Recent Ohio Court Case Explored the Scope of Communication Responsibilities Among Financial Institutions, Trustees and Trust Beneficiaries

Jeff Ireland and Michael Mayer represented individual clients who sued PNC Bank N.A. for violations of trust agreements.  Jeff and Michael worked in conjunction with co-counsel from Cincinnati.  Plaintiffs (three brothers) brought several claims against a bank and its co-trustee of three trusts in which plaintiffs were named as the trusts' primary beneficiaries.  Plaintiffs alleged that they were kept in the dark about the trusts' existence, while the trustees wrongfully transferred millions of dollars' worth of assets and funds from the trust to a non-primary beneficiary.  Defendants denied any wrongdoing and asserted several defenses.  Jeff and Michael led the discovery and motion practice that resulted in partial summary judgment in favor of the individual clients.  Steel v. PNC Bank, N.A. et al, Case No. 2016 CV 3666 (Montgomery County Court of Common Pleas).

On May 25, 2018, Judge Richard S. Skelton granted partial summary judgment in favor of the individuals on liability and denied the bank-trustee's motion for summary judgment.  In a 12-page opinion, Judge Skelton held that the bank's "deference of distribution decisions to [the co-trustee] without…independent review and approval, establishes its breach of duties to plaintiffs.  Such carte blanche deference is tantamount to an abdication of its duties as a trustee owed to the beneficiary-plaintiffs."  The Court also determined that genuine issues of material fact precluded summary judgment in favor of the bank-trustee on any of its arguments, including whether claims were barred under the trusts' incontestability and exculpatory provisions or under certain statutes of limitation.  Judge Skelton noted that "there is a genuine issue of material fact as to whether a trustee may terminate a trust without notifying the beneficiaries[, thus] gaining the benefit of the running of the statute of limitations that would then deny the beneficiaries a remedy when they later discover misconduct by the trustee that may have involved active fraudulent concealment by the trustee."  For the full opinion, click here.  The parties subsequently entered into a confidential settlement agreement, and the case has been dismissed.