Opinion
No. 27794-CA.
December 6, 1995.
APPEAL FROM TWENTY-SIXTH JUDICIAL DISTRICT COURT, PARISH OF WEBSTER, NO. 54334, STATE OF LOUISIANA, HONORABLE BRUCE M. BOLIN, J.
Taylor, Porter, Brooks Phillips by Frank M. Coates, Jr., Harry J. Philips, Jr., Eleanor Owen Kerr, Baton Rouge, for Appellant.
Jay Nolen, Sedric E. Banks, Monroe, for Appellees.
Before SEXTON, BROWN, WILLIAMS and STEWART, JJ., and SAVOIE, J. Pro Tem.
The defendant, Premier Bank, appeals from the trial court's refusal to grant its declinatory exception of improper venue. For the reasons assigned below, we reverse the judgment of the trial court. The case is transferred to the First Judicial District Court in Caddo Parish.
FACTS
This case involves a dispute between the beneficiaries of a testamentary trust and the trustee concerning the management of the trust. The plaintiffs, Randall Marston, Lisa Marston, and Randy Marston, are beneficiaries of testamentary trusts created by the will of Randolph Marston, Sr. The late Mr. Marston owned property in several parishes throughout the state, and his total estate was valued at about $5 million. Premier Bank was designated as the trustee, as well as the executor for Mr. Marston's succession. The succession proceedings were filed in the First Judicial District Court in Caddo Parish. The succession and the three trusts were administered by Premier Bank's office in Caddo Parish.
No third parties are involved in this litigation.
The plaintiffs filed a rule to remove Premier Bank as the trustee and to recover damages for breach of fiduciary duty. Suit was brought in Webster Parish. The petition asserted that certain property and mineral interests located in Webster Parish were imprudently managed by Premier Bank, as trustee. The plaintiffs sought Premier Bank's removal as trustee and their recognition as owners of the property held in trust.
Premier Bank filed a declinatory exception of improper venue. It argued that under LSA-R.S. 9:1725 (5) and 9:1789 of the Louisiana Trust Code, the "proper court" for a dispute involving a testamentary trust would be the court having jurisdiction over the settlor's succession, i.e., the First Judicial District Court in Caddo Parish.
The trial court overruled the exception of venue. The court held that the allegations in the plaintiffs' rule, alleging wrongful conduct, were sufficient to trigger application of LSA-C.C.P. Art. 74, which provided for venue in the parish where an offense or tort occurred. Premier Bank appealed.
LAW
Venue Articles
Venue refers to "the parish where an action or proceeding may properly be brought and tried under the rules regulating the subject." LSA-C.C.P. Art. 41. The general rules of venue are set forth in LSA-C.C.P. Art. 42. The general rules of venue set forth in LSA-C.C.P. Art. 42 are subject to the exceptions provided in Articles 71 through 85 and as otherwise provided by law. LSA-C.C.P. Art. 43.
LSA-C.C.P. Art. 74 provides the following exception to the general rules of venue:
An action for the recovery of damages for an offense or quasi offense may be brought in the parish where the wrongful conduct occurred, or in the parish where the damages were sustained. An action to enjoin the commission of an offense or quasi offense may be brought in the parish where the wrongful conduct occurred or may occur.
Since exceptions to the general venue rules are in derogation of a common right, they must be strictly construed, and the party claiming the benefit of an exception must bring himself clearly within the exception. Hawthorne Oil and Gas Corporation v. Continental Oil Company, 377 So.2d 285 (La. 1979); Keele v. Knecht, 621 So.2d 106 (La.App. 2d Cir. 1993).
Trust Code Provisions
According to LSA-R.S. 9:1789 "[a] trustee may be removed in accordance with the provisions of the trust instrument or by the proper court for sufficient cause shown." LSA-R.S. 9:1725 (5) defines "proper court" in the case of a testamentary trust as "the district court having jurisdiction of the settlor's succession."
LSA-R.S. 9:2081 defines a breach of trust as "[a] violation by a trustee of a duty he owes to a beneficiary as trustee." The liability of a trustee who commits a breach of trust is set forth in LSA-R.S. 9:2201, which provides:
If a trustee commits a breach of trust he shall be chargeable with:
(1) A loss or depreciation in value of the trust estate resulting from a breach of trust; or
(2) A profit made by him through breach of trust; or
(3) A profit that would have accrued to the trust estate if there had been no breach of trust.
LSA-R.S. 9:2221 establishes the beneficiary's remedies against an errant trustee:
A beneficiary of a trust may institute an action:
(1) To compel a trustee to perform his duties as trustee;
(2) To enjoin a trustee from committing a breach of trust;
(3) To compel a trustee to redress a breach of trust;
(4) To remove a trustee.
Among other Trust Code provisions addressing breaches of trust by the trustee are the following:
If a trustee commits a breach of trust, the proper court in its discretion may deny him all compensation, allow him a reduced compensation, or allow him full compensation.
A trustee is not liable to a beneficiary for a loss or depreciation in value of the trust property, or for a failure to make a profit not resulting from a breach of trust.
The proper court for cause shown and upon notice to an interested beneficiary may excuse a trustee wholly or partly from liability for a breach of trust if the trustee acted honestly and reasonably.
DISCUSSION
Examination of the plaintiffs' petition reveals that it is drafted in terms of the trustee's alleged breaches of trust, with the plaintiffs seeking redress under provisions of the Trust Code. Among the relief requested is damages for loss or depreciation in value of the trust estates as a result of breach of trust by Premier Bank, denial and/or reduction of fees paid to Premier Bank as trustee, and removal of Premier Bank as trustee. The petition alleges, and other documentation demonstrates, that the trust contains property in several parishes, including Webster, Caddo, Red River, Richland and Madison Parishes. Evidence in the record further shows that the First Judicial District Court in Caddo Parish had jurisdiction over the succession of the settlor, Mr. Marston. Therefore, it is "the proper court" as defined in LSA-R.S. 9:1725 (5).
In the instant case, we find that Caddo Parish is the proper venue for the plaintiff's action. The plaintiffs seek relief under the Trust Code. All of the relief sought under their rule is available under LSA-R.S. 9:2201 and LSA-R.S. 9:2221. If a trustee is to be removed, the removal must be ordered by the "proper court" under LSA-R.S. 9:1789. When a trustee commits a breach of trust, "the proper court" determines the effect of that breach upon the trustee's compensation. LSA-R.S. 9:2182. Furthermore, "the proper court" may excuse a trustee from liability for a breach of trust under certain circumstances. LSA-R.S. 9:2208. These provisions demonstrate that the legislature intended for proceedings for breaches of trust involving a testamentary trust to be dealt with in a forum where information concerning the testamentary trust and its administration would be readily and conveniently available. This is particularly important in a situation, such as the present one, where the trust involves property in numerous places. The legislature clearly did not intend to allow the trustee to be subjected to suits by the trust beneficiaries in any and every parish in which the trust owned property or the trustee acted in its representative capacity. Furthermore, implicit in all these provisions of the Trust Code is the concept that the proper court can make the beneficiary whole, by an award of damages, in the event of a breach of trust.
Under most circumstances, suits instituted on different theories of recovery may be brought in the venue which is proper for any theory alleged in the suit. Hebert v. Myers, 449 So.2d 185 (La.App. 3d Cir. 1984); Hamm v. Amy, 544 So.2d 691 (La.App. 3d Cir. 1989); LSA-C.C.P. Art. 45. Nevertheless, we deem this action to be an exception to this rule. Even if other actions are joined with a suit against the trustee for removal and/or breach of trust, the Trust Code requires the action to be brought in the "proper court," which is the court having jurisdiction of the settlor's succession.
Also, the plaintiffs have failed to adequately demonstrate that the present situation falls into any of the exceptions to general venue they claim, i.e., LSA-C.C.P. Art. 74 (action on an offense or quasi-offense), Art. 76.1 (action on a contract), or Art. 80 (action involving immovable property).
Therefore, we sustain Premier Bank's exception of improper venue and order that the case be transferred to "the proper court," the First Judicial District Court in Caddo Parish.
CONCLUSION
The judgment of the trial court is reversed. The case is hereby transferred to the First Judicial District Court in Caddo Parish. Costs are assessed against the appellees.
REVERSED. CASE TRANSFERRED TO FIRST JUDICIAL DISTRICT COURT, CADDO PARISH.
BROWN, J., concurs with reasons.
To state that this action merely concerns the management of a trust is disingenuous. Distinct claims of fraud, theft, and illegal inside trading are asserted. The allegations contained in the pleadings and documents of record need to be set forth.
Randall F. Marston, Sr. was domiciled in Shreveport. Marston died January 30, 1990. Marston's only marriage ended in divorce and he was survived by one son.
In 1982, Marston executed a last will and testament, which was drafted by T. Haller Jackson, Jr., of the Shreveport law firm of Tucker, Jeter, Jackson Hickman. The bulk of the estate was entrusted to First National Bank of Shreveport, now Premier Bank, to hold in three separate trusts for the benefit of Marston's son and two adult grandchildren. The bank was also designated as executor. The trustee was given complete power to decide what income to pay or whether to invade the principal. The trustee possessed sole discretion to wholly or partially terminate a beneficiary's trust.
When Marston died in 1990, his estate was solvent. A sworn descriptive list of assets and liabilities filed in April 1991 by Premier Bank showed assets of approximately 4.7 million dollars (immovable property and mineral interests — $1.4 million; stocks and bonds — $2.4 million; cash — $348,314; insurance — $8,567; and miscellaneous properties — $491,792).
On the other hand, Marston's debts totaled only $76,221. Administrative expenses, however, were listed as $337,118. These expenses included: $118,054 — Premier Bank's executor's commission; $84,000 — legal fees, Tucker, Jeter, Jackson Hickman; $24,000 — legal fees, a law firm in Mexico; and, $30,062 — appraisal fees.
Marston owned 28,099 shares of Premier Bank's common stock Premier Bancorp, Inc.), which were valued at the time of death (January 1990) at $4.50 per share. Within four months of Marston's death, Premier sold this stock for less than $3.50 a share. It is alleged that at the time of the sale, Premier Bank was secretly involved in negotiations to merge with Banc One and knew that such a merger would substantially increase the value of the stock.
Premier's chief executive officer and chairman of its holding company, George Lee Griffin, was made a defendant in a third amended and supplemental complaint. In the spring of 1990, Griffin is alleged to have conducted secret negotiations with Banc One. The bank's attorney, Frank M. Coats, Jr., was alleged to be providing legal advice to Griffin at this time. It is alleged that when Premier announced in February 1991, that it had acquired new capital from Banc One and given Banc One an option to buy Premier at 125% of its book value, the bank's stock increased to more than $20 per share.
This third amended and supplemental petition was allowed to be filed and made part of the record by the trial court during the pendency of this appeal.
Documents attached to the third amended and supplemental petition contain an affidavit from an officer of Legg Mason (stock brokerage firm) and a copy of correspondence from Coats, who represents Premier in this action. On May 30, 1990, LaBanc Co., described as Premier's investment advisors, sold 14,000 shares of Marston's Premier stock at 3-7/16th. On May 31, 1990, an alleged director of Premier Bank, F. Charles McMains, Jr., purchased through Legg Mason 10,000 shares of Premier stock for $3.50 a share. It is further alleged in the third amended complaint that McMains serves in the state legislature and "since making handsome profits in Premier Bank stocks . . . Representative McMains has 'chosen' to sponsor considerable banking legislation favorable to Premier."
On June 12, 1990, the remaining 14,099 shares of Marston's stock were sold at 3-1/8th. On June 13, 1990, Premier's attorney, Frank Coats, purchased 2,000 shares through his brother, who is a broker for Legg Mason, at $3.25 each for his sons' trusts. Coats states in his letter to plaintiffs' attorney that he resold these shares at $17.75 per share. Coats explained in his correspondence that he "was willing to bet a small amount of my children's money that Premier Bank would make it." Plaintiffs allege that Coats' letter was written only after Premier's opposition to disclosure by Legg Mason was denied. The remaining shares of Marston's Premier stock were allegedly purchased by Premier for the benefit of its employees.
It is alleged that Premier employed extortion and abuse of legal process against trust beneficiaries who complained about Premier's fiduciary practices. It is also alleged that a portion of a 1,666 acre farm owned by Marston in Red River Parish was sold to a Premier preferred customer for considerably less than its appraised value. The remaining allegations, including those concerning Marston's mineral interests in Webster Parish, describe mismanagement claims under the Trust Code.
The issue is venue. Premier argues that the rights and obligations set forth in the Trust Code are exclusive and do not give rise to any tort liability under La.C.C. 2315. Thus, Premier argues that the venue provided in tort is immaterial. Citing no jurisprudence on point, the majority adopts Premier's argument. The majority, however, recognizes that where recovery is sought under different theories, but arising out of the same factual circumstances, venue is proper anywhere allowed under any of the theories alleged. LSA-C.C.P. Art. 45. The Trust Code does not state an exception to this rule nor does it strip trust beneficiaries of their rights under the law of torts.
Clearly, other legal theories are alleged in pleadings in this case; however, these theories are not related to the mineral interest in Webster Parish. Thus, I concur that Webster Parish is not a proper venue.
In oral argument, Premier's attorney stated that the value of Marston's estate has already been reduced by one-half through taxes, administrative fees and legal expenses. Why a trust was needed in the first place is not clear from the limited record. It should be obvious, however, that this litigation, even if the trustee is successful, will deplete the estate. Premier's refusal not to exercise its discretion to terminate the trusts could arguably be tantamount to a breach of fiduciary duty.