Dater v. Dater Foundation, 2003 Ohio 7148 (Ohio App. 12/30/2003)
| Decision Date | 30 December 2003 |
| Docket Number | Trial No. A-9706260.,Appeal Nos. C-020675, C-020784. |
| Citation | 2003 Ohio 7148 |
| Parties | ANN C. DATER, Plaintiff-Appellant/Cross-Appellee, v. CHARLES H. DATER FOUNDATION, Defendant-Appellee/Cross-Appellant and JIM PETRO, Attorney General of the State of Ohio, Defendant-Appellee. |
| Court | Ohio Court of Appeals |
Quintin F. Lindsmith, Karen M. Moore and Bricker & Eckler, for Plaintiff-Appellant/Cross Appellee,
Mark A. Vander Laan, Timothy S. Mangan, Amanda L. Prebble and Dinsmore & Shohl, LLP, for Defendant-Appellee/Cross Appellant Charles H. Dater Foundation.
Monica L. Moloney, Assistant Attorney General, for Defendant-Appellee Jim Petro.
O P I N I O N.
{¶1} Plaintiff-appellant/cross-appellee Ann C. Dater challenges the trial court's dismissal of her claims against defendant-appellee/cross-appellant the Charles H. Dater Foundation, Inc. In a cross-appeal, the Foundation takes issue with the trial court's denial of its motion for summary judgment. For the following reasons, we hold that the Foundation was not entitled to summary judgment, and we reverse the trial court's dismissal of the case and remand the cause for further proceedings.
{¶2} The late Charles H. Dater was a successful businessman who had acquired great wealth during his lifetime. By 1985, Mr. Dater's personal net worth was over $25 million. Over a period of years, Mr. Dater had placed many of his assets in the custody of the investment firm Merrill Lynch through a broker named Alan Ziegler. Sometime in the early 1980s, Ziegler retired and Mr. Dater's account with Merrill Lynch was taken over by Daniel L. Olberding. Olberding was in a partnership relationship with two other Merrill Lynch brokers, Stanley Frank, Jr., and John Silvati, in which they agreed to share commissions and business opportunities.
{¶3} In August 1985, Mr. Dater suffered a stroke and was unable to manage his financial affairs. Shortly thereafter, Olberding referred Mr. Dater to the law firm of Eichel & Krone. In November 1985, Charles Dater's estate plans, which had been in place with the Central Trust Company since 1940, were modified by the creation of the Charles H. Dater Foundation, Inc., an Ohio charitable trust. At the Foundation's inception, Paul W. Krone, Paul's son, Bruce A. Krone, David L. Oberding, Stanley J. Frank, Jr., and John D. Silvati were named as Foundation trustees.1
{¶4} Approximately one month later, Mr. Dater executed a new agreement that created the Charles H. Dater Trust. On January 5, 1990, despite evidence that Mr. Dater was suffering from dementia and Alzheimer's disease and that his mental condition was deteriorating, Mr. Dater executed the Charles H. Dater Last Will and Testament and bequeathed the residue of his estate under a pour-over provision to the Dater Trust, an existing inter vivos trust. On that same day, Mr. Dater also executed a document called the Second Amendment and Restatement of Trust Agreement, which amended the terms of the Dater Trust.
{¶5} Mr. Dater died on September 23, 1993. He was survived by his wife, Ann Dater. Pursuant to the estate plans, the Dater Trust provided that, upon Mr. Dater's death, Paul W. Krone, Bruce A. Krone, David L. Olberding, Stanley J. Frank, Jr., and John D. Silvati would become trustees of the Dater Trust. The trust further provided that if one of these trustees died or stepped down, he would be succeeded by his wife and then children in descending order of age.2 The Dater Trust also contained a provision calling for the Foundation to receive assets upon Mr. Dater's death. The Dater Trust divided the corpus into shares, one of which was paid outright to the Foundation, with the remaining shares to be held in trust for Mrs. Dater and her children, and with the bulk of the remainder thereof to be paid over to the Foundation. At the time of Mr. Dater's death, the Dater inter vivos trust was a fully funded trust with assets over $50 million.
{¶6} In September 1997, Ann Dater, her child, and her grandchildren ("Plaintiffs") filed a complaint against Bruce A. Krone, Dorothy G. Krone,3 David L. Oberding, Stanley Frank, Jr., and John D. Silvati, in their capacities both as individuals and as trustees of the Charles H. Dater Second Amendment and Restatement of Trust Agreement ("Dater trustees"), the law firm of Eichel & Krone, Co., L.P.A., the Dater Foundation, and the Ohio Attorney General.4 The Plaintiffs, asserting claims for fraud, breach of fiduciary duty, professional negligence, tortious interference, and unjust enrichment, sought, among other things, to have the second amendment to the Dater trust agreement declared invalid.
{¶7} In June and July of 1998, the trial court issued findings of fact and conclusions of law dismissing the Plaintiffs' claims against the Foundation entirely. In August 1998, the trial court ratified its June 1998 legal conclusion in its amended findings of fact and conclusions of law. In 1999, the Plaintiffs entered into a confidential settlement agreement with all of the defendants except the Foundation. On December 6, 1999, the trial court amended its July 1998 entry dismissing the Foundation to include a Civ.R. 54(B) certification. On December 7, 1999, the trial court issued an order of dismissal, stating that "[u]pon application and for good cause shown, all claims against all Defendants in this action, except for the Charles H. Dater Foundation, are hereby dismissed with prejudice." The plaintiffs appealed the trial court's dismissal of their complaint.
{¶8} On December 1, 2000, we reversed the trial court's dismissal of the Plaintiffs' claims against the Foundation.5 We held that because the trial court had sua sponte reviewed documents in Charles H. Dater's probate file and had used that information as the basis for its dismissal of the Plaintiffs' complaint, it had converted the Foundation's motion to dismiss into one for summary judgment. Because "the trial court [had given] no notice to the parties of the conversion and [had] not provide[d] them with the opportunity to present documentary evidence for the court to consider in determining whether triable issues existed under Civ.R. 56," we concluded that the trial court had erred in granting the Foundation's motion to dismiss. We further held that because the Dater Trust, which had funded the Foundation, was a valid inter vivos trust, the trial court had erred in applying the Ohio Supreme Court's decision in Hageman v. The Cleveland Trust,6 which concerned an invalid inter vivos trust, to conclude that the Plaintiffs' failure to contest the Dater will in probate court had precluded them from proceeding with their claims against the Foundation. Moreover, we concluded that the trial court had abused its discretion in denying the Plaintiffs' motion for leave to amend their complaint. Consequently, we reversed the trial court's entry granting the Foundation's motion to dismiss and remanded the cause for further proceedings.
{¶9} On March 26, 2001, Ann Dater filed an amended complaint against the Foundation, in which she asserted claims of lack of capacity, unjust enrichment, constructive trust, and conversion.7 The thrust of the complaint was that, from the time of the Foundation's incorporation, one or more of its trustees had "actively engaged in a scheme to take advantage of [Mr. Dater's] incapacity and to have monies transferred from Mr. Dater's trust to the Dater Foundation so that the greater the Foundation's assets, the greater would be the trustee and professional fees paid themselves." The complaint sought the return of approximately $27 million to the Charles H. Dater Trust.
{¶10} On July 19, 2001, Assistant Attorney General Monica A. Moloney deposed Foundation Trustee Bruce A. Krone. During the course of the deposition, the assistant attorney general, as well as Mrs. Dater's counsel, sought to inquire into matters relating to the administration and operation of the Foundation after Mr. Dater's death in September 1993. Krone's personal counsel, as well as counsel for the Foundation, objected to the relevance of such questioning on the basis that discovery concerning matters after Mr. Dater's death was not relevant to any of the claims in the amended complaint. As a result, counsel for the Dater Foundation invoked the provisions of Civ.R. 30(D) and adjourned the deposition in order to present the dispute to the trial court.
{¶11} On August 31, 2001, the Foundation moved for a protective order under Civ.R. 30(D) and 26(C). The Foundation argued that inquiry into matters related to the Foundation's administration after Mr. Dater's death was not reasonably calculated to lead to the discovery of admissible evidence, but only served to harass, embarrass, and oppress the Foundation and its trustees. Mrs. Dater filed a memorandum opposing the protective order along with a motion to compel the completion of Bruce Krone's deposition. The Ohio Attorney General also filed a memorandum opposing the protective order. On September 18, 2001, the trial court held a hearing on the Foundation's motion. On September 27, 2001, the trial court granted the Foundation's motion for a protective order and denied Mrs. Dater's motion to compel the completion of Bruce Krone's deposition.
{¶12} On December 4, 2001, the Foundation filed a motion for summary judgment. Both the Ohio Attorney General and Mrs. Dater filed a memorandum opposing the Foundation's motion for summary judgment. The Foundation filed replies to both opposing memoranda. On February 6, 2002, Mrs. Dater filed a ...
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