Everdell v. Preston
Decision Date | 09 August 1989 |
Docket Number | No. 89-624-CIV-T-17(C).,89-624-CIV-T-17(C). |
Citation | 717 F. Supp. 1498 |
Parties | William EVERDELL, et al., Plaintiffs, v. Walter L. PRESTON, et al., Defendants. |
Court | U.S. District Court — Middle District of Florida |
Leigh E. Dunston, Stephen L. Hayford, Gunster, Yoakley, Criser & Stewart, P.A., West Palm Beach, Fla., for plaintiffs.
Charles W. Pittman, MacFarlane, Ferguson, Allison & Kelly, Tampa, Fla., for defendants.
ORDER ON MOTIONS TO DISMISS
This cause is before the Court on Defendants' motions to dismiss the claims of the estate of Marian P. Darling and to dismiss the claims of Eleanore D. Everdell, filed May 25, 1989; memoranda in support of the motions, filed June 1, 1989; and responses thereto, filed June 22, 1989.
A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that Plaintiff can prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). A trial court, in ruling on a motion to dismiss, is required to view the complaint in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1947).
The complaint in this cause of action was filed May 3, 1989, by Plaintiffs William Everdell and Howard R. Merriman, co-executors of the estate of Marian P. Darling (Darling Estate), and Eleanore Darling Everdell (Everdell). The complaint named the following defendants: Walter L. Preston as co-trustee of trusts A, B, and C of the third clause under will of Mary M. Preston; Walter L. Preston as president, director, chief executive officer, controlling person and controlling shareholder of the Manatee Fruit Company, Inc.; Walter L. Preston, individually; and the Manatee Fruit Company, Inc. (the Company).
The complaint asserts the following facts, which the Court accepts as true for the purposes of the motions to dismiss:
1. Defendant Walter Preston is co-trustee, with Hayden Preston, of three (3) trusts created by the will of Mary M. Preston, which trusts are denominated as Trust A, Trust B, and Trust C under the Third Clause under the Will of Mary M. Preston (Will Clause).
2. The three trusts were established in order to provide lifetime income for each of her three children, Hayden Preston, Whiting Preston and Marian Preston Darling, and to ensure a substantial remainder benefit to the issue, if any, of her children.
3. Originally the corpus of each trust consisted of shares of the common stock of the Company. In or about October, 1988, Trust A held 7,950 shares, Trust B held 4,770 shares, and Trust C held 3,180 shares.
4. The lifetime income beneficiary of Trust A is Hayden Preston, who is currently living and without issue. All three trusts will terminate upon the death of Mr. Preston.
5. The original beneficiary of Trust B was Whiting Preston, deceased. The issue of Whiting Preston are Walter Preston and Jane Preston Fitzgerald, who are the income beneficiaries of this trust.
6. Trust C's original beneficiary was Marian P. Darling, deceased. The only living issue of Ms. Darling is Eleanore D. Everdell and income beneficiary of Trust C. Ms. Everdell is also the sole beneficiary of the estate of Marian P. Darling.
7. Under the Will Clause, on the death of Hayden Preston, the corpus of Trust A will be divided as follows: Part 1) sixty percent (60%) of the corpus will be transferred to the corpus of Trust B and Part 2) forty percent (40%) of the corpus will be transferred to Trust C. After said division, the trusts will be dissolved and the corpus of the respective trusts will be paid over to the beneficiaries; for Trust B to Walter Preston and Jane Preston Fitzgerald and for Trust C to Eleanore D. Everdell.
8. The Company is a closely-held corporation whose shareholders are limited to the issue of Mary Preston, their estates, and the three trusts. Prior to October 18, 1988, the distribution of the 40,000 outstanding shares was as follows:
Shareholder Number of Shares Estate of Darling 4,300 Trust A 7,950 Trust B 4,770 Trust C 3,180 Great and great, great grandchildren 1,440 Hayden Preston 4,300 Jane Fitzgerald 4,254 Whiting Preston II 2,657 Walter Preston 7,149
The complaint alleges that in the fall of 1988, Defendant Walter Preston set in motion a scheme to consolidate his control of the Company and perpetuate control in himself and his issue after the death of Hayden Preston and the termination of the trusts. In furtherance of his plan, Plaintiffs assert that Walter Preston caused the Company to use corporate resources to redeem the shares held by the estate of Darling and the shares held by Trusts A and C; as of May 1, 1989, 7,480 shares had been redeemed by transferring them to non-voting treasury stock at company expense.
The complaint further alleges that Walter Preston caused a disproportionate benefit to accrue to interests held by his sister or held in Trust A and B for her benefit. The complaint alleges that conversely Walter Preston caused a disproportionate disadvantage to the stock held by the estate of Darling and Trust A and C held for the benefit of Eleanore D. Everdell. The complaint pleads the methods Walter Preston allegedly utilized to accomplish said scheme. (Complaint pages 7-17).
The complaint contains the following claims: 1) breach of fiduciary duty as a trustee (redemption of the 4,300 shares owned by the estate of Darling)—against Walter Preston, as co-trustee, by all Plaintiffs; 2) breach of fiduciary duty and duty of good faith as corporate officer/director and as controlling shareholder (redemption of the 4,300 shares owned by the estate of Darling)—by Plaintiffs William Everdell and Howard Merriman; 3) fraud (redemption of the 4,300 shares owned by the estate of Darling)—by Plaintiffs William Everdell and Howard Merriman; 4) breach of fiduciary duty as trustee (Walter Preston's purchase of certain shares from Trusts A and B)—by Plaintiff Eleanore D. Everdell; 5) action for accounting-by Plaintiff Eleanore D. Everdell; 6) action to enjoin division of trust-by Plaintiff Eleanore D. Everdell; and 7) action to remove trustee-by Plaintiff Eleanore D. Everdell.
Defendants move to dismiss Count I of the complaint because the complaint fails to make sufficient allegations of ultimate fact to support the contention that Walter Preston owed a fiduciary duty to the estate of Darling. Defendants allege that the sale concerned in Count I was between the Company and the estate of Darling and that Walter Preston was not a party in the capacity of co-trustee.
Plaintiffs assert that in the circumstance of this case, the conduct of Walter Preston toward the estate of Darling should be controlled by the same high standard of fiduciary duty that would govern his duty as a trustee of the three trusts and that the claim of Defendants is rendered inapplicable by Walter Preston to fully disclose.
The parties appear to agree that generally there is no fiduciary duty imposed on a trustee as to dealings with the trust beneficiary as to dealings on property owned by either party which is unrelated to the trust. Bogert, Trusts and Trustees Section 544 (2d Ed.1979). Plaintiff...
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