Shelton v. Tamposi

Samuel Tamposi, Sr.’s SAT Sr. Trust funded sub-trusts benefitting his children and grandchildren, including the Elizabeth M. Tamposi Trust (EMT Trust) benefitting his daughter, Elizabeth Tamposi (Betty) (plaintiff), and her three children. Pursuant to the SAT Sr. Trust, governance of all sub-trusts was split into two distinct roles: (1) as investment directors, Samuel’s sons, Steve and Sam Jr. (investment directors) (defendants), had sole discretion to manage, invest, and disburse trust assets, including from the SAT Sr. Trust to the sub-trusts, and from the sub-trusts to the beneficiaries; and (2) as directed trustee, Julie Shelton (plaintiff) handled the distribution of trust assets to, and on behalf of, the beneficiaries in accordance with the written instructions of the investment directors. Shelton and the investment directors each carried only those fiduciary duties relevant to their respective roles. In essence, Shelton’s role was administrative in nature and subservient to the investment directors. In 2007, Shelton and Betty sued the investment directors, arguing that Shelton should have sole discretion to determine the needs of Betty and her children, and that Shelton should be able to direct the investment directors to disburse funds to and from the EMT Trust to meet those needs. The trial court dismissed Shelton and Betty’s petition as contrary to the trust instrument’s directives and removed Shelton as trustee for violating her fiduciary duties. Shelton and Betty’s litigation costs substantially drained the EMT Trust’s assets, resulting in insufficient assets to care for Betty’s three children. Shelton and Betty appealed.