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Wood v. U.S. Bank, N.A.

Ohio Court of Appeals
828 N.E.2d 1072 (2005)


Facts

John Wood II created a trust worth over $8 million and of which his wife, Dana Barth Wood (plaintiff) was a beneficiary. At the time of John’s death, the trust assets consisted of eighty-two percent Firstar stock and eighteen percent Cincinnati Financial stock. The trust named Star Bank, of which Firstar (defendant) was a successor-in-interest, as trustee and specifically allowed Firstar, to “retain any securities in the same form as when received, including shares of a corporate Trustee…, even though all of such securities are not of the class of investments a trustee may be permitted by law to make and to hold…” Firstar met with the beneficiaries shortly after John’s death and suggested a plan for liquidating stock to pay the debts and expenses of the estate that resulted in further concentration of Firstar stock. In early 1999, after the Firstar stock price had increased to $35 per share, Dana Barth and her financial advisors made non-written requests to Firstar to diversify the Firstar stock, but Firstar did not diversify. By mid-2000, Firstar’s stock price dropped to $16 per share, costing Dana Barth $771,099. Dana Barth commenced an action against Firstar claiming that it had a duty to diversify under Ohio’s version of the Uniform Prudent Investor Act (UPIA) absent special circumstances. Firstar claimed that the duty to diversify did not apply because the language of John’s trust authorized Firstar to retain the stock. The trial court refused to instruct the jury on the requirements of the UPIA. Instead, the trial court instructed the jury that Firstar would be liable for breach of duty if it abused its discretion in not diversifying since the trust gave Firstar discretion to retain the stock despite the default rule requiring diversification. The court further instructed the jury that dishonesty or bad faith was required to find abuse of discretion, and since no evidence of dishonesty or bad faith was presented at trial, the jury returned a verdict for Firstar. Dana Barth appealed the trial court’s jury instructions.

Rule of Law

Issue

Holding and Reasoning (Painter, J.)

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