Justia Trusts & Estates Opinion Summaries
Articles Posted in US Court of Appeals for the Eighth Circuit
Jackson v. Gosset
Chapter Kris Jackson, the debtor, appeals the bankruptcy court’s order denying her motion for sanctions, damages, and other relief against Rachel Gosset and Jordan Beswick, co-trustees of the Jackson Family Trust. Jackson sought an evidentiary hearing on these issues, an order requiring the co-trustees to post a bond, an order barring them from filing any involuntary bankruptcy petition without court approval, and a declaration that the case is void ab initio.The United States Bankruptcy Court for the Western District of Missouri initially held a status hearing and decided to bifurcate Jackson’s motion to dismiss from her other motions. The court dismissed the involuntary petition under 11 U.S.C. § 305 but denied Jackson’s requests for sanctions and damages, citing minimal potential damages, lack of authority to award damages under 11 U.S.C. § 303(i) when dismissing under § 305, and Jackson’s litigation tactics.The United States Bankruptcy Appellate Panel for the Eighth Circuit reviewed the case. The panel noted that the Eighth Circuit Court of Appeals in Stursberg v. Morrison Sund PLLC clarified that damages under 11 U.S.C. § 303(i) are available even when a case is dismissed under § 305. The panel found that the bankruptcy court should have held an evidentiary hearing to allow Jackson to present evidence supporting her claims for damages and other relief. The panel remanded the case to the bankruptcy court for such a hearing.The panel also denied Jackson’s various motions, including her motion to strike the appellees' brief and her motion for sanctions, as they were outside the scope of the appeal. The panel emphasized that its role was to review the bankruptcy court’s decisions, not to make initial determinations on issues the bankruptcy court abstained from deciding. View "Jackson v. Gosset" on Justia Law
UMB Bank v. Guerin
In this case, UMB Bank, N.A. (UMB) filed a complaint against Jessie Benton and her children, alleging that they violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by committing acts of mail, wire, and bank fraud. The dispute arose from the management of a family trust, which included works of art, real estate, and personal effects. The beneficiaries of the trust accused UMB of mismanagement and sued UMB in a separate Missouri state court case. UMB then filed this federal case, arguing that the beneficiaries and their attorney engaged in fraudulent activities to force UMB to increase trust distributions or resign as trustee.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision to dismiss UMB's complaint for failure to state a civil RICO claim. The court agreed that UMB failed to sufficiently allege a pattern of racketeering activity. Although UMB might be able to prove that three communications to media outlets qualify as predicate acts of mail, wire, or bank fraud, these acts did not show a pattern of racketeering activity because they occurred within a few days and targeted a single victim (UMB). The court also affirmed the district court's denial of UMB's post-judgment motions for leave to amend the complaint, as the proposed amendment was both untimely and futile. View "UMB Bank v. Guerin" on Justia Law
Larry Muff v. Wells Fargo Bank NA
The estate of Joseph A. Muff brings three conversion claims against Wells Fargo Bank for allegedly failing to detect that Joseph’s stepson, Josh Paige, was stealing money from Joseph by way of fraudulently endorsed checks. After denying the estate’s motion to amend its complaint, the district court granted summary judgment in favor of Wells Fargo on all three claims. The estate appealed.
The Eighth Circuit affirmed in part, vacated in part, and remanded to the district court. The court concluded that the district court did not abuse its discretion in denying the estate’s motion to amend its complaint. Further, the court explained that because the Muff Corporate and Muff Farm accounts were not controlled by Wells Fargo, any injury to those accounts under a theory of conversion is not fairly traceable to Wells Fargo. In other words, the estate has not demonstrated a “causal connection” between the “injury”—Josh’s inappropriately removing funds from said accounts—and the “conduct complained of”—Wells Fargo’s allegedly allowing this to take place. Moreover, even assuming the existence of a confidential relationship under Iowa law could give the estate standing to sue, the factual record fails to support the existence of a confidential relationship in the first place. Because the estate has not demonstrated standing, the court wrote that it lacks jurisdiction over Count 3. As with Count 2, the district court should have dismissed the claim instead of entering summary judgment for Wells Fargo. However, unlike Counts 2 and 3, the estate has standing to pursue Count 1 in federal court. View "Larry Muff v. Wells Fargo Bank NA" on Justia Law
Lisa Crain v. Shirley Crain
Years after their father’s death, Appellees filed a diversity lawsuit against their stepmother, Defendant,and the executor of their father’s estate to adjudicate rights to property owned by their father and Defendant. Before the district court, Appellees argued that their father, H.C. “Dude” Crain, Jr. (Dude), breached a property settlement agreement (PSA) that he entered into with their mother, Marillyn Crain (Marillyn), pursuant to Dude and Marillyn’s divorce. The PSA— which the Logan County, Arkansas Chancery Court ruled was “contractual and nonmodifiable”—required Dude to maintain a will whereby he would leave “one-half of [his] estate” to Appellees. However, at Dude’s death, no such will existed. Instead, Defendant took sole possession of Dude’s separate property and retitled all jointly owned assets in her name. After the ruling that Dude breached the PSA, the district court imposed a constructive trust over all property Dude owned immediately prior to his death. The district court then used the principles set forth in the Restatement (Third) of Restitution to equitably divide the property, valued at nearly $100 million. Defendant appealed.
The Eighth Circuit affirmed. The court explained that although there is an open, ongoing probate action in Arkansas state court, the district court has never attempted to interfere with that court’s possession of any of the property at issue there. Rather, the district court adjudicated the parties’ rights to the property and imposed a constructive trust on it. Therefore, the court held that the probate exception to subject matter jurisdiction does not apply. View "Lisa Crain v. Shirley Crain" on Justia Law
The Estate of Charles D. Smith v. Kansas City Chrome Shop, Inc.
This case concerns a $225,000 life insurance policy issued on the life of C.S. When C.S. died in 2018, his estate (“Estate”) made a claim for the policy proceeds. His former employer, Kansas City Chrome Shop (“KCCS”), together with KCCS’s president, Dora Clark-Wall, made a competing claim. After the district court granted partial summary judgment in favor of the Estate, Clark-Wall brought equitable claims in her personal capacity. Following a bench trial, the district court found that Clark-Wall was entitled to an equitable portion of the proceeds totaling $55,253.28 and that the Estate was entitled to the remaining $169,746.72. KCCS and Clark-Wall appealed.
The Eighth Circuit affirmed. The court explained that Clark-Wall’s continued payments and renewal of the policy were essentially a gamble on C.S’s life—a benefit she hoped to reap if he died before she did. The law does not view such conduct favorably. The court, therefore, failed to see how the principles of fairness and justice demand that Clark-Wall is awarded accumulated interest on her payments. Accordingly, the court found no abuse of discretion in the district court’s equitable award to Clark-Wall. View "The Estate of Charles D. Smith v. Kansas City Chrome Shop, Inc." on Justia Law
Marjory Thomas Osborn-Vincent v. American Express Financial
Decedent was an unnamed class member in an action involving alleged misrepresentations made by Defendants while marketing, selling, administering, and servicing various life insurance and annuity products. After the class member died her Estate commenced an action asserting various contract, fraud, and elder abuse claims pertaining to Decedent’s 1989 purchase of a purported “single-premium universal life insurance policy.” The district court granted Defendants’ motion to enforce the settlement agreement and enjoined the Estate from pursuing the Oregon claims.The Eighth Circuit affirmed. The court explained to effectuate service under Rule 4, a party may either follow state law where service is made or fulfill one of the following: (a) deliver a copy to the individual personally; (b) leave a copy at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there; or (c) deliver a copy to an authorized agent. Here, the personal representative (a nonparty) was served with the motion to substitute in a manner provided by Rule 4, received notice in compliance with Rule 25(a), and was properly brought within the jurisdiction of the Minnesota district court.Further, beyond the Estate’s self-serving statements, there is no evidence suggesting Defendants did not follow the approved procedures. Finally, the court held that upon careful review of the record, the district court did not abuse its discretion in finding the doctrines of laches and unclean hands were inapplicable under the facts and circumstances of this case. View "Marjory Thomas Osborn-Vincent v. American Express Financial" on Justia Law
Jo Ann Howard & Assoc., PC v. National City Bank
The Eighth Circuit affirmed the district court's award of damages after a bench trial that resulted in a judgment in favor of appellees and a group of state guaranty associations where the district court ruled that Allegiant Bank breached its fiduciary duties in administering seven trusts, and that PNC was liable for the breach as the successor-in-interest to National City Bank, which in turn had acquired Allegiant.The court concluded that the district court did not clearly err in calculating the compensatory damages award; even assuming for the sake of analysis that Missouri law does require damages to be readily ascertainable to award prejudgment interest, the court still found no basis for reversal of the award of prejudgment interest; assuming that Federal Rule of Civil Procedure 60(a) was not the proper source of authority for the district court's correction of a clerical mistake, any error was harmless; considered in its entirety, the evidence supports an award of punitive damages; and the district court did not abuse its discretion in awarding attorney's fees and PNC's claims to the contrary are unavailing. View "Jo Ann Howard & Assoc., PC v. National City Bank" on Justia Law
Gillick v. Elliott
Employer-appointed trustees filed a complaint in the district court seeking the appointment of an impartial umpire to resolve a deadlock on a motion, pursuant to Section 302(c)(5) of the Labor Management Relations Act, brought by one of the employer-appointed trustees. The district court dismissed the complaint and declined to appoint an umpire.The Eighth Circuit affirmed, concluding that, based on the entirety of the Trust Agreement, the delegation proposed by the employer trustees' motion is beyond the trustees' authority to implement. The court explained that because the proposed delegation and amendment to the Trust Agreement are beyond the trustees' authority to implement, the deadlocked motion is not a matter arising in connection with the administration of the plan or a matter within the trustees' jurisdiction. Therefore, the Trust Agreement does not authorize the appointment of a neutral umpire to resolve the deadlocked motion. Furthermore, because the court found that adopting the employer trustees' proposed motion would require amending the Trust Agreement, the court also necessarily concluded that the deadlocked motion does not concern trust fund "administration" under section 302(c)(5). Accordingly, the deadlocked motion is not a matter of trust "administration" under either the Trust Agreement or section 302(c)(5), and thus the district court did not err in declining to appoint an umpire. View "Gillick v. Elliott" on Justia Law
Rollo-Carlson v. United States
The Eighth Circuit affirmed the district court's dismissal, based on lack of subject matter jurisdiction, of plaintiff's suit against the government under the Federal Tort Claims Act (FTCA), alleging that the VA provided negligent psychiatric care that resulted in her son's death. In this case, plaintiff concedes she was not the appointed trustee under Minnesota law and was only the next-of-kin at the time she filed a claim with the VA. Therefore, plaintiff failed to present the VA with her authority to act as the trustee as required by the FTCA. Because this was a jurisdictional requirement under the FTCA, the court held that the complaint was properly dismissed. View "Rollo-Carlson v. United States" on Justia Law
Northport Health Services of Arkansas, LLC v. Posey
The Eighth Circuit reversed the district court's grant of summary judgment for Northport in a wrongful death action brought by plaintiff, Mark, as the representative of the estate of his deceased father. Another son, Matt, signed the admission agreement, which included an arbitration agreement, at the residential rehabilitation center owned by Northport. Northport sought to compel arbitration and the district court granted the motion. Mark appealed, asserting that the district court misused the third-party beneficiary theory when no underlying agreement was present between the Poseys and Northport.Arkansas courts have repeatedly declined to find that individuals like Matt—relatives without power-of-attorney or other legal authority who admit a family member to a nursing home—possess valid authority to bind their relatives to arbitration under a third-party beneficiary theory. In this case, because Matt was undisputedly not his father's legal guardian or attorney-in-fact, he lacked the capacity to sign the contract as his father's representative. Accordingly, the court reversed the order compelling arbitration and remanded for further proceedings. View "Northport Health Services of Arkansas, LLC v. Posey" on Justia Law