September 2021
IMO The Estate of Meredith L. Sullivan, CA No. 2018-0741-PWG (September 16, 2021)
We initially blogged about this case at https://www.gfmlaw.com/blog/master-recommends-finding-delaware-law-applies-one-life-insurance-policy-designation, shortly after the Master made her recommendations in this matter.
After the Master issued her recommendations, both sides also filed exceptions. Vice Chancellor Glasscock then reviewed, de novo, both the Master’s factual and legal findings as he was required to do by Delaware law whenever exceptions are taken. After doing a de novo analysis, the Vice Chancellor rejected the exceptions and fully adopted the Master’s conclusions of fact and law.
The most interesting part of this decision is perhaps the Vice Chancellor’s general comments on the de novo review required whenever exceptions are taken. He wrote,
“De novo review of Masters’ decisions creates unnecessary uncertainty, delay, and expense for litigants. It encourages long-shot appeals, because the losing party is able to proceed with a clean slate. It delays justice in the case being reviewed, and the other cases pending in the Court which are behind it in the judge’s queue. The work the Masters do adds much efficiency and value to the Court; given the current caseload, they are indispensable. But their utility is diminished by the required de novo review.”
Perhaps those comments will lead to a sustained effort to revise the rule that requires de novo review in all instances of any findings by Masters in Chancery. We shall see.
In the Matter of The Jeremy Paradise Dynast Trust and The Andrew Paradise Dynasty Trust, Cons. C.A. No. 2021-03540 KSJM (August 17, 2021)
In this case, Chancellor McCormick denied Petitioner’s motion for immediate removal of fiduciaries (the “Fiduciaries”) and appointment of a receiver pendente lite as to two dynasty trusts. The Petitioner alleged, inter alia, that the Fiduciaries were hostile for failing to discuss removing two of the trustees, refusing to increase monthly distributions without reason, refusing to provide copies of fully executed trust agreements, and for allegedly maligning the Petitioner’s reputation. The Chancellor found these arguments unpersuasive in light of the high standard required to remove a trustee and appoint a receiver pendente lite.
The removal of a trustee is only appropriate in extreme situations and, thus, courts utilize it only sparingly. Removal is only appropriate when there is hostility between the trustees and the beneficiaries that threatens the efficient administration of the trust. To justify the appointment of a receiver pendente lite, there must exist an urgent need for immediate protection against injury. A mere possibility of danger and loss does not warrant the appointment of a receiver pendente lite.
Although the Petitioner was able to establish friction between the Petitioner and the Fiduciaries, the Petitioner did not meet the high standard required to compel the appointment of a receiver pendente lite. For example, Petitioner did not allege that the Fiduciaries took profit for themselves or impacted the Trust in a way that would permanently affect the Beneficiaries. Petitioner also did not allege any need for immediate protection, instead pointing to the “prospect of further damages.” Thus, the Petitioner could not establish the degree of hostility required to justify the appointment of a receiver pendente lite or removal of the Fiduciares.
