Mary Scanlan v. Marshall Eisenberg , 669 F.3d 838 ( 2012 )


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  •                               In the
    United States Court of Appeals
    For the Seventh Circuit
    No. 11-1657
    M ARY B UCKSBAUM SCANLAN,
    Plaintiff-Appellant,
    v.
    M ARSHALL E ISENBERG , et al.,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Northern District of Illinois, Eastern Division.
    No. 1:09-cv-05026—John F. Grady, Judge.
    A RGUED S EPTEMBER 28, 2011—D ECIDED JANUARY 20, 2012
    Before B AUER, W OOD and T INDER, Circuit Judges.
    B AUER, Circuit Judge.     Mary Bucksbaum Scanlan
    (“Scanlan”) is a current beneficiary of several dis-
    cretionary trusts. Scanlan brought claims of legal mal-
    practice and breach of fiduciary duty against the trustee
    and her lawyers. The district court dismissed all of
    her claims with prejudice and ruled that Scanlan
    lacked Article III standing because she did not allege
    facts showing a likelihood that the trusts’ corpus were
    2                                                    No. 11-1657
    insufficient to pay her         discretionary   distributions.
    We reverse and remand.
    I. BACKGROUND
    A. The Trusts and the Parties
    Scanlan was born in 1969 and is the daughter of Martin
    Bucksbaum. Bucksbaum and his brother developed
    shopping centers eventually founding General Growth
    Properties, Inc. (“GGP”), one of the largest traded real
    estate investment trusts in the United States, with
    $34 billion in total market capitalization and $3 billion
    in annual revenues. GGP currently trades around
    $14 per share1 on the New York Stock Exchange under
    the ticker, GGP.
    Beginning when Scanlan was a child, her father and
    uncle established six trusts (the “Trusts”), naming
    Scanlan as the primary beneficiary. Each of the Trusts
    authorizes the corporate trustee, General Trust Company
    (the “Trustee”), to distribute “all or as much of the net
    income or principal, or both” of the trust to Scanlan “as
    the Trustee deems to be necessary for her support” or
    “in her best interests.” No other person is eligible to
    receive any distributions from the Trusts during
    Scanlan’s lifetime, and Scanlan’s children are contingent
    remaindermen.
    The law firm of Neal, Gerber & Eisenberg, LLP (the “Law
    Firm”), through two of its partners, Marshall Eisenberg
    1
    As of December 20, 2011, GGP closed at $14.52.
    No. 11-1657                                             3
    (“Eisenberg”) and Earl Melamed (“Melamed”) generally
    represented Scanlan throughout her adult life when she
    needed legal advice. At the same time, they represented
    both the Trustee and GGP. In addition to his legal repre-
    sentation of GGP, Eisenberg also served as the Secretary
    of GGP from April 1993 through October 2008; Eisenberg
    and Melamed both own GGP stock.
    Eisenberg and Melamed personally control General
    Trust Company. For example, Eisenberg is its majority
    owner, its president, a member of its board of directors,
    and one of the three members of its Trust Committee.
    Melamed serves on General Trust Company’s board of
    directors, serves as its Secretary, and is the second mem-
    ber of its Trust Committee.
    B. The Stock Purchases
    In 2007 and 2008, the Trusts purchased hundreds of
    millions of dollars of additional GGP stock. These pur-
    chases were financed with the proceeds of a loan
    secured by a pledge of the Trusts’ assets. At the time of
    the purchases, the Trusts were already heavily invested
    in GGP stock, which constituted over 65% of the
    Trusts’ assets. Eisenberg and Melamed approved the
    GGP stock purchases in their capacity as officers and
    directors of the Trustee, and the Law Firm, together
    with Eisenberg and Melamed, provided legal advice
    concerning the transaction.
    On April 16, 2009, GGP declared bankruptcy. Scanlan’s
    Trusts suffered more than $200 million in losses due to a
    drop in GGP stock purchased in 2007 and 2008.
    4                                               No. 11-1657
    C. The Lawsuit
    Scanlan brought an action on August 17, 2009, naming
    the Trustee, the Law firm, Eisenberg, and Melamed as
    defendants (collectively, the “Defendants” or “Appellees”).
    On June 30, 2010, Scanlan filed an amended complaint,
    which added her children as plaintiffs based on their
    status as contingent beneficiaries of the Trusts. Because
    her children are minors, Scanlan is suing on their behalf.
    In her amended complaint, Scanlan complains that the
    Trustee’s purchases of GGP stock were not made in
    her best interests, but instead to further (1) her lawyers’
    own financial interest in retaining GGP as a client; (2) the
    interests of other members of the Bucksbaum family
    who managed GGP (whom her lawyers also repre-
    sented); (3) Eisenberg and Melamed’s personal interests
    as shareholders; and (4) Eisenberg’s interest as Secretary
    of GGP.
    Specifically, Scanlan brings claims against the Trustee
    for breaching its fiduciary duties of loyalty, prudence,
    and disclosure when it purchased the GGP stock in 2007
    and 2008. Scanlan also brings claims against her lawyers
    for breach of fiduciary duty, legal malpractice, and
    aiding and abetting the Trustee’s breach of its fiduciary
    duty. Lastly, Scanlan seeks equitable relief, including
    (1) restoration of the Trusts’ corpus; (2) the removal of
    the Trustee; (3) an accounting and books and records
    request; (4) modification of the Trusts to provide her
    with power to remove the Trustee; (5) the disgorgement
    of attorneys’ fees; and (6) punitive damages.
    No. 11-1657                                              5
    D. Procedural Context
    On October 28, 2009, the Defendants filed a Rule 12(b)(1)
    motion arguing that Scanlan was improperly seeking a
    direct payment of damages. In her response, Scanlan
    claimed that she was seeking an order compelling the
    Defendants to restore the Trusts’ corpus. During the
    argument on the motion, the district court raised,
    sua sponte, the issue of whether Scanlan might lack
    Article III standing because she was a discretionary
    beneficiary. The Trustee’s attorney all but made
    Scanlan’s argument for her, first, conceding that Scanlan
    had standing to seek restoration of the corpus, but then
    agreeing to take that issue under advisement and re-brief
    the issue if the district court preferred.
    On October 14, 2010, the district court ruled that
    Scanlan lacked Article III standing and dismissed all of
    her claims with prejudice. Specifically, the district court
    held that Scanlan lacked standing unless she could
    allege “facts showing a likelihood that the corpus of
    the trusts would ever be insufficient to pay all of her
    discretionary distributions to which [she] might become
    entitled during her lifetime.” This appeal followed.
    The issue on appeal, then, is a narrow one: whether
    Scanlan has constitutional standing to assert her claims
    in federal court. We find that she does and reverse
    the district court.
    II. DISCUSSION
    We review a district court’s decision to grant a
    Rule 12(b)(1) motion to dismiss for lack of standing
    6                                               No. 11-1657
    de novo, accepting as true all facts alleged in the
    well-pleaded complaint and drawing all reasonable
    inferences in favor of the plaintiff. Family & Children’s
    Ctr., Inc. v. School City of Mishawaka, 
    13 F.3d 1052
    , 1057
    (7th Cir. 1994).
    The burden to establish standing is on the party in-
    voking federal jurisdiction—here, Scanlan—and the
    elements she must show are:
    (i) an injury in fact, which is an invasion of a legally
    protected interest that is concrete and particularized
    and, thus, actual or imminent, not conjectural or
    hypothetical; (ii) a causal relationship between the
    injury and the challenged conduct, such that the
    injury can be fairly traced to the challenged action
    of the defendant; and (iii) a likelihood that the
    injury will be redressed by a favorable decision.
    Lee v. City of Chicago, 
    330 F.3d 456
    , 468 (7th Cir. 2003)
    (citing Lujan v. Defenders of Wildlife, 
    504 U.S. 555
    , 560-61
    (1992)).
    To satisfy the injury-in-fact requirement, Scanlan “must
    establish that [she] has sustained or is immediately in
    danger of sustaining some direct injury.” Wis. Right
    to Life, Inc. v. Schober, 
    366 F.3d 485
    , 489 (7th Cir. 2004)
    (quoting Tobin for Governor v. Ill. State Bd. of Elections,
    
    268 F.3d 517
    , 528 (7th Cir. 2001)). “Mere speculation
    is not enough to establish an injury in fact.” 
    Id. The district
    court’s standing inquiry, and more specifi-
    cally, its injury-in-fact analysis, focused primarily on the
    current value of the Trusts’ assets. Having found that
    No. 11-1657                                                  7
    Scanlan did not allege any facts indicating that the
    value of the Trusts’ corpus—approximately $800 mil-
    lion—would ever be insufficient to fund any potential
    “support” and “best interests” payments, the district
    court concluded that Scanlan did not suffer an injury
    in fact for purposes of Article III. To put it differently,
    Scanlan’s legally protected interest arising out of her
    status as a discretionary beneficiary, according to the
    district court, is limited to her interest in potential dis-
    cretionary payments made pursuant to the Trusts’ instru-
    ments. And without an injury to that specific interest,
    the court concluded, Scanlan has no injury in fact. We
    disagree with that characterization of Scanlan’s interest.
    That Scanlan must suffer an invasion of a legally pro-
    tected interest is a principle of federal law. But the nature
    and extent of Scanlan’s interest as a beneficiary of a
    discretionary trust, and therefore, whether that interest
    can form the basis of a federal suit, depend on the law
    that defines the rights of a discretionary beneficiary.
    FMC Corp. v. Boesky, 
    852 F.2d 981
    , 993 (7th Cir. 1988); see
    also Bochese v. Town of Ponce Inlet, 
    405 F.3d 964
    , 981 (11th
    Cir. 2005); Cantrell v. City of Long Beach, 
    241 F.3d 674
    ,
    684 (9th Cir. 2001). In this case, that is the law of Illinois.
    So we look to see whether according to Illinois law
    a discretionary trust beneficiary has the kind of stake
    that Article III requires.
    So stated, this is an issue that has meager precedent.
    The Restatements (Third) of Trusts, Section 94, addresses
    who may bring a suit against a trustee for breach of trust,
    and therefore, provides some guidance on this topic. See
    8                                               No. 11-1657
    In re Estate of Lieberman, 
    909 N.E.2d 915
    , 922 (Ill. App. Ct.
    2009). Section 94, which is entitled, “Standing to Enforce
    a Trust,” provides:
    A suit against a trustee of a private trust to enjoin or
    redress a breach of trust or otherwise to enforce the
    trust may be maintained only by a beneficiary or by
    a co-trustee, successor trustee, or other person acting
    on behalf of one or more beneficiaries.
    The Restatements (Third) of Trusts, § 94(1).
    Comment b to § 94 then explains who qualifies as
    a “beneficiary” with standing to bring suit to redress a
    breach of trust:
    A suit to enforce a private trust ordinarily . . . may be
    maintained by any beneficiary whose rights are or
    may be adversely affected by the matter(s) at issue.
    The beneficiaries of a trust include any person
    who holds a beneficial, present or future, vested or
    contingent . . . . This includes a person who is eligible
    to receive a discretionary distribution . . . .
    
    Id. § 94,
    cmt. b.
    Clearly then, Comment b provides that a beneficiary of
    a discretionary trust whose rights are “adversely af-
    fected” has standing to enforce the trust. But Comment b
    poses, rather than answers, the question: What does
    it mean for a discretionary beneficiary’s rights to be
    “adversely affected”? Again, the Appellees argue that
    Scanlan’s rights as a discretionary beneficiary are not
    “adversely affected” until the Trustee fails to make a
    distribution in which she is entitled to under the terms
    No. 11-1657                                                     9
    of the Trusts. Only after that showing will Scanlan have
    standing, the Appellees claim. Such a rigid standard is
    not supported by trust law authority, which indicates
    that a discretionary beneficiary’s rights include some-
    thing more than just an interest in potential distributions.
    In Illinois, a beneficiary has an equitable interest in the
    trust property. Parkway Bank & Trust Co. v. Northern Trust
    Co., 
    572 N.E.2d 1055
    , 1058 (Ill. App. Ct. 1991); Farkas v.
    Williams, 
    125 N.E.2d 600
    , 605 (Ill. 1955) (“The declaration
    of trust immediately creates an equitable interest in the
    beneficiaries . . . .”); Gordon v. Gordon, 
    129 N.E.2d 706
    , 708
    (Ill. 1955); Norris v. Estate of Norris, 
    493 N.E.2d 121
    , 126 (Ill.
    App. Ct. 1986). Jurisdictions examining the nature of
    a discretionary beneficiary’s interest have found that,
    like an ordinary beneficiary, a discretionary beneficiary
    has an equitable interest in the trust property. See, e.g.,
    Pritzker v. Pritzker, Case Nos. 02 CH 21426, 03 CH 7531,
    at 15-16 (Cir. Ct. of Cook Cty., Ch. Div. March 5, 2004)
    (“It is clear that beneficiaries of a discretional trust have
    a present, existing property interest in the trust res.”);
    In re Marriage of Jones, 
    812 P.2d 1152
    , 1157 (Colo. 1991)
    (citing 2 A. Scott on Trusts § 130, at 409 (4th ed. 1987))
    (noting that a discretionary trust beneficiary has an
    equitable interest, but the beneficiary cannot force the
    trustee to pay income or principal unless the beneficiary
    could establish the trustee had engaged in fraud or an
    abuse of discretion); Pack v. Osborne, 
    2008 WL 4907545
    ,
    at *3 (Ohio App. Ct. Nov. 14, 2008) (determining the
    nature of the discretionary beneficiary’s interest in the
    trust and concluding it was an equitable interest);
    Paulson v. Paulson, 
    2010 ND 100
    , 
    783 N.W.2d 262
    , 272
    (stating that a discretionary beneficiary has an equitable
    10                                                 No. 11-1657
    interest in the trust assets); United States v. O’Shaughnessy,
    
    517 N.W.2d 574
    , 577 (Minn. 1994) (citing Restatement
    (Second) of Trusts 199 (1959)) (commenting that a dis-
    cretionary beneficiary has equitable remedies against
    a trustee for breach of trust).
    Cases that establish a beneficiary’s equitable interest
    in trust property, the Appellees argue, do not arise in
    contexts involving standing and instead merely recite
    general trust law principles. Yet we see no reason why
    canonical principles of trust law should not be
    employed when determining the nature and extent of a
    discretionary beneficiary’s interest for purposes of an
    Article III standing analysis. Applying those principles,
    we conclude that Scanlan has an equitable interest in
    the corpus of the Trusts. And it is from that equitable
    interest that Scanlan acquires standing to enforce the
    Trusts.
    Stemming from Scanlan’s status as a beneficiary is a
    fiduciary relationship between her and the Trustee that
    gives rise to equitable remedies against the Trustee
    for breach of trust. A trustee owes a fiduciary duty to
    a trust’s beneficiaries and is obligated to carry out the
    trust according to its terms and to act with the highest
    degree of fidelity and utmost good faith. In re Estate of
    Muppavarapu, 
    836 N.E.2d 74
    , 77 (Ill. App. Ct. 2005); Paul H.
    Schwendener, Inc. v. Jupiter Elec. Co., Inc., 
    829 N.E.2d 818
    ,
    828 (Ill. App. Ct. 2005); Giagnorio v. Emmett C. Torkelson
    Trust, 
    686 N.E.2d 42
    , 46 (Ill. App. Ct. 1997); see also Restate-
    ment (Second) of Trusts § 2, cmt. b (1959); Restatement
    (Second) of Trusts § 170 (1959). The fiduciary obligation
    No. 11-1657                                                 11
    of loyalty flows from the relationship of the trustee and
    beneficiary, and the essence of that relationship is that
    the trustee is charged with equitable duties toward the
    beneficiary. Home Federal Savings and Loan Ass’n of
    Chicago v. Zarkin, 
    432 N.E.2d 831
    , 845-46 (Ill. 1982); Restate-
    ment (Second) of Trusts § 164, cmt. h (1959); Matter of
    Reiman’s Estate, 
    450 N.E.2d 928
    (1983) (“[A] trust
    involves not merely a discretionary authority, but a legal
    relationship whereby the trustee is under a fiduciary
    obligation to deal with property in accordance with the
    instructions of the trustor for the benefit of a third
    party . . . .”). So by virtue of the fiduciary relationship
    between Scanlan and the Trustee, Scanlan acquires the
    right to bring an action for breach of fiduciary duty.
    See Parish v. Parish, 
    193 N.E.2d 761
    , 766 (Ill. 1963); Burrows
    v. Palmer, 
    125 N.E.2d 484
    , 486-87 (Ill. 1955); Restatement
    (Second) of Trusts § 199 (1959).
    Our conclusion in this regard is further supported
    by trust law that recognizes a beneficiary’s standing is
    not based on an absolute entitlement or a probability
    of receiving trust assets. The mere fact that a beneficiary
    may ultimately never receive trust assets does not
    prevent that beneficiary from bringing a claim. For ex-
    ample, a contingent beneficiary can bring an action
    against the trustee—even though his interest is remote
    and contingent—to protect his possible eventual interest,
    i.e., to protect and preserve the trust res. Barnhart v.
    Barnhart, 
    114 N.E.2d 378
    , 388 (Ill. 1953). In Illinois, there-
    fore, “a trustee owes the same fiduciary duty to a con-
    tingent beneficiary as to one with a vested interest
    insofar as necessary for the protection of the contingent
    12                                               No. 11-1657
    beneficiary’s rights in the trust property.” 
    Burrows, 125 N.E.2d at 486-87
    ; see also Shaw v. Weisz, 
    91 N.E.2d 81
    ,
    87 (Ill. App. Ct. 1950).
    If a beneficiary who may never receive the trust’s
    assets stands in a fiduciary relationship with the
    trustee, then so should a beneficiary of a discretionary
    trust. We see no reason why a beneficiary, simply by
    virtue of being the beneficiary of discretionary trust,
    should be denied the ordinary equitable rights that
    flow from the fiduciary duty that runs from a trustee
    to a beneficiary. Included in those rights is the right
    to bring an action for breach of trust.
    Goodpasteur v. Fried offers further support. 
    539 N.E.2d 207
    , 208 (Ill. App. Ct. 1989). In Goodpasteur, one of the
    beneficiaries of a discretionary trust sought an order
    requiring the trustee to provide an inventory of trust
    assets and an accounting of the trust’s receipts and dis-
    bursements. 
    Id. The appellate
    court rejected the trustees’
    argument that the discretionary beneficiary should not
    be able to bring his suit because his interest in the trust
    was an “expectancy” and the real party concerned was
    the remainderman. 
    Id. at 210.
      In reversing the circuit court, the appellate court rea-
    soned:
    Plaintiff is a named beneficiary of the trust. . . .
    It is conceivable that, at the death of the beneficiaries
    in plaintiff’s class, no income or principal will be left
    to distribute to the [remainderman]. It is incongruous
    to argue that plaintiff should not be allowed to main-
    tain this action because the [remainderman], which
    No. 11-1657                                               13
    will enjoy the benefits of the trust only if funds are
    left at the death of plaintiff and beneficiaries in his
    class, is the party “really concerned.” Such a state-
    ment implies that defendants have already decided
    not to make any payments to plaintiff and the bene-
    ficiaries in his class.
    We are of the opinion that plaintiff is a beneficiary
    eligible to have the benefit of income under
    the trust. As such, plaintiff is entitled to an account
    showing the receipts, disbursements and inventory
    of the trust estate. . . .
    
    Id. at 210-11.
      Again, no authority requires a discretionary beneficiary
    to first allege that the trust corpus is insufficient to fund
    a distribution when bringing a claim for breach of trust.
    That sort of inquiry has a damages flavor to it, which is
    a merits, not a standing, question. See Aurora Loan Servs.
    Inc. v. Craddieth, 
    442 F.3d 1018
    , 1024 (7th Cir. 2006) (“The
    point is not that to establish standing a plaintiff must
    establish that a right of his has been infringed; that
    would conflate the issue of standing with the merits of
    the suit. It is that he must have a colorable claim to
    such a right.”).
    The Appellees argue that Illinois trust law and Article III
    are not coextensive, and the mere fact that a discre-
    tionary beneficiary may have a right to sue under state
    law does not ensure standing. It is true that a standing
    inquiry does not necessarily end with the determination
    of a state right to sue. But the Supreme Court stated in
    Sprint Commc’n Co., L.P. v. APCC Services, Inc. that
    14                                              No. 11-1657
    “history and tradition offer a meaningful guide to the
    types of cases that Article III empowers federal courts
    to consider” and that where parties have “long been
    permitted to bring” the type of suit at issue, it is “well
    nigh conclusive” that Article III standing exists. 
    554 U.S. 269
    , 274-75, 285 (2008). After carefully reviewing
    beneficiaries’ rights, we determined that beneficia-
    ries—including discretionary beneficiaries—have “long
    been permitted to bring” suits to redress a trustee’s
    breach of trust.
    Moreover, in FMC Corp. v. Boesky, we held that the
    actual or threatened injury required under Article III
    can be satisfied solely by virtue of an invasion of a recog-
    nized state-law right. 
    852 F.2d 981
    , 993 (7th Cir. 1988). In
    Boesky, FMC brought a claim for wrongful misappropria-
    tion and misuse of its confidential business informa-
    tion, which forced FMC to increase its cash distribution
    to its shareholders under a revised capitalization plan.
    
    Id. at 989-90.
    Finding that the distribution of FMC’s
    assets to the owners of those assets was merely a move-
    ment of assets between owners, the district court found
    there was no injury for purposes of Article III. 
    Id. We reversed
    the district court and held that the misap-
    propriation of confidential information “constitutes a
    distinct and palpable injury that is legally cognizable
    under Article III’s case and controversy requirement.”
    
    Id. Basing our
    decision, in part, on Warth v. Seldin—which
    held that injury required by Article III may exist solely
    by virtue of statutes creating legal rights, the invasion
    of which creates standing—we concluded that “[t]he
    same must also be true of legal rights growing out of
    state law.” 
    Boesky, 852 F.2d at 993
    (citing Warth v. Seldin,
    No. 11-1657                                                   15
    
    422 U.S. 490
    , 498 (1975)). In fact, we pointed out that
    if this were not so, “federal courts sitting in diversity
    could not adjudicate some cases involving only state-
    law breach-of-fiduciary claims . . . because some
    actions for breach of fiduciary duty do not require
    the plaintiff to show an injury.” 
    Id. Here, Scanlan
    is the beneficiary of several discretionary
    Trusts, and under those Trusts, she is currently eligible
    to receive all of the Trusts’ corpus. We established that
    Scanlan, as a beneficiary, is owed a fiduciary duty and
    that she has an interest in ensuring that the Trustee
    discharge its duties with fidelity and a certain degree
    of care. The Trustee and her lawyers, Scanlan claims,
    breached those fiduciary duties, causing the Trusts’
    corpus to lose approximately $200 million. Under these
    circumstances, the Trustee’s and Lawyers’ dereliction of
    their fiduciary duties is a direct invasion of Scanlan’s
    protected interest in the prudent and loyal administra-
    tion of the Trusts. Scanlan has therefore suffered an
    injury sufficient to satisfy Article III’s case and con-
    troversy requirement.
    This holding is consistent with the objective of the
    standing doctrine. As the Supreme Court has explained,
    the purpose behind the standing doctrine is to ensure
    that plaintiffs have a “personal stake in the outcome”
    sufficient to “assure that concrete adverseness which
    sharpens the presentation of issues upon which the
    court so largely depends for illumination of dif-
    ficult . . . questions.” Baker v. Carr, 
    369 U.S. 186
    , 204 (1962).
    The Court has also explained:
    16                                                No. 11-1657
    [T]he standing inquiry requires careful judicial ex-
    amination of a complaint’s allegations to ascertain
    whether the particular plaintiff is entitled to an ad-
    judication of the particular claims asserted. Is the
    injury too abstract, or otherwise not appropriate, to
    be considered judicially cognizable? Is the line of
    causation between the illegal conduct and injury
    too attenuated? Is the prospect of obtaining relief
    from the injury as a result of a favorable ruling too
    speculative?
    
    Allen, 468 U.S. at 752
    .
    Scanlan has a “required stake” in her suit; she has a
    legally protected interest in Trusts’ corpus and in the
    proper administration of that corpus. Her claims against
    her lawyers and the Trustee are brought to protect that
    interest and redress her injury by seeking to remove
    the Trustee, restore the Trusts’ corpus, and disgorge
    attorneys’ fees. Scanlan’s injury, therefore is not “too
    abstract.” Nor is the relief she seeks too speculative.
    The Appellees argue that under some circumstances
    a discretionary beneficiary’s present interest in the trust
    property—before a trustee has made a distribution—is
    too attenuated to be considered the beneficiary’s prop-
    erty. The Appellees, therefore, urge us to conclude
    that Scanlan only has an interest in her potential dis-
    tributions, rather than the Trusts’ corpus. It is true that
    in some circumstances, e.g., for purposes of public aid
    eligibility and determining the bankruptcy estate, a
    discretionary beneficiary’s interest in the trust assets
    is too remote to count as property. See, e.g., Linser v. Office
    No. 11-1657                                              17
    of Attorney Gen., 
    2003 ND 195
    , 
    672 N.W.2d 643
    , 646;
    In re Britton, 
    300 B.R. 155
    , 159 (Bankr. D. Conn. 2003);
    In re Eley, 
    331 B.R. 353
    , 358 (Bankr. S.D. Ohio 2005). Like-
    wise, in some cases, creditors are prevented from at-
    taching the assets of a discretionary trust and have no
    remedy against the trustee until the trustee distributes
    the property. See, e.g., United States v. O’Shaughnessy,
    
    517 N.W.2d 574
    , 577 (Minn. 1994); Harker v. Evatt,
    
    44 N.E.2d 355
    , 357 (1942); Doksansky v. Norwest Bank
    Neb., N.A., 
    615 N.W.2d 104
    , 106-10 (Neb. 2000); In re
    Duncan’s Will, 
    362 N.Y.S.2d 788
    , 790 (Sur. 1974).
    These rules, however, are the result of underlying
    principles and policy considerations involving restraints
    on involuntary alienation. Those concerns, which are not
    present here, are distinct from the equitable principles
    of trust law at work in this case; namely, a beneficiary’s
    right to hold trustees accountable and ensure that
    they properly discharge their fiduciary duties when
    administering trust property. That in some contexts
    Scanlan’s interest in the Trusts’ assets may not rise to
    the level of a “property interest” does not negate the
    fact that she and the Trustee stand in a fiduciary rela-
    tionship. The same can be said of her relationship with
    her attorneys.
    We remain unpersuaded that our holding will lead to
    any beneficiary having standing whether or not its
    specific interest is affected. Only a beneficiary of a dis-
    cretionary trust whose rights are “adversely affected” has
    standing to enforce a trust. In claims for breach of trust,
    the requirement that a beneficiary of a discretionary
    18                                              No. 11-1657
    trust must plead facts indicating that the diminution in
    the trust assets had, or will ever have, a probable
    adverse impact on discretionary distributions is too
    demanding. Essentially that rule, which the Appellees
    ask us to adopt, would insulate trustees from suits for
    breach of trust. For instance, under that reasoning, a
    trustee could mismanage a trust with impunity, substan-
    tially reducing the assets over time, so long as there
    were enough assets left in the corpus to fund a future
    distribution. In fact, the larger the trust’s corpus, the
    more likely that could happen. Take the Trusts in this
    case for example: with nearly $1 billion in assets, it is
    hard to imagine that there would ever be a situation
    in which the corpus would be insufficient to fund
    Scanlan’s “best interests” and “support” distributions.
    Surprisingly, the Appellees admit this. The Trustee,
    could, under the Appellees’ reasoning, reduce the assets
    by 90%—to a paltry $100 million—and still be sheltered
    from a breach of trust claim.
    The Appellees’ rule ignores the fiduciary relationship
    between a beneficiary and a trustee and is practicably
    unworkable because the question inevitably becomes:
    at what point is the trust’s corpus diminished to such
    an extent that the trustee can no longer make a future
    distribution? The Appellees cannot answer this ques-
    tion. Nor can we. Scanlan’s standing should not turn on
    whether her “best interests” and “support” needs, what-
    ever they may be, will be met. The district court, therefore,
    erred to the extent it concluded that Scanlan lacked
    Article III standing because she did not suffer an injury
    in fact.
    No. 11-1657                                       19
    III. CONCLUSION
    For the reasons stated herein, we R EVERSE and
    R EMAND for further proceedings consistent with this
    opinion.
    1-20-12