Rollins v. Rollins, A12A2516.

CourtUnited States Court of Appeals (Georgia)
Writing for the CourtRAY
Citation321 Ga.App. 140,741 S.E.2d 251
PartiesROLLINS, et al. v. ROLLINS, et al.
Docket NumberNo. A12A2516.,A12A2516.
Decision Date29 March 2013

321 Ga.App. 140
741 S.E.2d 251

ROLLINS, et al.
ROLLINS, et al.

No. A12A2516.

Court of Appeals of Georgia.

March 29, 2013.

[741 S.E.2d 252]

Timothy Scot Rigsbee, Lisa Rosenblum Strauss, Bondurant, Mixson & Elmore, H. Lamar Mixson, Atlanta, for Appellants.

Troutman Sanders, John J. Dalton, James Andrew Lamberth, Katie Lamb Balthrop, Alan William Bakowski, Atlanta, Lynette Eaddy Smith, Sidney Leighton Moore III, for Appellees.

Rogers & Hardin, John K. Larkins III, amicus curiae.

RAY, Judge.

[321 Ga.App. 140]Four siblings, Glen W. Rollins, Ruth Ellen Rollins, Nancy Louise Rollins, and O. Wayne Rollins II, are the beneficiaries of several trusts (the “Beneficiaries”). The Beneficiaries brought this action for, among other things, breach of trust and breach of fiduciary duty, against their father, Gary W. Rollins, and their uncle, R. Randall Rollins, individually and as trustees of the trusts at issue; and a family friend, Henry B. Tippee, in his capacity as a trustee of the trusts at issue. The parties cross-motioned for summary judgment, and the Beneficiaries appeal from the trial court's order. The Beneficiaries enumerate as error the trial court's refusal to order an accounting of family entities held within the trusts and its refusal to find that various actions by the appellees taken at the entity level, rather than the trust level, amounted to breaches of trust and of fiduciary duty. Additionally, the Beneficiaries contend that the trial court erred in its findings regarding actual harm and in granting summary judgment to the appellees. For the

[741 S.E.2d 253]

reasons that follow, we reverse the judgment and remand the case to the trial court for further proceedings.

[321 Ga.App. 141]Pursuant to OCGA § 9–11–56(c),

on appeal from the denial or grant of summary judgment[,] the appellate court is to conduct a de novo review of the evidence to determine whether there exists a genuine issue of material fact, and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.1

Properly viewed, this voluminous, 51–part record covering some 40 years of trust history shows the following relevant facts: O. Wayne Rollins (the “Settlor”) is the founder of a number of extremely successful enterprises yielding assets worth several billion dollars. He established the five trusts at issue in this litigation: the Rollins Children's Trust (“RC Trust”) and four Subchapter S–Trusts. These five trusts further hold interests in a complex web of family entities and holding companies, as described below.

RC Trust

The Settlor established the irrevocable RC Trust in 1968 for the benefit of his grandchildren and great-grandchildren. The Beneficiaries at issue here are four of the nine grandchildren who benefit from the RC Trust. The Settlor's sons, Gary and Randall, and the Settlor's friend, Tippee, are trustees of the RC Trust. Under the terms of the trust instrument, a portion of the trust principal, as determined by a calculation contained in the indenture, was distributed to the nine grandchildren, including the four Beneficiaries at issue here, on their 25th and 30th birthdays. The RC Trust terminates when the last of the nine beneficiaries dies, with any remainder to be apportioned among their descendants. The first half of the principal has been distributed to and accepted by all the grandchildren, including the Beneficiaries here. The trustees are authorized to encroach on the corpus, at their discretion, for the grandchildren's benefit, and to distribute income or not at their discretion. This trust originally was funded primarily with Rollins, Inc. stock. In the 1970s and 1980s, primarily to reduce tax liability, the Settlor created several family entities to hold assets within the trust: ROL, Inc., LOR, Inc., the Rollins Grandchildren's Partnership (“RGP”), and the Rollins Holding Company (“RHC”) (collectively, the “Family Entities”).

The Subchapter S–Trusts

In 1986, again to limit tax liability, the Settlor established irrevocable Subchapter S–Trusts for the benefit of each of his nine [321 Ga.App. 142]grandchildren, including the four Beneficiaries at issue here. Gary is the sole trustee of the S–Trusts at issue in this litigation. The original assets in the S–Trusts were interests in LOR, Inc. The same year that the S–Trusts were created, the trustee purchased the S–Trusts' LOR, Inc. stock from RGP and RHC with promissory notes, thereby using debt to acquire the LOR, Inc. stock. Further, in 1988, the Settlor created another family entity called the Rollins Investment Fund (“RIF”), held within the S–Trusts. One of the purposes of RIF was to minimize tax liability.

The trust indenture establishing the S–Trusts requires the trustee “to distribute at least annually all of the trust income to the beneficiary of such trust,” but gives the trustee discretion to determine what is income and what is principal. The trust indenture further requires that when a beneficiary turns 45 years of age, “the Trustee shall turn over to each beneficiary, free of trust, all property then remaining in such beneficiary's trust, subject to any unpaid indebtedness of such trust.” Only one of the four Beneficiaries, Glen Rollins, has turned 45.

The Claims

The Beneficiaries here, in general, allege that following the Settlor's death, the appellees made various changes to the structure, leadership, holdings, and distribution methods used within the various Family Entities that are held within the S–Trusts and the RC Trust. The Beneficiaries contend that the appellees have shifted power from the Beneficiaries to themselves, have ensured that the Beneficiaries' interests in the Family Entities are illiquid and nontransferable rather than

[741 S.E.2d 254]

liquid and marketable, and have established non pro rata distribution systems, all in contravention of the trust indentures and the Settlor's intent. These actions and others, the Beneficiaries contend, amount to breaches of trust and of fiduciary duty.

1. The Beneficiaries first contend that the trial court erred in failing to order a “judicial accounting and an accounting of the entities controlled by the trustees which hold the trust assets.” 2 We agree.

[321 Ga.App. 143]On motion for partial summary judgment, the Beneficiaries did not seek an accounting, but rather sought only “summary judgment that Defendants have breached their fiduciary duties and committed breaches of trust. Plaintiffs do not seek summary judgment as to any particular remedy for these breaches in this motion.” The trial court granted the Beneficiaries' summary judgment motion on this issue, finding that the appellees engaged in breaches of trust and fiduciary duties by their “failure to provide an accounting of the trust assets,” and finding that only after the complaint in the instant case was filed did the trustees provide a report on trust assets prepared by Ernst & Young. The trial court then denied “all other relief associated with this claim.” Noting that the Beneficiaries had received “complete relief” on their requests related to the accounting, the trial court then granted the appellees' motion for summary judgment as to all claims in the Beneficiaries' second amended complaint. The second amended complaint requested an order requiring a “third-party master or receiver” to review the books of the RC Trust and the Subchapter S–Trusts, as well as the books of LOR, Inc. and RIF, which are entities held within the trusts; additionally, the complaint requested a full accounting of the trusts and investments of the trust property. The record shows that the Ernst & Young accounting that the Beneficiaries already received covered only the S–Trusts and the RC Trust.

OCGA § 53–12–243(a) and (b)(1) provide:

On reasonable request by any qualified beneficiary ... the trustee shall provide ... a report of information, to the extent relevant to that beneficiary's interest, about the assets, liabilities, receipts, and disbursements of the trust, the acts of the trustee, and the particulars relating to the administration of the trust, including the trust provisions that describe or affect such beneficiary's interest. A trustee shall account at least annually ... to each qualified beneficiary of an irrevocable trust to whom income is required or authorized in the trustee's discretion to be distributed currently.3

[321 Ga.App. 144]The RC Trust, by its terms, further provides for the Beneficiaries to receive periodic “statements disclosing [the] condition of the trust estate” not more often than every six months. The terms of the S–Trusts do not address accountings.

The appellees counter that they should not have to provide an accounting of the family entities held within the trusts because such an accounting is required only if the trust holds a controlling interest in the entity, and

[741 S.E.2d 255]

that the S–Trusts, for example, hold only minority interests in the family entities. The appellees base their argument upon a line of cases from New York courts that they contend hold that fiduciaries are obligated to account for corporate assets held in trust if either they or the trust hold a controlling, majority position in the corporation at issue. We find that these cases, which are of course persuasive authority in our state, are instructive, but must be read more broadly.

For example, in a case involving an estate in which the decedent and a fiduciary had been co-stockholders in close corporations holding realty, the beneficiaries requested an accounting, which the court granted, finding that the fiduciary, when his individual holding in the corporation was combined with that of the estate of which he was executor, held the “balance of power over the conduct of [the] corporation solely by virtue of his possession of the estate's one-third interest therein.” 4 The court went on to say:

It is not disputed that where a corporation is wholly owned by an estate full...

To continue reading

Request your trial
8 cases
  • Rollins v. Rollins, A12A2516
    • United States
    • United States Court of Appeals (Georgia)
    • 15 Julio 2016
    ...vacated in part, and case remanded.Branch, J., concurs. Miller, P.J., concurs in the judgment only.--------Notes:1 Rollins v. Rollins , 321 Ga.App. 140, 741 S.E.2d 251 (2013) ( Rollins I ), reversed in part, vacated in part, and remanded by Rollins v. Rollins , 294 Ga. 711, 755 S.E.2d 727 (......
  • Patterson v. Long, s. A12A2537
    • United States
    • United States Court of Appeals (Georgia)
    • 29 Marzo 2013
    ...that the arbitrator misapplied the law of strict liability as it relates to damages and requested that the superior court modify the [741 S.E.2d 251]second arbitration order to increase the damages to $750,000. But increasing the amount of damages awarded to the plaintiff because of an alle......
  • Rollins v. Rollins, A12A2516.
    • United States
    • United States Court of Appeals (Georgia)
    • 19 Noviembre 2014 the Family Entities, which they control, and which are held within the trusts at issue.” (Footnote omitted.) Rollins v. Rollins, 321 Ga.App. 140, 150(2)(a), 741 S.E.2d 251 (2013) (Rollins I ). The Supreme Court reversed in part, vacated in part, and remanded the case to us with direction......
  • Nelson v. Alliance Hospitality Management, LLC, 11 CVS 3217
    • United States
    • North Carolina Superior Courts of Law and Equity of North Carolina
    • 20 Agosto 2013
    ...(1) the existence of a fiduciary duty; (2) breach of that duty; and (3) damage proximately caused by that breach.'" Rollins v. Rollins, 321 Ga.App. 140, 150–51, 741 S.E.2d 251, 259 (2013) (quoting SunTrust Bank v. Merritt, 272 Ga.App. 485, 612 S.E.2d 818 (2005)); see also Nalley v. Langdale......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT