Case: 4:20-cv-00302-JCH Doc. #: 21 Filed: 06/15/20 Page: 1 of 8 PageID #: 297
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MISSOURI
`EASTERN DIVISION
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`IN RE THE JOYCE C. DALTON TRUST
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`DAVID P. OETTING, Trustee,
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` Plaintiff,
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` vs.
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`WELLS FARGO BANK, N.A.,
`Former Co-Trustee,
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` Defendant.
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`Case No. 4:20CV302 JCH
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`MEMORANDUM AND ORDER
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`This matter is before the Court on Defendant Wells Fargo Bank, N.A.’s Motion to Dismiss
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`or, in the Alternative, for Appointment of Special Fiduciary (“Motion to Dismiss”), filed March 19,
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`2020. (ECF No. 9). The motion is fully briefed and ready for disposition.
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`BACKGROUND1
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`In or about 1988, Joyce C. Dalton (“Mrs. Dalton”) created a Revocable Living Trust (the
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`“Trust”). (Petition (hereinafter “Complaint” or “Compl.”), ECF No. 6, ¶ 1). On January 19, 1998,
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`Mrs. Dalton executed a Total Restatement of Revocable Trust Agreement for Joyce C. Dalton. (See
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`Id., attached to Plaintiff’s Complaint as Exh. A, ECF No. 6-1). As relevant here, Mrs. Dalton
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`provided that her children born before the date of the Trust included Andrea B. Dalton (“Andrea”)
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`and Arthur R. Dalton, Jr. (Id., Article I(A)). Mrs. Dalton named A.G. Edwards Trust Company2 and
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`1 The majority of the Court’s background section is taken from Plaintiff’s Complaint and attached
`exhibits, to which Defendant has not yet filed an answer.
`2 Defendant is a successor-by-acquisition to A.G. Edwards Trust Company. (See Memorandum in
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`her attorney, Plaintiff David P. Oetting, to be co-trustees upon her death, incapacity or resignation.
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`(Id., Article II(B), (C)). After providing for Mrs. Dalton during her lifetime and paying certain
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`expenses, taxes and cash legacies, the Trust provided as follows:
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`Article VI. Residue
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`A.
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`I give the Residue of the Trust Fund, real and personal, wherever
`located, including any property mentioned above but not effectively
`disposed of, to my Descendants who survive me, per stirpes, subject,
`however, to the provisions of the Descendants’ Trusts.
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`Article VII. General Provisions Re Descendants’ Trusts.
`Whenever
`property passes to my Descendants subject to the provisions of the Descendants’
`Trusts, to the extent provided in this Article the property shall not pass outright, but
`instead shall be held by the Trustees under this Agreement in accordance with the
`following directions:
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`A.
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`Such property shall be held in the Descendants’ “Single Trust” if at
`the time in question the term for that trust as applied to that property has
`not yet expired.
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`Article VIII. Single Trust for Descendants.
`shall have these terms:
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`The Descendants’ Single Trust
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`A.
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`During the Single Trust term:
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`1.
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`2.
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`3.
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`As much of the net income and/or principal of the trust as the
`Trustees may from time to time determine shall be distributed to
`such one or more of my Children and Descendants of any
`deceased Child of mine, in such amounts or proportions, as the
`Trustees may from time to time select, for the recipient’s health,
`education, support in his or her accustomed manner of living, or
`maintenance.
`As much of the net income and/or principal of the trust as the
`Trustees (excluding, however, any “Interested Trustee”) may
`from time to time determine shall be distributed to such one or
`more of my Children and Descendants of any deceased Child of
`mine, in such amounts or proportions, as the Trustees (excluding,
`however, any Interested Trustee) may from time to time select,
`for any purpose.
`Any net income not so distributed shall be accumulated and
`from time to time shall be added to principal.
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`Support of Motion to Dismiss (“Defendant’s Memo in Support”), P. 2 n. 2).
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`4.
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`5.
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`6.
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`Without limiting the Trustees’ discretion, I want the Trustees
`to know that, to the extent consistent with the foregoing, it would
`not be contrary to my intent for the Trustees to regard the needs
`of my daughter, ANDREA B. DALTON, who is mentally and
`physically deficient and who is residing in a special care facility
`as more important than those of my son or his Descendants.3
`ANDREA who is an adult qualifies to receive government
`assistance because of her above condition. Without limiting the
`Trustees’ discretion, I want the Trustees to know that, to the
`extent consistent with the foregoing, it would not be contrary to
`my intent for the Trustees to make available to ANDREA or for
`her benefit such income and thereafter principal from this trust as
`will not disqualify her from benefits available to her, unless in the
`sole discretion of a “Disinterested Trustee”, such Trustee
`determines that for her overall benefit additional income and/or
`principal should be paid out for her benefit.
`The Trustees, in their sole discretion, may use and apply the
`net income or principal on behalf of ANDREA directly (without
`the intervention of a legal guardian, conservator and/or custodian)
`for the uses and purposes hereinbefore stated.
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`(Id., Articles VI-VIII). Mrs. Dalton died in 1998, and at that time the Trust became irrevocable.
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`(Compl., ¶ 5). After Mrs. Dalton’s death, Plaintiff and Defendant served as co-trustees of the Trust
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`until Defendant resigned as trustee effective January 1, 2018. (Id., ¶ 7).
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`According to Plaintiff, beginning in or around 2014 he learned that Defendant was paying
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`expenses for Andrea, including her housing and medical care at Emmaus Homes. (Compl., ¶ 9).
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`Plaintiff allegedly disputed Defendant’s payment of the expenses, concerned they would interfere
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`with Andrea’s qualifying for government benefits and thus unnecessarily dissipate Trust assets.
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`(Id.).4 Around that same time, Emmaus Homes advised both Plaintiff and Defendant that it intended
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`to move Andrea to a new facility. (Id., ¶ 11). The proposed move stood to increase Andrea’s care
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`and living expenses significantly, and Plaintiff maintains he thus repeatedly asked Defendant for
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`3 According to Plaintiff, the primary beneficiary of the Trust is Andrea, the incapacitated adult
`daughter of Mrs. Dalton. (Compl., ¶ 4).
`4 Plaintiff claims that while Defendant was co-trustee of the Trust, it routinely paid Andrea’s living
`expenses, which often exceeded $60,000 per year, from the Trust. (Compl., ¶ 73). According to
`Plaintiff, the State of Missouri and/or other government entities had available financial assistance to
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`information regarding the management of Trust assets. (Id., ¶¶ 11-12). While Defendant provided
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`some information, including monthly statements regarding investments and information regarding
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`invoices from and payments to Emmaus Homes, Plaintiff claims he did not receive adequate
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`information regarding efforts to qualify Andrea for government assistance, including Social Security
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`Disability and Medicaid payments. (Id., ¶ 13).5 Despite this lack of information, Plaintiff maintains
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`that in early 2015, he began the lengthy and involved process of seeking additional government aid
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`for Andrea, primarily in the form of state Medicaid funding. (Id., ¶ 80). Plaintiff claims he
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`eventually secured such assistance, thereby saving the Trust somewhere between $60,000 and
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`$350,000 per year on an indefinite basis. (Id., ¶ 81).
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`On or about November 9, 2017, Defendant provided notice that it intended to resign as co-
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`trustee of the Trust. (Compl., ¶ 16).6 On or about January 30, 2018, Defendant filed a Petition for
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`Judicial Approval of Trustee Accounts in the Circuit Court of St. Louis County, Missouri, Probate
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`Division (the “Wells Fargo Lawsuit”). (Id., ¶ 20). Named as Defendants were Andrea (in her
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`capacity as primary beneficiary of the Trust); Colleen and David Barringer (in their capacity as co-
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`guardians of Andrea); Arthur Rex Dalton, Jr. and Tresa Dalton (in their capacity as contingent
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`beneficiaries of the Trust); and Plaintiff (in his capacity as trustee of the Trust). (See Petition for
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`Judicial Approval of Trustee Accounts, attached to Plaintiff’s Complaint as Exh. F, ECF No. 6-6).
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`On or about March 14, 2018, Plaintiff filed a Motion to Collect Trust Property in the Wells Fargo
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`Lawsuit, seeking to collect certain property and records of the Trust from Defendant. (Compl., ¶
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`28). Defendant voluntarily dismissed its Petition for Judicial Approval of Trustee Accounts on May
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`pay all or a significant part of Andrea’s living expenses. (Id., ¶ 74).
`5 Plaintiff further asserts he repeatedly requested that Defendant produce materials relating to
`internal and external investigations by various government agencies regarding a variety of
`malfeasance and fraud allegedly committed by Defendant. (Compl., ¶ 14).
`6 Defendant’s resignation became effective on January 1, 2018, and Plaintiff has served as sole
`trustee since that time. (Compl., ¶¶ 18-19).
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`16, 2018, and according to Plaintiff, said dismissal prevented him from being heard on his Motion to
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`Collect Trust Property. (Id., ¶¶ 30-31).
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`On or about January 24, 2020, Plaintiff, as trustee of the Trust, filed a Petition in the Circuit
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`Court of St. Louis County, Missouri, Probate Division, against Defendant Wells Fargo Bank, N.A.,
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`as former co-trustee. (ECF No. 6). Plaintiff asserts he brings claims “to recover funds of the Trust []
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`that were wrongly disbursed by the former co-trustee Wells Fargo, without Mr. Oetting’s
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`knowledge, and to recover attorney fees from Wells Fargo for litigation that Wells Fargo wrongfully
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`commenced and then abruptly terminated relating to the Trust.” (Id., P. 1). Plaintiff lodges the
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`following claims against Defendant: Suit against Former Co-Trustee Wells Fargo for Attorney Fees
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`and Costs Relating to Failure to Timely Turn Over Trust Property (Count I)7; Recovery Against
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`Wells Fargo of Extraordinary Fees and Attorney’s Fees and Costs (Count II); Negligence Against
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`Wells Fargo for Using Trust Assets to Pay Andrea Dalton’s Living Arrangements Instead of
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`Obtaining State Assistance (Count III); Wrongful Retention and Conversion of Trust Property
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`Against Wells Fargo (Count IV); Frivolous and Wrongful Use of Civil Proceedings By Wells Fargo
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`(Count V); and Disgorgement of Fees Against Wells Fargo (Count VI).
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`On February 24, 2020, Defendant removed Plaintiff’s action to this Court, on the basis of
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`diversity jurisdiction. (ECF No. 1). Defendant filed the instant Motion to Dismiss on March 19,
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`2020, asserting Count III of Plaintiff’s Complaint should be dismissed because (1) neither applicable
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`trust law nor the trust instrument imposes a duty on Defendant as alleged by Plaintiff to seek out
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`government assistance for a beneficiary, and (2) even if such a duty did exist, Plaintiff is as culpable
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`as—if not more culpable than—Defendant for failing to seek out assistance for Andrea, and thus
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`7 Plaintiff alleges that following its resignation as co-trustee of the Trust, Defendant wrongfully
`elected to withhold money from the transfer of Trust assets, in order to reimburse itself for
`anticipated attorney’s fees and expenses in connection with the Wells Fargo Lawsuit. (Compl., ¶¶
`42-45). While Defendant ultimately repaid the funds it had withheld, Plaintiff claims Defendant’s
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`cannot act in the interests of the Trust’s beneficiaries due to a conflict of interest. (ECF Nos. 9, 10).8
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` Because it is dispositive, the Court addresses only the latter assertion.
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`DISCUSSION
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`As noted above, in its Motion to Dismiss Defendant asserts that assuming an affirmative duty
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`to seek out government benefits existed for the trustees, it follows that Plaintiff cannot adequately
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`represent the Trust’s beneficiaries because he is afflicted by an untenable conflict of interest. (See
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`Defendant’s Memo in Support, P. 8). In other words, Defendant maintains that if in fact a duty
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`existed for anyone to seek government assistance, then Plaintiff is equally as culpable as Defendant
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`(in light of his role as co-trustee), and thus more appropriately situated as a defendant in this action
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`rather than a plaintiff. (Id., PP. 8-9).9
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`The Court finds Defendant’s conflict of interest argument raises the question of Plaintiff’s
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`standing to pursue Count III of his Complaint. The Eighth Circuit has held that there exist two
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`strands in standing jurisprudence: “‘Article III standing, which enforces the Constitution’s case-or-
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`controversy requirement; and prudential standing, which embodies judicially self-imposed limits on
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`the exercise of federal jurisdiction.’” Americans United for Separation of Church & State v. Prison
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`Fellowship Ministries, Inc., 509 F.3d 406, 419 (8th Cir. 2007) (quoting Elk Grove Unified Sch. Dist.
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`v. Newdow, 542 U.S. 1, 11-12, 124 S.Ct. 2301, 159 L.Ed.2d 98 (2004) (internal citations and
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`quotation marks omitted)).
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`actions forced him to expend time and incur attorney’s fees. (Id., ¶¶ 53, 58).
`8 Defendant claims Plaintiff is “impeded in pursuing this litigation and representing the interests of
`the Trust’s beneficiaries by his own self-interest in avoiding liability.” (Defendant’s Motion to
`Dismiss, P. 2).
`9 Defendant maintains Plaintiff actually is “more culpable by orders of magnitude”, as Plaintiff
`allegedly acted in all of the following capacities: Counsel for Mrs. Dalton, the settlor, personally;
`Counsel for Mrs. Dalton, as guardian for Andrea; Counsel for Janet Barringer, as successor guardian
`for Andrea; Counsel for David and Colleen Barringer, as successor guardians for Andrea; and Co-
`trustee of the Trust from 1998 to the present. (Defendant’s Memo in Support, PP. 8-9).
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`Whereas the Constitutional requirements focus upon the existence of a case
`or controversy, the prudential limitations focus upon the identity of the party-
`plaintiffs. That is, it is a question of whether the plaintiffs are “proper
`proponents of the particular legal rights on which they base their suit.”
`Singleton v. Wulff, 428 U.S. 106, 112, 96 S.Ct. 2868, 2873, 49 L.Ed.2d 826,
`832 (1976), Regents of Univ. of Minn. v. National Collegiate Athletic
`Association, 560 F.2d 352 (8th Cir. 1977).
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`School Dist. of Kansas City, Mo. v. State of Mo., 460 F.Supp. 421, 437 (W.D. Mo. 1978). “The
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`prudential limitations placed on standing have been established to insure that the plaintiff is not only
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`an aggrieved party but also an effective advocate of the issues.” Id. at 438-39.
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`Upon consideration the Court holds that even if Plaintiff, as current sole trustee of the Trust,
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`ordinarily would possess standing to asserts the rights of certain third parties, i.e., the Trust
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`beneficiaries and/or Andrea’s guardians, “other very practical considerations and factors lead to the
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`conclusion that critical prudential restrictions exist warranting the denial of standing to [Plaintiff].”
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`Id. at 440. Of primary concern is the distinct potential for the evidence to uncover acts of negligence
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`or breach of trust by Plaintiff himself. Id. In other words, while Plaintiff claims he first learned in
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`2014 that Wells Fargo was paying certain expenses for Andrea, and that Wells Fargo made the
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`payments without his knowledge and then refused to give him the documents necessary to uncover
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`its misconduct (see Response of David P. Oetting in Opposition To Motion to Dismiss, PP. 3, 11),
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`Defendant’s evidence reveals that Plaintiff was cc’d in 2006 on a Support Plan for Andrea that
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`clearly showed she was “private pay”, her expenses were paid from a trust fund, and she did not
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`receive SI/SS/VA and/or Railroad Retirement. (See Defendant’s Exh. F, ECF No. 10-6).10
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`Furthermore, it is undisputed that Plaintiff did not attempt to secure government benefits for Andrea
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`10 As noted by Defendant, the Court properly may consider matters of public record in support of a
`motion to dismiss without converting the motion to one for summary judgment. See Dittmer
`Properties, L.P. v. Fed. Deposit Ins. Corp., 708 F.3d 1011, 1021 (8th Cir. 2013).
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`from 1998 to 2015, despite the fact that the Trust itself instructed she qualified for such assistance.
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`(See Trust, Article VIII(A)(5)).
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`Upon consideration of the foregoing, the Court finds these factors militate against Plaintiff
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`acting as primary advocate of the Trust beneficiaries’ rights. The potential for conflict between the
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`interests of the Trust beneficiaries, seeking to show the greatest extent of negligence/breach of trust
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`on the part of the trustees, and the interests of Plaintiff, who may resist the introduction of
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`incriminating evidence concerning his own past or present actions, “is a very real and threatening
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`potential.” Id.at 441. This grave concern leads to the conclusion that “even if [Plaintiff] could
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`satisfy the constitutional requirements of standing, the prudential limitations expressed in the
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`doctrine of jus tertii lead to the conclusion that [Plaintiff] is not the correct nor effective advocate of
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`[the Trust beneficiaries’] rights.” Id.at 442. Defendant’s Motion to Dismiss Count III of Plaintiff’s
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`Complaint will therefore be granted.11
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`CONCLUSION
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`Accordingly,
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`IT IS HEREBY ORDERED that Defendant Wells Fargo Bank, N.A.’s Motion to Dismiss
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`or, in the Alternative, for Appointment of Special Fiduciary (ECF No. 9) is GRANTED in part, and
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`Count III of Plaintiff’s Complaint is DISMISSED without prejudice.
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`Dated this 15th Day of June, 2020.
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`/s/ Jean C. Hamilton
`UNITED STATES DISTRICT JUDGE
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`11 Because Mr. Oetting (as Trustee) is the only Plaintiff, the Court will dismiss Count III rather than
`realign him as a party-defendant. The dismissal is without prejudice to the right of a proper party
`plaintiff to refile the claim.
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