___________ No. 95-2426

___________ Jonathan D. Brown; Deborah B. * Billow; Nancy B. Brown; * Gretchen A. Brown, * * Appeal from the United States Appellants, * District Court for the * Western District of Missouri. v. * * United Missouri Bank, N.A.; * Thomas Brown, * * Appellees. *

___________ Submitted: January 11, 1996 Filed: March 12, 1996

___________ Before WOLLMAN, ROSS, and MURPHY, Circuit Judges.

___________ WOLLMAN, Circuit Judge.
This is an appeal from the district court's grant of summary ju dgment to defendants on two claims and judgment as a matter of law (JAML) on the remaining claims following opening statements, in this diversity action. We reverse and remand for trial.

I.

Prior to his death, Maurice Brown (Maurice) created two trusts from his estate. Maurice's third wife, Virginia, was the income beneficiary of the first trust, referred to as the QTIP trust, and the appellants , Maurice's children (the Brown children), were th e remaindermen. The Brown children were also the beneficiaries of the second trust, referred to as the residual trust. Maurice and United Missouri Bank (UMB) were co

trustees during Maurice's life, although Maurice could conduct any busines s on his own as long as

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he was competent, and UMB became the sole trustee after Maurice's death. One of th e trust assets was the Maurice L. Brown Company, which Mauric e sold to Petroleum Resources Management, Inc. (Petroleum Resources) in 1983

. The Maurice L. Brown Company was renamed Petroleum Production Management, Inc. (Petroleum Production). As part of the sale proceeds, Mauric e received a promissory note with a face value of $2.5 million, secured by junior mortgages on properties owned by Petroleum Production. Petroleum Resources later issue d an additional promissory note for $750,000. These notes were allocated to the residual trust.

After the sale of his company, Maurice was diagnosed with brai n
can cer, and his health deteriorated significantly in 1988. By Novembe r 1988, h e had lost his eyesight, and on December 3, 1988 he began takin g Roxanol, a liquid mor phine. At a meeting held December 13, 1988, Maurice released his security interest in the Petroleum Production properties so they could be sold to another company. Thomas C. Brown (Thomas), Maurice' s stepson and Virginia's son, represented Petroleu m Resources in the matter. Maurice died on January 11, 1989. The Brown chi ldren did not learn of the release until after Maurice's death.

Af ter Maurice's death, UMB determined that Virginia should receiv e $570,000 per year to maintain her lifestyle. Due to the mix of assets in the trust, however, the trust generated income in the first three year s after Maurice's death of $900,000, $800,000, and $700,000, which was paid to Virginia. UMB also sold the notes in the tru st account to a subsidiary of Petroleum Resources for $450,000.

Maurice's children brought this action in the district court , all eging that: UMB breached a fiduciary duty by failing to follo w reasonable practices to preserve the value of the Petroleum Resources note s (Count I); UMB breached a fiduciary duty in administering the trusts (Coun t II); Thomas Brown committed fraud

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by in ducing Maurice Brown to release the trust assets (Count III); an d Thom as Brown knowingly participated in a breach of fiduciary duty b y forci ng UMB to sell the promissory notes for an unreasonably low pric e (Count IV).

The district court struck the Brown children's jury demand on Counts I, II, and IV, finding that claims against a trustee for breach o f fiduciary duty are equitable and therefore not t riable to a jury, and that Count IV against Thomas was dependent on the equ itable claims against UMB. The distri ct court then granted summary judgment to UMB and Thomas o n Counts I and III, finding that both counts were dependent upon Maurice's competency at the time he signed the release and that the Brown children had not raised a genuine issue of material fact on the issue. The court also excluded from evidence the transcript of taped telephone conversation s between one of the Brown children and UMB employees.
Finally, the district court granted JAML to UMB and Thomas on th e remain ing claims following the parties' opening statements. The cour t found that the Brown children did not demonstrate that they would be able to show that UMB abused its discretion or acted in anything other than a prudent manner with respect to the sale of the Petroleum Resources notes or to the debt/equity mix of the trust. The cou rt then found that because the Brown children could not show that UMB breached its fiduciary duty , there was no basis for finding that Thomas parti cipated in the breach. In the alternative, the court found that the Brown children did not "offe r
even a sc intilla of proof that such a breach was improperly prompted b y Thomas Brown."

II.

We will first address the counts of the complaint dependent upo n Mauric e's competency. The district court granted summary judgment o n Counts I and III because it found that Maurice was

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competent to sign the release and that thus the claims based on the releas e must fail . We review the district court's grant of summary judgment d e novo, and we will affirm if the evidence, viewed in the light mos t favorable to the non- moving party, shows that no dispute of material fact exists and that the moving party is entitled to judgment as a matter o f law. Michalski v. Bank of America Ariz. , 66 F.3d 993, 995 (8th Cir. 1995)

. Bec ause this is a diversity case, we also review de novo the distric t court's interpretatio n of state law. Id. (citing Salve Regina College v. Russell , 499 U.S. 225, 231 (1991)).

Under M issouri law, a person is incompetent to contract if he doe s not have "sufficient mental capacity to understand the nature and effect of the particular transaction." McElroy v. Math ews , 263 S.W.2d 1, 10 (Mo. 1953). Because two cases are rarely even substantially the same, each cas e must be decided on its own facts. Peterein v. Peterein , 408 S.W.2d 809, 814 (Mo. 1966). Evidence of the person's mental condition before and afte r
exec ution can be sufficient if it provides a reasonable inference o f inc ompetency at the time of execution. Estate of Brown v. Brown , 72 2 S.W.2d 345, 347 (Mo. Ct. App. 1987).

UM B and Thomas submitted the affidavits of four witnesses to th e effect that Maurice was alert and aware and that he appeared to understand wha t was going on at the December 13 meeting when he released th e collateral for the promissory notes. UMB and Thomas also submitted th e affidavit of the nurse who cared for Maurice, who attested that he wa s clear and alert both before and after the meeting. The Brown childre n chal lenge the impartiality and/or credibility of the witnesses, notin g specifically that: Thomas benefitted from the d eal, as he had an interest in Petroleum Resource s; Connie Rolan, as Thomas's legal assistant, was an interested party; Christopher Glenn, as Thomas's brother-in-law, was a n interested party; andJudith Wimmer, Maurice's secretary, "was very close with Virginia" and was previously employed by

### The district court did not consider the affidavit of Dr

. 1 

### Stephen Williamson, who reviewed Maurice Brown's records and stated tha t he had serious questions about Maurice's competence to mak e important business decisions on December 13. The court stat ed that because Dr. Williamson did not examine or treat Maurice Brown, his affidavit was speculative.
-5- Glen n's company, and thus was an interested party. Mary Lou Pullen , Maurice's nurse, attested only that she was inst ructed to withhold Roxanol when Maurice needed to conduct business--not that she actually withheld th e medication. Pullen's daily notes confirm that s he gave Maurice Roxanol at 9:50 a.m., 12:50 p.m., and 3:45 p.m. on the day of the meeting, and he r notes also confirm that on that same day Maurice suffered fro m hallucinations, believing that his friends were tied up in the garage.

The Brown children also point out that Maurice did not have lega l representation at the meeting, that he did not follow his usual practice of informing his family members of the transaction he was contemplating, that he could have be en confused into thinking that Thomas and Glenn were
on his si de, and that he signed the document with an unrecognizabl e scrawl. The district court did not hear live witness testimony on th e

1 competency issue, but instead granted summary judgment to UMB and Thomas on the basis of the affidavits.

We conclude that the Brown children submitted sufficient evidence to raise a factual question as to whether Maurice was competent to release th e collateral. Thus, summary judgment should not have been granted on the tw o counts dependent upon Maurice's incompetence.

III.

We next address the breach of fiduciary duty claims. The distric t court granted JAML on Counts II and IV, finding that UMB

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did not breach its fiduciary duty and that thus neither UMB nor Thoma s
cou ld be held liable. The Brown children argue that UMB breached it s fiduciary duty in several ways, including: by overpaying Virginia about $700,000 in three yea rs, which reduced the value of the QTIP trust assets to their detriment; by selling the Petroleum Resources notes for a n unreasonably low price under pressure from Virgi nia, Thomas, and Petroleum Resources and by not obtaining substitute collateral for the notes; b y failing to dispose of real estate in a prudent manner; and by chargin g improper attorney's fees to the trust.

We review a district court's grant of JAML de novo, resolving al l doubts in favor of the nonmoving party and giving him the benefit of all reasonable inferences

. Harvey v. Wal-Mart Stores, Inc. , 33 F.3d 969, 970 (8th Cir. 1994). A district court should grant JAML following openin g statements only in rare circumstances, exercisin g great restraint if there is any doubt as to the propriety of such a judgm ent. See Morfeld v. Kehm , 803 F.2d 1452, 1454 (8th Cir. 1986). The Brown children were not required to set forth all of their evidence in the opening statement; the purpose of their opening statement was simply to provide a general summary of what the case was about. See id. at 1455 n.3.

Becau se there was a standard by which the reasonableness of UMB' s actions could be tested, the court needed to determine whether UM B exercised reasonable judgment in choosing the de bt/equity mix of the trust account. See In re Heisserer , 797 S.W.2d 864, 8 70-71 (Mo. Ct. App. 1990). Based on the evidence that the Brown children proposed to admit, we believ e
a jury could reasonably find that UMB manipulated the investment mix t o overpay Virginia at the expense of the remainder men and that UMB's actions in allowing the overpayment were unreasonable.

Factual issues also remained as to w hether UMB acted unreasonably in selling for $450,000 promissory notes on which

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principal and interest due exceeded $4.5 million . Although the sale price
was within the range of the most recent appraisal, previous appraisals wer e higher, and UMB did not retain a broker or marke t the notes before selling them back to a subsidiary of Petroleum Resources. The district cour t impermissibly relied on factual assertions by UM B and Thomas that were not admitted by the Brown children in finding that t he price for the notes was reasonable. The Brow n children should also be allowed to put forth their evidence that UMB failed to dispose of real esta te in a prudent manner and charged the trust for improper attorney's fees.

The district court found that because UMB did not breach it s fiduciary duty, Thomas could not be liable for conspiring to breach th e fiduciary duty. Alternatively, the court found that the Brown children di d not offer proof that Thomas induced the breach. Because we have found tha t UMB may be liable for a breach of fiduciary duty , the claim against Thomas Brown cannot be dismissed on the first ground. In addition, the Brow n children stated that they would offer evidence t hat Thomas used the threat of a lawsuit to induce UMB to sell the promissory notes for what he knew was an unreasonably l ow price to a company in which Thomas himself had an interest. We believe such allegations could state a claim under Missouri law for inducement to breach a fiduciary duty. See Massie v. Barth , 634 S.W.2d 2 08, 211 (Mo. Ct. App. 1982) (third party liable for loss if o n notice of and participates in trustee's breach of trust). (We den y Thomas's motion to strike portions of the Brown children's reply brie f addressing this claim, or in the alternative to file a sur-reply brief, as the Brown children sufficiently argued their cla ims against Brown in their opening brief and responded to Thomas's arguments in their reply brief.)

IV.
Whether a party is entitled to a jur y trial is a legal question that we review de novo. Pandazides v. Virginia Bd. of

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Educ. , 13 F.3d 823, 8 27 (4th Cir. 1994). Courts of equity generally have exclusive jurisdiction over actions against a tr ustee for breach of trust, as they are equitable actions. See Mertens v. Hewitt Assocs. , 113 S. Ct. 2063, 2068 (1993). S uch actions are legal and not equitable, however, if the beneficiaries are entitled to recover money arising out of a breach of trust di rectly upon obtaining a judgment against the trustee. Se e Restatemen t (Second) of Trusts § 198(1) (1959); Snook v. Trust Co. o f Georgia Bank of Savannah, N.A. , 909 F.2d 480, 48 6-87 (11th Cir. 1990). An act ion for damages for a breach of trust, as distinguished from a n indebtedness arising out of a breach of trust, remains an equitable action

. See Restatement (Second) of Trusts § 198(1) cmt. e (1959).

The Brown children contend that because they are entitled t o immediate payment of the trust proceeds upon a finding that UMB breached its fiduciary duty, t heir action is triable to a jury. Because the Brown children are not immediately entitled to any pro ceeds from the QTIP trust, their claims regarding that trust are equitable and are thus not triable to a jury. As to the residual trust, the Brown children's claims regardin g UMB's mi shandling of the promissory notes and real estate are als o equitable claims, as those claims are for damages, rather than for a n indebtedness arising out of a breach of trust. The only legal claim the Brown children have stated against UMB is that UMB charged the residua l trust for inappropriate attorney's fees. This claim against UMB is triabl e to a jury.

The Brown children's claim against Thomas for inducing Maurice t o relea se the trust assets is a legal claim triable to a jury. The clai m that Thomas participated in a breach of fiduciary duty is also a lega l claim triable to a ju ry. Although the court's determination of whether a breach occurred may determine the outcome of the issue, it is for the jury to determine whether Thomas induced the breach if it did occur.

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Adistrict court's decision regarding the admission of evidence i s committed to its sound discretion and will not be disturbed absent an abus e of discretion. McGautha v. Jackson County, Mo. Collections Dep't , 36 F.3d 53, 57 ( 8th Cir. 1994), cert. denied , 115 S. Ct. 2561 (1995). Withou t belabo ring the particulars of the circumstances under which they wer e recorded, we conclude that the district court di d not abuse its discretion in ruling inadmissible transcripts of telephone conversations betwee n Jonathan Brown and certain of UMB's employees and agents.
We deny the Brown children's motion to remand the case to a dif ferent judge. W e will take such an action only where the district court ha s exercised "`such a high degree of favoritism or antagonism as to make fair judgment impossible.'" Hunter v. Delo , 62 F.3d 271, 276 (8th Cir. 1995) (quoting Liteky v. United States , 114 S. Ct. 114 7, 1157 (1994)). Although there were exchanges between the district court and counsel for the Brown children that manifes ted the district court's impatience with counsel and its skepticism about the bona fides of the action, we do not believe that they manifest the deg ree of favoritism or antagonism that would make fair judgment i mpossible in the context in which this case will proceed o n remand.

The judgment is reversed and the case is remanded to the distric t court for trial.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.