Hill v. Hill
| Decision Date | 25 March 2022 |
| Docket Number | Civil Action No. 3:20-CV-3634-L |
| Parties | Albert G. HILL, III and Erin Nance Hill, Plaintiffs, v. The ESTATE OF Albert G. HILL Jr.; Margaret Keliher; Tyree B. Miller; Lyda Hill; Heather Hill Washburne; Elisa Hill Summers; Chester J. Donnally, Jr.; The Estate of Ivan Irwin Jr.; Carol E. Erwin; and Thomas P. Tatham, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
William Joseph Skepnek, Skepnek Law Firm, Lawrence, KS, Robert E. Thackston, Lathrop GPM LLP, Dallas, TX, for Plaintiffs.
G. Michael Gruber, Brian E. Mason, Dorsey & Whitney LLP, Dallas, TX, for Defendants Margaret Keliher, Estate of Albert G. Hill Jr., Tyree B. Miller.
Thomas M. Melsheimer, Grant Kojis Schmidt, Winston & Strawn LLP, Dallas, TX, for Defendant Lyda Hill.
Tom M. Dees, III, Hallett & Perrin, P.C., Dallas, TX, for Defendants Heather Hill Washburne, Elisa Hill Summers.
Michael J. Lang, Alexandra Ohlinger, Crawford Wishnew & Lang, Dallas, TX, for Defendants Chester J. Donnally, Jr., Estate of Ivan Irwin Jr., Carol E. Irwin.
Before the court are Defendants’ Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b) and Brief in Support (other than Defendant Lyda Hill) (Doc. 18), filed March 3, 2021; Motion to Dismiss and Supporting Brief of Defendant Lyda Hill (Doc. 21), filed March 3, 2021; and Plaintiffs’ Combined Response and Motion to Strike All Defendants’ Motions to Dismiss ("Plaintiffs’ Motion to Strike") (Doc. 26), filed April 12, 2021. Having considered the motions, responses, replies, pleadings, record, and applicable law, the court grants Defendants’ Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b) (Doc. 18); grants Motion to Dismiss of Defendant Lyda Hill (Doc. 21), and denies Plaintiffs’ Motion to Strike (Doc. 26).
This lawsuit, filed by Albert G. Hill, III ("Hill III") and Erin Nance Hill ("Erin Hill") (collectively, "Plaintiffs") on December 20, 2020, involves, once again, a dispute relating to two trusts formed by Haroldson Lafayette ("H.L.") Hunt, "the late Texas oil baron reputed to be one of the world's richest men when he died in 1974." Hill v. Washburne , 953 F.3d 296, 300 (5th Cir. 2020) (citations omitted). In addition to parsing through the terms of the trusts, the court is required, yet again, to revisit the Global Settlement and Mutual Release Agreement (the "GSA") and the final judgment (the "Final Judgment") issued on November 8, 2010, by the Honorable Reed O'Connor ("Judge O'Connor") of the United States District Court for the Northern District of Texas (Dallas Division) in the lawsuit styled Hill v. Hunt et al. , Civil Action No. 3:07-cv-2020-L (the "2020 Action").1
In this latest iteration, Plaintiffs assert claims against the Estate of Albert G. Hill, Jr.; Margaret Keliher ("Keliher"), individually and as Executor of the Estate of Albert G. Hill, Jr.; Tyree Miller ("Miller"), individually and as Trustee of The Albert G. Hill, Jr. Family Trust; Chester J. "Don" Donnally, Jr. ("Donnally"), individually and in his capacity as the court appointed trustee for the MHTE-Albert G. Hill, Jr. Trust and the HLHTE-Albert G. Hill, Jr. Trust; Carol E. Irwin ("Irwin"), in her capacity as Personal Representative and Independent Executor of the Estate of Ivan Irwin, Jr., Deceased; Thomas P. Tatham ("Tatham"), individually and in his capacity as an advisory board member for the MHTE-Albert G. Hill, Jr. Trust and the HLHTE-Albert G. Hill, Jr. Trust; Heather Hill Washburne ("Washburne"), individually and as an advisory board member for the MHTE-Albert G. Hill, Jr. Income Beneficiary/Heather Termination Beneficiary Trust; Elisa Hill Summers ("Summers"), individually and as an advisory board member for the MHTE-Albert G. Hill, Jr. Income Beneficiary/Elisa Termination Beneficiary Trust; and Lyda Hill. Plaintiffs contend that they and their three children (Albert Galatyn Hill IV, Nance Haroldson Hill, and Caroline Margaret Hill)2 are contingent or remainder beneficiaries of various trusts created as a result of the GSA and the Final Judgment. They assert that Defendants, following the December 2, 2017 death of Hill III's father, Albert G. Hill, Jr. ("Hill Jr."), have breached their duties owed to Plaintiffs in the GSA and Final Judgment by terminating and dissolving these trusts in 2016, rather than allowing them to terminate twenty-one years after the deaths of their initial beneficiaries. See generally Pls.’ Compl., Doc. 1. They make similar allegations against Lyda Hill. Although the history of the dispute between Hill III and his deceased father (and other relatives) is beyond the scope of this opinion, resolving the pending motions to dismiss the Complaint requires the court to revisit the trusts at issue, the 2020 Action, the GSA, and the Final Judgment.
On December 28, 1935, H.L. Hunt and his wife Lyda Bunker Hunt created trusts for their six children. Two of those trusts are at issue here, namely: (1) the Margaret Hunt Trust Estate ("MHTE"); and (2) the Haroldson L. Hunt, Jr. Trust Estate ("HHTE"). Each of the trusts is governed by a document titled "Articles of Agreement and Declaration of Trust" (the "1935 Trust Instruments"). The terms of the Trust Instrument for the MHTE are the same as those of the HHTE except for the designation of, and reference to, the primary beneficiary of each trust. The primary beneficiary of the MHTE was Margaret Hunt Hill and the primary beneficiary of the HHTE was Haroldson L. Hunt, Jr. ("Hassie"). The 1935 Trust Instruments provide that "it is the desire and purpose of said H. L. Hunt and Lyda Hunt" to create an "irrevocable trust," and both provide, among other things, that during the lifetime of the beneficiary, only the annual income could be distributed to the beneficiary requiring that the corpus remain "intact and undisturbed" until twenty-one years after the death of the named beneficiary, at which time the trust would terminate and the corpus of the trust would be distributed to the beneficiary's descendants per stirpes. Exhibit B to Pls.’ Compl., Doc. 1-2 at 10-11, Art. IV § 3 (MHTE); Exhibit C to Pls.’ Compl., Doc. 1-3 at 10-11, Art. IV § 3 (HHTE).
Article III, Section 3 of the 1935 Trust Instruments, however, provides a current MHTE and HHTE beneficiary with powers of appointment, as follows:
At the time of the death of the Beneficiary, her [or his] equitable interest in said Trust Estate, unless disposed of otherwise by said Beneficiary , shall pass to and vest in her [or his] heirs in accordance with the laws of descent and distribution then in force, applicable to the equitable interest of such Beneficiary and said Trust Estate. (The term "Beneficiary" applies not only to [Margaret Hunt or Haroldson L. Hunt, based on the language of the specific trust] but to all her [or his] successors to beneficial interests under this Trust.)
Exhibit B to Pls.’ Compl., Doc. 1-2 at 10 Art. III § 3 (MHTE); Exhibit C to Pls.’ Compl., Doc. 1-3 at 10 Art. III § 3 (HHTE) (emphasis added).
On April 20, 2005, Hassie died. In his will, Hassie exercised his general testamentary power of appointment in the HHTE in favor of "the lineal descendants of my sister Margaret Hunt Hill, per stirpes." 2020 Action, Doc. 212-6; Doc. 203 at 4-5, § 2; Doc. 211 at 2-4, § II.A. After Hassie's death, therefore, his equitable interests in the HHTE passed in equal shares to Margaret Hunt Hill's three children (Hill Jr., Lyda Hill, and Alinda Hill Wikert), as they were Margaret Hunt Hill's lineal descendants on the date of Hassie's death. See id.
On March 22, 2005, Hill Jr. executed a disclaimer as to certain portions of the equitable interests he was to receive under the MHTE (the "2005 Disclaimer") in favor of his three children: Hill III, Washburne, and Summers. The effect of the 2005 Disclaimer is that Hill Jr.’s disclaimed interest passed to Hill III, Washburne, and Summers after Margaret Hunt Hill's death. Specifically, Hill Jr. disclaimed 75% of his one-third income interest in the MHTE, and 90% of his one-third termination interest in the MHTE (the "Disclaimed Beneficial Interests"). 2020 Action, Doc. 879 at 39-40; Doc. 999-1 at 7-8. The 2005 Disclaimer further provided, among other things:
If MHH [Margaret Hunt Hill] does not exercise her general power of appointment, each intestate heir of MHH will also possess under Article III, Section 3 of the Trust Agreement a general power of appointment allowing such heir to appoint his or her Income Interest or Termination Interest in the Trust, or both, to someone else.
2020 Action, Doc. 879 at 38, ¶ 7; Doc. 999-1 at 6, ¶ 7. The Disclaimer also provided:
The Disclaiming Beneficiary is not renouncing or disclaiming any interest in the Trust besides the Disclaimed Interests. Thus, the Disclaiming Beneficiary is retaining all interests in the Trust other than the Disclaimed Interests (including, without limitation, the Beneficiary's power of appointment over such retained interests).
On June 14, 2007, Margaret Hunt Hill died and her equitable interest in the MHTE passed in equal shares to her three children—Hill Jr., Lyda Hill, and Alinda Hill Wickert—subject to any disclaimers. 2020 Action, Doc. 212-2 at 10, ¶ 18. In December 2007, Hill III brought a lawsuit in Texas state court in his individual capacity and on behalf of the MHTE and HHTE against specific beneficiaries of the MHTE and HHTE, including his father (Hill Jr.), Hill Jr.’s siblings, and the trustees and members of the advisory boards of the MHTE and HHTE. Among other things, Hill III alleged wrongdoing in the management and administration of the MHTE and HHTE by their respective trustees and violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C § 1961, et seq. A primary focus of the lawsuit was...
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