Eitel v. PNC Bank
| Decision Date | 23 February 2023 |
| Docket Number | Civil Action 3:20-cv-12-RGJ |
| Parties | MARY EITEL Plaintiff v. PNC BANK, N.A. ET AL Defendants |
| Court | U.S. District Court — Western District of Kentucky |
Defendants Wells Fargo Bank, N.A. (“Wells Fargo”), Marilyn Casey Eitel (“Marilyn”), PNC Bank, N.A. (“PNC”), South State Bank, N.A. (“South State Bank”), and South State Advisory, Inc. (“South State Advisory”) move for summary judgment on Plaintiff Mary Eitel's (“Plaintiff”) claims against them in the Second Amended Complaint. [DE 232, 256, 321, 324, 325 326].[1] Plaintiff responded to Wells Fargo's Marylin's, and PNC's motions. [DE 243, 265, 349 358].[2] Wells Fargo, Marylin, and PNC replied. [DE 248, 268, 357, 371]. Plaintiff did not respond to South State Bank's or South State Advisory's motions for summary judgment. [DE 270, Notice]. South State Advisory, South State Bank, Wells Fargo, PNC, and Plaintiff move to exclude expert testimony. [DE 320, 323, 327, 329, 330]. Plaintiff moves the Court to reconsider its previous order as it pertains to disclosure of privileged communications. [DE 341]. For the reasons below, the Court grants Wells Fargo's, Marilyn's, and PNC's motions for summary judgment, dismisses Plaintiff's claims against South State Bank and South State Advisory as abandoned, and denies all other motions as moot.
The Court addresses the parties' motions below in different order than filed.
Plaintiff alleges that Defendants have denied her rightful benefits in three trusts created by her paternal grandparents, Paul T. Eitel, Sr. (“Senior”) and Bernice L. Eitel (“Bernice”). Senior was president of Porter Paint Company. [DE 104, Sec. Am. Compl, ¶ 50]. Senior died in 1970 and Berenice died in 1977. [DE Sec. Am. Compl, ¶ 50]. Senior's son, Paul T. Eitel, Jr. (“Junior”) was vice president of Porter Paint and retired in 1977 at age 50. [DE 256-2, Marylin Dep. at 58[3], DE 232-4, Pl. Dep. at 211]. Plaintiff's parents, Junior, and Mary C. Eitel, divorced in 1982. In 1986, Junior married Marilyn. [DE 232-4, Pl. Dep. at 34]. Junior and Marylin were married 32 years and Junior died on November 23, 2018. [DE 232-4 at 17]. Junior paid $36,000 per year in alimony to Mary C. Eitel from 1982 until 2007 when she died. [DE 232-4, Pl. Dep. at 34, 137].
The first trust at issue was created by Senior: the 1968 Paul T. Eitel, Sr. Trust Under Will (“Senior's Trust Under Will”) [DE 23-2; DE 90-1 at 1255; DE 232-1]. The second trust was created by Berenice: the 1977 Berenice L. Eitel Trust Under Will (“Berenice's Trust Under Will”) [DE 23-3; DE 90-1 at 1257; DE 232-2]. Both Senior's Trust Under Will and Berenice's Trust Under Will paid income to Junior during his lifetime. [DE 232-1 at 2618-19, II(3)(g); DE 232-2 at 2628-29, Item VII(1)]. These trusts permitted discretionary distributions of trust principal to Junior for his health, maintenance, and welfare. Senior's Trust Under Agreement specifically allowed principal distributions to Junior “when required for health, maintenance, education, general welfare or comfort of such income beneficiary or his issue, as determined by the Trustee in its sole discretion.” [DE 232-1, II(3)(g); DE 232-2, VII(2), DE 232-4, Pl. Dep. at 15:5-19.]. Bernice's Trust Under Will authorized payment to Junior of “such portion of the corpus of the trust, as [the trustee] may consider necessary, as determined in its discretion for their health and maintenance or the health, maintenance or education of their issue.” [DE 232-2, § VII(3); DE 232-4, Pl. Dep. 23:9-18].
Such encroachments were limited by the agreement of the Advisory Committee to the Trust. [DE 232-1, Item VI, DE 232-2, Item X]. Like the Advisory Committee to Senior's Trust Under Agreement, Senior's Trust Under Will appointed Berenice as the Advisor to the Trustee during her life, and, after her death, appointed Junior and Helen to serve as joint advisors. Id. Berenice's Trust Under Will appointed Junior as Advisor to the trust, and after his death, appointed Mary C. Eitel, Plaintiff's mother, and if there is no Advisor then acting, the Trustee would exercise its own discretion. [DE 232-2, Item X]. Both trusts provide that the “Trustee shall be fully protected in failing to take any action not concurred in by the Advisor . . .” [DE 232-1, Item VI, DE 232-2, Item X]. Berenice's Trust under Will provided that the Trustee could resign and appoint a successor trustee and such change could be made by the acting Advisor, if any, otherwise by the concurrence of all income beneficiaries who had attained majority and the guardians of any income beneficiaries who had not obtained majority. [DE 232-4, Item XI]. Upon Junior's death, each testamentary trust distributed remaining assets equally to Junior's then-living children.
The third trust is an inter-vivos trust created by Senior: the 1963 Paul T. Eitel, Sr. Trust Agreement (“Senior's Trust Under Agreement”) [DE 232-3; DE 90-1 at 1245]. Senior's Trust Under Agreement paid income to Plaintiff's grandmother, Berenice, during her lifetime. [Id.] Upon Berenice's death, the trust required the remaining principal be divided equally into separate trusts to benefit Senior's then-living children “and their families.” [Id.] At the time of Berenice's death in 1977, Senior had two surviving children: Junior and Helen Rollins. Plaintiff was twenty years old for when Berenice died. [DE 90-1 at 1249].
Senior's Trust Under Agreement required that the income of the trust created for Junior's benefit be paid to him during his lifetime. [DE 90-1 at 1255]. Like Senior's Trust Under Will and Bernice's Trust Under Will above, Senior's Trust Under Agreement also entitled the trustee to use “some portion of the fund or funds for the education . . . or the maintenance in health and reasonable comfort of the income beneficiary, or his or her issue ....” including Junior. [DE 232 3, § V; DE 232-4, Pl. Dep. 30:4-15]. This power was subject to approval by the Advisory Committee unless the power was for the benefit of the Advisory Committee or the Advisory Committee's issue. [Id. Item IX]. The Advisory Committee consisted of a single individual, in the following succession: first, Paul Eitel Sr. was the sole member of the Advisory Committee; then, following his death, Berenice Eitel would become the sole member of the Advisory Committee; next, Junior would assume the role as the sole member of the Advisory Committee; and lastly, Helen C. Rollins would occupy that role. Id. The Trustee had to confer and obtain the approval of the Advisory Committee for sale of Trust property and investment and reinvestment of funds. The Trust stated, “the approval of the Advisory Committee covering the above relieves the Trustee from any liability or responsibility for having acted in accordance with such approval.” Id.
Senior's Trust Under Agreement provided that the Advisory Committee to the Trust had the right at any time to remove the Trustee and appoint a successor Trustee as long as such successor Trustee was a trust company or bank possessing trust powers having a combined capital and surplus of not fewer than three million dollars. [DE 232-3, Item VI]. The parties dispute what should happen under this trust upon Junior's death. Plaintiff argues that upon Junior's death the assets of the trust are to be distributed to Junior's then-living issue.[4] South State Bank argues that upon the death of Junior, his then-living spouse, Marilyn, was to continue to receive income and upon her death, the assets of his trust were to be distributed “per stirpes” to the then-living “issue” of Junior.
The Court will refer collectively to Senior's Trust Under Will, Bernice's Trust Under Will, and Senior's Trust Under Agreement as the “the Trusts.” Otherwise, the Court will refer to the trusts individually.
The Trusts were administered by PNC Banks' predecessors-in-interests, First Kentucky Trusts, and First National Bank from 1963 to 1994. [DE 326 at 8625]. As early as May 1981, FKT directed trades for the Trusts through Plaintiff, who was a stockbroker the time. [DE 232-4, Pl. Dep. at 47:12-48:5, 142:15-144:7, 147:5-8, 151:15-152:22; DE 232-6, Robert Biggs Mem. to Janice Westwood, May 20, 1981 (Pl. Dep. Ex. 27); DE 232-77, Pl. Handwritten Notes, Oct. 23, 1986 (Pl. Dep. Ex. 30)].
From 1983 through 1986, Plaintiff worked with Steve Van Dyke from PNC's predecessor, FKT, to pick out stocks for the Trusts. [DE 326-9, Exh. G, 1983 Van Dyke Note; DE 326-3, Pla Dep. at 146-47]. In one of Van Dyke's notes concerning the Trusts, dated June 7, 1983, it states, [DE 326-9, Exh. G, 1983 Van Dyke Note; DE 326-3, Pla. Dep. at 146-47, 154]. On April 30, 1984, Junior wrote a letter to Van Dyke at FKT to “confirm that all transactions, sales [and] purchases, shall be made through Mary M. Eitel, Prudential Bache,” and stating that “Prudential Bache will charge only the negotiated commission rate on these transactions.” [DE 326-11, Exh. I, 1984 Van Dyke Ltr.]. On October 23, 1986, Plaintiff sent a note to FKT stating, [DE 326-12, Exh. J, 1986 FKT ...
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