Smith v. Suntrust Bank

325 Ga.App. 531

754 S.E.2d 117

SMITH et al.

v.SUNTRUST BANK et al.

No. A13A2256.

Court of Appeals of Georgia.

Jan. 15, 2014.

Certiorari Denied Sept. 8, 2014.

Aitkens & Aitkens, Robert G. Aitkens, Teresa T. Aitkens, Atlanta, Caldwell & Watson, Harry W. Macdougald, for Appellants.

Cohen Pollock Merlin & Small, Kevin Timothy O'Sullivan, Leslie Shane Kehoe, Elizabeth Bloom Hodges, Atlanta, for Appellees.

BARNES, Presiding Judge.

Appellants Rob Smith, Don Smith, Roy Smith, Jr., and Christie Romano are income beneficiaries of a trust created in 1969, and they claim that the trustees breached their fiduciary duties in several respects. Specifically, the appellants claim that the trustees sold the primary asset of the trust to one of the co-trustees and her husband for inadequate consideration in an alleged straw man transaction; that the corporate trustee distributed all of the income in a sub-trust to the same co-trustee in violation of the means-of-support test applicable to the sub-trust; and that the trustees failed to provide them with an annual accounting of the sub-trust as required by the terms of the trust. The trial court held that these claims were barred by the applicable statute of limitation and granted summary judgment to the trustees. On appeal, the appellants argue that the trial court erred in granting summary judgment to the trustees because a genuine issue of material fact exists as to whether the trustees fraudulently concealed their breaches of fiduciary duty, creating a jury issue as to whether the limitation period had been tolled. For the reasons discussed below, we affirm in part, vacate in part, and remand with instruction.

Summary judgment is proper if the pleadings and evidence “show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” OCGA § 9–11–56(c). “A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.” (Citation omitted.) Gayle v. Frank Callen Boys & Girls Club, 322 Ga.App. 412, 745 S.E.2d 695 (2013).

On summary judgment, a trial court is not authorized to resolve disputed issues of material fact. A trial court is authorized only to determine whether disputed issues of material fact remain. If, and only if, no disputed issue of material fact remains is the trial court authorized to grant summary judgment.

(Citation omitted.) Ly v. Jimmy Carter Commons, LLC, 286 Ga. 831, 833(1), 691 S.E.2d 852 (2010). Guided by these principles, we turn to the record in this case.

The Fisher Family Trust. T. Orr Fisher created the Fisher Family Trust (the “Trust”) in 1969 for the benefit of his only child, Emily Fisher Crum, and seventeen other relatives and their lineal descendants. Mr. Fisher named three trustees: Ms. Crum and S. Spencer Linder as the individual trustees and Trust Company of Georgia n/k/a SunTrust Bank (“SunTrust”) as the corporate trustee (collectively, the “Trustees”).

The original corpus of the Trust was a 15 percent interest in real estate located along Clairmont Road and Interstate 85 in DeKalb County, Georgia, known as Century Center (the “Century Center Property”). The Century Center Property is under a 90–year ground lease to an office park developer that was signed in 1968 and expires in 2058. The Century Center Property is comprised of approximately 88 acres of land and now contains a large office park development.

Mr. Fisher specifically provided in the Trust that it was his “wish that the trustees retain the interest in the [Century Center Property],” but that he was “impos[ing] no requirement that the same be retained if the trustees determine that it is wise in view of the purposes of the trust that said interest be disposed of.” The Trust further provided that during the lifetime of Mr. Fisher and his wife, Bessie Fisher, the interest of the Trust in the Century Center Property could not be disposed of by the Trustees “without the permission of those living of [Mr. Fisher] and his wife.”

The Trust established three sub-trusts, referred to by the parties as Trusts A, B, and C. Ten percent of the Trust's interest in the Century Center Property was allocated to Trust A, with the income to be distributed to Mr. Fisher's daughter, Trustee Crum, during her lifetime. Trust A is not at issue in this case. Sixty percent was allocated to Trust B, with the income to be distributed equally among 17 named beneficiaries or their descendants per stirpes. The remaining 30 percent was allocated to Trust C, which had the same beneficiaries as Trust B, but also included Trustee Crum as a beneficiary and was to be administered by the corporate trustee, SunTrust. All or a portion of the income from Trust C was to be distributed

among any one or more of a group consisting of the beneficiaries of [Trust C] as [SunTrust] shall determine necessary for the maintenance, health, support and education of each member of such group, taking into consideration any means of support which any such member is known by [SunTrust] to have, and accumulating any income not so paid.

The Trust further provided that the Trustees “shall each year render an account of their administration of each trust under this instrument to [Mr. Fisher], and if he is not living, to the beneficiaries of a present beneficial interest in each trust hereunder.”

Lastly, the Trust contained a termination provision for Trusts B and C stating that “any trust established by this instrument shall terminate, if it has not previously terminated, twenty-one (21) years after the death of the survivor of the [seventeen named beneficiaries of Trust B] living on the date that this instrument is executed.” The Trust stated that upon termination, the Trustees were to pay “the then remaining principal and undistributed income” of Trusts B and C to the Fisher Foundation, Inc. or to an alternative remainder beneficiary if the foundation was no longer in existence.¹

Mr. Fisher died in August 1969, only a few months after creating the Trust. He was survived by his wife, Bessie Fisher, and by his daughter, Trustee Crum. The four appellants are descendants of one of the original seventeen named beneficiaries of Trust B and C (collectively, the “Appellant Beneficiaries”). ²

Sale of the Century Center Property. The Appellant Beneficiaries contend that a decade after the death of Mr. Fisher, on October 1, 1979, the Trustees, unbeknownst to them, conveyed the Trust's ownership interest in the Century Center Property to Trustee Crum and her husband in a straw man transaction. On that date, the Trustees first conveyed the Trust's 15 percent interest in the Century Center Property to Mr. Fisher's widow, Bessie Fisher, in exchange for $300,000. Deed records reflect that Mrs. Fisher then immediately conveyed her interest in the Century Center Property to Trustee Crum and her husband. The deeds for the two conveyances were signed the same day, had the same witnesses for the signatures of Mrs. Fisher and Trustee Crum, and were recorded within minutes of one another.³

The price paid to the Trust for the Century Center Property was the amount of an appraisal the Trustees had obtained five months earlier. There is no indication in the record that the Century Center Property was otherwise exposed to the market, or that any judicial proceeding was conducted to approve the sale of the Trust's primary asset. The Appellant Beneficiaries presented the affidavit of an expert appraiser who opined that the methodology of the Trust's appraisal was improper and that the Century Center Property had been substantially undervalued at $300,000. The record also includes a letter later written by Trustee Crum and her husband in which they estimated that the income generated from the property upon the expiration of the 90–year ground lease would “be an astronomical figure and could even be great enough to finance the entire operation of a reasonably sized college.”

The trust account statements for Trusts A, B, and C for the fourth quarter of 1979 contain a notation under “Principal Cash Balance” stating that the Century Center Property had been “Sold to Bessie A. Fisher on 10–1–79.” The Trustees allege that the fourth quarter trust account statements were sent to all then-current beneficiaries of Trusts B and C in 1979, including Appellant Beneficiary Rob Smith and Roy Smith, Sr., the father of the remaining three Appellant Beneficiaries.⁴ However, Rob Smith testified that he never received copies of the 1979 account statements and did not learn of the alleged straw man conveyance of the Century Center Property until this litigation commenced in 2011. The Roy Smith Beneficiaries do not deny that their father received the 1979 account statements, but they testified that their father never mentioned the sale of the Century Center Property to them, that they never saw the 1979 account statements themselves, and that they too did not learn of the alleged straw man conveyance until this litigation.

Income Distributions from Trust C. As previously noted, under the terms of the Trust, SunTrust as corporate trustee was to pay all or a portion of the income from Trust C to one or more of the beneficiaries for their maintenance, health, support, and education, taking into consideration their other means of support. Despite the means test applicable to distributions from Trust C, Trustee Crum requested from SunTrust that she be paid all of the net income from Trust C to the exclusion of the remaining seventeen beneficiaries because she had advanced funds to help pay the state and federal taxes levied on the estate of her father, Mr. Fisher, following his death in 1969. SunTrust granted her request and distributed the net income from Trust C solely to Trustee Crum on a semiannual basis from the Trust's inception until 1989 without any...