In her Final Report, Master LeGrow Adopts the Ruling of her Draft Report that the Individual Co-Trustee Acted in Bad Faith Willful Misconduct, and thus Breached his Duties to the Beneficiaries

Delaware Fiduciary Litigation Blog

Posted April 29, 2015

Kathryn Mennen et al v. Wilmington Trust Company et al C.A. No. 8432-ML (Post-trial)(April 24, 2015)

On December 8, 2014, the Master in Chancery issued a draft report finding that the individual co-trustee, Jeff Mennen, was in breach of his fiduciary duties because he acted in bad faith and willful misconduct when making disastrous  investment decisions over the past twenty years. The corporate trustee, Wilmington Trust Company, had argued that the trust was a directed trust, and thus was required to make Jeff’s investments. The Master did not make a ruling on Wilmington Trust’s conduct because Wilmington Trust settled on the eve of trial. We wrote about the Draft Ruling in December, and that summary can be found here.

On April 24, 2015, the Master issued her Final Report, adopting her ruling in the Draft Report. Her Final Report is nearly identical to the Draft Report, with the exception of the final amount due to the beneficiaries. The parties took exceptions on how to calculate certain set-offs. Specifically, the parties disagreed as to whether the set-offs should be taken before or after pre-judgment interest is calculated. The Master adopted the Restatements' approach which states that set-offs should be taken after pre-judgment interest is calculated. As a result, the Court found that in total, Jeff owed the beneficiaries $96,978,299.93, plus pre-judgment interest at 7.75% compounded quarterly, accruing from the date of each wrongful investment until the date of judgment. In her, Draft Report, that amount was $72,448,299.93.

Author(s)

Phillip Giordano
Associate
Gordon, Fournaris & Mammarella, P.A.
William M. Kelleher, Director
Director
Gordon, Fournaris & Mammarella, P.A.