Regions Bank v. Kramer

• Decision Date: 01 June 2012
• Docket Number: 1100967 and 1100968.
• Citation: 98 So.3d 510
• Parties: REGIONS BANK, in its fiduciary capacity as trustee of the Helga M. Kramer Revocable Trust, and Delores Ancell v. Ernest KRAMER. Regions Bank, in its fiduciary capacity as trustee or cotrustee of the Kenyon R. Kirkland Irrevocable Trust, the Kenyon R. Kirkland Revocable Trust, and the Kenyon R. Kirkland Managed IRA Trust, and David Puckett v. Kenyon R. Kirkland.
• Court: Alabama Supreme Court

98 So.3d 510

REGIONS BANK, in its fiduciary capacity as trustee of the Helga M. Kramer Revocable Trust, and Delores Ancell

v.Ernest KRAMER.

Regions Bank, in its fiduciary capacity as trustee or cotrustee of the Kenyon R. Kirkland Irrevocable Trust, the Kenyon R. Kirkland Revocable Trust, and the Kenyon R. Kirkland Managed IRA Trust, and David Puckett

v.Kenyon R. Kirkland.

1100967 and 1100968.

Supreme Court of Alabama.

June 1, 2012.

Cynthia G. Lamar, Luther M. Dorr, Jr., Maibeth J. Porter, and Kirby Sevier of Maynard, Cooper & Gale, P.C., Birmingham, for appellants.

Peter H. Burke, Richard S. Frankowski, and Robert E. Norton of Burke, Harvey & Frankowski, LLC, Birmingham, for appellees.

PARKER, Justice.

Regions Bank, in its fiduciary capacity as trustee or cotrustee of various trusts described below, Delores Ancell, and David Puckett (Regions Bank, Ancell, and Puckett are hereinafter collectively referred to as “the trustees”) filed two permissive appeals, pursuant to Rule 5, Ala. R.App. P., from the Jefferson Circuit Court's orders denying the trustees' motions to dismiss in part Ernest Kramer's and Kenyon R. Kirkland's complaints filed against the trustees. We affirm the trial court's orders.

Facts and Procedural History

The following relevant facts are presented in these permissive appeals. Regions Bank serves as trustee or cotrustee of four separate trusts, the management of which is at issue in this case: 1) the Helga M. Kramer Revocable Trust, of which Ernest Kramer is the sole beneficiary (“the Kramer revocable trust”) (which is the subject of appeal no. 1100967); 2) the Kenyon R. Kirkland Irrevocable Trust (“the Kirkland irrevocable trust”), of which Kirkland is the grantor; 3) the Kenyon R. Kirkland Revocable Trust (“the Kirkland revocable trust”), of which Kirkland is both the grantor and the beneficiary; and 4) the Kenyon R. Kirkland Managed IRA Trust (“the IRA trust”), of which Kirkland is both the grantor and the beneficiary (which trusts are the subject of appeal no. 1100968).

Kramer and Kirkland (hereinafter collectively referred to as “the plaintiffs”) brought separate actions against the trustees. On November 20, 2008, Kramer sued Regions Bank and Ancell, the Regions Bank trust officer assigned to the Kramer revocable trust (hereinafter collectively referred to as “the Kramer defendants”), as well as others not parties to permissive appeal no. 1100967. In his complaint, Kramer alleged that the Kramer defendants' management of the assets held by the Kramer revocable trust constituted a breach of fiduciary duty, negligence, wantonness, breach of contract, fraud, reckless misrepresentation, negligent misrepresentation, suppression, violation of the Alabama Securities Act, Ala.Code 1975, § 8–6–1 et seq., deceit, and conspiracy; Kramer requested a jury trial as to all claims.

On January 6, 2010, the Kramer defendants filed a motion to dismiss all of Kramer's claims except Kramer's breach-of-fiduciary-duty claim. The Kramer defendants argued, in pertinent part, as follows:

“[Kramer's] Complaint is fundamentally at odds with the Alabama Supreme Court's declaration of Alabama law in [Regions Bank v.] Reed [, 60 So.3d 868 (Ala.2010) ]. Instead of stating his allegations solely in terms of breach of trust, [Kramer] purports to state claims [of] negligence, wantonness, breach of contract, fraud, reckless misrepresentation, negligent misrepresentation, suppression, violation of Alabama Securities Act, deceit, and conspiracy—claims that the plaintiffs attempted to assert in Reed. The Alabama Supreme Court has made abundantly clear that these allegations—all of which relate solely to the trustee's actions and decisions in administering the trusts—constitute solely a claim for breach of trust. Id. Thus, based on the categorical authority of Reed, the longstanding Alabama precedents followed therein, and the plain language of the [Alabama Uniform Trust Code], all counts alleged in [Kramer's] Complaint, except Count One for breach of fiduciary duty (i.e., a claim for breach of trust), should be dismissed.”

The Kramer defendants also sought to strike Kramer's request for a jury trial.

On October 20, 2010, Kirkland sued Regions Bank and David Puckett, the Regions Bank trust officer assigned to the Kirkland irrevocable trust, the Kirkland revocable trust, and the IRA trust (hereinafter collectively referred to as “the Kirkland defendants”), as well as others not parties to permissive appeal no. 1100968. In his complaint, Kirkland alleged that the Kirkland defendants' management of the assets held by the Kirkland irrevocable trust, the Kirkland revocable trust, and the IRA trust constituted a breach of fiduciary duty, negligence, wantonness, breach of contract, fraud, reckless misrepresentation,negligent misrepresentation, suppression, violation of the Alabama Securities Act, deceit, and conspiracy.

On December 9, 2010, the Kirkland defendants filed a motion to dismiss all of Kirkland's claims, except Kirkland's breach-of-fiduciary-duty claim. The Kirkland defendants argued, in pertinent part, as follows:

“[Kirkland's] Complaint is fundamentally at odds with the Alabama Supreme Court's declaration of Alabama law in [Regions Bank v.] Reed [, 60 So.3d 868 (Ala.2010) ]. Instead of stating his allegations solely in terms of breach of trust, [Kirkland] purports to state claims [of] negligence, wantonness, breach of contract, fraud, reckless misrepresentation, negligent misrepresentation, suppression, violation of Alabama Securities Act, deceit, and conspiracy—claims that the plaintiffs attempted to assert in Reed. The Alabama Supreme Court has made abundantly clear that these allegations—all of which relate solely to the trustee's actions and decisions in administering the trusts—constitute solely a claim for breach of trust. Id. Thus, based on the categorical authority of Reed, the longstanding Alabama precedents followed therein, and the plain language of the [Alabama Uniform Trust Code], all counts alleged in [Kirkland's] Complaint, except Count One for breach of fiduciary duty (i.e., a claim for breach of trust), should be dismissed.”

The Kirkland defendants also sought to strike Kirkland's request for a jury trial.¹

On March 15, 2011, Kramer filed a response to the Kramer defendants' motion to dismiss; on March 22, 2011, Kirkland filed a response to the Kirkland defendants' motion to dismiss and motion to strike Kirkland's demand for a jury trial.

On April 13, 2011, the trial court entered identical orders in each case, granting in part and denying in part the trustees' motions to dismiss. Specifically, the trial court granted the trustees' motion to dismiss insofar as the trustees sought the dismissal of the plaintiffs' common-law claims, i.e., the counts of the plaintiffs' complaints alleging negligence, wantonness, breach of contract, fraud, reckless misrepresentation, negligent misrepresentation, suppression, deceit, and conspiracy. The trial court denied the trustees' motions to dismiss insofar as the trustees sought the dismissal of the plaintiffs' claims alleging violations of the Alabama Securities Act; thus, those claims, as well as the plaintiffs' claims alleging breach of fiduciary duty, remained pending. The trial court also denied the trustees' motions to strike the plaintiffs' requests for jury trials, as follows:

“Regions next argues that the breach of fiduciary duty claim is purely equitable in nature, so that the plaintiff may not seek either a jury or punitive damages with regard to it. The Court agrees that no jury right attaches to this cause of action. If the claim based on the Alabama Securities Act goes to trial, however, then a jury must decide any disputed issues of fact common to the claims. See Ex parte Taylor, 828 So.2d 883 (Ala.2001), and Ex parte Thorn, 788 So.2d 140 (Ala.2000).” ²

On April 27, 2011, the trustees filed motions in both actions entitled “motion to reconsider or, in the alternative, petition for permission to appeal.” The trial court denied the trustees' motions to reconsider, but it certified for permissive appeals under Rule 5, Ala. R.App. P., its interlocutory orders denying in part the trustees' motions to dismiss. Pursuant to Rule 5, the trustees then filed petitions for permission to appeal with this Court, which this Court granted. We have consolidated the permissive appeals for the purpose of writing one opinion.

Discussion

In its certification for permissive appeal, the trial court must include a statement of the controlling question of law. In conducting our de novo review of the question presented on a permissive appeal, “this Court will not expand its review ... beyond the question of law stated by the trial court. Any such expansion would usurp the responsibility entrusted to the trial court by Rule 5(a) [, Ala. R.App. P.].” BE & K, Inc. v. Baker, 875 So.2d 1185, 1189 (Ala.2003). Therefore, the only issue before this Court is the following question of law identified by the trial court in its Rule 5 certifications:

“Whether the plaintiff[s], as beneficiar[ies] of a trust, may maintain a claim against the trustee under the Alabama Securities Act, Ala.Code [1975,] § 8–6–1 et seq., or whether the only state law claim that may be asserted against a trustee is for breach of fiduciary duty under the Alabama Uniform Trust Code.”

The answer to the first part of the question posed will of necessity answer the second part.

The trustees argue that Regions Bank v. Reed, 60 So.3d 868 (Ala.2010), is dispositive of the issue before us.³ The trustees argue that, in Reed, “this Court held repeatedly and unequivocally that all matters pertaining to trusts remain within equity's exclusive jurisdiction.” The trustees' briefs, at p. 15. The trustees argue that the trial court's order denying their motions to dismiss as to the plaintiffs' claims brought under the Alabama Securities Act creates “a new, additional exception to the equitable jurisdiction of the...