trust and one for his grandchildren. It appears that Caroline Lasiter’s trust would not be affected by the sisters’ lawsuit.
The sisters also discovered that their father never transferred the Redstone stock to Michael Lasiter or to his trust, and that not all the payments were made on the succession plan agreement they signed back in 2000.
“Michael had a fiduciary duty as Trustee of Mannie’s Trust to give Christy and Holly accurate information detailed above and intentionally concealed it from them,” the lawsuit said.
They are asking for an unspecified amount of damages and want Michael Lasiter’s trust to pay them dividends on 275 shares of the company stock from 2004-16. They also want the succession agreement rescinded.
As of last week, no answer had been filed in the sisters’ lawsuit.
A Cautionary Tale
Caroline Lasiter’s complaint against the man who served as attorney, accountant and financial adviser to her and her husband could serve as a cautionary tale for lawyers and clients, said Joshua Silverstein, a law professor at the Bowen School of Law at the University of Arkansas at Little Rock.
Silverstein, who was not familiar with the Lasiter lawsuits, said that if attorneys offer advice that goes beyond the traditional practice of law, they have to make sure that they are legally entitled to perform the services and are professionally competent to do so.
Clients should make sure that their lawyers are competent to give business advice and that they’re legally allowed to give that advice.
“Part of the problem is clients can’t figure out the latter question because that’s why they hired a lawyer to begin with,” he said.
The last several years have seen a rise in the number of malpractice lawsuits involving estate attorneys.
A 2015 study of legal malpractice cases filed in the United States by the American Bar Association found that 12.05 percent of all malpractice lawsuits against attorneys were against real estate, trust and probate lawyers. In 2011, that share was 10.67 percent.
William T. McCaffery, a legal malpractice defense attorney at the firm L’Abbate Balkan Colavita & Contini in Garden City, New York, said he thinks such claims have increased partly because society has become more litigious. “In years past, I don’t think people would think to sue their lawyer,” he said. “I think that is something that’s becoming more and more popular.”
And some states have made rules that make it easier for beneficiaries of estates to sue their attorneys, McCaffery said.