McCormick v. McCormick

Brooks McCormick, Jr. (Junior) (plaintiff) established a trust in 1964 for assets he received from his grandmother. Junior was both the settlor and beneficiary of the trust. Junior’s father, Brooks McCormick (Senior) (defendant), was a trustee. Charles Schroeder (defendant), the president of Miami Corporation (defendant), a holding company for McCormick family assets, was a trustee from 1978 to 1980. Myron Ratcliffe (defendant), a past president of Miami Corporation, was also a trustee, from 1964 to 1977. The trust directed the trustees to pay Junior income and principal that the trustees considered advisable for Junior’s comfortable maintenance, medical care, and welfare. In 1977 construction of a residence for Junior began on land Junior had purchased from Senior. The trustees negotiated and entered into contracts for the residence’s construction for $398,000. Junior approved two change orders that increased the residence’s cost to $449,542. The trustees authorized additional spending without Junior’s consent, so that the cost of the residence was $1.9 million. Junior filed suit against the trustees and Miami Corporation, claiming that the trustees, their agents, and Miami Corporation committed mismanagement and waste of trust assets. Junior alleged that the residence remained incomplete and that payments were made for incomplete work, duplicate charges, and work that did not satisfy contractual specifications. Junior alleged that the trustees used a more expensive means to finance the construction than an ordinary mortgage. Junior also claimed that the trustees unlawfully delegated judgmental and discretionary functions to agents of Miami Corporation. Junior further demanded an accounting. The trial court dismissed Junior’s complaint, holding that the trustees used their best judgment and that Junior was intimately involved in the residence’s construction. Junior appealed.