A legal dispute involving the transfer of a deceased mother’s ownership interest in a family business has resulted in the reversal of a lower court’s decision, raising questions about how assets are handled within trusts and limited liability companies. The Virginia Court of Appeals announced on April 7, 2026, that it has reversed the Circuit Court of the City of Virginia Beach’s grant of summary judgment in favor of Tasos A. Galiotos and Executive Cove, LLC, following appeals filed by Paul A. Galiotos and Stavros P. Galiotos.
The appeals were filed by Paul A. Galiotos, individually and as co-trustee of the Irene A. Galiotos Revocable Trust, along with Stavros P. Galiotos, individually and as co-trustee, challenging actions taken by their brother Tasos A. Galiotos regarding the redemption of their late mother Irene A. Galiotos’s interest in Executive Cove, LLC after her death in 2016.
According to the court opinion issued by Judge Mary Bennett Malveaux, Irene A. Galiotos’s will directed that her entire probate estate be transferred to her revocable trust for the benefit of all three sons—Stavros (Steve), Paul, and Tasos—who were also named as co-trustees upon her death. At issue was whether Executive Cove’s Operating Agreement allowed for Tasos and Executive Cove to redeem Irene’s interest before it passed into the trust.
In 2018, two years after Irene’s death, Tasos asserted that Article 10.4 of Executive Cove’s Operating Agreement provided a right of first refusal for members or the company itself to purchase Irene’s share before it could be transferred to non-members or by operation of law. Steve disagreed with this interpretation, arguing that this provision did not apply to Irene’s situation.
On October 1, 2018, Executive Cove redeemed Irene’s estate interest for $565,620. Shortly before this transaction was finalized, litigation began over both management issues related to Irene’s estate and whether this redemption was valid or undervalued her share.
The circuit court initially removed both Steve and Tasos as co-executors due to concerns about their actions regarding Executive Cove but denied Steve’s motion to set aside the redemption itself. Stephanie C. Smith was appointed administrator for Irene’s estate with authority to pursue any necessary legal action concerning the redemption.
Smith later filed an amended complaint seeking declaratory judgment or aid from the court on whether the redemption was proper and if its price reflected fair market value. In response, Steve and Paul filed counterclaims against Smith as administrator; cross-claims against Tasos individually and as co-trustee; third-party claims against Tasos as former executor; and additional claims against Executive Cove itself—all challenging how the redemption was handled.
Tasos and Executive Cove responded with demurrers arguing that only Smith had standing to bring such claims on behalf of the estate—not Steve or Paul acting as trustees—and moved for summary judgment on Smith’s complaint/petition.
The circuit court granted summary judgment in favor of Tasos and Executive Cove, finding both that Article 10.4 permitted such a redemption under these circumstances and that both process and price were proper. The order also included a finding that Smith acted “in good faith” when bringing her complaint.
On appeal, however, Judges Malveaux, Bernhard, and Senior Judge Humphreys found multiple errors in these rulings:
– The appellate court held that Article 10.4 did not apply because upon Irene’s death her membership interest became only a financial (assignee) interest rather than one with control rights—a distinction made clear under Virginia law unless otherwise specified in an operating agreement (which it was not). Thus “the circuit court erred in determining that the redemption…was proper.”
– The appellate panel also determined Steve and Paul had standing as co-trustees to assert claims relating directly to trust assets allegedly harmed by Tasos’ actions after their mother’s death: “Steve and Paul had standing to assert claims against Tasos in his capacity as another co-trustee.”
– Finally, they ruled it was improper for the circuit court order to include findings about Smith’s good faith conduct since those matters were not raised or alleged in pleadings before the court: “the failure…to allege her good faith…placed these issues beyond reach.”
As relief from the courts below is reversed on these grounds—including prior awards related to attorney fees—the matter is remanded back to circuit court for further proceedings consistent with this appellate opinion.
Attorneys involved include Joseph M. Rainsbury (with Richard H. Ottinger; Katherine Lennon Ellis; Woods Rogers Vandeventer Black PLC) representing appellant Paul A. Galiotos; Roman Lifson (with David B. Lacy; Grayson B. Cassada; Christian & Barton LLP) representing appellant Stavros P. Galiotos; Gary A Bryant (with Bethany J Fogerty; Willcox & Savage PC) representing appellees Tasos A Galiotos/Executive Cove LLC; Kyle McNew (with Alison R Zizzo; LeeAnne C Schocklin; MichieHamlett PLLC/Midgett Preti Olansen PC) representing appellee Stephanie C Smith/Estate Administrator.
The case IDs are Record No. 2041-24-1 (Paul/Stavros v Stavros/Executive Cove) and Record No 2063-24-1 (Stavros et al v Tasos et al).
Source: 2063241_Galiotos_v_Galiotos_Opinion_Virginia_Court_of_Appeals.pdf