UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
January 21, 2010
KAREN FELD, PLAINTIFF,
KENNETH FELD, DEFENDANT.
The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge
MEMORANDUM OPINION AND ORDER
This dispute arises from a testamentary trust of which the parties are the only surviving beneficiaries.*fn1 Before the Court are plaintiff's motion to remove defendant as trustee [Dkt. 12], plaintiff's motion to disqualify defendant's counsel [Dkt. 13], defendant's motion to dismiss the First Amended Complaint ("FAC") [Dkt. 28], plaintiff's motion for partial summary judgment on Count II of the FAC [Dkt. 32], and defendant's cross-motion to stay the proceedings [Dkt. 36]. Based upon the Court's consideration of the parties' submissions and the relevant legal authorities, it is hereby ORDERED that:
1) Plaintiff's motion to remove defendant as trustee is DENIED. While it may be that breaches of fiduciary duties, the existence of bad faith, or the existence of mutual hostility between a trustee and beneficiary may be grounds for removal, see McPherson v. Cox, 96 U.S. 404, 419 (1877); see also McDonald v. O'Donnell, 8 F.2d 792, 793 (D.C. Cir. 1925) (affirming removal of trustee); Wilson v. Wilson, 14 N.E. 521, 524 (Mass. 1888) (same), at this early stage, the Court cannot conclude that there are sufficient undisputed facts to justify the removal of defendant as trustee under D.C. Code § 19-1307.06.
2) Plaintiff's motion to disqualify counsel is DENIED. Plaintiff argues that defendant's counsel must be disqualified because in addition to representing defendant in his capacity as trustee in this action, counsel represents defendant in his personal capacity and his business in a separate action brought by plaintiff.*fn2 Her argument rests upon the premise that defendant's counsel has a duty of loyalty to plaintiff by virtue of defendant's role as trustee, such that counsel continues to owe her that duty in an adversary context. Plaintiff concedes that this the minority view, which has not been accepted in this jurisdiction. Therefore, this Court will not adopt it. Cf. Hopkins v. Akins, 637 A.2d 424, 428 (D.C. 1993) (joining "the broad majority of courts" and holding, as a matter of law, that attorney of estate's personal representative owed no duty of care to estate's beneficiary).
3) Defendant's motion to dismiss is DENIED. There are numerous factual disputes, and many of defendant's asserted grounds for dismissal rest upon documents that are not a part of the FAC or its attachments and that are not materials "upon which the complaint necessarily relies . . . ." Navab-Safavi v. Broad. Bd. of Governors, 650 F. Supp. 2d 40, 56 n.5 (D.D.C. 2009).*fn3
4) Plaintiff's motion for partial summary judgment is DENIED. Under D.C. Code § 19-1308.08(d), an individual who is empowered to direct a trustee's actions, such as the trust's Designee, Charles F. Smith,*fn4 "is presumptively a fiduciary actor" who must "act in good faith with regard to the purposes of the trust and the interest of the beneficiaries." Section 19-1308(b) requires defendant, as trustee, to comply with the Designee's directions unless they are "manifestly contrary to the terms of the trust" or the trustee knows that the directions are a "serious breach" of the Designee's fiduciary duty to the trust's beneficiaries. Material questions of fact remain regarding (i) the testator's intent and whether Smith should be presumed a fiduciary, (ii) Smith's good faith in instructing a division of the trust principal, and (iii) whether the purported hostility between defendant and Smith arises from changed circumstances that would require Smith's removal as Designee.*fn5 These and other factual issues preclude partial summary judgment on Count II.*fn6
5) Defendant's cross-motion to stay the proceedings is DENIED as moot.
6) An initial scheduling conference is hereby set for February 10, 2010 at 10:30 a.m. in Courtroom 14.