Forbes v. Forbes

• Decision Date: 12 May 2022
• Docket Number: S-21-0159
• Citation: 2022 WY 59
• Parties: WALDO E. FORBES, Appellant (Plaintiff), v. WILLIAM C. FORBES; JULIA FORBES; EDITH L. FORBES and DONALD C. BINGHAM, individually and in their capacity as Trustees of the Beckton Ranch Trust U/A/D April 1, 1920, Appellees (Defendants).
• Court: Wyoming Supreme Court

2022 WY 59

WALDO E. FORBES, Appellant (Plaintiff), v. WILLIAM C. FORBES; JULIA FORBES; EDITH L. FORBES and DONALD C. BINGHAM, individually and in their capacity as Trustees of the Beckton Ranch Trust U/A/D April 1, 1920, Appellees (Defendants).

No. S-21-0159

Supreme Court of Wyoming

May 12, 2022

Appeal from the District Court of Sheridan County The Honorable John Fenn, Judge

Representing Appellant: Mitchell H. Edwards, Nicholas &amp Tangeman, LLC, Laramie, Wyoming. Argument by Mr. Edwards.

Representing Appellee William C. Forbes: Timothy S. Tarver Tarver, Kerns & Bunting, Sheridan, Wyoming. Argument by Mr. Tarver.

Representing Appellees Julia Forbes, Edith L. Forbes, and Donald C. Bingham: Thomas N. Long and Justin A. Daraie, Long Reimer Winegar LLP, Jackson, Wyoming. Argument by Mr. Daraie.

Before FOX, C.J., and KAUTZ, BOOMGAARDEN, GRAY, JJ., and OVERFIELD, D.J.

OVERFIELD, DISTRICT JUDGE

[¶1] In January 2018, Waldo E. Forbes (Spike)^[1] gifted his shares in the Beckton Ranch Trust (BRT) to two of his stepsons. The current trustees of the BRT, William C. Forbes (Cam), Julia Forbes, Edith L. Forbes, and Donald C. Bingham (collectively Trustees), chose to exercise an option within the trust instrument to reacquire Spike's gifted shares at "fair value." The Trustees appraised the "fair value" of the shares through a sealed bidding process between the beneficiaries of the BRT. Under the terms of the BRT, the Trustees are also beneficiaries. At the end of the sealed bidding process, several beneficiaries purchased the shares for their "fair value," including Trustee Edith who purchased one share. Spike disputed the Trustees' method for appraising the "fair value" of the shares and filed a complaint against the Trustees seeking declaratory judgment, damages for breach of fiduciary duty, and an accounting.

[¶2] Following a hearing on several dispositive motions, the district court found Spike did not have standing to seek declaratory relief as it related to the value of the gifted shares. The district court also found the Trustees did not breach their duty of loyalty but had rendered an inadequate accounting. The Trustees subsequently filed a new accounting, which the district court found to be sufficient. Spike challenges the district court's findings on appeal. We affirm in part, reverse in part.

ISSUES

[¶3] We state the issues as follows:

1. Whether the district court erred when it held Spike did not have standing under the Uniform Declaratory Judgments Act?

2. Whether the district court erred in granting summary judgment in favor of the Trustees finding no breach of the fiduciary duty of loyalty?

3. Whether the district court erred in finding the BRT's 2019 Annual Report satisfied all the requirements for a common law accounting?

FACTS

[¶4] We previously discussed the history and details of the BRT in Forbes v. Forbes, 2015 WY 13, 341 P.3d 1041 (Wyo. 2015). The BRT is now set to terminate on August 31, 2036. At the time this matter was before the district court, the BRT had 21 beneficiaries, which included Spike and the Trustees and 1, 188 outstanding shares.

[¶5] After Spike filed the litigation resulting in Forbes, the Trustees began issuing annual reports outlining the affairs and assets of the BRT. The Trustees have also issued supplemental reports for any extraordinary transactions that occurred during a given year. The annual reports contained information on the BRT's finances, the status of various lease agreements, and identified the shareholders and number of shares held.

[¶6] The current dispute began in January 2018 when Spike gifted one share to his son-in-law Jeff Durkin, two shares to his stepson Geoffrey Scott, and two shares to his stepson Jeremy Scott. In February 2018, Spike wrote a letter to the Trustees informing them of his gift to Jeff Durkin and his belief that, based on the annual reports, the value of a single BRT share was $21, 600. Additionally, in March 2018, Spike attempted to gift five shares to the Sheridan College Foundation. Then in June 2018, Spike informed the Trustees of the gifts to his stepsons.

[¶7] Under Article Twelfth of the BRT, trustees are given the option to purchase shares held by non-descendants of William Hathaway Forbes at "fair value." Article Twelfth states:

TWELFTH - If at any time any person who is not a descendant of William Hathaway Forbes, late of Milton aforesaid, and who is not the widower or widow of such a descendant shall acquire whether by devise or purchase or otherwise any interest in the trust estate, any such person shall give notice in writing to two or more of the trustees that he has so acquired an interest, stating in such notice the nature and extent thereof. As soon as such interest is so acquired the trustees shall have an option to purchase the same at its fair value and shall have power to appraise said interest and determine the value thereof, such appraisal to be binding and conclusive. Said option may be exercised at any time within a period ending three months after the trustee last notified receives his written notice or six months after said interest is so acquired, whichever is the later date. If the trustees elect to exercise their option to buy such interest they shall within the period aforesaid give notice in writing to such person of such election and of the value which they have fixed and he shall thereupon become bound to convey his interest as aforesaid to the trustees in return for the payment of said value. After purchase they shall hold in trust said interest to sell and convey the same in their discretion to any person or persons descended from William Hathaway Forbes as aforesaid or the widower or widow of any such descendent.

(Emphasis added.)

[¶8] Pursuant to Article Twelfth, the Trustees decided to exercise their option to purchase the shares Spike gifted to the Scotts.^[2] On June 29, 2018, the Trustees notified the Scotts they would be exercising their option to purchase the shares. Within the written notice, the Trustees stated the shares' fair value would be determined through a sealed bidding process.

[¶9] The Trustees decided the sealed bidding process would be the most adequate way to appraise the fair value of the BRT shares. In this process, each of the current and past adult beneficiaries of the BRT would be given the opportunity to bid on the shares. The Trustees felt the confidential nature of the process would hide the identity of the bidders and force each bidder to bid the highest price he or she would be willing to pay for the shares. The Trustees also felt the sealed bidding process would inform them about how much they could fairly spend recovering the shares without the BRT losing money.

[¶10] On July 5, 2018, the Trustees sent a request for bids to the current and past adult beneficiaries of the BRT, which included Spike and his biological children. The request for bids stated:

The trustees have concluded that the fair value of the BRT shares can best be thought of as the price that a knowledgeable, financially unrelated party would pay for the shares, taking into account factors such as the life of the trust, liquidity of the investment, potential for appreciation or depreciation, potential to produce income, and other potential risks and benefits, etc.

[¶11] The request for bids also stated:

Because the shares that are to be sold were conveyed by Spike to Geoffrey and Jeremy by gift or sale, any bid from Spike, or from either of his two children (who are considered to be financially related to Spike) would be seen as a simple buy-back to return the shares to their original owner or his direct heirs, and would therefore not be used as part of the determination of the fair value. The fair value will therefore be calculated as follows:

1. If Spike Forbes and his children are not winning bidders, then the fair value per share will be the sum of payments received by the BRT from the winning bidders, divided by four.

2. If Spike Forbes or either of his children are winning bidders, then the fair value per share will be the sum of payments that would have been received by the BRT from the bidders who would have won the right to purchase the shares had Spike and his children not participated in the bidding process.

[¶12] The Trustees stated in the request that a minimum bid price was set at $4, 000 per share. The request indicated the minimum bid price did not reflect the Trustees' opinion on the "fair value" of each share. Bidders were required to delineate the price per share and how many shares they were willing to purchase at the per-share price. The request also required any bids to be sent to the BRT's certified public accountant by noon on July 27, 2018.

[¶13] After the request for bids was sent out to the beneficiaries, the Trustees received notice of Spike's gift of five BRT shares to the Sheridan College Foundation. The Trustees believed the gift to have been accepted and chose to exercise their option under Article Twelfth to purchase the gifted shares. The Trustees then sent out a revised request for bids indicating the total number of available shares had increased to nine. Because the Trustees were also beneficiaries who intended to bid, the Trustees established rules in the revised request for bids to disadvantage themselves in the bidding process. For instance, the revised request stated, "[i]n the event that the per-share price offered by a trustee bidder and a non-trustee bidder are equal then the bid submitted by the non-trustee bidder will be given first priority."

[¶14] On July 10, 2018, Cam delivered a letter to the Sheridan College Foundation explaining the Trustees' decision to exercise their option under the terms of the trust to reacquire the shares gifted...