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UNITED STATES DIS'l`ig’
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JOHN K. DWIGHT, MARGO D. FORBES, : V g _ _ . . _
PATRICIA D. HALLENBECK and ; tif.} _? y e .- _ `· A
ELIZABETH D. RICHARDSON, : CIEAISENUMBER 303 CV 0117 (WWE)
Plaintiffs
v.
: January 30, 2004
JP MORGAN CHASE BANK, Trustee of : .
the Russell S. Dwight, Jr. Trust, and :
PATRICIA W. DWIGHT, :
Defendants :
SUPPLEMENTAL MEMORANDUM IN SUPPORT I
OF PLAlNTIPPS’ MOTION FOR PARTIAL
SUMMARY JUDGMENT RELATING TO TRUSTEE REMOVAL \
Plaintiffs John K. Dwight, Margo D. Forbes, Patricia D. Hallenbeck and Elizabeth D. 2
Richardson ("Plaintiffs") by and through their attorneys, Gravel and Shea, hereby submit this
Memorandum and the accompanying affidavit of Robert B. Hemley in order to inform the Court
of recent factual developments that further support their motion seeking removal of JP Morgan
Chase Bank (the "Bank") as Trustee.
SUMMARY OF ARGUMENT
Plaintiffs’ earlier Motion for Partial Summary Judgment, dated September 9, 2003 _
explains why the Trust permits them to remove the Bank as Trustee. The Trust provides that the
Trustee may be removed at any time by a majority of the adult beneficiaries "then entitled to
receive income". The Plaintiffs tit that definition because they are in the class of persons entitled
i _ Case 3:03-cv-00117-JCH Document 48 Filed O2/O3/2004 Page 2 of 4 i
i to receive income presently, as opposed to other persons, such as their children, whose l
entitlement is contingent on future events. The Bank has taken a different view, contending that
those persons "entitled to receive income," and accordingly empowered to determine the Trustee, I
are only those persons whom the Trustee deems entitled to actually receive a distribution of ·
income. As detailed in their earlier filing, Plaintiffs point out that the Bank’s interpretation would
eliminate any protection against a biased, irresponsible, or just plain careless Trustee. Persons
actually receiving the income from the Trustee would of course not be expected to seek the ‘
Trustee’s removal, and accordingly under the Bank’s interpretation, the Trustee would be
perpetual.
However flawed the Bank’s analysis is, its recent actions have now made the argument
quite beside the point. Discovery in this case has established that under any interpretation ofthe
Trust, based on her limited needs, the Bank’s decision to direct Q of the Trust income to Mrs.
Dwight was incorrect. After Plaintiffs formally put the Bank on notice ofthe irrefutable facts the
Bank has now reluctantly determined that the Plaintiffs are entitled to currently receive income in
excess of $20,000} Accordingly, even accepting the Bank’s illogical analysis ofthe Trust
language, the Plaintiffs are authorized to remove it as Trustee. The Plaintiffs have reissued I
notices demanding that the Bank step down in favor of another financial institution. Giving no l
reason, the Bank has refused, precipitating this further filing.
ARGUMENT i
The Trust provides in relevant part at Article XV. l. that:
' For reasons set forth in their cross-motion for Summary Judgment, Plaintiffs do not
believe Mrs. Dwight is entitled to any income from the Trust.
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·— Case 3:03-cv-00117-JCH Document 48 Filed O2/O3/2004 Page 3 of 4
“‘Any Trustee serving hereunder 1nay be removed at any time by written
notice delivered to the Trustee f`rom Grantor, if living; but if not, from a
majority of (i) the adult beneficiaries then entitled to receive income S
distributions hereunder, and (ii) any minor beneficiaries by their guardians °
or custodians? j
Afhdavit in Support of Supplemental Memorandum ("Supplemental Affidavit"), {[2 and Exhibit
A thereto.
By correspondence dated June 17, 2003, Plaintiffs delivered a written notice of removal I
to the Bank, together with information regarding the name, address and contact information for '
their proposed successor Trustee. Supplemental Affidavit, 113. By correspondence dated June |
23, 2003, Defendant Patricia Dwight objected to the notice of removal, asserting, among other j
things, that Plaintiffswere not beneficiaries "then entitled" to distributions and therefore could
not seek removal ofthe Trustee. Supplemental Affidavit, 114. Adopting this same position, the
Trustee has heretofore failed and refused to honor Plaintiffs’ notice of removal. Supplemental
Affidavit,
On December 17, 2003, following discovery in this case which clearly demonstrated Mrs.
Dwight had overstated her need for income, the Trustee reversed its earlier position, stating that I
Mrs. Dwight should receive only $20,000.00 of the Trust’s annual income for 2004 which was
estimated to be $3 6,875.00. The Bank determined that the Plaintiffs were entitled to the balance.
Supplemental Affidavit, $[5 and Exhibit D. Upon receipt of notification of the Trustee’s reversal
of position, the Plaintiff`s, who were now, by any party’s definition, the majority of beneficiaries I
“then entitled to receive income distributions" under the Trust, renewed their request that the
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Trustee step down in favor of The Chittenden Bank. Supplemental Affidavit, $[6 and Exhibit E.
The Trustee has continued to refuse to honor this request.
The plain language of the Trust unequivocally requires the Trustee to honor Plaintiffs’
notice of removal. The Trustee’s failure to do so evidences a further breach of its fiduciary
duties to Plaintiffs, and the Trustee’s bad faith refusal to treat the beneficiaries ofthe Trust in an i
impartial manner. See Gimbe! v. Gimbel Foundation, 347 A.2d 81, 88 (Conn. 1974) ("Although I
the settlor imparted to the trustees the widest possible discretion, they are, nonetheless, under a I
duty to deal impartially with successive beneficiariesâ€); Re.s·ta1emeni· 6'econd) ofTru.s·rs § 222
(1984) ("A provision in the trust instrument is not effective to relieve the trustee of liability for a R
breach of trust committed . . . with reckless indifference to the interests of the beneficiary"). I
CONCLUSION
For the foregoing reasons and for the reasons set forth in their Motion for Partial
Summary Judgment and in their Opposition and Cross—Motion for Summary Judgment, Plaintiffs
respectfully request this Court to order that Defendant JP Morgan Chase Bank must honor
Plaintit`ts’ notice of removal and step aside as the 'Trustee c ./ia s st. or
Dated: Burlington, Vermont ' if ._
January 30, 2004 ’ / ‘/
...» .,4 / J xv *4
obert . _ y, Esq. CT#244 _
Christina Reiss, Esq.
Gravel and Shea
P. O. Box 369
Burlington, VT 05402-03 • 9
(802) 658-0220
For Plaintiffs John K. Dwight, Margo D.
Forbes, Patricia D. I-lallenbeck and
Elizabeth D. Richardson
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