Meeks v. Successor Tr.S Of Marital Trust

• Decision Date: 01 September 2010
• Docket Number: No. CH-08-0964-2,No. W2009-02016-COA-R3-CV,CH-08-0964-2,W2009-02016-COA-R3-CV
• Parties: JOHN H. MEEKS, TRUSTEE OF MARITAL TRUST AND CREDIT SHELTER TRUST U/W/O MICHAEL HOLLIDAY v. SUCCESSOR TRUSTEES OF MARITAL TRUST AND CREDIT SHELTER TRUST U/W/O MICHAEL HOLLIDAY
• Court: Tennessee Court of Appeals

JOHN H. MEEKS, TRUSTEE OF MARITAL TRUST

AND CREDIT SHELTER TRUST U/W/O MICHAEL HOLLIDAY

v.SUCCESSOR TRUSTEES OF MARITAL TRUSTAND CREDIT SHELTER TRUST U/W/O MICHAEL HOLLIDAY

No. CH-08-0964-2

No. W2009-02016-COA-R3-CV

Court Of Appeals Of Tennessee

JULY 28, 2010 Session

Filed September 1, 2010

Lawrence M. Magdovitz, Cordova, Tennessee, for the appellant, John H. Meeks, Trustee of Marital Trust and Credit Shelter Trust u/w/o Michael Holliday.

R. Mark Glover, Kristine L. Roberts, Jacob A. Dickerson, Memphis, Tennessee, for the appellees, Successor Trustees of Marital Trust and Credit Shelter Trust u/w/o Michael Holliday.

Direct Appeal from the Chancery Court for Shelby County

Arnold Goldin, Chancellor

The plaintiff served as the trustee of two trusts for several years. After he was informed that his services were no longer needed, the plaintiff claimed that he was entitled to compensation in the form of trustee's fees for his service. The trial court ruled, on a motion for summary judgment, that the plaintiff had waived his right to trustee's fees and that he was equitably estopped from claiming such fees. The plaintiff appeals. We affirm.

Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed

ALAN E. HIGHERS, P.J., W.S., delivered the opinion of the Court, in which DAVID R. FARMER, J., and HOLLY M. KIRBY, J., joined.

OPINION

ALAN E. HIGHERS, J.

I. Facts & Procedural History

Michael Edward Holliday died on August 31, 2001. Mr. Holliday's will established two trusts: the Michael Edward Holliday Credit Trust, and the Marital Trust. The beneficiaries of the trusts were Mr. Holliday's wife and the couple's three sons. The will appointed John Meeks ("Plaintiff") to serve as trustee of the two trusts, as he was a close personal friend of the Holliday family. Plaintiff accepted the appointment as trustee and served in that capacity for several years. In May of 2007, Mrs. Holliday sent an e-mail message to Plaintiff, thanking him for his service as trustee and informing him that she had decided to become the trustee of the Marital Trust and that her sons would be serving as cotrustees of the Credit Trust.

In September of 2007, Plaintiff sent a letter directly to the trusts' investment manager at Morgan Stanley, in which Plaintiff stated that he was acting as trustee of the trusts, and he requested a check for nearly $250,000 for "trustee's fees" for the years 2002 through 2006. When the Hollidays objected, Plaintiff filed this lawsuit in chancery court.

Plaintiff's complaint set forth three causes of action against the Hollidays: a "claim for compensation for serving as trustee," a claim for unjust enrichment, and a request for a declaratory judgment that Plaintiff was replaced as trustee by the Hollidays and also released from any liability for his actions or inactions as trustee. Plaintiff sought $249,033 in trustee's fees, ¹ plus expenses, attorney's fees, and costs. Plaintiff claimed that he was entitled to trustee's fees based upon the following provision of Mr. Holliday's will:

Any person who serves as Executor and/or Trustee under this Will, shall be entitled to reasonable compensation for his or its services as such Executor and/or Trustee.

Plaintiff also claimed that he was entitled to an award of his attorney's fees, whether he was ultimately awarded trustee's fees or not, due to a provision of the will granting numerous powers to the executor and/or trustee, including the power

To employ such agents, accountants, attorneys and/or financial or investment advisors, who may be my Executor, or a firm or corporation in which my Executor may be interested; open and maintain such so-called "custody" or"safekeeping" accounts as they may deem appropriate for the proper management and administration of my estate or the trusts hereby created, or for legal, accounting, financial or investment advisory services in connection therewith; and allow and pay to such agents, accountants, attorneys, advisers and/or custodians requisite compensation, plus all necessary costs and disbursements, without prior judicial approval.

The Hollidays filed an answer denying that Plaintiff was entitled to compensation, attorney's fees, or costs, and raising the affirmative defenses of waiver, estoppel, laches, and/or the statute of limitations, among other things.

The Hollidays subsequently filed a motion for summary judgment as to counts one and two of the complaint (the compensation claim and the unjust enrichment claim), asserting that such claims were barred by waiver, estoppel, laches, and/or the statute of limitations. The Hollidays also argued that there was no basis for an award of Plaintiff's attorney's fees. In support of their motion, the Hollidays submitted Plaintiff's response to their requests for admissions, in which Plaintiff admitted that "after Mike Holliday's death, Donna Holliday and various members of her family lived in [my wife's] and my home for about six weeks. During that time, I remember one short conversation with Donna Holliday in which I brought up the subject of Trustee fees. At that time I stated words to the effect that I would not take a fee for my services as Trustee. I deny that such verbal statement constitutes an enforceable promise or agreement." It was undisputed that Plaintiff was never paid any compensation while serving as trustee. Plaintiff also admitted during discovery that on multiple occasions over the years, he approved the books, records, and tax returns of the trusts, in which there was no mention of trustee compensation. He also conceded that he did not claim a right to compensation or otherwise inform the Hollidays that he would be seeking compensation prior to September 20, 2007, when he sent the letter to Morgan Stanley.

In addition, the Hollidays submitted the affidavit of John Ivy, who had served as the trusts' tax accountant since the trusts were established. Mr. Ivy stated that he had met with Plaintiff when preparing the trusts' first tax returns in February or March of 2003. According to Mr. Ivy, "At our meeting, [Plaintiff] stated in my presence that he would not take a fee as Trustee. He stated that he was serving as Trustee because of his close relationship with Mike Holliday and the Holliday family." Mr. Ivy further explained during his deposition:

[W]hen we got down to business, I said, John, are you going-you know, are you going to draw a fee? It's not necessarily uncustomary for a trustee to collect a fee. And he said, oh, no, Mike and I are-I'm doing this as a favor to the family and Mike and I were best of friends and I just want to do whatever the Holliday family wants me to do.

Mr. Ivy stated that the trusts' tax returns never reflected any fee paid or due to Plaintiff as trustee, and that Plaintiff never asked for or mentioned the payment of a trustee's fee until the fall of 2007.

The Hollidays also submitted the affidavit of Joe Carney, who was Plaintiff's business partner at the time of Mr. Holliday's death. Mr. Carney stated:

Approximately two years after Mr. Holliday's death, I had a conversation with [Plaintiff] in which he mentioned that he had been named as trustee of trusts established by Mr. Holliday's will. We discussed the fact that I had another friend who was a trustee, and I said that my friend was not receiving any payment for serving as trustee. [Plaintiff] said that he, too, would never accept any payment for serving as trustee of the Holliday trusts.

The fact that [Plaintiff] was trustee of the Holliday trusts came up during subsequent conversations. [Plaintiff] said multiple times that he would not accept any payment for serving as trustee of the Holliday trusts. He said that because of his long-standing friendship with Michael Holliday, he was not going to accept any payment.

The Hollidays contended that all of these facts demonstrated that Plaintiff had waived any right to trustee's fees.

Plaintiff filed a response to the motion for summary judgment, in which he contended that his statement to Mrs. Holliday about not taking a fee was being taken out of context from the conversation in which the statement was made, although he did not elaborate on this assertion. Regarding Mr. Ivy's testimony, Plaintiff did not dispute that he told Mr. Ivy at their first meeting that he would not take a trustee's fee.² However, he pointed out that Mr. Ivy never inquired again as to whether Plaintiff would take a trustee's fee, and Plaintiff did not state again in subsequent years that he would not accept a fee. Regarding the statement of Mr. Carney, Plaintiff's former business partner, Plaintiff pointed out that during his deposition, Mr. Carney said he could not recall whether Plaintiff actually used the term "trustee" fees when stating that he would never accept fees from the family.

Plaintiff's response to the motion for summary judgment further alleged that he was entitled to compensation because one of Mr. Holliday's sons allegedly told him, in March 2007, that he was entitled to trustee's fees according to the will. During Plaintiff'sdeposition, he explained that there was "strife between the families at that time" due to a deteriorating business relationship between Plaintiff's son and one of the Hollidays' sons. Plaintiff said that Brad Holliday requested a meeting with Plaintiff and asked whether Plaintiff would continue to serve as trustee, and Plaintiff said that he would. According to Plaintiff, Brad Holliday asked Plaintiff if he knew that he was entitled to fees for serving as trustee. However, Plaintiff said that he "just kind of aired that off" because of the strife between the families and because he "didn't see any sense in making that situation any more difficult than it already was." Nevertheless, Plaintiff claimed that "after careful consideration," he later decided to accept "the Hollidays' offer of payment of Trustee fees."

The trial court entered an order on September 23, 2009, granting the Hollidays' motion for summary...