May 2022

In the Matter of Rogers v. Wilmington Trust Company, No. 21-1473 (March 3, 2022)

          This case involved a trust beneficiary and the current trustee making breach of trust claims against the former trustee (Wilmington Trust).  The Plaintiffs-Appellants lost at the trial level at the U.S. District Court for the State of Delaware, and they appealed to the Third Circuit. The Third Circuit affirmed all of the trial court’s rulings.

          On appeal, the Third Circuit noted that “the District Court correctly upheld the Trust Agreement’s exculpatory provision as enforceable, and accordingly, Plaintiffs-Appellants were required to show that Wilmington Trust actions, or lack thereof, constituted fraud, willful misconduct, or gross negligence.”

          In the trial court and on appeal, the Plaintiffs-Appellants advanced eight theories for liability. Of note is that the Plaintiffs-Appellants claimed that the former trustee had charged excessive fees.  But the district court ruled—and the 3rd Circuit affirmed—that that claim was time-barred by Section 3583 of Title 12 of the Delaware Code. In that regard, the Third Circuit wrote,

Appellants argue the District Court erroneously relied on documents that provided inadequate notice or were very defective, as a matter of law, and thus, could not trigger the statute of limitations period.  But “report” is not a defined term, and Appellants point to no evidence that Delaware’s legislature intended disclosures putting beneficiaries on notice to take a certain form. Likewise, we have found no Delaware case law suggesting a “report” must take a certain form to trigger the statute of limitations, nor do Appellants cite any decision to that effect.

          Also somewhat notable are the discussions of the rejected claims that the former trustee’s investments were not suitable and that the former trustee failed to properly tax plan for the Trust.