## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 11

- 1657 M ARYB UCK S BA UMS CAN LA N , P laint if f-A ppell ant, v. M ARS HALL E ISENBERG , et a l., D efend a nts-A pp ellees.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 1:09- cv-05026

—Jo hn F. G rady, Judge .
A RG UE D S EP TE MBE R 28, 2011

— D ECI DE D J AN UA RY 20, 2012

Befo re B AUER, W OO D a nd T INDER, C ircu it Judges . B A UER, Cir cu i tJudg e . M ar y Bucksba um S canl an ( “Sc anl an”) i s a curr ent b enefi ci ar y o fse ver aldi sc re tio n ar y t ru st s. Sc an lan br ou gh t c laim s o f lega l m alpract i ce a nd br each o ffi du ci ar y duty aga i nst the tr ustee and her l aw yer s. The di str i ct c ourtdi sm i ssed al l o f her cl ai m s with prej ud i ce an d rule d that S canl an l acke d A rti cl e I I Ist anding because she did notal l ege facts sh ow ing a l ike lihood that the tru sts’ corp us w ere2 N o. 11

- 1657

A s ofD ece m ber 20, 2011, G G P cl osed at $14. 52. 1 i nsuffi ci ent t o pay her d iscr eti onar y di str ibuti ons. W e r e v e r s e a nd r e man d.

I . B AC KGR OUND A . Th e Trusts and t he Part i es Sc an la n w as bo rn in 1 96 9 a n d is th e d au gh te r of M ar tin Bu cksb aum . Bucksbaum and his b ro therdevel oped shoppin g c enter s e ventual l y founding GeneralGrowth Pro perti es, I nc. ( “GG P”) , o ne o fthe l ar ges t t ra ded r eal est ate i n vestm ent t rust s in the U ni ted S tat es, with $3 4 b i l l i o n i n t o t a l ma r k e tc a pi t a l i z a t i o n a nd $ 3 bi l l i on i n a nnua l r ev en ue s. GGP c urrentl y t r ade s ar o und $14 per shar e o n the N ew Yor k S toc k Ex c h an ge und er 1 th e ti ck er, GGP. Beg i nni ngwhenS ca nl anwas a c hi l d, her f athe r a nd unc l e es tabl i sh ed si x t r us ts ( th e “T r us ts ”) , na m i ng Sca nl an as the pr im ar y b enefi ci ar y. Each ofthe Trusts a u th o r i z e s th e c o r p o r a t e t r u s t e e , G e n e r a l T r u s tC o mpany ( the “ Tr us t e e ” ) , t o di s t r ib ut e “ a l l o r a s muc h o fthe net i ncom e o r pri nci pal, o r both” o fthe tr ust t o Sca nl an “a s the Tr ustee deem s t o be ne cess ar y forhersup port ” o r “i n herbes t interes ts
. ” N o othe r perso n i s e l i gibl e t o r ec ei ve a ny di st r ibut i o ns fr o m the Tr us ts dur i ng S ca nl an ’ s li fet i m e, a nd S ca nl an ’ s ch i l dr ena r e co nt i ng en t r emai nde r m en . The l aw fi rm o f N eal, Gerber & Ei senber g, LLP ( the “ Law Firm ”), throu gh tw o of its partn ers, M arsh allEisenbe rgN o. 11

- 1657 3 (“E ise nb er g” ) an d E ar l M ela m ed (“M ela m ed ”) g en er ally r epr es en te d S ca nl anthr o ug ho uthe r a dul t l i fe w he n s he needed l ega l a d vic e. A t the sa m e t i m e, theyr epres ented both the Truste e a nd GG P. I n ad dit i on t o hi s l ega l r epresen tation of G G P, E isenb erg also served as th e Se c r e t ary of GG P from A p ril1993 th roug h O ctob er 2008; Eisenberg and M el am ed both own GG P sto ck. Eise nbergand M el am ed pers onal l y c ont ro l Genera l Trust Com pany. For exam ple , Eise nberg i s i ts m aj or i ty ow n er, i ts presi dent, a m em bero fi ts boar d ofdi re cto rs , and one o ft h e th ree m em ber s o fi ts Trust Com m i tte e. M el a med s e r v e s o n Ge ne r a l Tr us t Co mpa ny ’ s b o a r d o f d i r e c t o r s , s e r v e s a s i t s S e c r e t a r y, a n d i s th e s e c o n d me mbero fi ts Trust Com m i tte e.
B. Th e St ock Pu r chases I n 200 7 a nd 20 08, the Trusts pu rchas ed hund re d s o f m il li ons of d oll ars of ad d iti ona l G G P stoc k. T he se p urchases were fi nanced w ith the proc eeds o fa l oan secur ed by a pled ge o f the Trusts ’ as set s. A t the ti m e o f the pu rchas es, the Trusts w er e a l re ady heav i l y invest ed in G G P s to ck, whi chc o ns ti tu te d o ve r 6 5% o fthe Tr us ts ’ a ss et s. Eise nb er ga nd M el amed a ppr o ve d the GGP s to ckp urcha se s i n the i r c apa ci tya s o ffi ce r s an d dir ecto rs of the Truste e, and the Law Fi rm , tog ether w i th Ei senber g a nd M el am ed, pro vi ded l ega l advi ce co nc erni ngthe t r an sa ct i o n. O n A p ril16, 2009 , GG P d eclared ban krup tcy. Sca n la n ’s Trusts suffer ed m or e than $20 0 m i l l i on i n l oss es du e t o a drop i n GG P sto ck pu rchas ed i n 200 7 a nd 20 08.4 N o. 11

- 1657 C . T h e Law su it S c a n l a n b r o u g h t a n a c t i o n o n Au g u s t 1 7, 2 0 0 9 , na m i ng the Tr ustee , the La w fi rm , Ei senber g, and M el am ed as d efe n d a n t s (c o lle c t iv e ly , th e “D efend an ts” or “A p p ell ees”). On Jun e 3 0, 20 10, S canl an fi l ed an am ended com pla i nt, w h ich ad d ed h er ch ild re n as p l a i n tiffs ba se d on th eir sta tus a s co nti ngent benefi ci ar i es ofthe Trusts. Because he r children are m inors, Scan lan is suing on their beh alf

. I n h era m end ed c o m pl aint, S ca nl anc o m pl ains tha t th e T ru st ee ’s p u rc h as es ofG G P st oc k w er e n otm ad e in her besti nter est s, but i nstea d to furth er ( 1) herl aw yer s’ o wn fi na nc i ali nt er es t i n r et ainingGG P as a cl i en t; ( 2) the in te re st s o f ot h er m em b er s o f th e B u c ks b au m fam ily w ho m anage d G GP ( w hom herl aw yer s a l so re presente d); (3) Eise nbergand M el am ed’s per sonali nter est s as sh areh olders; and ( 4) Eisenberg’s interest as Secretary o fGGP. Speci fical l y, S canl an br i ngs c l ai m s a gai nst the Trust ee f orbr eachi ng i ts fi du ci ar y duti es ofl oya l ty, prudence, and discl osur e when i t purchas ed th e GG P sto ck i n 200 7 an d 2008. Scanlan also brings claim s against her law yers f o r b r ea cho ffi duci ar y d ut y, l eg almal pr ac ti ce , a nd aidin g and a b e t ting th e Tru stee’s breac h of i ts fi d uc iary dut y . La st l y, S ca nl ans ee k s equi tabl e r el i ef, i nc l udi ng ( 1) r est or ati on o fthe Trusts’ co rpus; (2) the r em ova l o f the T r us t e e ; ( 3 ) an a c c o un t i nga nd b o o k s a nd r e c o r ds re quest; ( 4) m odi ficati on o fthe Trusts to provi de her wi th po wer to r emov e th e Tr us te e; ( 5) the disgo r g ement ofat torneys’ fees ; and ( 6) puniti ve dam age s.N o. 11

- 1657 5 D . Proc edu r al Conte xt On O cto ber28 , 20 09, the Defe nd ants fi l ed a Rul e 1 2( b) ( 1) m oti on a rguingthat S c anl an was i m proper l y s eek i ng a direc t paym ent o fdam age s. I n herr esponse , S canl an cl ai m ed th ats he w as se ek i nga n o r derc o m pel l i ngthe Defen dan ts t o r es to r e th e Tr us ts ’ c o r pus . Dur i ngthe a r gum ent o n the mo t i o n, the di s t r i c tc o ur tr a i s e d, sua s ponte, the i ssue ofwh etherS canl an m i ght l ack A rticl e I I Ista nd ing beca us e she w as a d iscretionary b e ne fi c i ar y. T he T r us t e e ’ s a t t o r ne y a l l b utma de Sca nl an’ s a rgum en t fo r her, fi rs t, co ncedingthatS canl an had standi ng to se ek re sto ra ti on o fthe cor pu s, but then agr eei ng to tak e that i ssue und er advi sem ent an d re-bri ef the i s s ue i fthe di s t r i c tc o ur tp r e fe r r e d. On O cto ber14 , 20 10, the dist ri ct c ou rt r ule d that Sca nl an l acke d A rt i cl e I I Ist anding and dism i sse d al l o f he r clai m s w ith p rej ud ice. Spec ificall y, th e d istrict cou rt h eld th at Sc an lan lac ke d s ta n d in g u n les s s h e c ou ld al l ege “fac ts show i ng a l i kel i hood thatthe cor pu s o f th e t r us t s wo ul d e v e r b e i ns uffi c i e nt t o pa y a l l o fher d i s c r e t i o n a r y d i s t r ib u t i o n s t o w h i c h [ s h e ] mi g h tb e c o me e nt i t l e d d ur i ngh e r l i fe t i me. ” T hi s a pp e a l f o l l o we d. The i ss u e on app eal, then, i s a nar ro w o ne: wh ether S c a n l a n h a s c o n s t i t ut i o n a l s t a n d i n gt o a s s e r th e r c l a i ms i n federal c ou rt
. W e fi nd thatshe does and rev er se the di str i ct c ourt
.
I I . DI S C US S I ON W e r evi ew a dist ri ct c ourt ’ s deci si on t o gr ant a Rul e 12 ( b) (1) m o ti o n t o di smi ss f o r l ac ko fs ta ndi ng6 N o. 11

- 1657 deno vo , a cc ept i nga s tr ue a ll f ac ts a l l eg ed i n the w ell-p lea d ed co m p la i n t an d d ra w in g a ll rea so n ab le in fer en c es in fa vo r o f th e p lain tiff. Fam ily & Ch il dre n’s Ctr
. , Inc . v. Sc hool Ci ty of M i s hawaka , 1 3 F.3 d 1052, 10 57 (7th C ir. 1994). The b ur dent o e st ab l i shs ta ndi ngi s o n the pa r tyi nvok i ng federa l j uri sdic ti on

— here, S canl an

— an d the el em ents she m ust s how ar e: (i) an inju ry in fa c t, w h ich is an inv as ion of a leg a l ly pr ote cted i nter estthati s co ncre te and parti cul ar i zed and, thus, actual o r i m m i nent, n ot c onj ectur alo r hy po th et i ca l ; ( i i ) a c au sa l r el at i o ns hi p b etwee n the i nj ur y an d th e ch al l en g ed co nduc t, su ch th at the i nj ur y c a n b e f a i r l y t r a c e d t o the c ha l l e ng e d a c t i on o fthe de fen dan t; a nd ( i i i ) a l i k el i ho o d tha t th e i nj ur y wi l l b e r edr es se d b y a f av o r ab l e dec i si o n. Le ev. Ci ty of

Chi cago , 33 0 F
. 3d 456, 46 8 (7 th Ci r. 20 03) ( ci ti ng L uj an v . De

f e n de rs o f Wil dlif e , 50 4 U.S
. 55 5, 56 0- 61 (1992)). To sa ti sfy the inj ury- i n-f act re quir em ent, S canl an “m ust es ta b lish th at [ s h e ] h as su st ain ed or is im m ed iat ely in danger of susta i ni ng som e dir ect inj ury. ” Wi s . Right to Life, Inc. v. Sch o ber, 366 F. 3d 485, 489 ( 7th C ir. 20 04) ( quoti ng Tobi n f

orGove r norv. Il l
. St at eBd. of Ele ct i ons , 268 F
. 3 d 5 1 7, 5 2 8 ( 7 th Ci r . 2 0 0 1 ) )
. “ M e r e s pe c ul ati on i s no t e nough to es tabl i sh an inj ury i n f act. ” Id

. T h e d ist ric t c ou r t ’ s s ta n d in g in q u iry , an d m or e s p ec ifica l l y, i ts i nj ur y - i n- f ac t an al y si s, f o cus ed pr i m ar il y on th e curr ent v al ue o ft h e T rust s’ as set s. H avi ng f ound thatN o. 11

- 1657 7 S ca nl andi d no t al l eg e any fac ts i ndi ca tingtha t th e value o fthe Tr us ts ’ c o r pus

— ap p ro x im at ely $8 00 m ill i on

— w oul d everb e insuffi ci ent t o fund any potenti al “support” and “be st i nter est s” paym ents, t h e di str i ct cou rt con c lu d ed that Scan lan d id n ot su ffer an inj ury i n fa c t f orpurposes o fA rt i cl e I I I
. To put i t di ffer entl y, Sca nl an’ s l ega l l y pr ote cted i nteres t ari sing o ut o fher st atus a s a di sc r et i o na r y b en efi ci ar y, a cc o r di ngt o the dist ri ct c ourt, i s l i m i t e d to her i nter esti n potenti aldi scr et i o na r y pa y m en ts made pur su an t to the Trus ts ’ i ns tr um en ts. A nd witho ut an inj ury to that speci fi c i nter est, th e c o u r tc o n c l u d e d , S c a n l a n h a s n o i nj u r y i n f a c t
. We disa gr ee w i th thatchar acte ri zati on o fS canl an’ s inter est
. That S canl an m ust s ufferan i nvasi on o fa l ega l l y pr otect ed i nt erest is a p rinciple of fede ral law

. Bu t the natu re an d exte nt of Scan lan’s i nt erest as a ben efi ciary of a disc re ti onar y t rust, and ther ef or e, wh etherthatint erest can f or m the basi s ofa federa l sui t, depend o n the l aw that defines the r i ghts ofa disc re ti on ar y b enefi ci ar y. FM C Corp
. v. Boe s ky, 852 F.2d 98 1 , 9 9 3 (7t h C ir. 19 88 ); see a lso B o ch ese v. To w n o f P o nc e Inlet, 40 5 F
. 3d 964, 98 1 ( 11th C ir. 20 05 ); C antre ll v . City of Long B each , 24 1 F
. 3d 674, 684 (9t h Ci r. 20 01)
. I n thi s ca se, thati s the l aw o fI l l i noi s. So we l oo k t o see wh etheracc or ding to I llin oi s l aw a disc re ti onar y tr ust benefi ci ar y has the ki nd of s tak e that A rt i cl e I I Ir equi re s. So st ate d, thi s i s a n i ssue that has m eag erpre cedent. The Resta tem ents ( Thir d) o fTrust s, S ecti on 9 4, address es w ho m ay b ringa sui t a gai nst a tr ustee f orbr each o ftr ust, and ther ef or e, pro vi de s so m e gui dance on thi s t opi c. See8 N o. 11

- 1657 In reEs t at eof

Li e b e r m an , 90 9 N
. E.2d 9 15 , 92 2 ( I l l

. A pp . Ct. 2009 )
. S ecti on 9 4, wh i ch i s e nti tl ed, “S tandi ng to Enfo rce a Tr ust, ” pro vi des: A sui t a gai nst a tr ustee of a p riv ate tr ust t o enj oi n or r edr es s a br ea chof t r us t o r o th er wi se t o e nf o r ce the tr ust m ay be m ai ntai ned o n ly by a be nefi ci ar y o r by a co - tr us te e, s ucc es so rt r us te e, o r o th erpe r so n a ct i ng on be hal fo fo ne o r m or e be nefi ci ar i es. T he Res tatem en ts (Th ird) ofTru sts, § 94(1)
. Com m ent b to § 9 4 then expla i ns wh o quali fi es as a “ benefi ci ar y” w i th s tandi ng to br i ng sui t t o re dress a bre ach o ftr ust: A sui t t o enf or ce a pri vate tr ust o rdi nari l y . . . m ay be m ai ntai ned by a ny be neficia ry wh ose r i ghts ar e o r m ay be a dvers el y a ffecte d by the m att er ( s) ati ssue. The benefic iar i es ofa tr ust incl ud e a ny per son w ho hol ds a be n efici al, pre sent orfuture, ve ste d or c on tin ge n t . .
. . T h is in c lu d es a p er so n w h o i s eligib le to rec eiv e a d isc re tio n ar y d ist rib u tio n . . . . Id . § 94 , cm t. b. Clea rl y then, Com m ent b pro vi des thata benefi c iary o f a d iscretionary t r u st w hos e ri gh ts are “ad versely affecte d” has s tandi ng to enf or ce the tr ust. But Com m ent b poses , r atherthan answ er s, the q u es ti on: W hat doe s i t m ean f ora disc re ti on ar y benefi ci ar y’ s r i ghts to be “a d versel y a ffecte d”? A gai n, the A pp el l ees ar gue that Sca n lan’ s r i ghts as a di scr eti onar y b enefi ci ar y a re not “adver sel y a ffecte d” unti l the T ru st ee f ai l s t o m ake a d i s t r ib u t i o n i n w h i c h s h e i s e nt i t l e d t o u n d e r th e t e r msN o. 11

- 1657 9 ofthe Trusts. Onlyafterthatsho w ing wil l S canl an have st an d in g, th e A p p elle es cla im . Su c h a rig id st an d a r d is not supp or ted by t rust l aw autho ri ty, wh i ch i nd i cate s that a di scr eti onar y b enefi ci ary’s ri ghts i ncl ud e s om ethi ng m or e than j ust an i nter est i n potenti aldi str ibuti ons. I n I l l i n o i s , a b e n e fi c i a r y h a s a n e q u i t a b l e i n t e r e s t i n t he tr u st p ro p e r t y . P a rkw a y B a nk& Trust C o . v. No rthern Trust Co. , 572 N .E .2d 10 55 , 10 5 8 ( Il l . A p p . C t. 19 91 ); Farkas v. Wi l l i a ms , 12 5 N
. E.2 d 600, 60 5 ( Ill. 1 955) ( “The decl ar ati on o ft r us t i m m edi at el y c r ea te s ane qui tabl e i nt er es t i n the b en efic iar ies
. . . .”); Gord on v. G o rdon , 12 9 N
. E.2 d 706, 70 8 (Ill. 19 55 ); N orris v. E st ate of Norris , 493 N .E .2d 12 1, 12 6 (Ill. A pp . Ct. 19 86)
. J uri sdic ti ons exam i ni ng th e nature of a di scr eti onar y b enefi ci ar y’ s inter esthave f ound that, li ke an ordina ry ben efi ciary , a discret ionary ben efi ciary h a s a n eq u ita b le in te re st in t h e t ru st p ro p er ty
. S e e, e . g. , P ritz k er v. P ritz k er, Case N os. 02 C H 2 1426, 03 CH 75 31, at1 5

- 1 6 ( Ci r . Ct
. o fCo o kCty . , Ch

. Di v . Mar c h 5 , 20 04) ( “I t i s cl earthatbene fi ci ar i es ofa disc reti onaltr ust hav e a p resen t, ex isti n g p rop erty interest in th e trus t res. ”); In re M ar r i age o

f Jon es, 81 2 P. 2d 1152 , 11 57 ( Col o. 19 91) ( ci ti ng 2 A
. Scotton Trus ts § 130, at 409 (4t h ed

. 1987)) ( noti ng tha t a di scr eti onar y t rustbene fi ci ar y has an equi tabl e i nt er es t, b utthe b en efi ci ar y c an no t fo r ce the tru stee to p ay in com e or princip al unless th e ben efi ciary coul d establ i sh the tr us te e had engag ed i n fra ud o r an ab u se of d isc re tio n ); Pack v
. O s b or ne, 2008 W L 49 0754 5, at* 3 ( Ohi o App. Ct
. Nov
. 1 4, 2 00 8) ( det er m i ni ngthe na tu r e o fthe di sc r etiona r y b en efi ci ar y ’ s i nt er es t i n the tru st an d conc lud ing it w as an equ itable i nt erest); Paul s on v. Pa ulson , 20 10 N D 100, 78 3 N
. W
. 2d 262, 27 2 (st at i n g t h at a d isc re tio n ar y b en efic iar y h as an eq u ita b le10 N o. 11

- 1657 interest i n th e trus t assets ); U nited Sta tes v. O ’Sh a ug hn essy, 51 7N. W. 2 d 5 74 , 5 7 7( Mi n n . 1 9 9 4 ) ( c i t i n gR e s t a t e men t ( Se cond) ofTrus ts 1 99 ( 1959 ) ) ( com m enti ng tha t a di scre ti onar y b enefi ci ar y has equi tabl e r em edi es aga i nst a trus tee for breach of tru st). Cases that es tabl i sh a benefi ci ar y’ s e quit abl e inter est in tru st p ro p er ty , th e A p p elle e s a r g u e, d o n otaris e in conte xts invol vi ng st and i ng and i nstea d m er el y r eci te g en er alt r us t l aw pr i nc i pl es . Ye t we s ee no r ea so n why can o ni c a l pr i nc i pl e s o f t r us t l a w s ho ul d no t be em p loyed w he n d eterm ining th e nat ure and exte nt of a disc re ti onar y benefi ci ar y’ s inter estf orpurposes o fan A rt i cl e I I Ist anding anal ysi s. A pp l yi ng tho se p ri nci ple s, w e c o n c l u d e t h at Sc an lan h as an eq u ita b le in te re st in th e c or p u s o f th e T r u s t s . A n d it is fro m th at eq u ita b le i nt er es t th atScan l ana cqui r es s ta ndi ngt o e nf o r ce the T ru st s. St em m i ng fro m S canl an’ s s tatus as a benefi ci ar y i s a fi du ci ar y r el ati onshi p between herand the Truste e that gi ves ri se to equi tabl e r em ed i es aga i nst the Trust ee f orbr each o ftru st . A truste e o w es a fi du ci ar y duty to a tr us t’ s be ne fi ci ar i es a nd i s o bl i g at ed to c ar r y o utthe tr ust a ccor ding to i ts ter m s a nd to actwith the hi ghest deg r ee o ffi del i tya nd ut m o stg o o d fai th

. In reEs t at eof M upp avarapu , 836 N .E .2d 74 , 77 (Ill. A p p . C t. 20 05 ); P a u l H. Sc hwe nde ne r, In c. v. Jupi t e rEle c. Co. , Inc . , 82 9 N
. E.2 d 818, 82 8 (Ill. A p p . C t. 20 05 ); Giag nor i o v. Em m e t tC. Torke l s on Trust, 6 86 N
. E
. 2d 4 2, 46 (I ll

. A p p . Ct
. 1997); s e eal s o Restat em ent ( Se cond) ofTrust s § 2, cm t. b ( 19 59 ) ; Re st at ement ( Se cond) ofTrust s § 170 ( 1959 )
. The fi du ci ar y obl i gat i onN o. 11

- 1657 11

o fl o y al tyfl o ws fr o m the r el at i o ns hi p o fthe tr us te e an d benefi ci ar y, and the ess ence ofthatr el ati onshi p i s that th e tr us te e is c ha r g ed wi the qui tabl e dut i es t o war d the b en efi c i ar y. H om eFe de r al Sa vi ngs an d L oan Ass ’ n o f C hicago v. Za rkin , 432 N
. E.2 d 831, 84 5- 46 ( I l l

. 19 82) ; Rest ate
m ent ( Se cond) ofTrusts § 164, cm t. h (19 59 ); M at t e rof R ei m an’s E state, 45 0 N
. E.2 d 928 ( 1983 ) ( “[ A ] tr ust i nvol ves not m er el y a di scr eti onar y a uthor i ty, but a l ega l relation sh ip w he reby th e trus tee is un d er a fidu ciary o bl i g at i o n t o de alwi thpr o per tyi n a cc o r dan ce wi ththe instru ctions of th e trus tor f or the ben efi t of a third p ar ty
. . . .”). S o b y v i r tu e o f th e fid u c iar y re lat ion sh ip be twe enS ca nl ana nd the Tr us te e, S ca nl anacqui r es the ri ght t o bring an acti on f orbr each of fid uci ar y duty. See P a rish v . P a rish , 193 N .E .2d 7 61 , 766 (Ill . 196 3); Bur r ows v. P a lm er, 1 25 N. E. 2d 48 4, 486- 87( I l l

. 1 95 5) ; Re st at ement (Second ) of Trus ts § 199 (1959). Ou r concl usi on i n thi s r ega rd i s fur thersupporte d b y t ru st la w th at rec og n ize s a be n efic iar y’s st an d in g is not base d on an abso l ute e nti tl em ent o r a proba b ili ty ofr ec ei vingt r us t as se ts
. The mer e f ac t th ata b en efi ciary m ay ult i m ate l y nev err ecei ve tr ust a sse ts does not pr ev en t th atben efi ci ar y fr o m b r i ng i nga c l ai m . F o r e xam ple , a contingent benefi ci ar y can bring an ac tio n ag ai nst the tr ustee

— e v e n tho ugh hi s i nt e r e s ti s r e m ote an d c o nt i ng en t

— to prot ect hi s pos sibl e e ventuali nter est, i.e., to p ro te c t a n d p re se rv e t h e t ru s t res . Barn har tv. B a rnh a rt, 11 4 N
. E.2 d 378, 38 8 ( I l l

. 19 53)
. I n I l l i noi s, ther ef o r e, “ a tr us te e o wes th e sa m e fi duci ar y dutyt o a c o nti ngent benefi ci ar y a s t o one w i th a v ested i nter est i ns o f ar as ne ce ss ar y f o r th e pr o te ct i o n o f th e con ti ng en t12 N o. 11

- 1657 benefi ci ar y’ s r i ghts i n th e trust pro perty
. ” Bur r ows , 12 5 N .E .2d at48 6-8 7; see also Sh a w v. Weisz , 91 N
. E.2 d 81, 87 (I ll

. A p p . Ct
. 1950). I f a ben efi ciary w ho m a y nev er receive the tru st’s as se ts s ta nds i n a fi duci ar y r el at i o ns hi p wi ththe tru ste e , t he n so sh ou ld a ben efi ciary of a d iscretionary tr ust. W e s ee no r eason wh y a bene fi ci ar y, si m plyby v i r t ue o fb e i ngthe b e ne fi c i a r y o fdi s c r e t i o na r y t rust, shoul d be deni ed the or dinar y e quit abl e rights that fl ow fr om the fi du c iar y d uty that r uns fro m a tr ustee to a b e n e fi c i a r y . I n c l u d e d i n th o s e r i g h t s i s th e r i g ht to bring an acti on f orbr each oftr ust. G o o dp a steur v. Fried o ffer s further s up port
. 53 9 N
. E.2 d 20 7, 20 8 ( I l l

. App. Ct
. 1 98 9)
. I n Goodpas t e ur, o ne o fthe benefi ci ar i es ofa disc re ti onar y t rustso ught an or der re quir i ng the truste e t o provi de an i nventor y o ftr ust ass ets and a n acco unti ng of the tr ust’ s re cei pts an d d i sburse m ents. Id

. The appel l ate co urt rej ecte d the t rust ees ’ ar gum ent that the di scr eti on ar y benefi ci ar y s houl d not be abl e t o bring hi s s uitbec au se h i s inter esti n the tr ust w as an “ex pectancy” and the re alparty c oncer ned w as th e re m ain d er m an . Id . at 2 10
. I n re ver si ng the ci rcui t co urt, the appell ate co urt re aso n ed : P la i n t i f fis a n am ed be n efic iar y of t h e t ru st
. . . . I t i s co ncei vabl e that, atthe death o fthe benefi ci ar i es in plaintiff’s c la s s , no incom e or princip al w il l be left to di st r ibut e to the [ r emai nde r m an ]
. I t i s i nc o ng r uo us to a r g ue tha t pl aint if f sho ul d no t be a l l o wed t o mai nta in thi s a cti on be cause the [ re m ai nd er m an] , wh i chN o. 11

- 1657 13

w il l enj oy the ben efi ts of the t r u s t on ly iffun d s are left at the death of pla i nti ff and b enefi ci ar i es i n h is cl ass , i s the par ty “r eally concer ned. ” S uch a s tat em en t im pli es that defe nd ants have al re ady deci ded not to m ake any paym ents to pla i nti ff and the be nefi ci ar i es i n hi s cl ass . W e ar e o fthe o pi ni o n tha t pl aint i ffi s a be ne fi ci ar y el i gibl e t o have the b enefi t of incom e under th e tr us t. As su ch, pl aint i ffi s en ti tl ed to a n a cc o unt sh ow ing the receipts , disbu rsem en ts an d i n ven tory of t h e t ru st es ta te
. . . . Id

. at21 0- 11. A gain, no aut hority requ ires a d iscretionary ben efi ciary to fi r sta l l eg e th atthe t r us t co r pus i s i ns uffi ci en t to fund a di str ibuti on wh en br i ngi ng a cl ai m f orbr each o ftr ust. T h at so rtof in q u iry h a s a d am ag es flav or to it, w h ich is a m er its , n o t a st an d in g, q u es tio n . See A uro ra L o a n S ervs. Inc. v. Cradd ie th , 4 42 F
. 3d 10 18 , 1 02 4 ( 7th Ci r . 2 00 6) ( “T he poi nt i s not that to est abl i sh sta nd i ng a pla i ntiff m ust est abl i sh thata ri ght o fhi s has bee n in frin ge d; that w oul d confl ate t h e i ssue ofst anding w i th the m er i ts of the sui t. I t i s that he m ust h av e a co lor abl e claim to su ch a ri gh t.”)
. T h e A p p elle es a rg u e th at Illin ois tru stlaw an d A rt icle II I ar e not coe xtensi ve, and the m er e f act th at a disc re ti onar y b enefi ci ar y m ay have a r i ght t o sue under sta te l aw do es no t ens ure st an di ng . I t i s tr ue tha t a st an di ng i nquir y doe s no t nec ess ar i l y e nd wit h t h e dete rm i nati on of a sta te ri ght to sue. Bu t the Suprem e Court st at ed in Spr i nt C om m c’n C o., L. P
. v. AP C CSe rvic es, Inc. that14 N o. 11

- 1657 “h i st o r y a nd t r adi ti o n o ff er a mean i ng fulg ui de to the types of case s that A rt i cl e I I I em pow er s federa l courts to consi der” and that where p ar ti es have “l ong been p er m itt ed to br in g” th e t yp e o f su i t a t is su e, it is “ w ell n igh c oncl usi ve” that A rt i cl e I I Ist anding exi sts
. 55 4 U. S
. 2 69 , 2 74 -75, 2 85 ( 20 08 )
. Af te r c ar eful l y r ev i ewi ng benefi ci ar i es’ r ights , we deter m i ned that benefi ci ari es

— i ncl ud i ng di scr eti onar y b enefi ci ar i es

— ha ve “ l o ng been perm itted to bri ng ” su its to r ed ress a trus tee’s bre ach o ftr ust. M o r eo ve r, i n FM C Corp
. v. Boe s ky, we he ld th atthe ac tu al or th re at en ed inju ry req u ire d u n d er A rt icle II I canb e s a t i s fi e d s o l e l y b y v i r t ue o fa n i nv a s i o n o fa r e c o gn ize d st a t e - l a w r igh t. 85 2 F .2d 98 1, 99 3 (7 th C ir. 19 88 ). In Boes ky, FM C bro ught a cl ai m f orwrongful m i sapprop riati on a nd m i suse ofi ts confi denti albusi ness i nfo rm ati on, wh i ch f or ced FM C to in c re ase i ts cash di str ibuti on to i ts s ha r eh o l der s unde ra r ev i se d c api tal iza ti o n pl an . Id

. at 989-90. Fin d ing tha t the distribu tion of FM C ’s ass ets t o th e own er s o ftho se ass ets was m er el y a m ove m en t o fa ss et s be twe eno w ne rs, th e di st r i ctc o ur t f o und th er e w as n o inj u ry for p u rp os es o fA r t icle II I. Id

. W e r e v e r s ed the di s t r i c tc o ur ta nd h e l d tha tthe mi s a ppropri ati on o fco nfi denti al i nfo rm ati on “ const i tutes a d ist in c t a n d p alp ab le inj u ry th at is leg ally co g n i z ab le u n d er A rt icle I II ’s c as e a n d co n tr ov er sy req u ire m en t.” Id. Bas i ng o urde ci si o n, i n pa r t, o n Warth v. Se ldin

— w hi ch h eld th at inju ry req u ire d by A rt icle II I m ay ex ist s o l e ly by vi rtue o f st atute s cr eat i ng l ega l r i ghts, the i nvasi on o fwhi chc r ea te s st an di ng

— we conc l ude d tha t “[ t] he sam e m ust a l so be t rue ofl ega l r ights gr owing out of state l aw . ” Boes ky, 85 2 F
. 2d at 993 ( ci ti ng Warth v. Se ldin ,N o. 11

- 1657 15 422 U
. S. 49 0, 49 8 ( 1975 ) )
. I n fa c t, w e poi nted out that if t h is w er e no t s o, “federa l co urts si tting i n div er si ty coul d not a dj ud ica te so m e ca ses i nvol vi ng o nl y s tat el a w b r e a c h

- o f

- fi d u c i a r y c l a i ms . . . b e c a u s e s o me action s for breac h of fidu ciary d ut y d o not req uire the pl ai nti ffto sho w an inj ury. ” Id

. H ere, Scan lan is the be ne fi ciary of seve ral d iscretionary T ru st s, an d u n d er th os e T ru st s , sh e is cu rre n tly eligib le to re cei ve al l o fthe Trusts’ co rpus. W e e stabl i shed that S ca nl an, a s a be ne fi ci ar y, i s o w ed a fiduc i ar y duty a nd that she has an inter esti n ensuring that t h e Tr ustee disc harg e i ts d u ties with fi del i ty and a ce rt ai n degr ee ofcar e. The Trust ee and her l aw yer s, S canl an cl ai m s, bre ached thos e fi du ci ar y duti es, causing the Trust s’ cor pu s t o l ose approxi m ate l y $ 200 m i l l i on. U nd er thes e ci rcum st an ces, the Truste e’ s a nd Law yer s’ dere l i cti on o f th eir fi d uc iary du ties i s a d irect i nv asion of Scanlan ’s prot ecte d i nter estin the prudent and l oya l adm i ni str ati on o fthe Trusts. S canl an has ther ef or e s uffer ed an i nj ur y s uffi ci en t to sa ti sfy Art i cl e I I I ’ s ca se a nd c o ntr ove rs y r equi re m ent. Thi s ho l di ngi s co ns i st en t wi ththe o bj ec ti ve o fthe s t a nd i ngdo c t r i ne . As the S up r e me Co ur th a s e xp l a i ne d, th e pu rp ose beh ind the sta nd ing d octrine is to ensu re that pla i nti ff s hav e a “per sonalst ake i n the outco m e” suffi ci ent t o “ass ure that concr ete adver senes s which sh ar pen s th e pr es en ta ti o n o fi ss ue s upo n whi chthe cou rt so l argely dep en d s for il lum ination of diffi cul t .
. . questi ons. ” B a k er v. C a rr, 369 U
. S. 186, 204 (1962 ). Th e Co ur th a s a l s o e xp l a i ne d:16 N o. 11

- 1657 [ T] he s ta ndi ngi nqui r yrequi r es c ar efulj udi ci ale xam in at ion of a c o m p lain t’s alleg at ion s t o a sc er ta in whe the r the p a r t i c ula r pl a i nt i ffi s e nt i t l e d t o a n a dj udi cat i o n o fthe pa r ti cul arc l ai m s as se r te d. I s th e i nj ury too abs tr act , or otherwis e no t a pp ro pri ate , to be c onsi dered j ud i ci ally cogni zabl e? I s the l i ne o f cau sation be tw een the il lega l con d uc t and i njury too at tenuate d? I s the prospect ofo btaini ng r el i ef f ro m the i nj ury as a r esul t o fa f avo rabl e r uling to o specul ati ve? A llen , 46 8 U.S
. at75 2. Sca nl an has a “ re quir ed sta ke” i n hersui t; she has a l eg al l y pr o te ct ed i nt er es t i n T rust s’ c o r pus a nd i n the properadm i ni str ati on o fthatco rpus. H ercl ai m s a gai nst her l aw yer s a n d t h e Trustee ar e br ought to prot ect that i nter estand re dress heri nj ury by see ki ng to r em ove the Tr ustee , r est ore the Trust s’ co rpus, and dis gor ge att or neys’ fees . S canl an’ s inj ury, ther ef or e i s no t “ too abst ra ct. ” N ori s the r el i efshe see ks too specul ati ve. The A pp el l ees ar gue that under som e ci rcum sta nces a di scr eti onar y b enefi ciary’ s pre sent i nter esti n the tr ust proper ty

—bef or e a tr ustee has m ade a dist ributi on

— is t o o a t t e n u a t e d t o b e c o n s i d e r e d th e b e n e fi c i a r y ’ s p r o pe r t y . T he App e l l e e s , the r e f o r e , urg e us t o c o nc l ud e that Sca nl an o nl y has an inter esti n herpote nti aldi str ibuti ons, r atherth an the Trusts’ co rpus. I t i s t rue that in so m e c irc u m st a n c e s , e . g. , for p u rp os es of p u b lic a id elig ibilit y a n d d et e r m i n in g t h e b an kr u p tc y e st at e, a disc re ti onar y benefi ci ar y’ s i nter est i n the tr ust a ssets i s too rem ote to count as proper ty
. Se e, e . g. , Linse r v. O ff iceN o. 11

- 1657 17

o f A tto rney G en . , 20 03 N D 1 95 , 6 72 N
. W
. 2d 643, 64 6; In reBr i t t on , 300 B
. R
. 155, 159 (B an kr. D. Con n. 2003); In re E ley, 33 1 B. R. 35 3, 35 8 ( Bankr. S
. D. O h io 20 05 )
. Li kew i se, i n so m e ca ses , cr edi tor s a re pre vente d fro m at
tachi ngthe a ss et s o fa di sc r et i o na r y t r us t an d ha ve no re m edy ag ai nst the t rust ee unti l the tr ustee di str ibutes th e p ro p er ty
. See, e.g., U nited S t a t e s v. O ’Sh a ug hn essy, 51 7 N .W .2d 57 4, 57 7 (M in n . 199 4); Harker v . E v a tt, 44 N .E .2d 35 5, 35 7 (1 94 2); D oks ans ky v
. Norwes tBank Neb
. , N. A. , 615 N .W .2d 10 4, 10 6- 1 0 ( N e b . 200 0); In re D uncan’s Wil l , 362 N
. Y
. S. 2d 788, 790 (Sur. 1974). The se r ul es , how ev er, a r e th e r es ul t o funde r l y i ng pri n ci ple s a nd pol i cy consi derat i ons i nvol vi ng r est ra i nts on i nvol untaryal i enati on. Those concerns, w h ich ar e no t pres en t her e, ar e di sti nct fro m the equi tabl e pr i nci ple s of trust law at w ork i n t h is cas e; na m ely, a bene fi ciary’s ri ght t o h old truste es acco untabl e a nd ensur e that they proper l y di schar ge thei r fi du ci ar y d uti es w hen adm i ni ste ri ng tru st proper ty. That in so m e co ntexts Sca nl an’ s inter esti n the Trusts’ ass ets m ay not ri se to th e l ev elo fa “ pr o per tyint erest” do es no t ne g at e th e f act that she a nd the Truste e s tand i n a fi du ci ar y r el ati onshi p. The sa m e c an b e sai d ofherr el ati onshi p w i th her att or neys. W e r em ai n unp er suaded th at our hol ding w i l l l ead to anybene fi ci ar y hav i ng standing w hethero r not i ts s pe c i fi c i nt e r e s ti s a ffe c t e d. On l y a b e ne fi c i a r y o fa di scre ti onar y trustw hose r i ghts ar e “ advers el y a ffecte d” has sta nd i ng to enf or ce a tr u st. I n cl ai m s f orbr each o ftr ust, th e requ irem e n t tha t a ben efi ciary of a d iscretionary18 N o. 11

- 1657 tr u st m u stp lea d fac ts ind ica tin g t h at th e d im in u tio n in t h e t r u s t a ss et s h ad , or w ill eve r h av e, a p ro b ab le advers e i m pact o n discre ti onar y di str ibuti ons i s t oo dem anding. Essenti al l y that r ule , wh i ch the A pp el l ees as k us t o a do pt, wo ul d i ns ul a t e t r us t e e s f r o m s ui ts f or b re ac h of tr u st . For i n st an c e, u n d er th at rea so n in g, a tr us te e co ul d m i smana g e a tr us t w i thi m puni ty, s ubs ta ntiall y red u c in g t he assets ove r ti m e, so long as the re w ere enou gh assets left in th e c o r p us to fun d a fut ure di st r ibu tion. I n f ac t, the l ar g erthe t r us t’ s co r pus , the m or e like ly th at co u l d h ap p en . Ta ke th e T ru st s in th is c as e fo r ex am p le: w ith n ea rly $1 bill i o n in a ss et s, it is hard to i m ag in e that there would eve r be a si tuati on i n wh i c h th e c o r p u s wo u l d b e i n s u ffi c i e n tt o fund Sca nl an’ s “ besti nter est s” and “supp or t” dist ributi ons. Sur pri si ngl y, the A pp el l ees adm i t t h i s. The Trust ee, coul d, und erthe A pp el l ees ’ r eas oni ng, r educe the ass ets b y 90 %

— to a pal tr y $ 100 m i l l i on

— and sti l l be shel ter ed f r o m a b r e a c h o ft r u s tc l a i m. T h e A p p elle es ’ ru le ign or es th e fid u c iar y re lat ion sh ip b et w ee n a b e n efic iar y a n d a tr u st ee an d is p ra c tic ab ly unw or kabl e be cause the quest i on inev i tabl y b eco m es: a twh a tp o i nti s the t r us t ’ s c o r pu s di mi ni s he d t o such an exte nt that the t r u s t e e can no longer m ake a futu re dist ributi on? The Ap pel l ees cannotanswer thi s qu esti on. N or can w e. S canl an’ s s tandi ng sho uld nottur n on w hetherher“be st i nter est s” and “supp or t” needs, wh ateve r they m ay be, w i l l be m et. The di str i ct c ourt, ther ef or e, er re d t o the extent i t concl ud ed that Sca nl an lac ked A rticl e I I Ista n d in g beca us e she did not su ffer an inj ury i n f act.N o. 11

- 1657 19 I I I . C ONC L US I ON F o r the r e a s o ns s t a t e d h e r e i n, we R EV ERSE a nd R EMA ND for fu rt h er p ro c ee d i n gs co n sis te n t w ith th is o pi ni o n.

1- 20- 12