September 2013
Mennen v. Wilmington Trust, C.A. No. 8432-ML (September 18, 2013)
In this final report, the Master recommended that the Court enter an order finding that the trustee waived its attorney-client privilege for all communications with counsel regarding its powers and duties under the trust agreements, other than communications in which counsel directly evaluated the trustee’s potential exposure or its litigation strategy. The trustee invoked an advice of counsel defense regarding the directed nature of the trust and the Master had previously found that the trustee had waived attorney-client privilege as to all powers and responsibility documents. The trustee is maintaining that the trust is directed. Given that stance, the Master found that the trustee placed at issue the advice of counsel regarding to what extent the trust agreement required the corporate trustee to follow investment directions from the individual trustee. The trustee agreed that it was waiving privilege as to all powers and responsibilities documents, but it sought to limit that waiver to communications relating to challenged decisions. But the Master concluded that allowing that “would unfairly limit or eliminate the Beneficiaries’ ability to assess the reliability of the advice and the factual information on which it was based.” The trustee cited patent infringement cases and argued that the waiver should only extend to the information base of the legal advice from which the reliance allegedly arose. The Master, however, found that the patent infringement case law was not convincingly analogous.
Cecil W. Scott v. Roland E. Scott C.A. No. 6604-MA (September 13, 2013)
Following a contested guardianship proceeding, whereby the ward’s (“Cecil”) brother (“Roland”) sought to be Cecil’s primary guardian, Cecil’s sister (“Dinah”) filed a complaint against Roland, seeking to set aside certain land conveyances from Cecil to Roland. Dinah alleged that at that time Cecil lacked capacity and was unduly influenced by Roland because Cecil had just undergone heart surgery and a transient ischemic attack, and was a chronic paranoid schizophrenic. The Master, in her final report, reaffirmed Delaware’s longstanding law that adults are presumed to have contractual capacity and that the burden is on the party alleging incapacity. The Master then applied the routine capacity challenge standard (i.e., that Dinah must show that Cecil was incapable of understanding the nature and effect of the transaction or that he was so mentally impaired the he was unable to properly, intelligently and fairly protect and preserve his property rights) and the five elements of undue influence ((1) a susceptible grantor; (2) the opportunity to exert influence; (3) a disposition to do so for an improper purpose; (4) the actual exertion of such influence; and (5) a result demonstrating its effect). The Master concluded that there was no evidence that Cecil was incapable of understanding the nature and effect of the transaction or that he was mentally impaired at the time of the transaction. The Master further held that Dinah failed to demonstrate any disposition on Roland’s part to exert his influence for an improper purpose because, in part, Roland had spent the last sixteen years taking care of Cecil. The Master also reaffirmed that undue influence is not established if the evidence discloses one or more plausible alternative explanations for the testator’s change of beneficiaries or, as in this case, for the grantor’s conveyance of the properties.
IMO Estate of Robert N. Gardner C.A. No. 5506-MA (August 13, 2013)
The Master in Chancery ordered a fiduciary to provide the Court with a formal accounting of the handling of estate funds. The Master in Chancery offered the respondent an opportunity to demonstrate that her expenditures had been incurred for the benefit of the estate. In response, the Master in Chancery received a submission consisting of “148 pages of copies of receipts, handwritten notes and receipts, invoices, bank statements, credit card statement, investment account statements, EZ pass statements, utility bills, store receipts, and checks.” The Master found this submission did not constitute the required formal accounting as the Master found that it is not the Court’s responsibility to try to determine where and how moneys were used. As a result, the Master recommended that a personal judgment be entered against the respondent for the amount not clearly addressed in the formal accounting.
