Mary Kirgan v. Manufacturers & Traders Trust ( 2020 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 19-1009
MARY ANNE KIRGAN, as successor trustee of the Clarence Manger and Audrey
Cordero Plitt Trust; ROBERT S. KIRGAN, as successor trustee of the Clarence
Manger and Audrey Cordero Plitt Trust,
Plaintiffs - Appellants,
v.
MANUFACTURERS AND TRADERS TRUST COMPANY, d/b/a M&T Bank,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern District of Virginia, at
Alexandria. Claude M. Hilton, Senior District Judge. (1:17-cv-00327-CMH-TCB)
Submitted: March 19, 2020 Decided: April 17, 2020
Before WILKINSON, QUATTLEBAUM, and RUSHING, Circuit Judges.
Affirmed by unpublished opinion. Judge Wilkinson wrote the opinion, in which Judge
Rushing joined. Judge Quattlebaum wrote an opinion concurring in part and dissenting in
part.
Michael S. Nadel, MCDERMOTT WILL & EMERY LLP, Washington, D.C., for
Appellants. John C. Hayes, Jr., Brian J. Whittaker, NIXON PEABODY LLP, Washington,
D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
WILKINSON, Circuit Judge:
In this appeal, we determine whether the individual trustees of a charitable trust may
remove the corporate trustee without cause. The individual trustees argue that, while they
could remove the original corporate trustee only for cause, a merger has made this
restriction inapplicable. In contrast, the corporate trustee argues that, by virtue of a merger,
it has inherited both the rights and obligations of the original corporate trustee—including
the right to be free from removal without cause.
We agree with the corporate trustee, as did the court below. The individual trustees
here lack the power to remove the current corporate trustee without cause. Several related
issues appealed by the individual trustees are also without merit. For this reason, we affirm
the district court’s holdings in full.
I.
A.
Clarence Plitt, a Maryland resident, executed a will in 1976 and passed away later
that year. In his will, Plitt created the Clarence Manger and Audrey Cordero Plitt Trust (the
“Plitt Trust”), a charitable trust which provides educational institutions with grants to be
used for need-based loans to students. The will named Plitt’s longtime domestic partner
Mary E. McC. Kirgan (“Mary Kirgan”) as individual trustee and the First National Bank
of Maryland (“First National”) as corporate trustee. It further directed that, once Mary
Kirgan stepped down, two individual trustees would serve along with the corporate trustee.
The will spoke briefly to the individual trustees’ ability to remove the corporate
trustee:
3
The individual Trustees serving at any time hereunder may by their joint
action, change any corporate Trustee serving hereunder and appoint a new
successor corporate Trustee to serve in its place and stead. Such action shall
be effective upon their delivery of a written instrument to the current
corporate Trustee evidencing their decision to terminate its position and
status as corporate Trustee and designating and appointing a new successor
corporate Trustee.
J.A. 94 (emphasis added). No other references to a “successor corporate Trustee” are found
in the will. See J.A. 90-94.
Around a decade later, Mary Kirgan and First National jointly petitioned the Circuit
Court for Baltimore City to, among other things, have the will “clarified to provide that the
Corporate Trustee may only be removed ‘for cause.’” J.A. 95-96. The court agreed to this
request, issuing an order—using exact wording suggested by the petitioning parties—
declaring “that the individual Trustees acting jointly pursuant to [the will] do not have the
power to remove the originally named corporate Trustee, except for cause,” (the “1985
order”). J.A. 104; see also J.A. 100.
A detailed review of First National’s corporate history is not needed to understand
this case. Suffice it to say, for almost two decades after issuance of the 1985 order, Mary
Kirgan and a member of the First National corporate family served without issue as trustees
for the Plitt Trust. Two pieces of information are relevant for our purposes. First, in the late
1990s, First National changed its name to Allfirst Bank. Second, in 2003, Allfirst merged
with the Manufacturers and Traders Trust Company (“M&T Bank”), setting the stage for
the current dispute.
At the time of the merger, Mary Kirgan remained individual trustee for the Plitt
Trust. She was sent a notice regarding the Allfirst-M&T merger, which informed her that
4
M&T had assumed the position of “successor fiduciary” for the trust and outlined her
ability to object to its appointment. J.A. 107-108. Over a month later, Kirgan’s attorney
sent M&T a letter requesting that the bank “acknowledge and agree that [Kirgan] . . . and
thereafter the successor trustees . . . have the right to replace the corporate trustee including
M&T Bank as co-trustee with or without cause.” J.A. 109-10 (emphasis added). The letter
included specified language to this effect, and requested that M&T include that exact
language in its response. It also indicated that Kirgan would not object to M&T’s
appointment if she received a satisfactory response from the bank.
Soon after, M&T sent a letter to Mary Kirgan addressing the individual trustees’
removal power. This letter stated that, “[a]t such time as more than one individual co-
trustee is serving, the individual co-trustees, acting jointly, have the power to remove and
replace M&T (or any other successor corporate co-trustee that may be serving from time
to time).” J.A. 114. Notably, M&T’s response did not include Kirgan’s requested language
allowing M&T’s removal “without cause.” Despite this omission, Kirgan did not object to
M&T’s appointment.
Mary Kirgan passed away the following year. Her children, Mary Anne Kirgan and
Robert Kirgan (“the Kirgans”), became successor individual trustees of the Plitt Trust.
Over a decade later, in 2015 and 2016, M&T raised some concerns about the Kirgans’
management of the trust and compensation level. Soon after, in late 2016, the Kirgans sent
M&T a letter stating that they had elected to remove it as corporate trustee and to replace
it with a local bank. M&T responded that it was “unable to comply” with this request
5
because, under the 1985 order, “the individual Trustees may only remove the Corporate
Trustee for cause.” J.A. 55.
B.
The Kirgans filed suit in the United States District Court for the Eastern District of
Virginia. They brought five counts: (I) a request for a declaratory judgment that they had
the power to remove M&T as corporate trustee without cause, and had already done so;
(II) alternatively, a request for the court to remove M&T as corporate trustee for cause;
(III) a breach of contract claim, alleging that M&T had violated an agreement it made with
Mary Kirgan in correspondence following the Allfirst merger; (IV) a breach of fiduciary
duty claim; and (V) a fraud claim based on the same conduct underlying the breach of
contract claim. 1 The Kirgans’ complaint concluded with a demand for a jury trial “on all
issues so triable.” J.A. 46.
The district court resolved Count I in M&T’s favor, holding from the bench that
M&T could not be removed as corporate trustee without cause. The court noted that the
original corporate trustee, First National, could be removed only for cause. It held that
M&T, as a “successor trustee” under Maryland law, had “all of the rights, powers, duties,
and obligations of the original trustee. And so therefore, the removal for cause applies to
the substitute trustee just as it did the original trustee, so the substitute trustee has to be
removed for cause.” J.A. 370-71.
1
M&T brought several counterclaims against the Kirgans, which were resolved by
the district court below and are not relevant to this appeal.
6
Counts III and V, for breach of contract and fraud, were settled in M&T’s favor on
summary judgment. The district court disagreed with the Kirgans’ assertion that the
communications between Mary Kirgan and M&T following the Allfirst merger created a
contract allowing for the bank’s removal without cause. The court found instead that there
was no contract, because “there was never any kind of meeting of the minds or any offer
or acceptance that comes through” in the two relevant letters. J.A. 371. Likewise, the court
disagreed that M&T’s post-merger communications contained false representations,
instead finding “no evidence of any kind of fraud.” J.A. 371.
The district court held a bench trial on Counts II and IV, the request that it remove
M&T as trustee for cause and the breach of fiduciary duty claim. The court once again
found in M&T’s favor. On Count II, the court held “that M&T’s actions, taken in whole,
do not warrant cause for removal.” J.A. 1049. Similarly, on Count IV, the court found that
M&T did not breach its fiduciary duty.
The Kirgans now appeal three issues. First, they allege that the district court erred
in holding that they can remove M&T only for cause. Second, they argue that the court
erred by granting summary judgment on the breach of contract and fraud claims. Third,
they claim the court erred by failing to submit the breach of fiduciary duty claim to a jury.
II.
The Kirgans argue that, under the terms of the will and the 1985 order, they may
remove M&T as corporate trustee without cause. This is a pure question of law, subject to
de novo review. United States v. Hall, 972 F.2d 67, 69 (4th Cir. 1992).
7
To make their case, the Kirgans first point to the will, which states that the individual
trustees may “change any corporate Trustee serving hereunder and appoint a new successor
corporate Trustee to serve in its place and stead,” seemingly without requiring cause. J.A.
94. They next direct our attention to the 1985 order, which states that the individual trustees
“do not have the power to remove the originally named corporate Trustee, except for
cause.” J.A. 104. The Kirgans argue that the combined effect of these documents is clear—
they can remove any corporate trustee, except First National, without cause.
The Kirgans’ argument fails for one reason: it ignores that the will and the 1985
order must be interpreted against the backdrop of laws ensuring the continuity of fiduciary
obligations following a merger. These laws show that, by buying out “the Maryland bank
who was the original trustee,” M&T now “stand[s] in the position of the original trustee.”
See J.A. 323. As such, M&T has the same “rights, powers, duties, and obligations” as First
National, including the right to be free from removal without cause. See Md. Code Ann.,
Est. & Trusts § 15-1A-02(b) (West).
Stepping back for a moment, we note that banks cannot merge their way out of
fiduciary obligations. See, e.g., Md. Code Ann., Fin. Inst. § 3-712(c) (West); Md. Code
Ann., Corps. & Ass’ns, § 3-114(e)-(f) (West); 12 U.S.C. § 215a(e)-(f). The mischief that
could occur if merging banks inherited assets, but not obligations or duties, is self-evident.
This truism, however, operates as a two-way street. Just as banks obtain obligations and
duties through merger, they also obtain corresponding rights and powers. Inherited rights
ultimately dictate the result in this case.
8
Because Maryland law controls here, we look to it to determine M&T’s fiduciary
status and rights post-merger. Under the Maryland Code Estates and Trusts, M&T is a
“successor fiduciary” of First National. This code defines a “successor fiduciary” to include
“a corporate fiduciary that is substituted for another corporate fiduciary under the
provisions of § 15-1A-02 of this subtitle, by reason of . . . [a] merger.” Md. Code Ann.,
Est. & Trusts § 15-1A-01(h) (West). Here, M&T merged with corporate fiduciary Allfirst,
which was itself successor fiduciary to First National.
Section 15-1A-02, for its part, outlines the process for such a substitution: “a
successor fiduciary shall be substituted as a fiduciary for its predecessor corporate
fiduciary, immediately upon the adoption of a corporate resolution” to this effect. Md.
Code Ann., Est. & Trusts § 15-1A-02(a). While seeming to concede that M&T is a
successor fiduciary, the Kirgans argue that there is no evidence of a corporate resolution
sufficient to show M&T’s substitution for Allfirst under § 15-1A-02(a).
This gets it wrong. Section 15-1A-01(h) indicates that substitution can occur “by
reason of . . . [a] merger.” In other words, the merger, and corresponding papers enacting
it, may serve as a corporate resolution of substitution. Any other interpretation—in addition
to violating the basic principle that fiduciary status transfers with mergers—would create
inconsistencies within Maryland law. See, e.g., Md. Code Ann., Fin. Inst. § 3-712(c)
(stating that after a bank merger, “[t]he [combined entity] has the same powers that each
constituent bank had as to any property held in any fiduciary capacity, without any deed,
transfer, or other action”) (emphasis added). Here, documentation of the M&T-Allfirst
9
merger found in the record is sufficient to satisfy the requirements of § 15-1A-02(a). See
J.A. 202-14. 2
As successor fiduciary, M&T has clearly delineated rights under Maryland law.
Two provisions of the Maryland Code Estates and Trusts are relevant here. The first
provision specifies that, as successor fiduciary, M&T “shall have all the rights, powers,
duties, and obligations of the predecessor corporate fiduciary.” Md. Code Ann., Est. &
Trusts § 15-1A-02(b). This provision makes clear that, under the 1985 order, M&T has the
same right to be free from without-cause removal as predecessor fiduciaries Allfirst and
First National.
The second provision goes even further. It states that, as successor fiduciary, M&T
“shall be deemed named as fiduciary in any writing, including a will, trust, court order, or
similar document or instrument that names the predecessor corporate fiduciary as fiduciary,
whether executed before or after the successor fiduciary is substituted, unless the writing
expressly provides otherwise.” Md. Code Ann., Est. & Trusts § 15-1A-02(c). Thus, after
the merger, the will must be read to refer to M&T anywhere that First National is named.
In effect, the will now states that, “[t]he original Trustees of this trust shall be THE
MANUFACTURERS AND TRADERS TRUST COMPANY and MARY E. McC.
2
Even if more were needed, M&T provided notice of the merger to Mary Kirgan.
Its notice, which referenced Section 15-1A of the Maryland Code Estates and Trusts,
stated: “This is to advise you that effective June 13, 2003, Allfirst Trust Company, National
Association was merged with Manufacturers and Traders Trust Company. By virtue of that
merger, Manufacturers and Traders Trust Company has assumed the fiduciary duties of
Allfirst Trust Company, National Association.” J.A. 107-108. This notice itself appears
sufficient to show a corporate resolution of fiduciary substitution.
10
KIRGAN.” See J.A. 93. The 1985 order clarifies “that the individual Trustees acting jointly
pursuant to [the will] do not have the power to remove the originally named corporate
Trustee, except for cause.” J.A. 104. In sum, § 15-1A-02(c) ensures that M&T, like First
National, cannot be removed without cause.
Nothing in the will or the 1985 order “expressly provides” that § 15-1A-02(c)’s
naming provision is inapplicable to a successor by merger. When debating this point, the
parties occasionally appear hung up on the semantics of whether M&T is the original
corporate trustee versus whether it should be treated as the original corporate trustee. This
is a distinction without a difference. Maryland law provides that M&T stands in the shoes
of original corporate trustee First National. Nothing in the will or the 1985 order provides
otherwise.
The Kirgans assert that the will does provide otherwise, by allowing them to remove
a successor corporate trustee without cause. This argument, based on a faulty premise, fails.
No one is arguing that the Kirgans lack the power to remove a “successor corporate
trustee,” as defined by the will, without cause. The problem for the Kirgans is that M&T is
not a “successor corporate trustee” under the terms of the will. The will indicates that a
“successor corporate trustee” is one appointed by the individual trustees after their removal
of the prior corporate trustee. See J.A. 94. M&T does not satisfy this definition, because it
was not appointed by the Kirgans after removal of a prior corporate trustee. Instead, it
inherited its position as trustee through merger.
M&T’s status as a “successor fiduciary” under Maryland law does not somehow
convert it to a “successor corporate trustee,” subject to removal without cause, under the
11
will. Maryland law ensures the opposite result: by requiring that M&T be treated as the
original corporate trustee, it provides M&T freedom from removal without cause. 3
III.
The Kirgans next argue that the district court erred in granting summary judgment
for M&T on the breach of contract and fraud claims. “Summary judgment is appropriate
only when there is no genuine issue as to any material fact and the moving party is entitled
to a judgment as a matter of law.” Evans v. Techs. Applications & Serv. Co., 80 F.3d 954,
958 (4th Cir. 1996) (quotation omitted). In our review, we draw all reasonable inferences
in favor of the Kirgans as non-moving party. Roe v. Doe, 28 F.3d 404, 406-407 (4th Cir.
1994). We find, once again, that the district court did not err.
A.
The Kirgans argue that, after the Allfirst merger, communications between M&T
and Mary Kirgan created a contract allowing the individual trustees to remove M&T as
corporate trustee without cause. The Kirgans follow that, at the very least, these
communications show substantial evidence of a contract such that the breach of contract
claim should have gone to a jury instead of being resolved on summary judgment.
When granting summary judgment for M&T, the district court described why no
reasonable jury could have found a contract created by the post-merger letters:
3
The Kirgans’ assertion that M&T, due to its post-merger communications, is
estopped from arguing that it cannot be removed without cause under the terms of the will
and the 1985 order is discussed infra Section III.
12
There just isn’t sufficient evidence to make such a finding.
I think it’s clear after studying both of these letters that these were
discussions between the parties about the trustee and maybe some other
issues as well, but there was never any kind of meeting of the minds or any
offer or acceptance that comes through . . . .
J.A. 371.
When Mary Kirgan and her attorney reached out to M&T, they requested that the
bank “acknowledge and agree” that the individual trustee or trustees had the power to
remove it “with or without cause.” J.A. 109. Their letter contained specified language to
this effect, and requested that M&T include that exact language in its response.
M&T’s response did not contain the requested language. Nor did it address the
trustees’ ability to remove the corporate trustee without cause. It acknowledged, instead,
that “[a]t such time as more than one individual co-trustee is serving, the individual co-
trustees, acting jointly, have the power to remove and replace M&T.” J.A. 114. For all
intents and purposes, M&T’s letter tracked language in the will without elaboration; it
certainly did not address without-cause removal or the impact of the 1985 order on the will.
Because there was no meeting of the minds on the individual trustees’ power to remove
M&T without cause, no contract concerning this power was created. See Pavel Enters.,
Inc. v. A.S. Johnson Co., 674 A.2d 521, 531 (Md. 1996).
Even if there had been a meeting of the minds, there is a second reason to be wary
of finding an enforceable contract here. As discussed supra Section II, the combined effect
of the will and the 1985 order prevents M&T from being removed as corporate trustee
without cause. As such, Mary Kirgan’s letter to M&T after the Allfirst merger was, in
13
effect, a request to modify the terms of the trust. Maryland law, understandably,
discourages trustees from altering the terms of a trust without court involvement.
Maryland law provides that “ordinarily, trustees should seek prior approval of the
court before deviating from the precise terms of the [trust] instrument.” Gordon v. City of
Baltimore, 267 A.2d 98, 111 (Md. 1970). Further, a court is not required to accept changes
that trustees agree to amongst themselves. Id. This likely explains why, in 1985, the trustees
jointly petitioned the Circuit Court for Baltimore City to modify the terms of the Plitt Trust
rather than attempting to do so themselves through contract.
Even courts lack the power to modify the terms of a trust unless “facts and
circumstances exist that could not have been foreseen by the testator and that as a result of
that lack of foresight, the beneficiary will suffer loss.” Probasco v. Clark, 474 A.2d 221,
223 (Md. Ct. Spec. App. 1984); see also Shriners Hosps. for Crippled Children v. Md.
Nat’l Bank, 312 A.2d 546, 551-52, 555-56 (Md. 1973). It can hardly be said that bank
mergers are unforeseeable. Nor does granting the individual trustees enhanced removal
power unambiguously support the trust’s beneficiaries and mission. Because a court would
have lacked the power to modify the terms of the Plitt Trust as requested by Mary Kirgan
after the merger, the trustees acting alone certainly would have lacked the ability to do so
through contract.
B.
The district court did not err by granting summary judgment for M&T on the fraud
claim. This claim, which was based on the same post-merger communications as the breach
of contract claim, must fail for similar reasons. Just as there was no evidence of a meeting
14
of the minds as needed for a breach of contract claim, there is no evidence of a false
representation as needed for a fraud claim. Hoffman v. Stamper, 867 A.2d 276, 292 (Md.
2005). As the district court noted, the post-merger communications simply do not provide
“evidence of any kind of fraud.” J.A. 371. M&T, in response to Mary Kirgan’s letter,
summarized an undisputed provision of the will without elaboration. This is not a false
representation.
Similarly, M&T is not estopped from arguing that it cannot be removed as corporate
trustee without cause. Because M&T’s communications with Mary Kirgan never promised,
or even suggested, that it could be removed without cause, neither the promissory nor
equitable estoppel requirements are met. Pavel Enters., 674 A.2d at 532; Knill v. Knill, 510
A.2d 546, 549-50 (Md. 1986).
IV.
Before the district court, the Kirgans asserted that M&T breached its fiduciary duty
under Maryland law. The Kirgans sought compensatory and punitive damages for the
alleged breach. The district court, after conducting a bench trial, found no breach. The
Kirgans argue on appeal that the court erred when it conducted a bench trial on this claim
instead of sending it to a jury. We review a party’s claim that it was denied its right to a
jury trial de novo. Pandazides v. Va. Bd. of Educ., 13 F.3d 823, 827 (4th Cir. 1994). We
conclude here that the district court did not err by holding a bench trial.
“It is firmly established that the Seventh Amendment right to trial by jury attaches
to civil actions that are legal, not equitable, in nature.” Fowler v. Land Mgmt. Groupe, Inc.,
978 F.2d 158, 163 (4th Cir. 1992). The Kirgans argue that their breach of fiduciary duty
15
claim is legal, despite conceding that their Count II claim—requesting M&T’s for-cause
removal for, in essence, breaching its fiduciary duty—is equitable. The district court held
that the breach of fiduciary duty claim also “lies in equity.” J.A. 371-72. We agree.
To determine whether a state-created claim is legal or equitable in a diversity case,
we look to federal law, Simler v. Conner, 372 U.S. 221, 222 (1963) (per curiam), which
supplies a two-part test, Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42 (1989). First,
we compare the “action to 18th-century actions brought in the courts of England prior to
the merger of the courts of law and equity.” Granfinanciera, 492 U.S. at 42 (quotation
omitted). This first part weighs against the right to a jury trial here, since, as a general rule,
“breach of fiduciary duty claims were historically within the jurisdiction of the equity
courts.” Pereira v. Farace, 413 F.3d 330, 338 (2d Cir. 2005).
“Second, we examine the remedy sought and determine whether it is legal or
equitable in nature.” Granfinanciera, 492 U.S. at 42 (quotation omitted). This second part
weighs even more strongly against the right to a jury trial than the first. As noted above,
the Kirgans’ breach of fiduciary duty claim arises under Maryland law. A federal court
“adjudicating a State-created right”—such as this one—“solely because of the diversity of
citizenship of the parties . . . cannot afford recovery if the right to recover is made
unavailable by the State.” Guar. Tr. Co. v. York, 326 U.S. 99, 108-109 (1945); see also
Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 407-408 (2010)
(plurality). We must therefore look to Maryland law to determine the remedies available
for a breach of fiduciary duty claim.
16
Although the Kirgans purport to seek legal relief, compensatory and punitive
damages, Maryland law dictates that only equitable relief is available for this claim. When
the Kirgans bring a breach of fiduciary duty claim against co-trustee M&T, they do so on
behalf of the trust’s beneficiaries, or, to be more precise here, on behalf of the trust and its
potential beneficiaries. See Appellants’ Opening Br. at 24; see also Killen v. Houser, 210
A.2d 527, 531 (Md. 1965); Restatement (Second) of Trusts § 200 cmts. a, e (1959). As a
result, the Kirgans are bound by the same limitations as a beneficiary bringing a claim
against a trustee. See Killen, 210 A.2d at 531; Restatement (Second) of Trusts § 200; id. at
§§ 197-99.
Maryland law dictates that “the remedies of the beneficiary against the trustee are
exclusively equitable,” subject to “exceptions . . . [which] arise where the trustee’s duty is
immediately and unconditionally to pay money or to transfer a chattel to the beneficiary.”
Kann v. Kann, 690 A.2d 509, 516 (Md. 1997) (quotation omitted); see also Restatement
(Second) of Trusts § 198. Since neither exception is applicable here, the Kirgans’ breach
of fiduciary duty claim, brought against a trustee under Maryland law, may seek only
equitable relief.
Because the Kirgans cannot convert an equitable claim into a legal one by seeking
unavailable relief, their breach of fiduciary duty claim is, by default, equitable in nature.
There was no right to a jury trial on this claim.
***
For the reasons set forth above, the Kirgans’ appeals lack merit. We thus affirm the
judgment of the district court.
17
AFFIRMED
18
QUATTLEBAUM, Circuit Judge, concurring in part and dissenting in part:
I am pleased to join in much of the majority’s analysis. I agree that the district court
properly granted summary judgment in favor of M&T Bank on the breach of contract and
fraud claims. 1 I also agree that the district court did not err in not submitting the breach of
fiduciary duty claim to a jury.
However, I write separately on the narrow issue of the district court’s declaratory
judgment ruling that the Kirgan children, as individual trustees of the Plitt trust, may only
remove M&T Bank for cause. Because I do not think Maryland fiduciary law compels the
result reached by the district court and because I think Mr. Plitt’s will unmistakably
empowers the individual trustees to remove the corporate trustee with or without cause, I
would reverse the district court on this issue and hold that the Kirgan children may remove
M&T Bank with or without cause.
1
While I would affirm the district court’s grant of summary judgment in favor of
M&T Bank on the breach of contract claim, I would do so for a slightly different reason
than the majority. The record indicates that there is a genuine issue of material fact as to
whether Mary Kirgan and M&T Bank reached a meeting of the minds concerning her
removal power in 2003. M&T Bank’s own internal document described an agreement
between Mary Kirgan and M&T Bank to that effect, noting “[r]ather than get involved in
a lawsuit, we signed an agreement that Mrs. Kirgan could remove us as Trustee without
any cause, whereas the previous court order required cause for removal.” J.A. 115. At a
minimum, this evidence raises a genuine issue of material fact as to a meeting of the minds.
However, like the majority, I conclude that, even if there was a meeting of the minds in
2003, Mary Kirgan and M&T Bank could not modify the terms of the will or trust through
contract. Consequently, the district court was correct to grant summary judgment in favor
of M&T Bank on the breach of contract claim.
19
I.
Before explaining why I would reverse the district court’s declaratory judgment
ruling, some background is in order. I begin, where we should, with the terms of Clarence
Plitt’s will, which authorized the creation of the Plitt trust. Although much attention has
rightly been given to the arguments of the Kirgan children and M&T Bank as trustees, I
fear we have overlooked the original intent of Mr. Plitt—the trust’s creator.
Mr. Plitt executed his will in 1976. In it, he authorized the creation of the trust for
the laudable purpose of providing grants to educational institutions to make need-based
student loans. In the will, Mr. Plitt outlined the responsibilities of the trustees on a variety
of matters, ranging from the trustees’ role in providing charitable disbursements to
educational institutions to the removal power of the individual trustees at issue here. From
the language of the will, his intent as testator on the issue before us—the ability of the
individual trustees to remove the corporate trustee—is plain. Mr. Plitt intended that the
individual trustees, acting jointly, should be able to remove the corporate trustee with or
without cause. Item Four L. of the will provides that the individual trustees “may by their
joint action, change any corporate Trustee serving hereunder and appoint a new successor
corporate Trustee to serve in its place and stead.” J.A. 94. This provision places only one
limitation on the individual trustees’ removal power—the requirement that the individual
trustees act jointly to remove the corporate trustee. It imposes no additional limitations. It
certainly cannot be read to impose a for cause limitation on their removal power. Perhaps
recognizing the clear language of the will, M&T Bank does not and cannot argue that its
position is supported by Mr. Plitt’s intent as testator. It instead relies solely on the 1985
20
order. Setting aside the effect of the 1985 order for now, under the plain language of the
will, it is clear Mr. Plitt intended that the individual trustees “may by their joint action”
remove the corporate trustee with or without cause.
To me, starting the analysis with Mr. Plitt’s intent is critical. Under Maryland law,
the paramount concern of a court in interpreting a will is “to ascertain and effectuate the
testator’s intent.” Pfeufer v. Cyphers, 919 A.2d 641, 645 (Md. 2007) (quoting Emmert v.
Hearn, 522 A.2d 377, 379 (Md. 1987)). Ordinarily, the testator’s expressed intent is
discerned from the four corners of the will itself, giving the words of the will their plain
meaning. Id. So far as possible, I believe our decisions concerning the dispute between the
Kirgans and M&T Bank should be made with Mr. Plitt’s intent in mind.
II.
I turn next to the effect of the 1985 Maryland court order. Almost a decade after
Mr. Plitt died, the originally named individual trustee—Mary Kirgan—and the originally
named corporate trustee—the First National Bank of Maryland—petitioned the Circuit
Court of Baltimore City for the will to be “clarified to provide the Corporate Trustee may
only be removed ‘for cause.’” J.A. 95–96. The reasons for this petition are not clear from
the record. But what is clear is that, while the petitioners claimed to only seek a clarification
of the terms of the will, the effect of the 1985 petition and order is actually a change or a
modification of the terms of the will itself—a change inconsistent with the plain language
of Mr. Plitt’s will.
21
Importantly, under Maryland law, “[i]t is clear beyond question that subject to rare
exception a court of equity has no power to rewrite or amend a decedent’s will.” Shriners
Hosps. for Crippled Children v. Md. Nat’l Bank, 312 A.2d 546, 573 (Md. 1973) (internal
quotation marks omitted). Likewise, a court may modify a trust only if “facts and
circumstances exist that could not have been foreseen by the testator and that as a result of
that lack of foresight, the beneficiary will suffer loss.” Probasco v. Clark, 474 A.2d 221,
223 (Md. Ct. Spec. App. 1984). Courts have traditionally been reluctant to modify a trust
because they attempt to effectuate the wishes of the settlor, recognizing that a settlor “can
dispose of his property as he likes; his wishes in creating the trust being paramount to the
wishes of the beneficiaries.” Id. The majority summarizes this law well. “Even courts lack
the power to modify the terms of a trust unless ‘facts and circumstances exist that could
not have been foreseen by the testator and that as a result of that lack of foresight, the
beneficiary will suffer loss.’” Maj. Op. at 14 (quoting Probasco, 474 A.2d at 223).
Despite the high standard of giving priority to the intent of the testator or settlor in
modifying the terms of the will or the trust, the Maryland court granted the petition of Mary
Kirgan and the First National Bank of Maryland. It declared that “the individual Trustees
acting jointly pursuant to Item Four L. of the Last Will and Testament of Clarence M. Plitt
do not have the power to remove the originally named corporate Trustee, except for cause.”
J.A. 104.
Frankly, I have concerns about whether the 1985 order properly falls within the
standards set forth under Maryland law for modifying wills and trusts. But that issue is not
before us and, in the interest of comity, I do not challenge the validity of that state court
22
order. Nevertheless, in resolving the dispute that is before us, the 1985 order should be
construed narrowly in light of Mr. Plitt’s intent and the general presumption against
modifications of wills and trusts under Maryland law. 2 With these considerations in mind,
I turn to district court’s holding that the will, as modified by the 1985 order, provides that
M&T Bank may only be removed for cause.
III.
The district court’s holding appears to be largely based on provisions of Maryland
estates and trust law. The court first found that M&T Bank was a “successor trustee” under
Maryland law. J.A. 370. It then found that M&T Bank, as a successor trustee, should be
substituted for First National Bank of Maryland in the will and in the modification of the
will set forth in the 1985 order. Accordingly, the district court held the will, as modified,
provides that the Kirgan children do not have the power to remove M&T Bank, except for
cause.
Although the district court did not explain its reasoning in detail, it seemed to rely
on Section 15-1A-02 of the Maryland Code, Estates and Trusts, which was enacted in 1989,
2
An additional reason for narrowly construing the 1985 order can be found in Item
One of Plitt’s will, which provides “I direct that no Court of Law or Equity shall take or
have any jurisdiction pertaining to the administration of my estate or the trust created
hereunder other than as may be required by law; and in the event that the said estate or trust
become subject to the jurisdiction of such court in connection with any particular matter, I
desire that jurisdiction to cease and terminate after the court has decided or resolved that
matter.” J.A. 90.
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thirteen years after Mr. Plitt executed his will, in reaching this conclusion. 3 Three
provisions of Section 15-1A-02 are potentially relevant to the district court’s analysis. First,
Section 15-1A-02(a) provides, “a successor fiduciary shall be substituted as a fiduciary for
its predecessor corporate fiduciary, immediately upon the adoption of a corporate
resolution by both the successor fiduciary and the predecessor corporate fiduciary
providing for the substitution.” Md. Code Ann., Est. & Trusts § 15-1A-02(a). Second,
Section 15-1A-02(b) provides a successor fiduciary “shall have all the rights, powers,
duties, and obligations of the predecessor corporate fiduciary.” Md. Code Ann., Est. &
Trusts § 15-1A-02(b). And third, Section 15-1A-02(c) provides a successor fiduciary “shall
be deemed named as fiduciary in any writing, including a will, trust, court order, or similar
document or instrument that names the predecessor corporate fiduciary as fiduciary,
whether executed before or after the successor fiduciary is substituted, unless the writing
expressly provides otherwise.” Md. Code Ann., Est. & Trusts § 15-1A-02(c).
But under Section 15-1A-02, M&T Bank should not be substituted for the
“originally named corporate Trustee” in the 1985 order. First, the statute was enacted
thirteen years after Mr. Plitt’s will was executed and four years after the 1985 order was
issued. Generally, under Maryland law, statutes are presumed to apply prospectively unless
the legislature clearly expresses an intent that the statute apply retroactively. See Pautsch
v. Maryland Real Estate Comm’n, 31 A.3d 489, 509 (Md. 2011). Section 15-1A-02
3
The district court appeared to invoke the language of Section 15-1A-02(b) in
reaching this holding.
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contains no express language applying the statute retroactively. Consequently, I question
its retroactive application to a will and an order that substantially pre-dates its date of
enactment.
Second, even if that statute applies to the will and the order, the district court did
not give proper consideration to subsection (c), which provides that a successor fiduciary
should not be substituted for a predecessor fiduciary if “the writing expressly provides
otherwise.” Md. Code Ann., Est. & Trusts § 15-1A-02(c). The will and the 1985 order
expressly provide otherwise, especially when the two documents are construed together.
Mr. Plitt’s will distinguishes between categories of trustees. Some portions of the
will broadly reference corporate trustees and individual trustees generally. See J.A. 94.
These broad references can be construed to include not only the identified, original trustees
but also any future trustees. However, other portions of the will reference specific,
identifiable trustees, such as the original corporate trustee—the First National Bank of
Maryland. See J.A. 93. Thus, through its own terms, the will distinguishes between broad
categories of present and future trustees and more specific categories of present,
identifiable trustees.
These distinctions are important in interpreting the 1985 order, which for the reasons
discussed above, should be construed narrowly. As previously noted, the 1985 order
modified Item Four L. of the will, which provides that “[t]he individual Trustees serving
at any time hereunder may by their joint action, change any corporate Trustee serving
hereunder and appoint a new successor corporate Trustee to serve in its place and stead.”
J.A. 94. This provision references a broad category of corporate trustees, encompassing
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not only the present corporate trustee but also any future corporate trustees, such as M&T
Bank. The 1985 order modified this provision to provide that “the individual Trustees
acting jointly pursuant to Item Four L. of the Last Will and Testament of Clarence M. Plitt
do not have the power to remove the originally named corporate Trustee, except for cause.”
J.A. 104. In contrast to the will’s broad language, the 1985 order expressly limited its effect
to a single, identifiable trustee—the originally named corporate trustee, the First National
Bank of Maryland. The district court’s decision that M&T Bank should be substituted for
the originally named corporate trustee fails to give proper consideration to the very narrow
modification of the will declared in the 1985 order.
The significance of this narrow modification is highlighted when compared to Mary
Kirgan and the First National Bank of Maryland’s petition to the Baltimore court. They
petitioned the court to clarify that Item Four L. of the will allowed “the Corporate Trustee”
to be removed only for cause. J.A. 96. In other words, they sought a broad modification
that would apply to any corporate trustee, not just the originally named corporate trustee.
Had the Baltimore court granted that request, the district court might have been correct
here. 4 But the court declined to adopt such a broad modification, limiting the “for cause”
modification to the “originally named corporate Trustee.” J.A. 104. This narrow language
expresses an intent that the requirement of cause for removal—which once again is
contrary to the original language of Mr. Plitt’s will—only apply to the originally named
4
Of course, granting that request would be even further at odds with Mr. Plitt’s
intent and might, for that reason, be questionable under Maryland law.
26
corporate trustee. Thus, the 1985 order should be viewed as exclusively applying to the
First National Bank of Maryland and not to any other corporate trustee. Whether or not
M&T Bank is a successor trustee or a successor fiduciary, it certainly was not the originally
named corporate trustee. To substitute M&T Bank for the originally named corporate
trustee would conflict with the express and specific language in the 1985 order.
Given the will’s careful distinctions between categories of trustees, the 1985 order’s
narrow language and the history of the 1985 petition, I would conclude that the will and
1985 order, taken together, expressly provide that M&T Bank should not be substituted for
the First National Bank of Maryland in the will or 1985 order. To be sure, the 1985 order
could have been more specific. For example, it could have said that that only the First
National Bank of Maryland may be removed for cause and any successor fiduciary to it by
virtue of a merger may be removed with or without cause. But Section 15-1A-02(c), even
if it applies, cannot be expected to require such precision, especially with respect to
documents executed years before the statute’s effective date. Reading the will and 1985
order together, and giving proper deference to the intent expressed by Mr. Plitt, the 1985
order applies only to the First National Bank of Maryland. M&T Bank may be removed
with or without cause under the terms of the will.
IV.
My view on the powers of the individual trustees to remove the corporate trustee is
not and should not be construed as an endorsement of the conduct of the Kirgan children
or as opposition to the conduct of M&T Bank. Likewise, it should not be construed as a
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limitation on the obligations of fiduciaries under Maryland law. Indeed, those issues are
not before us. The key issue to me is that we give proper respect to the intent of Mr. Plitt
as expressed in the plain language of his will. Mr. Plitt intended that the individual trustees
be able to remove the corporate trustee with or without cause. And because Maryland law
does not compel a contrary result, I would seek to effectuate Mr. Plitt’s intent and reverse
the district court and hold that the Kirgans may remove M&T Bank with or without cause.
28