Court Opinion

ID: 4665705
Source: CourtListenerOpinion
Date Created: 2021-03-08 19:02:50.683291+00
Date Added: 2024-06-11T08:02:44.766130
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

    IN THE MATTER OF:         )
    THE JEANNETTE T. MCDOWELL ) C.A. No. 2019-0515-PWG (JRS)
    TRUST U/A 5/1/1996        )
                              )
    IN THE MATTER OF:         )
    THE JEANNETTE T. MCDOWELL ) ROW File No. 13133-S-PWG (JRS)
    TRUST U/A 5/1/1996        )

                             ORDER UPON REMAND

         This    8th   day of March, 2021, the Court having reviewed the Order of

the Supreme Court of Delaware, dated March 3, 2021, remanding this matter to this

Court for further action, it appears to the Court that:

         1.     On June 8, 2020, this Court entered an Order Overruling Exceptions

and Affirming Master’s Order (the “Order”), in which it affirmed decisions of a

Master in Chancery denying exceptions brought by John W. McDowell, Jr.

(“Mr. McDowell”) to the First and Final Accounting for the Estate of Jeannette T.

McDowell and granting a Petition to Terminate Trust Or In the Alternative Appoint

a Trustee (the “Petition”) for the Jeannette T. Powell Trust (the “Trust”).1

1
    D.I. 38.
          2.      Mr. McDowell appealed the Order on June 29, 2020.2 After full

briefing, the Supreme Court remanded the matter to this Court to address

Mr. McDowell’s exceptions relating to the Trust. Upon review of the Order, this

Court agrees that the exceptions relating to the Trust were not adequately addressed

in the Order.

          3.      The Trust provides that Donald L. McDowell (“Donald”) is to serve as

successor trustee of the Trust.3 The Trust is to be administered for the benefit of its

beneficiaries, with Mr. McDowell to receive all net income from the Trust during

his lifetime, Mr. McDowell’s son, John W. McDowell, III, to receive all net income

from the Trust following his father’s death, and the then-remaining principal of the

Trust to be distributed per stirpes to four remainder beneficiaries upon the death

John W. McDowell, III. 4

          4.      In failing health, Donald, then 88 years old, petitioned the Court of

Chancery either to terminate the Trust or appoint a substitute trustee. 5 Notice of the

Petition was given to all constituents with an interest, including Mr. McDowell, his

2
    D.I. 39.
3
    D.I. 1, Ex. A (“Trust”), Art. 2A.
4
    Id. Art. 7.
5
 D.I. 1. The Trust named Wilmington Trust Company as successor trustee if Donald is
unable to serve, but Wilmington Trust renounced because the Trust assets did not meet
Wilmington Trust’s minimum assets under management threshold. Trust, Art. 2A.

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son and the living remainder beneficiaries. Mr. McDowell and his son appeared at

the October 31, 2019 hearing on the Petition and stated their positions that the Trust

should be terminated.6 Both opposed the appointment of a substitute trustee. 7 More

specifically, Mr. McDowell maintained the Trust should be terminated and the

corpus of the Trust should immediately be distributed 50% to him and 50% to his

son. 8

          5.     At the conclusion of an often contentious hearing, the Master

announced her final ruling on Donald’s Petition. 9 Donald was relieved as trustee;

the Petition to terminate the Trust was denied; and the alternative Petition to appoint

a substitute trustee, Supportive Care Solutions, Inc. (“Supportive Care”), was

granted. The Master explained that, in keeping with the paramount importance of

adhering to the intent of the testator, termination of the Trust could not be justified

on the record before the Court. The Master also explained that Donald had done his

best to find a substitute trustee that would comply with the Trust’s requirements, but

6
  D.I. 21. (Transcript of October 31, 2019 hearing on Petition to Terminate) (“Tr.),
at 16, 21.
7
    Id. at 17, 22.
8
    Id. at 38.
9
    Id. at 13, 16, 40–41, 48–49 (examples of Mr. McDowell’s behavior during the hearing).

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after an exhaustive search, no qualified trust institutions would agree to serve.10

Accordingly, the Master approved the appointment of Supportive Care as substitute

trustee for the Trust, a provider well-known to the Court as providing excellent fee-

for-service fiduciary guardianship services. 11

         6.     Mr. McDowell filed exceptions to the Master’s decision. In essence,

Mr. McDowell reiterated his position that the Trust should be terminated and its

corpus distributed immediately to him and his son. As for the appointment of

Supportive Care as substitute trustee, Mr. McDowell’s principal objection was that

he had “never heard of” Supportive Care prior to the filing of Donald’s Petition.12

         7.     The Court has conducted a de novo review of the factual and legal

conclusions in the Order.13 The Court has carefully reviewed the record and has

determined that it is possible to conduct a de novo review without conducting a

further evidentiary hearing.14 The exceptions do not turn on dispositive credibility

determinations that would require the Court to view the witnesses. 15

10
 Counsel for Donald spoke with 25 qualified trust institutions. For various reasons, none
would agree to serve. Tr. at 33–35.
11
     Id. at 42–47.
12
     D.I. 14.
13
     See DiGiacobbe v. Sestak, 743 A.2d 180, 184 (Del. 1999).
14
     See id.
15
  See id.; accord Lynch v. City of Rehoboth Beach, 2005 WL 2000774, at *1 (Del. Ch.
Aug. 16, 2005) (“When the parties except to one or more of the Master’s findings from the
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         8.     The Court of Chancery may appoint a trustee for a Delaware trust when

it concludes that the “objects and purposes of any such trust are in danger of not

being performed or effectuated.” 16 When determining whether to appoint a trustee,

the court’s first reference point is the intent of the settlor as stated in the trust

document, and such intent “should not be disregarded in the absence of compelling

circumstances.”17 But, in circumstances where “a settlor’s express intent runs up

against circumstances that it is obvious the settlor never foresaw at the creation of

the trust,” the court may depart from the trust and exercise its appointment power in

a manner it determines best furthers the purpose of the trust.18

         9.     Here, the designated trustee, Donald, is no longer able to serve in that

capacity.      The settlor’s choice for successor trustee, Wilmington Trust, has

renounced as permitted by the Trust.19 The trustee’s counsel diligently searched for

a substitute trustee that would meet the requirements set forth in the Trust for an

evidence in the case, the Court can read the record that is relevant to the exceptions raised
and draw its own factual conclusions.”).
16
     12 Del. C. § 3501.
17
     McNeil v. McNeil, 798 A.2d 503, 514 (Del. 2002).
18
     Hurd v. Hurd, 2020 WL 504980, at *1 (Del. Ch., Jan. 31, 2020).
19
     Trust, Art. 3D.

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institutional trustee.20 None were willing to serve. 21 Accordingly, Donald filed a

Petition that presented the Court with two alternatives: either terminate the Trust or

appoint a substitute trustee that does not match the criteria set forth in the Trust.

          10.    The Master conducted a thorough evidentiary hearing during which she

heard from all concerned. At the conclusion of the hearing, in ruling on the Petition,

the Master began where the Court must begin: with a review of the Trust itself.

There, the settlor made clear her intent that the corpus of the Trust should be

administered not by Mr. McDowell or his son, but by a trustee. 22 Nothing in the

Trust suggests the settlor was comfortable turning over the corpus of the Trust

directly to these beneficiaries. Nor is there evidence the settlor intended the corpus

of the Trust to be distributed directly to Mr. McDowell and his son without regard

for the remainder beneficiaries. Thus, the Trust itself revealed the settlor would not

have supported termination of the Trust under the circumstances.

          11.    The Master then concluded that all reasonable efforts had been made to

comply with the settlor’s intent with respect to the appointment of a successor

trustee. But no institutional trustee that met the criteria was willing to serve, thus

revealing it was impossible to fulfill the letter of the Trust regarding the appointment

20
     Trust, Art. 2B.
21
     Tr. at 33–35.
22
     Trust, Art. 7.

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of a successor trustee. There was no meaningful challenge to that conclusion offered

at the hearing, and none has been offered since. Finally, the Master reviewed the

qualifications of the proffered substitute trustee, Supportive Care, and concluded that

its extensive experience serving as fiduciary in its role as guardian of the property

of adult wards made it a worthy candidate to serve as trustee of the Trust under the

circumstances.

         12.   After de novo review, I am satisfied the Master’s decision was well

grounded in the law and the facts of record. I see no basis to overturn it.23

Termination of the Trust is contrary to the settlor’s intent as stated in the Trust. And,

failing the agreement of a trust institution meeting the criteria stated in the Trust to

serve as trustee, Supportive Care is a qualified substitute trustee given its extensive

experience serving in a fiduciary capacity in the protection and administration of

property for the benefit of others.

         13.   Based on the foregoing, the exceptions to the Order are overruled and

the Master’s decision is affirmed.

         IT IS SO ORDERED.

                                                     /s/ Joseph R. Slights III
                                                          Vice Chancellor

23
     In re Erdman, 2011 WL 2191680, at *1 (Del. Ch. May 26, 2011).

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