Ward v. Nationsbank of Virginia, N.A.

In 1965, J. L. and Pauline H. Hartman established a trust naming their grandchildren, Lynn-Hall Ward, Robert Lee Walker, Jr., Margaret Martin, and Anne Walker Durrett (collectively, the grandchildren) (plaintiffs) as beneficiaries. The trust’s purpose was for the grandchildren’s education. The trust asset was a 29.26-acre tract of swampy wetland. The trustee was the predecessor of NationsBank of Virginia, N.A. (NationsBank) (defendant). Wendell Wood sought to purchase the land in 1969 for a maximum of $200,000. NationsBank refused to sell the land outright and instead agreed to lease it with an option to purchase for $750,000 at the end of the 25-year term. Wood struggled with property development, and in 1972 Wood assigned his interest to Rio Associates Limited Partnership (Rio) (defendant). NationsBank agreed to subordinate its fee interest to deeds of trust securing loans for the property development. Rio developed the property into a shopping center, financed by loans totaling over $5 million from the Life Insurance Company of Virginia (Life of Virginia) (defendant). Rio exercised the purchase option with a closing date in December 1994. Believing the $750,000 purchase price was too low, the grandchildren began exploring legal options, but they delayed legal action to secure NationsBank’s cooperation in structuring the property’s sale as a like-kind sale to avoid capital-gains tax. The sale closed in 1995. The grandchildren then filed suit against NationsBank, Rio, and Life of Virginia, asking the court to void the conveyance of the property and the deed of trust and to remove NationsBank as trustee. At an evidentiary hearing, an expert testified that if NationsBank had sold the property outright in 1969 rather than leasing the property with a purchase option, the grandchildren would have significantly less. The trial court held that the deed of trust and deed of conveyance were valid, that the grandchildren had ratified, acquiesced, and consented to the deeds, and that the grandchildren were estopped from challenging the deed.