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In re Harrier Trust

Court of Appeals of Louisiana, Third Circuit

January 30, 2019

IN RE: HARRIER TRUST

          APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2016-3020 HONORABLE SHARON D. WILSON, DISTRICT JUDGE

          Hunter W. Lundy Rudie R. Soileau, Jr. T. Houston Middleton, IV Daniel A. Kramer Lundy, Lundy, Soileau & South, L.L.P. COUNSEL FOR DEFENDANT/APPELLANT; Preston L. Marshall

          Wilford D. Carter Wilford Carter Law, LLC COUNSEL FOR DEFENDANT/APPELLANT: Preston L. Marshall

          Philip A. Franco Leigh Ann Schell Adams and Reese LLP One Shell Square COUNSEL FOR PLAINTIFFS/APPELLEES: Adam P. Johnson Pastor Edward Alexander

          Walter M. Sanchez Alexander L. H. Reed The Sanchez Law Firm, LLC COUNSEL FOR PLAINTIFF/APPELLEE: Elaine T. Marshall, Trustee/Harrier Trust

          L. J. Hymel, Jr. Tim P. Hartdegen Michael Reese Davis Richard A. Sherburne, Jr. Hymel Davis & Petersen, LLC COUNSEL FOR PLAINTIFF/APPELLEE: Elaine T. Marshall, Trustee/Harrier Trust

          Todd S. Clemons Janet D. Madison Todd Clemons & Associates, APLC COUNSEL FOR PLAINTIFF/APPELLEE: Elaine T. Marshall, Trustee/Harrier Trust

          Court composed of Phyllis M. Keaty, D. Kent Savoie, and Van H. Kyzar, Judges.

          VAN H. KYZAR, JUDGE

          Savoie, J, dissents with written reasons.

         The defendant, Preston L. Marshall, appeals from a trial court judgment granting partial summary judgment in favor of the plaintiff co-trustees, Edward Alexander and Adam P. Johnson, finding that Elaine T. Marshall, in her capacity as trustee of the Harrier Trust, had authority under the trust instrument to appoint five co-trustees and that the co-trustees appointed were disinterested parties to the trust. For the following reasons, we affirm.

         DISCUSSION OF THE RECORD

         The Harrier Trust (the Trust) was created by the settlor, E. Pierce Marshall, Sr., [1] on May 5, 2006, who named his wife, Elaine T. Marshall, as trustee and his son, Preston L. Marshall (referred to as Preston), as the initial beneficiary, with his surviving descendants named as secondary beneficiaries. The Trust, which is irrevocable, was created pursuant to the laws of the Louisiana Trust Code, and provided that "[t]he Trustee shall apply to the [Fourteenth] Judicial District Court for Calcasieu Parish, Louisiana, for instructions regarding any questions that might arise regarding administration of the Trust."

         Matters related to the Trust have been before this court on numerous occasions, [2] and a further appeal is currently pending before this court.[3] The extensive factual background and litigation history of this matter has been exhaustedly set forth by this court numerous times, and thus, will not be repeated here.

         The Trust provides the trustee with general discretionary authority, stating, "The Trustee shall have the sole discretion to determine the manner, time, circumstances and conditions of the exercise of any right, power or authority vested in the Trustee." It further provides the trustee with the power to designate co-trustees, limited only as follows: 'The Trustee shall be empowered to select and designate one or more disinterested individuals to serve as co-trustee and may designate a successor trustee should she cease or otherwise fail to serve as Trustee for any reason whatsoever." Other than being disinterested, the Trust sets forth no other qualifications or requirements for being a co-trustee. The Trust also gives the trustee the authority to hire managers, supervisors, accountants, appraisers, or attorneys to assist with the proper administration of the Trust.

         In 2016, Mrs. Marshall, as trustee, appointed five co-trustees to serve with her in managing the trust. To accomplish this, she hired Lake Charles attorney Edwin Hunter and gave him instructions "to interview and find diverse people of very high quality and reputation" in Lake Charles who could serve as disinterested co-trustees. Mr. Hunter provided Mrs. Marshall with the resumes of such individuals, and on December 6, 2016, she appointed five individuals as co-trustees: Dr. Wayne S. Thompson, Jr., Judge Lilyann Cutrer, Dr. Karen Aucoin, Edward Alexander, and Adam P. Johnson. The notarial act appointing each co-trustee further provided the manner in which the co-trustee was to be compensated, as follows:

Compensation for the Co-Trustees shall be determined by a formula divided by the number of Co-Trustees serving for that year and compensation shall be paid in quarterly installments or if, for whatever reason, quarterly installments are not able to be made then annually. The Co-Trustees shall divide a trustees' fee for each calendar year not to exceed forty percent (40%) of the gross trust receipts, less than any principal distribution received from any trust, during that year. The fee shall equal to the sum of (1) 0.3% of (a) the calculation value, as defined below, of the trust's interest in the PLM/EPM Marital Income Trust and, (b) the fair market value of all other assets, and (3) 5% of the gross trust receipts. For the purpose of this agreement values shall be determined as of December 31sl of each year. The calculation value for the trust's interest in the PLM/EPM Marital Income Trust shall equal 60% of the fair market value of that trust's corpus adjusted to present value at 6% per annum discount rate with an actuarial based on Mrs. Elaine T. Marshall's life expectancy as determined by the use of Life Table 90 GM as published by the United States Department of the Treasury. There shall be no compensation for the year 2016.

         Mrs. Marshall initially filed this action as a petition for declaratory relief on July 22, 2016, alleging that her efforts to provide an accounting were impeded by the beneficiary's failure to cooperate. Subsequent to Mrs. Marshall's amendment of her petition for declaratory relief, Preston filed a motion to intervene as a defendant on November 4, 2016, which was granted by the trial court on December 15, 2016. On January 11, 2017, Mrs. Marshall filed a second amended petition for declaratory relief, in which she alleged that she had appointed the five co-trustees and asked that the trial court declare that the five co-trustees were properly appointed in compliance with the provisions of the Trust and with Louisiana trust law.

         On May 12, 2017, Mrs. Marshall, along with Co-trustees Alexander and Johnson, filed a motion for partial summary judgment, requesting the trial court to declare valid the appointment of the five co-trustees pursuant to the Trust.[4] The motion for partial summary judgment raised no further issues. In response, Preston opposed the motion and filed an exception of no right of action, challenging the two co-trustees' legal right to join in the motion for partial summary judgment.

         Following a December 12, 2017 hearing, the trial court denied Preston's exception of no cause of action, but granted the motion for partial summary judgment in favor of Co-trustees Alexander and Johnson, approving Mrs. Marshall's appointment of the five co-trustees of the Trust as having been done in compliance with the Trust and the Louisiana Trust Code. In its oral reasons for judgment, the trial court noted that Preston had remedies in place that would allow him to adjust the co-trustees' compensation, subsequent to their appointment, if he believed it too high or to seek redress from the co-trustees, should they violate the fiduciary duty they owe him as the beneficiary. As to the issue regarding the appointment of the co-trustees, the trial court held that partial summary judgment was proper because (1) the Trust clearly gave Mrs. Marshall the authority to appoint co-trustees and (2) there were no genuine issues of material fact to suggest that the co-trustees were not disinterested individuals.

         Following the trial court's oral ruling on December 12, 2017, Preston filed a motion for an appeal on January 3, 2018. Thereafter, on January 4, 2018, Co-trustees Alexander and Johnson filed a motion to have the trial court's judgment certified as a final judgment pursuant to La.Code Civ.P. art. 1915(B). On January 9, 2018, the trial court granted Preston's motion for appeal. On January 11, 2018, it rendered a written judgment and certified that it was a final judgment under La.Code Civ.P. art. 1915(B).[5]

On appeal, Preston asserts the following assignments of error:
(1) The District Court erred in granting summary judgment despite the fact that Mrs. Marshall and the Co-Trustees seek relief ...

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