Davis v. U.S. Bank National Association

Lorenz K. Ayers executed a trust under which his grandson, Harold A. Davis (plaintiff) was the life income beneficiary and after Davis’ death, the trust assets were to be distributed to Davis’ children. In the event that Davis’ children did not survive him, the assets go to his heirs-at-law, and if no heirs survived him, to the Lafayette College. The trust appointed Mercantile Trust Company, National Association (Mercantile) (defendant) as trustee. Davis filed a petition on behalf of himself and his two children, Dillon and Marguerite, to remove Mercantile as trustee, appoint U.S. Trust Company of Delaware (UST) as successor trustee and transfer the trust assets to UST. Davis argued that all of the statutory requirements for removal of a trustee without wrongdoing were met. First, all qualified beneficiaries were seeking removal of the trustee. Second, UST was a suitable successor trustee. Third, removal of Mercantile was not inconsistent with a material purpose of the trust. Fourth, removal of Mercantile best served the interests of the beneficiaries for the following reasons: (1) UST’s fee was 23.94 percent lower than Mercantile, as shown by the affidavits of an investment advisor and a bank officer and UST’s published fee schedule, (2) UST was more conveniently located within a thirty minute drive of Davis, (3) UST was located in Davis’ state of domicile, unlike Mercantile, and the change in domicile would avoid out of state income tax on the trust assets, and (4) UST understood Davis’ financial situation and was willing to work with an independent investment coordinator. The circuit court granted Davis’ motion for summary judgment and ordered removal of Mercantile and appointed UST as successor trustee. Mercantile appealed, asserting, inter alia, that Davis failed to join necessary parties, that Davis had a conflict of interest in representing his children, that issues of fact remained regarding UST’s reduced fee, that changing the trustee was inconsistent with a material purpose of the trust, and that discovery was needed before summary judgment could be granted.