Personal Jurisdiction Over Out-of-State Trust Fiduciaries

Client:	Corporate Trustee and Individual Trust Fiduciaries
Representation:	Defense of lawsuit to 'bust' two trusts
Locations:	Delaware

Summary:

Schiff Hardin attorneys represented a trustee and several members of trust "advisory committees" in connection with two lawsuits filed by a beneficiary who sought to "bust" two trusts created for her benefit. In dispute were the beneficiary's waiver of withdrawal rights from one trust and her assignment of the other trust's assets to a new trust for her benefit. The beneficiary accused her father (whom we also represented) of misleading her into executing the documents and using "economic duress" to force her to sign. She also accused the fiduciaries of both trusts of complicity in the alleged wrongdoing, and of perpetrating it by continuing to hold the assets in trust.

The plaintiff brought suit in her home state. None of the defendants was a resident of that state, but one of the trusts owned real estate there. We moved to dismiss both cases, arguing that there was no personal jurisdiction over any of our clients except the plaintiff's father (who was alleged to have entered the state to secure the assignment). We also argued that the claims were barred by the statute of limitations and laches.

The district court judges in both cases agreed, and after hearing oral argument, the United States Court of Appeals for the Third Circuit affirmed. This dispute represents an unusual federal court entrée into a trust dispute and supports the principle that a trustee is not automatically subject to jurisdiction wherever a beneficiary (or trust asset) happens to be located.