Justia Delaware Court of Chancery Opinion Summaries

Wallace B. Flint established a detailed estate plan in his Last Will and Testament that created a testamentary trust that would receive as its corpus the residue of his estate (the Trust). Flint’s daughter, Katherine, was an income beneficiary of the Trust. Katherine filed a petition seeking (1) to modify the terms of the Trust by rewriting its administrative provisions, thus converting the Trust from a traditional, trustee-managed structure into a directed trust where the trustee would serve only an administrative role; and (2) to modify a previous order regarding the law governing the Trust that would create a contingent choice of law provision in which Delaware law would govern all issues of administration unless it would or might create adverse tax affects, in which case New York law - the law that originally governed the Trust under Flint’s estate plan - would spring back into effect. The Court of Chancery denied both requests, holding (1) Katherine’s petition sought to modify the Will in a manner that conflicted with Flint’s intent; and (2) the proposed provision of the petition seeking an order providing that Delaware law will govern the administration of the trust under certain circumstances contained language that was too vague and uncertain to be implemented. View "In re Trust Under Will of Flint" on Justia Law

In 2004, Plaintiff retained Law Firm in connection with an action to inspect the books and records of certain defendants. Law Firm served as counsel in this litigation through the filing of claims against other defendants. In 2011, Law Firm withdrew as counsel. When some defendants prevailed at trial, the Court concluded that Law Firm should be awarded attorneys’ fees and expenses. Law Firm then moved to intervene, attaching a petition for a charging lien based on $766,166 in unpaid fees and expenses incurred in representing Plaintiff during the earlier stages of this litigation. The Court of Chancery granted the motion for leave to intervene, holding that Law Firm had an interest relating to the subject of the action, and Law Firm’s application was timely. View "Sutherland v. Sutherland" on Justia Law

At issue in this case was a trust (“the Raiff Trust”) that had expired under the terms of the trust instrument that established the trust. The trust was funded with shares of Jenzabar, Inc. At the time of this litigation, the Raiff Trust continued to hold shares of Jenzabar stock on behalf of its beneficiary. Plaintiff, trustee of a trust holding stock in Jenzabar, brought derivative claims related to a bonus payment for Jenzabar’s CEO and Chairman. The Raiff Trust moved to intervene in the litigation. Defendants filed a motion to dismiss, arguing that the trust lacked the capacity to prosecute this action on behalf of Jenzabar because it had no beneficial or economic interest in Jenzabar. The Court of Chancery granted Defendants’ motion to dismiss, holding that the trust could take only actions related to preserving its assets for purposes of distribution and wind-up, together with those actions for which the trust instrument specifically provided, which did not include the maintenance of the derivative litigation contemplated in this action. View "In re Jenzabar, Inc. Derivative Litigation" on Justia Law

During divorce proceedings between Daniel Kloiber (Dan) and Beth Ann Kloiber the Kentucky Family Court issued status quo orders that restricted Dan in his capacity as a human being over whom the Kentucky Family Court had personal jurisdiction, thereby restricting Dan’s actions as special trustee of the Daniel Kloiber Dynasty Trust and sole manager of three LLCs. Dan subsequently resigned from his positions and appointed Nick Kloiber as special trustee. Nick proceeded to take action contrary to the status quo orders, and the Kentucky Family Court issued a rule to show cause why Nick should not be held in contempt. PNC Delaware Trust Company (PNC), the trustee of the Dynasty Trust, and Nick filed petitions seeking instructions and declarations from the Court of Chancery, arguing that the Kentucky Family Court improperly asserted jurisdiction over the trustee, special trustee and trust and was requiring them to take actions contrary to their fiduciary duties. The Court of Chancery denied Nick’s application for a temporary restraining order (TRO) to prevent Beth from seeking to enforce the status quo orders, including the pending rule to show cause, holding that, because the Kentucky Family Court was not interfering with the Court’s jurisdiction, Nick lacked a colorable claim on which to base a TRO. View "In re Daniel Kloiber Dynasty Trust " on Justia Law

Settlor established a trust (Trust) for the maintenance of two burial lots. The Wilmington and Brandywine Cemetery (the Cemetery) and PNC Bank, N.A. (the Trustee) petitioned to modify the Trust, to direct that three percent of the net asset value of the Trust be distributed annually to the Cemetery for the general maintenance of the Cemetery. Contending that the Trust had a charitable purpose, the Cemetery and Trustee relied on the common law doctrine of cy pres, Delaware's statutory codification of the cy pres doctrine, and the common law doctrine of deviation in seeking modification. The Court of Chancery denied the petition, holding that petition did not provide any basis for modifying the Trust. View "In re Latimer Trust" on Justia Law

Petitioners in this case were current beneficiaries of seven testamentary trusts. Petitioners sought orders approving the resignations of individual trustees, confirming the appointment of Northern Trust Company of Delaware as the successor corporate trustee for each trust, confirming Delaware as the situs of each trust, reforming the trust, and accepting jurisdiction over the trusts. The Court of Chancery dismissed the petitions, declining to adjudicate this multistate trust matter in deference to the courts which asserted jurisdiction over and had an ongoing supervisory role with respect to the testamentary trusts. Specifically, the Court held (1) the petitions for the 1960 and 1969 trusts should be filed in New Jersey and Texas, if appropriate; and (2) the petition for the 2005 trusts should be filed in the jurisdiction where probate matters were ongoing or refiled with supplemental information in the Court of Chancery. View "In re Peierls Family Testamentary Trusts" on Justia Law

Petitioners in this case were the current trustees of a Washington charitable trust. Petitioners petitioned the Court of Chancery for orders (1) approving their resignations, (2) confirming the appointment of Northern Trust Company of Delaware as successor trustee, (3) confirming Delaware as the situs of the trust, (4) determining that Delaware law governs the administration of the trust, (5) accepting jurisdiction over the trust, and (6) reforming the trust to include an array of additional administrative positions. The Court accepted jurisdiction over the trust for the limited purpose of considering the application for reformation and held (1) Petitioners' first four requests sought impermissible advisory opinions, and to the extent the petition sought these declarations, it was dismissed; (2) Petitioners' application for reformation was denied, as Petitioners did not advance any recognized basis for reforming the Trust; and (3) jurisdiction over the trust was not retained. View "In re Ethel F. Peierls Charitable Lead Unitrust" on Justia Law

Petitioners in this case were current beneficiaries of five inter vivos trusts. Seeking declarations designed to cause Delaware to govern the administration of the trusts so they could be reformed to take advantage of features authorized by the Delaware trust statute, Petitioners requested orders approving the resignations of individual trustees, confirming the appointment of Northern Trust Company of Delaware as the sole successor trustee for each trust, and confirming Delaware as the situs of each trust. The Court of Chancery denied the petitions, holding that the petitions failed primarily because Delaware law did not govern the trusts, as each of the trusts affirmatively selected the governing law of a different jurisdiction. View "In re Peierls Family Inter Vivos Trusts" on Justia Law

This action came before the Court of Chancery on a petition for a decree of distribution in an estate matter. Petitioner and his sister, Respondent, were the intestate heirs of their mother's estate. Ordinarily the estate would be divided evenly between the two of them. Petitioner argued, however, that his sister was not entitled to any additional funds from the estate because (1) she benefited when the estate's property was sold and the proceeds were used to pay off a mortgage she owed on the property, which had the effect of decreasing the amount available in the estate for distribution to the heirs, and (2) Respondent's actions as administratrix depleted the value of the estate. The Court of Chancery ordered that all of the assets in the estate should be distributed to Petitioner, concluding that, after accounting for the benefit Respondent received when the mortgage was paid off, and the loss caused to the estate by the breach of Respondent's fiduciary duties, there were no funds remaining in Respondent's share of the estate. View "In re Riley" on Justia Law

This matter involved allegations of breach of duty made by a common stockholder of a Delaware statutory trust against the trustee of that trust, as well as claims by the stockholder against those entities she alleged aided and abetted the breach. Plaintiff failed to make a pre-suit demand against defendant trustees, who she conceded were independent and disinterested when they took the actions complained of. The court found that plaintiff's claims were derivative and not direct. To survive a motion to dismiss in these circumstances under Section 3816 of the Delaware Statutory Trust Act (DSTA), 12 Del. C. 3816, a plaintiff must plead particularized facts raising a reasonable doubt that the actions of the trustees were taken honestly and in good faith. Because a careful reading of the complaint disclosed that plaintiff failed to so plead, her complaint must be dismissed. View "Protas v. Cavanagh, et al." on Justia Law