IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 19-30200

DOCTOR STEPHEN D. COOK, In his capacity as Co-Trustee of Marshall 

Heritage Foundation,

Plaintiff–Appellee,

v.

PRESTON L. MARSHALL, In his capacity as Co-Trustee of Peroxisome 

Trust,

Defendant–Appellant.

Appeal from the United States District Court 

for the Eastern District of Louisiana

USDC No. 2:17-CV-5368

Before OWEN, Chief Judge, and BARKSDALE and DUNCAN, Circuit Judges.

PRISCILLA R. OWEN, Chief Judge:*

Stephen Cook, trustee of a charitable trust, sued the trustee of another 

trust, Preston Marshall, alleging that Preston was blocking payments the trust 

was required to make to Cook’s charitable trust. The parties filed cross-

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

December 31, 2020

Lyle W. Cayce

Clerk

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motions for summary judgment, and the district court ruled for Cook. We 

affirm.

I

The facts in this case are undisputed. The Marshall family inherited a 

significant amount of wealth from the late oil tycoon J. Howard Marshall. 

Elaine Marshall, the widow of one of J. Howard Marshall’s sons, had two 

children: Pierce and Preston Marshall. Stephen Cook was a longtime 

acquaintance of the Marshall family and served as trustee on several Marshall 

family foundations. For decades, the Marshall family distributed large sums 

of money to charity through the Marshall Heritage Foundation and its 

predecessors. The trustees of the Marshall Heritage Foundation included 

Elaine, Pierce, Preston, and Cook. In 2011, Elaine created the Peroxisome 

Trust (Peroxisome) as a vehicle to donate $100 million to the Marshall 

Heritage Foundation. Peroxisome’s trust instrument made Pierce and Preston 

its co-trustees and required the trustees to “pay to the Marshall Heritage 

Foundation an annuity amount equal to 6.647126% of the initial net fair 

market value of all property transferred to the trust, valued as of the date of 

the transfer.”

After significant disagreements between Pierce and Preston, the 

trustees of the Marshall Heritage Foundation and Peroxisome planned to split 

each trust in two. This planned division was unanimously approved by the 

trustees of the Marshall Heritage Foundation. Shortly after, a Louisiana state 

court authorized the division of both the Marshall Heritage Foundation and 

Peroxisome upon a majority vote of their respective trustees. Under this plan, 

each half of Peroxisome would fund half of the split Marshall Heritage 

Foundation.

In 2014, as part of the planned division, the Marshall Heritage 

Foundation split into the Marshall Legacy Foundation and The Marshall 

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Heritage Foundation (TMHF). Each successor foundation received half of the 

assets and obligations of the original Marshall Heritage Foundation. Preston, 

Cook, and Elaine served as co-trustees of the Marshall Legacy Foundation. 

Pierce, Cook, and Elaine served as co-trustees of TMHF. Pierce blocked 

Peroxisome from similarly splitting. From April 2014 through June 2016, the 

Peroxisome trustees approved payments equal to half what it owed to the 

original Marshall Heritage Foundation to the Marshall Legacy Foundation and

half to TMHF. In June 2016, Preston stopped authorizing payments from 

Peroxisome to TMHF and the Marshall Legacy Foundation.

Cook, as trustee of TMHF, asserts these payments were mandatory 

because TMHF is an income beneficiary of Peroxisome as the successor of the 

original Marshall Heritage Foundation. Preston counters that the payments 

were no longer required because the original Marshall Heritage Foundation no 

longer exists. In 2017, Cook, as a trustee of TMHF, filed suit against Preston, 

as a trustee of Peroxisome, seeking an order directing Preston to continue 

approving Peroxisome’s payments to TMHF. Cook and Preston filed crossmotions for summary judgment in the district court. The district court ruled 

in Cook’s favor, ordered Preston to authorize payments from Peroxisome to 

TMHF, and held Preston had breached his fiduciary duties. Preston appealed 

the decision and received a stay of the district court’s order pending this 

appeal.

II

Because this is an action brought under diversity jurisdiction, we apply 

the substantive law of Louisiana to this case.1 “We review a summary 

judgment de novo, applying the same legal standards as the district court.”2 

1 Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938).

2 Prospect Cap. Corp. v. Mut. of Omaha Bank, 819 F.3d 754, 756-57 (5th Cir. 2016) 

(citing Hemphill v. State Farm Mut. Auto. Ins. Co., 805 F.3d 535, 538 (5th Cir. 2015)); see also

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Summary judgment is appropriate only “if the movant shows that there is no 

genuine dispute as to any material fact and the movant is entitled to judgment 

as a matter of law.”3 When we review a summary judgment, “[t]he evidence 

and all inferences must be viewed in the light most favorable to the nonmovant.”4

III

We must decide whether TMHF is an income beneficiary of Peroxisome

to determine if Peroxisome is obligated to make payments to TMHF. Cook 

argues that the income Peroxisome owed to the original Marshall Heritage 

Foundation was an asset of the original foundation because the payments were 

“certain and quantified as to timing and amount,” and that such an asset was 

transferable. Cook asserts that the future income was also a transferable asset 

and that it was divided when the original foundation was divided, with half of 

it going to TMHF. Thus, Cook maintains, TMHF is an income beneficiary of 

Peroxisome.

Preston argues that TMHF is not a beneficiary of Peroxisome because 

TMHF is not named in Peroxisome’s trust instrument. Further, Preston

asserts, even if the interest the original Marshall Heritage Foundation had in 

the income from Peroxisome was an asset, the Peroxisome trust instrument 

prohibited the original foundation from transferring its interest. Finally, 

Preston argues, according to the plain wording of the trust instrument, when 

the original Marshall Heritage Foundation ceased to exist, the trustees needed 

to unanimously agree on a new charitable organization to donate the payments

Patel v. Tex. Tech Univ., 941 F.3d 743, 747 (5th Cir. 2019) (citing Ezell v. Kan. City S. Ry. 

Co., 866 F.3d 294, 297 (5th Cir. 2017)).

3 FED. R. CIV. P. 56(a).

4 Germain v. US Bank Nat’l Ass’n as Tr. for Morgan Stanley Mortg. Loan Tr. 2006-7, 

920 F.3d 269, 272 (5th Cir. 2019) (citing FDIC v. Dawson, 4 F.3d 1303, 1306 (5th Cir. 1993)).

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to. They did not. So, Preston concludes, TMHF is not an income beneficiary of 

Peroxisome.

A

In order to decide if the interest the original Marshall Heritage 

Foundation had in payments from Peroxisome was transferred to TMHF, we 

must first determine if the interest was a transferable asset.

The payments from Peroxisome were an asset of the original Marshall 

Heritage Foundation. They are an asset because “the interest of an income 

beneficiary [of a trust] is properly characterized as an incorporeal movable” 

under Louisiana law.5 An incorporeal movable is an asset under Louisiana 

law.6

This asset was also transferable. Under Louisiana law, “[a] beneficiary 

may transfer or encumber the whole or any part of his interest unless the trust 

instrument provides to the contrary.”7 Here, contrary to Preston’s contentions, 

nothing in the Peroxisome trust instrument prohibits its beneficiary from 

transferring or encumbering its interest. Preston argues that only the trustees 

can choose the beneficiary, but this assertion is only true under the terms of 

the trust if the original Marshall Heritage Foundation ceases to be a charitable 

organization. That clause does not otherwise affect the original Marshall 

Heritage Foundation’s or any chosen beneficiary’s ability to transfer its

interest. Accordingly, the interest in payments from Peroxisome was a 

transferable asset of the original Marshall Heritage Foundation.

5 In re Howard Marshall Charitable Remainder Annuity Tr., 709 So. 2d 662, 666 (La. 

1998).

6 See Messersmith v. Messersmith, 86 So. 2d 169, 174 (La. 1956) (concluding that an 

incorporeal movable piece of property is an asset).

7 LA. STAT. ANN. § 9:2001 (1964).

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Because the interest in the payments was a transferable asset, TMHF 

could be the income beneficiary of Peroxisome if the original Marshall Heritage 

Foundation transferred that asset to TMHF.8

B

Having decided that the interest the original Marshall Heritage 

Foundation possessed in payments from Peroxisome was a transferable asset, 

we must determine what interest the original Marshall Heritage Foundation 

transferred to TMHF. Under LA. STAT. ANN. § 9:2030, “[t]he division of a trust 

shall be based on the fair market value of the assets of the trust on the effective 

date of the division and need not result in a uniform interest in each asset.”9 

Here, before the division of the original Marshall Heritage Foundation, the 

trustees agreed to “divide and distribute” half of the original trust’s “assets and 

obligations” to the Marshall Legacy Foundation and half to TMHF. Therefore, 

TMHF received half of the original Marshall Heritage Foundation’s interest in 

payments from Peroxisome.

We must now decide whether the interest the original Marshall Heritage

Foundation transferred to TMHF ceased to exist when the original Marshall 

Heritage Foundation ceased to exist. A trust’s beneficiary can transfer or 

encumber only its interest in the trust property, not the trust’s property.10 

“The beneficiary’s ‘interest’ in the trust consists of [only] the right to receive 

income or principal or both.”11 A trust instrument “may include any 

conditions” on a beneficiary’s interest “that are not contrary to law or good 

morals.”12

8 See David v. Katz, 83 F. Supp. 2d 736, 738 (E.D. La. 2000).

9 LA. STAT. ANN. § 9:2030 (2001).

10 Read v. U.S. ex rel. Dep’t of Treasury, 169 F.3d 243, 249 (5th Cir. 1999) (per curiam).

11 11 EDWARD E. CHASE, JR., LOUISIANA CIVIL LAW TREATISE: TRUSTS § 9:2 (2d ed. 

2009).

12 LA. STAT. ANN. § 9:2271 (2009).

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Here, the Peroxisome trust instrument states:

If the Marshall Heritage Foundation is not an organization 

described in [26 U.S.C.] §§ 170(c), 2055(a), and 2522(a) at the time 

any payment is to be made to it, the Trustee shall instead 

distribute such payments to one or more organizations described 

in §§ 170(c), 2055(a), and 2522(a) as the Trustee shall select, and 

in such proportions as the Trustee shall decide, from time to time, 

in the Trustee’s sole discretion.

Preston argues this language means that when the original Marshall Heritage 

Foundation ceased to exist, the trustees were required to agree unanimously 

on a new charitable organization to donate the payments to, and because that 

did not occur, TMHF is not an income beneficiary of Peroxisome.

However, the language Preston cites from the Peroxisome trust 

instrument addresses only tax issues, and specifically what happens when the 

beneficiary falls out of Internal Revenue Code compliance. The language does 

not address what happens when the beneficiary is divided. Indeed, the 

provision is copied from Revenue Procedure 2007-45, which sets forth language 

required to be included in a charitable lead annuity trust instrument.13 

Preston offers no authority—and this court has found none—that supports the 

proposition that such a clause controls the transferability of beneficiary 

interests or what occurs when a beneficiary ceases to exist or divides itself 

under state law. The interest the original Marshall Heritage Foundation 

transferred to TMHF did not cease to exist when the original Marshall 

Heritage Foundation ceased to exist. TMHF succeeded the original Marshall 

Heritage Foundation as a beneficiary of Peroxisome.

But even if the interest the original Marshall Heritage Foundation had 

in Peroxisome was nontransferable or ceased to exist when the original 

Marshall Heritage Foundation ceased to exist, our conclusion would be the 

13 Rev. Proc. 2007-45, 2007-2 C.B. 90-91.

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same. In construing Louisiana trusts, “the settlor’s intention controls and is 

to be ascertained and given effect, unless opposed to law or public policy.”14 

Here, the settlor of Peroxisome named the original Marshall Heritage 

Foundation as its beneficiary. The trust instrument is silent on selecting a 

new beneficiary if the original Marshall Heritage Foundation cannot be the 

beneficiary for any reason besides tax status. Because TMHF and the 

Marshall Legacy Foundation are the successor trusts to the original Marshall 

Heritage Foundation directly resulting from the original foundation’s division 

under state law and there are no competing candidates as successor 

beneficiaries, they are also the logical replacements for the previous 

beneficiary. Thus, TMHF would still be an income beneficiary of Peroxisome.

IV

Preston contends that “the portion of the [d]istrict [c]ourt’s order 

requiring Preston to effect future distributions to . . . TMHF ‘for the term of 

the Peroxisome Trust’ [constitutes] error.” Preston argues that “[t]he trust 

instrument continues to authorize the co-trustees to choose a new beneficiary 

from time to time” and therefore, the court order contradicts the plain language 

of the trust instrument.

The district court ordered the following: “Marshall is directed in the 

future, for the term of the Peroxisome Trust, to effect required future 

distributions from the Peroxisome Trust to TMHF.” Because the district court 

only ordered that future distributions that are required to go to TMHF as the 

successive beneficiary of the original Marshall Heritage Foundation be paid to 

TMHF, it necessarily leaves open the possibility that there could be another 

14 Richards v. Richards, 408 So. 2d 1209, 1211 (La. 1981) (citing Lelong v. Succession 

of Lelong, 164 So. 2d 671, 674 (La. App. 3d Cir. 1964)).

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beneficiary besides TMHF under the terms of the trust instrument. The

district court did not err in its order.

V

Finally, we address whether Preston breached his fiduciary duty as 

trustee by refusing to issue required distributions to TMHF. A trustee owes 

“the very highest possible fiduciary responsibility” to the beneficiary of the 

trust.15 This duty includes “administer[ing] the trust solely in the interest of 

the beneficiary.”16 If a trustee fails to pay a trust beneficiary as required by 

the trust instrument without good cause, the trustee fails to administer the 

trust in the interests of the beneficiary.17 This failure is a breach of trust.18

Here, Preston blocked millions of dollars in disbursements to TMHF 

required by the Peroxisome trust instrument, causing TMHF to fall behind on 

its binding pledge to Tulane University. Without justification, this would be 

an obvious breach of fiduciary responsibility. Preston offers a justification: 

giving the money to TMHF would or could result in disastrous tax 

consequences for Peroxisome and its beneficiaries. Preston points to two 

reasons why these potential consequences exist. Each is considered in turn.

A

Preston argues that TMHF is not or might not be a tax-qualified entity. 

He points out that the Peroxisome trust instrument forbids disbursements to 

entities that are not tax-qualified, and that giving money to such an entity 

would cost Peroxisome and its beneficiaries significantly. The reasoning 

behind Preston’s argument that TMHF might not be a tax-qualified entity is 

not entirely clear outside of Elaine’s alleged control over TMHF, though he 

15 In re Succession of Dunham, 408 So. 2d 888, 901 (La. 1981).

16 LA. STAT. ANN. § 9:2082(A) (2001).

17 See LA. STAT. ANN. § 9:2090(A) (2001).

18 LA. STAT. ANN. § 9:2081 (1964).

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appears to argue it as a separate ground for not distributing the payments to 

TMHF.

Regardless of what his argument might be, it appears to be an argument 

devised after the fact. TMHF’s trust instrument requires it to be a taxqualified entity. Preston conceded twice in this litigation that TMHF is a taxqualified entity. Moreover, although Preston stopped approving payments to 

TMHF in 2016, neither he nor his tax expert looked to see if TMHF was on the 

IRS’s list of tax-qualified organizations until June 2018. Finally, TMHF is now 

on the IRS’s list of tax-qualified organizations. Thus, TMHF is clearly a taxqualified organization, and Preston has been aware of that fact for years. This 

argument does not justify Preston’s refusal to approve Peroxisome payments 

to TMHF.

B

Preston also argues that his refusal to approve the payments to TMHF 

was justified because Elaine’s control over TMHF could cause Peroxisome to 

become a grantor trust and thus incur a massive tax burden. Preston argues 

that since Elaine was the donor to Peroxisome, her having control over the 

money she donated would cause her to be the owner of those funds under the 

grantor trust provisions of the Internal Revenue Code. To evince Elaine’s

control, Preston points to the fact that Elaine has served as president of TMHF, 

and that TMHF has not adopted a resolution to stop her from voting on the 

disbursement of funds received from Peroxisome. These points are immaterial.

Elaine cannot be considered the owner of TMHF due to her alleged 

control of TMHF under 26 U.S.C. § 674. Under 26 U.S.C. § 674(b)(4), it does 

not matter if a grantor has complete control over a trust so long as the income 

and corpus must go to charitable causes compliant with 26 U.S.C. § 170(c). 

Here, it is undisputed that TMHF exists solely for charitable purposes 

pursuant to § 170(c). Therefore, Elaine cannot be an owner of TMHF for 

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federal income tax purposes. Since Elaine cannot be the owner of TMHF for 

federal income tax purposes, Preston could not justifiably withhold payment to 

TMHF on this basis.

Thus, Preston breached his fiduciary duty by withholding Peroxisome’s 

required payments to TMHF.

* * *

For these reasons, we AFFIRM the district court’s judgment.

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