Case Title: Ex parte Synovus Trust Company, N.A., et al. PETITION FOR PERMISSION TO APPEAL, OR, IN THE ALTERNATIVE, PETITION FOR WRIT OF MANDAMUS (In re: Robert F. Raines et al. v. Synovus Trust Company, N.A., etal.)

Citation: 

Docket Number: 1080100

State: alabama

Court: Alabama Supreme Court

Date: 2009-12-30T00:00:00Z

Document:
Rel: 12/30/2009
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2009-2010
____________________
1080100
____________________
Ex parte Synovus Trust Company, N.A., et al.
PETITION FOR WRIT OF MANDAMUS
(In re: Robert F. Raines et al.
v.
Synovus Trust Company, N.A., et al.)
(Walker Circuit Court, CV-07-301)
COBB, Chief Justice.
Synovus Trust Company, N.A. ("Synovus Trust"), Synovus
Investment Advisors, Inc., Richard E. Neumann, Carolyn G.
1080100
2
Dunkle, and Dan Davidson petition this Court for a writ of
mandamus directing the trial court to dismiss the claims
against them filed by Robert W. Raines, Ronald E. Raines, and
James E. Raines alleging breach of a fiduciary duty.  We grant
the petition and issue the writ.
Facts and Procedural History
On August 9, 2007, Robert F. Raines ("Mr. Raines"), his
wife, Helen H. Raines ("Mrs. Raines"), and their three
children -- Robert W. Raines, Ronald E. Raines, and James E.
Raines ("the Raines children") -- filed this action against
Synovus Trust, Synovus Trust Corporation, Synovus Investment
Advisors, Inc., Richard E. Neumann, Carolyn G. Dunkle, and Dan
Davidson ("the defendants").  According to the allegations of
the Raineses' complaint, Mr. and Mrs. Raines, with the help of
the Raines children, operated the Jasper Bowling Center in
Jasper for over 20 years with substantial financial success.
The Raineses allege that Mr. and Mrs. Raines amassed an
investment portfolio containing a large amount of stock in
Wal-Mart Stores, Inc. ("Wal-Mart"), a corporation that
operates a  chain of discount retail stores.
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3
The Raineses allege that, on March 2, 2000, Neumann,
Dunkle, and Davidson, as agents of Synovus Trust Corporation,
approached Mr. and Mrs. Raines to solicit their banking and
investment business.  The Raineses further contend that
Neumann, Dunkle, and Davidson represented to Mr. and Mrs.
Raines that, if they allowed Synovus Trust Corporation to
manage their money, Synovus Trust Corporation would generate
a five to eight percent return on their money, and that
Neumann, Dunkle, and Davidson could get such returns on the
Raineses' money "blindfolded" and "in their sleep."  According
to the Raineses, Neumann, Dunkle, and Davidson further
represented that, most likely, they would generate 15 to 20
percent returns on Mr. and Mrs. Raines's investment.  The
Raineses allege that Neumann, Dunkle, and Davidson presented
Mr. and Mrs. Raines with marketing material from Synovus Trust
Corporation showing that they could expect a 20 percent return
on their investment if they allowed Synovus Trust Corporation
to manage their money.
The Raineses further contend that Neumann, Dunkle, and
Davidson told Mr. and Mrs. Raines that they were invested "way
too heav[il]y" in Wal-Mart stock, i.e., that they had too much
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Wal-Mart stock in their portfolios.  According to the
Raineses, Neumann, Dunkle, and Davidson represented that, if
Mr. and Mrs. Raines would transfer their Wal-Mart stock and
other securities into a trust to be managed by Synovus Trust
Corporation, Synovus Trust Corporation would diversify Mr. and
Mrs. Raines's assets.  The Raineses allege that Neumann,
Dunkle, and Davidson told Mr. and Mrs. Raines that, if they
allowed Synovus Trust Corporation to manage their investments,
none of the Raineses would have to work again because of the
money Synovus Trust Corporation would make for them.  Neumann,
Dunkle, and Davidson allegedly told Mr. and Mrs. Raines that
Synovus Trust Corporation would "make a lot of money" for the
Raines family.
According to the Raineses' complaint, on March 31, 2000,
the Robert F. Raines Management Trust was created in reliance
on the representations of Neumann, Dunkle, Davidson, and other
agents of Synovus Trust Corporation.  Mr. Raines contributed
approximately $1 million in securities and other assets to
this trust.  Mr. Raines was the sole settlor of this trust,
which was revocable at any time.  Mr. Raines and Synovus Trust
Corporation were named as trustees of the management trust.
1080100
It does not appear that the nonsettlor beneficiaries of
1
the Robert F. Raines Management Trust held powers of
withdrawal while the trust was revocable.  See Ala. Code 1975,
§ 19-3B-603(b). 
It does not appear that the nonsettlor beneficiaries of
2
the Helen H. Raines Management Trust held powers of withdrawal
while the trust was revocable.  See Ala. Code 1975, §
19-3B-603(b).
5
Mr. and Mrs. Raines and the Raines children were named as
beneficiaries of this trust.1
The Raineses further allege in their complaint that, also
on March 31, 2000, Mrs. Raines created the Helen H. Raines
Management Trust in reliance on the representations of
Neumann, Dunkle, Davidson, and other agents of Synovus Trust
Corporation.  Mrs. Raines contributed approximately $1 million
in securities and other assets to this management trust.  Mrs.
Raines was the sole settlor of the trust, which, like the
Robert F. Raines Management Trust, was revocable at any time.
Mrs. Raines and Synovus Trust Corporation were named as
trustees of the Helen H. Raines Management Trust.  Mr. and
Mrs. 
Raines 
and 
the 
Raines 
children 
were 
named 
as
beneficiaries of this trust.2
The Raineses allege that, in connection with the creation
of the Robert F. Raines Management Trust and the Helen H.
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Raines Management Trust ("the trusts"), Mr. and Mrs. Raines
each entered into an investment agreement with Synovus Trust
Corporation.  These investment agreements allegedly gave
Synovus Trust Corporation the sole discretion to manage,
invest, and have custody of the property in the trusts, taking
into account the Raineses' express investment objective to
maximize growth of the assets.  According to the Raineses,
these investment agreements conferred on Synovus Trust
Corporation the sole discretion and ability to purchase, sell,
or invest the trust properties as Synovus Trust Corporation
deemed advisable.
According to the Raineses' complaint, Synovus Trust
Corporation, Synovus Trust, and their agents failed to
properly administer the trusts, did not diversify the trust
assets, and did nothing at all to manage the trust assets, to
generate income, to maximize the growth of the trust assets,
or otherwise to carry out Synovus Trust Corporation's
obligations as cotrustee of the trusts.  However, the Raineses
allege, Synovus Trust Corporation, Synovus Trust, and their
agents did charge management, advisory, and other service fees
in excess of $130,000.
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On November 14, 2005, Synovus Trust, Synovus Trust
Corporation, and their agents provided notice to the Raineses
of their resignation as trustees of both trusts, effective 90
days from the date of the notice.  The Raineses contend that,
at that time, they discovered that the defendants had not
managed the assets in the trusts as allegedly promised.
On June 30, 2008, the Raineses amended their complaint in
this action.  In the amended complaint, they sought to recover
damages on the following causes of action: breach of fiduciary
duty, fraud by misrepresentation or suppression of material
facts, promissory fraud, and breach of contract.
On July 15, 2008, the defendants moved to dismiss the
Raines children's breach-of-fiduciary-duty claims based on
lack of standing.  On September 24, 2008, the trial court
denied the motion.  On October 24, 2008, the defendants moved
the trial court to certify for permissive appeal the following
question, pursuant to Rule 5, Ala. R. App. P.: Whether the
beneficiaries of a revocable trust, other than the settlor of
the trust, have standing to assert claims alleging breach of
fiduciary duty against a trustee when the trust is revocable
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at any time by the settlor.  On October 10, 2008, the trial
court granted the motion and certified the question.
On October 23, 2008, the defendants filed in this Court
a petition for permission to appeal and, alternatively, a
petition for writ of mandamus.  On November 21, 2008, this
Court entered an order stating that the defendants' filing
would be treated as a petition for writ of mandamus and also
ordered answers and briefs.
Standard of Review
The standard of review applicable to a petition for a
writ of mandamus is well settled:
"'Mandamus is an extraordinary remedy and
requires a showing that there is: "(1) a clear legal
right in the petitioner to the order sought; (2) an
imperative duty upon the respondent to perform,
accompanied by a refusal to do so; (3) the lack of
another adequate remedy; and (4) properly invoked
jurisdiction of the court."  Ex parte Edgar, 543 So.
2d 682, 684 (Ala. 1989); Ex parte Alfab, Inc., 586
So. 2d 889, 891 (Ala. 1991); Ex parte Johnson, 638
So. 2d 772, 773 (Ala. 1994).'  Ex parte Gates, 675
So. 2d 371, 374 (Ala. 1996). See also Ex parte
Waites, 736 So. 2d 550, 553 (Ala. 1999)."
Ex parte Inverness Constr. Co., 775 So. 2d 153, 156 (Ala.
2000).
Analysis
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9
The lack of subject-matter jurisdiction may not be waived
by the parties, and subject-matter jurisdiction may not be
conferred by consent.  Ex parte Alabama Dep't of Human Res.,
999 So. 2d 891, 894 (Ala. 2008) (citing Ex parte Davis, 930
So. 2d 497, 499-500 (Ala. 2005)).  Thus, "[o]n questions of
subject-matter jurisdiction, this Court is not limited by the
parties' arguments or by the legal conclusions of the trial
... court[] regarding the existence of jurisdiction."   Ex
parte Alabama Dep't of Human Res., 999 So. 2d at 894-95
(citing Ex parte Smith, 438 So. 2d 766, 768 (Ala. 1983)).  "A
court is obligated to vigilantly protect against deciding
cases over which it has no jurisdiction because '[i]t would
amount to usurpation and oppression for a court to interfere
in a matter over which it has no jurisdiction, and its
pronouncements in respect thereto would be without force, and
its decrees and judgments would be wholly void.  This is a
universal principle, as old as the law itself.'"  Crutcher v.
Williams, 12 So. 3d 631, 635 (Ala. 2008) (quoting Wilkinson v.
Henry, 221 Ala. 254, 256, 128 So. 362, 364 (1930)).
"'Standing is a necessary component of subject matter
jurisdiction.'"  State v. Property at 2018 Rainbow Drive, 740
1080100
10
So. 2d 1025, 1028 (Ala. 1999) (quoting Barshop v. Medina
County Underground Water Conservation Dist., 925 S.W.2d 618,
626 (Tex. 1996)). "Standing ... turns on 'whether the party
has been injured in fact and whether the injury is to a
legally protected right.'"  2018 Rainbow Drive, 740 So. 2d at
1027 (quoting Romer v. Board of County Comm'rs of the County
of Pueblo, 956 P.2d 566, 581 (Colo. 1998) (Kourlis, J.,
dissenting) (emphasis added in Rainbow Drive)).
Alabama Code 1975, § 19-3B-101 et seq., also known as the
"Alabama Uniform Trust Code," became effective January 1,
2007.  The Alabama Uniform Trust Code "applies to all trusts
created before, on, or after January 1, 2007," and "to all
judicial proceedings concerning trusts commenced on or after
January 1, 2007."  Ala. Code 1975, § 19-3B-1204(a)(1) and (2).
"[A]ny rule of construction or presumption provided in [the
Alabama Uniform Trust Code] applies to trust instruments
executed before January 1, 2007, unless there is a clear
indication of a contrary intent in the terms of the trust."
Ala. Code 1975, § 19-3B-1204(a)(4).  
Alabama Code 1975, § 19-3B-603(a), provides: "While a
trust is revocable, rights of the beneficiaries are subject to
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the control of, and the duties of the trustee are owed
exclusively to, the settlor."  (Emphasis added.)  Therefore,
regardless of whether the Raines children have suffered injury
to their rights as beneficiaries of the trusts as a result of
the defendants' conduct, those rights were subject to the
control of Mr. and Mrs. Raines while the trusts were
revocable, and the fiduciary duties owed by the defendants
were owed "exclusively" to Mr. and Mrs. Raines during that
time.  See Ala. Code 1975, § 19-3B-603(a).  Thus, the Raines
children's causes of action for breach of fiduciary duty do
not seek redress for legally protected rights, and the Raines
children have no standing to assert those claims.  See, e.g.,
2018 Rainbow Drive, 740 So. 2d at 1027 (noting that, to have
standing to sue, a party must have suffered an injury to a
legally protected right). 
Therefore, the defendants have demonstrated a clear legal
right to a writ of mandamus directing the trial court to
dismiss the breach-of-fiduciary-duty claims of the Raines
children against them.  In addition, we find that the
defendants have carried their burden as petitioners to
demonstrate an imperative duty upon the trial court to dismiss
1080100
12
those claims and its refusal to do so, the lack of another
adequate remedy, and the proper  jurisdiction of this Court.
See Ex parte Inverness Constr. Co., 775 So. 2d at 156 (setting
forth the requirements for the issuance of a writ of
mandamus).  Therefore, the defendants are entitled to the writ
of mandamus.
Conclusion
The trial court is hereby directed to dismiss the
breach-of-fiduciary-duty 
claims 
of 
the 
Raines 
children 
against
all the defendants.
PETITION GRANTED; WRIT ISSUED. 
Lyons, Woodall, Stuart, Smith, Bolin, Parker, and Shaw,
JJ., concur.  
Murdock, J., concurs in the result.