Estate of Phillis T. Worrall by James Worrall v. J.P. Morgan Bank, N.A., Trustee of the James P. Thompson Trust ( 2022 )

RENDERED: APRIL 28, 2022
TO BE PUBLISHED
Supreme Court of Kentucky
2021-SC-0166-DG
ESTATE OF PHILLIS T. WORRALL APPELLANT
BY EXECUTOR JAMES WORRALL
ON REVIEW FROM COURT OF APPEALS
V. NO. 20-CA-1561
JEFFERSON CIRCUIT COURT NO. 20-XX-00009
JEFFERSON DISTRICT COURT 18-P-004814
J. P. MORGAN BANK, N.A., APPELLEE
TRUSTEE OF THE JAMES P. THOMPSON
TRUST
OPINION OF THE COURT BY JUSTICE VANMETER
REVERSING AND REMANDING
The Uniform Trust Code, KRS1 Chapter 386B, sets forth the rights and
duties of trustees and beneficiaries upon termination of a trust. The specific
duties at termination are set forth in KRS 386B.8-170 and 386B.8-180,
including a prohibition on the trustee “request[ing] any beneficiary indemnify
the trustee against loss in exchange for the trustee forgoing a request to the
court to approve its accounts at the time the trust terminates or at the time the
1 Kentucky Revised Statutes.
trustee is removed or resigns[.]” In this case, J. P. Morgan Chase Bank, N.A.
(the “Bank”), did precisely that and then proceeded to obtain a Jefferson
District Court Order which improperly directed the Bank to liquidate the trust
assets and pay them into the Jefferson Registry of Court. Because of the
violations of the Bank’s statutory and fiduciary obligations to the trust
beneficiary, we reverse the opinion of the Jefferson Circuit Court and remand
this matter to the Jefferson District Court with directions to require an
accounting and to assess any appropriate remedies or damages against the
Bank, as further set forth in this Opinion.
I. Facts and Procedural Background.
In 1958, James P. Thompson died and his probated will established a
testamentary trust for the benefit of his daughter, Phillis Worrall. James P.
Thompson Will, Article Seventh (The “Trust”). The bequest in trust was of
specific shares in one company’s stock, as to which the then trustee had
discretion to pay out to his daughter. The final dispositive sentence reads,
“[u]nless sooner terminated, this Trust shall terminate at the death of my said
daughter, and said shares of stock shall in that event be paid over to her
estate.” Mrs. Worrall died in June 2018; her son, James Worrall, was
appointed as executor of her estate six months later in December 2018.
Worrall is the sole beneficiary of her estate under her probated will. The Estate
and Worrall will be collectively referred to as “Worrall.”
Over the course of 2019, the Bank filed at least three motions asserting
its desire to liquidate the assets of the Trust and pay the proceeds into the
2
Registry of the Court. The first two motions were filed in In re: Trustee under
Will of James P. Thompson, f/b/o Phillis Thompson Worrall, Jefferson District
Court, Division Fifteen (Chief District Judge Anne Haynie), Docket No. 83-P-
002899, the case file established by registration of the Trust when the Bank’s
predecessor, Liberty National Bank & Trust Company of Louisville, had become
successor trustee in 1983.2 Both motions were apparently withdrawn for
reasons not appearing in the record.3
The third motion to liquidate was filed on December 18, 2019, in In re:
Estate of Phillis T. Worrall, Jefferson District Court, Division Four (District
Judge Julie Kaelin), Docket No. 18-P-004814.4 The Bank’s motion claimed the
liquidation, attendant payment of trustee’s and attorney’s fees, and release of
the trustee was necessitated by Worrall, as his mother’s Executor, “repeatedly
refus[ing] to sign a receipt and release as required by the [Bank] to liquidate
and transfer the assets to the Executor.” The motion attached the Bank’s trust
officer’s affidavit that Worrall, as Executor, “failed to execute the appropriate
receipt and release in order to take possession of the Trust assets[,]” that
Worrall, as Executor, “was notified of the need to sign a receipt and release to
2In 1983, the trust registration provisions were contained in KRS 386.655.
Those provisions are now set out at KRS 386B.2-050.
3The Bank argues that those motions were withdrawn by Worrall’s agreement
to comply with the Bank’s conditions for paying over the Trust’s assets.
4 Just as the reasons for withdrawal of the prior motions are unclear, the
reasons this matter was refiled in Jefferson District Court, Division Four, instead of
the division in which the Trust had been registered, Division Fifteen, are also unclear.
While this process may have been a type of forum shopping, Worrall does not so claim
in his brief and we thus do not address it further.
3
obtain possession of the Trust assets[,]” and that Worrall, as Executor, “has
failed to take proper action to take possession of the Trust assets.”
Significantly, the Bank’s counsel had previously corresponded with Worrall’s
counsel, and in a letter dated November 8, 2019, stated the following:
As we discussed, our firm has been retained by J.P. Morgan,
Trustee of the James Thompson Trust Under Will f/b/o Phillis
Worrall (the ''Trust"). Pursuant to the terms of the trust, now that
Ms. Worrall has died, the Trustee is to distribute all remaining
assets to the estate of Phillis Worrall.
We see two options for how the Trustee can distribute the
assets to the estate: Option one is for your client, James Worrall,
as Executor of the Estate of Phillis Worrall, to sign the attached
simple release form from the Trustee and accept the assets into the
estate. Option two is a more formal and expensive option, which
would include court intervention and the use of all legal avenues
available. We are willing to allow Mr. Worrall to choose which
option he would like to pursue, but our client will proceed one way
or the other in order to meet their [sic] fiduciary duty to terminate
the Trust.
If Mr. Worrall would like to proceed under option one, please
deliver the attached release agreement to me by November 22. If I
have not received anything by that date, we will begin to seek court
intervention immediately.
The first page of the attached “simple release” was titled “Receipt and
Release,” identified the Bank as trustee, the Trust, the Bank’s account number
for the Trust, and thirty assets to be distributed in “partial satisfaction of the
share of the undersigned[.]” The second page of the “simple release” contained
the following provisions by which the signatory:
2. Releases and discharges JPMorgan Chase Bank, N.A.,
individually and as the Trustee, from all claims, demands, suits,
actions, liabilities and responsibilities of any kind, arising from or
related to the entitlement that is described in this instrument.
4
3. Approves of the Accounts of Trustees [sic] JPMorgan Chase
Bank N.A. since inception of the Trust and acknowledges that
statements of the activities in the Trust are available upon request.
4. Agrees to return any or all of the property described above, to
JPMorgan Chase Bank, N.A., upon demand, if recourse thereto
becomes necessary for the payment of taxes, expenses, costs or
other demands in connection with the administration of the Trust,
and agrees to indemnify the Trustee against all such demands or
claims, to the extent the property described above is subject to
such demands or claims.
On January 8, 2020, the Bank’s motion was heard before the Jefferson
District Court, Division Four. The district court initially inquired as to the
problem and why no response to the motion had been filed. Worrall’s attorney,
Richard Porter, identified himself and advised that he had just been retained
and was requesting time to look at the case.5 The district court admonished
that Worrall had “had lots of time to deal with this.” When Worrall’s counsel
advised that Worrall’s brokerage account number was available, the following
exchange occurred:
Bank’s counsel: Well, we've been asking . . .
Worrall’s counsel: They don't want to.
Bank’s counsel: We've been asking for that for a year-and-a-half.
Worrall’s counsel: What?
District court: Yeah.
Bank’s counsel: But we need Mr. Worrall to sign a release and
indemnification.
Worrall’s counsel: He's not going to do that.
District court: Then I'm going to order it. Have a good day,
gentlemen.
5 According to Worrall, his previous counsel advised on the day prior to the
hearing that he, counsel, was in Florida and thus unavailable to appear at the
January 8 hearing.
5
Worrall’s counsel: You're going to order the liquidation of the
property?
District court: Yes. This has been going on for more than a year.
Worrall’s counsel: Well, why don't they just transfer it to his
brokerage account at Raymond James?
District court: You are welcome to file something in response if
you'd like, but this has been going on far too long. He decided not
to hire someone until today. Not our problem.
Worrall: Your Honor, may I speak?
District court: You have an attorney for that reason.
Worrall’s counsel: He would like to address the Court, Judge.
District court: Okay.
Worrall: Thank you, Your Honor. I have wanted the money
distributed for a year-and-a-half. It’s in my best interest, since I'm
the beneficiary of the estate, the sole beneficiary. I have provided
the bank and the previous counsel, Doug Bozell, the account
numbers. The bank has failed on . . . they've ignored two orders to
distribute . . .
Worrall’s counsel: Of this Court.
Worrall: Yeah, from this Court. Two orders they failed to
distribute. All . . . they're demanding an indemnification, and I'm
not . . . I don't want to sign an indemnification.
Worrall’s counsel: He's not going to release them of any liability for
mistakes they’ve made. And if you allow the property to be sold,
then the property is . . . it can't be recovered, Judge.
District court: The file in the case that . . . for more than a year
they've been trying to get some sort of agreement. Nothing
Worrall’s counsel: Well . . .
District court: Let me finish. Do not interrupt.
Worrall’s counsel: Okay.
District court: There has been nothing filed at all saying “here's
why I won't do this.” He hasn't done anything.
Worrall’s counsel: Well, now he's going to. He now has competent
counsel . . .
District court: It’s a little too late, sir. That's what I've said.
Worrall’s counsel: Well, Judge, that's why I'm here, to explain that
to the Court.
6
District court: Today.
Worrall’s counsel: We can't . . . we . . .
District court: He retained you today.
Worrall’s counsel: . . . have the account number right here.
District court: We are done. We are done. Have a good day.
Worrall’s counsel: All right. Well, we'll file an appeal.
District court: Great.
Bank’s counsel: Thank you, Your Honor.
(END OF RECORDING)6
Immediately following the hearing, on January 8, the district court
entered the Bank’s tendered Order directing the Bank to liquidate the Trust’s
assets, paying trustee’s and attorney’s fees, transferring remaining proceeds to
the Receiver of the Court; releasing the Bank as Trustee pursuant to KRS
386B.8-170, and releasing previous registration of the Trust. Worrall appealed
the Order to the Jefferson Circuit Court on January 17. On February 7,
precisely thirty days following the entry of the district court’s Order, the Bank
tendered a check in the amount of $831,402 to the Receiver of the Court.
Worrall subsequently obtained an Order from the district court directing
distribution of trust proceeds to the Estate. Following submission of the case,
the circuit court affirmed the district court’s action. Worrall then sought
discretionary review, in turn, from the Court of Appeals and then from this
Court. The Court of Appeals denied review; we granted it.
6 The entire hearing took less than three minutes.
7
II. Standard of Review.
This matter largely involves interpretation of the Uniform Trust Code,
KRS Chapter 386B, and a trustee’s obligations upon the termination of a trust
pursuant to its terms. The construction and application of statutes is a matter
of law and may be reviewed de novo. Community Fin. Serv. Bank v. Stamper,
586 S.W.3d 737, 741 (Ky. 2019); Bob Hook Chevrolet Isuzu, Inc. v.
Commonwealth, Transp. Cabinet, 983 S.W.2d 488, 490 (Ky. 1998). We
therefore review the statute without deference to the statutory interpretation of
a lower court. Est. of Benton by Marcum v. Currin, 615 S.W.3d 34, 36 (Ky.
2021); Hauber v. Hauber, 600 S.W.3d 204, 207 (Ky. 2020). Further, we note
that a court has a duty to accord to words of a statute their literal meaning
unless to do so would lead to an absurd or wholly unreasonable conclusion.
Bailey v. Reeves, 662 S.W.2d 832, 834 (Ky. 1984).
As to whether the district court, as the trial court in this instance,
abused its discretion in entering the January 8 Order, “[t]he test test for abuse
of discretion is whether the trial judge's decision was arbitrary, unreasonable,
unfair, or unsupported by sound legal principles.” Commonwealth ex rel.
Conway v. Thompson, 300 S.W.3d 152, 162 (Ky. 2009).
III. Analysis.
Worrall raises a number of issues before us. First, he alleges the Bank’s
failure to perform pursuant to the Trust terms and its violation of statutory and
fiduciary duties. Second, he alleges that the district court denied him due
process of law in conducting a three-minute hearing without a meaningful
8
opportunity to be heard, present evidence, and respond. The Bank counters
that Worrall failed to preserve any argument for appeal and was provided with
due process. The Bank further argues that it did not present Worrall with an
“ultimatum,” and that Worrall is seeking to litigate claims unconnected with
this appeal.
A. Violation of Statutory and Fiduciary Duties.
1. Statutory Violations. In enacting the Uniform Trust Code, the
legislature codified comprehensive provisions governing many situations which
would occur in trust management. As to termination of a trust, KRS 386B.8-
170, Distribution upon Termination, and KRS 386B.8-180, Duties of Trustee
upon Termination, appear applicable to the Trust at issue in this case.
As an initial matter, the Bank phrased its motion in the district court as
one under subsection KRS 386B.8-170, which provides, as follows:
(1) Upon termination or partial termination of a trust, the
trustee may send to the beneficiaries a proposal for distribution.
The right of any beneficiary to object to the proposed
distribution terminates if the beneficiary does not notify the
trustee of an objection within thirty (30) days after the
proposal was sent, but only if the proposal informed the
beneficiary of the right to object and of the time allowed for
objection.
(2) Upon the occurrence of an event terminating or partially
terminating a trust, the trustee shall proceed expeditiously to
distribute the trust property to the persons entitled to it, subject to
the right of the trustee to retain a reasonable reserve for the
payment of debts, expenses, and taxes.
(3) A release by a beneficiary of a trustee from liability for
breach of trust is invalid to the extent:
(a) It was induced by improper conduct of the trustee; or
9
(b) The beneficiary, at the time of the release, did not know of
the beneficiary's rights or of the material facts relating to the
breach.
(emphasis added).
The record does not reveal and, importantly the Bank failed to allege,
that its proposal for distribution informed Worrall of his right to object and of
the time allowed for objection. See PNC Bank, Nat’l Ass’n v. Edwards, 590
S.W.3d 818, 820 (Ky. 2019) (removing bank trustee advised beneficiary of her
right to object to any action or omission and of the time allowed for objecting).
As a result, section 1 of KRS 386B.8-170 is inapplicable to any resolution of
this matter.7
By contrast, KRS 386B.8-170(2) and KRS 386B.8-180 do apply. The
former required the Bank, as trustee, to “proceed expeditiously to distribute the
trust property to the persons entitled to it[.]” The record discloses that the
Bank for over a year conditioned distribution on Worrall’s executing an overly
broad release and when he objected, it failed to follow the statutory procedures
of KRS 386B.8-180. This latter statute sets forth a number of items to be
provided to the beneficiary when a trust terminates by its terms: “the fair
market value of the net assets to be distributed, a trust accounting for the prior
five (5) years and an estimate for any items reasonably anticipated but not yet
received or disbursed, the amount of any fees, including trustee fees,
7To be clear, a trustee’s failure to notify a beneficiary of the right to object and
the timing of an objection only renders section (1) of KRS 386B.170 inapplicable to
termination. Sections (2) and (3) of this statute still apply.
10
remaining to be paid, and notice that the trust is terminating.” KRS 386B.8-
180(1)(a). The immediately following subsection provides for a hearing in the
district court to resolve a beneficiary’s objections as set forth in written notice
provided to the trustee. KRS 386B.8-180(1)(b). The requirement of written
objection and district court hearing, however, only ensues after the proper
delivery to the beneficiary of the items required by KRS 386B.8-180(1)(a).8
Again, the Bank did not allege, and the record does not contain, the required
notice and information required by the initial subsection.
Worrall, and the Bank as well, clearly and unambiguously brought to the
attention of the district court, in its truncated hearing, that the Bank was
requiring a release and indemnification agreement in order for Worrall to
obtain distribution of the Trust. Any argument that this issue was not
preserved is plainly disproved by the record. See Fischer v. Fischer, 348 S.W.3d
582, 591 (Ky. 2011) (stating that “the answer to the question of how much
specificity of grounds is required [for preservation] is resolved by simply saying
that enough must be stated to establish the basis of the movant's argument so
that the trial court has the opportunity to consider that basis in making a
ruling[]”); see also Skaggs v. Assad, ex rel. Assad, 712 S.W.2d 947, 949 (Ky.
1986) (noting matter in question was not preserved because neither party
8 In fact, the Bank’s “simple release” provided that trust statements were
available on request. Under this statute, the notice requires delivery to the beneficiary
of five-years’ accounting. While five-years’ worth of trust statements detailing assets
held, bought and sold, and itemizations of receipts and disbursements likely would
satisfy the accounting requirement, a boilerplate provision that “statements of the
activities in the Trust are available upon request” clearly does not.
11
submitted a request, oral or written, to the trial court[]). The Bank’s action was
in direct violation of KRS 386B.8-180(5): “[n]o trustee [of a] trust shall
request that any beneficiary indemnify the trustee against loss in
exchange for the trustee forgoing a request to the court to approve its
accounts at the time the trust terminates or at the time the trustee is
removed or resigns . . . .”9 The Bank’s trust officer admitted this violation;
Bank counsel’s November 8, 2019, letter contained the violation;10 and Bank
counsel directly advised the district court of the violation at the January 8
hearing. While we might agree that prudent practice dictates a trustee’s
attempt to receive such a document, however titled, it is simply beyond the
pale for a trustee to extort such a document when the legislature has provided
an adequate mechanism and remedy for the settlement and distribution of
trust assets.
2. Breach of Fiduciary Duties. Worrall argues that the Bank violated
its fiduciary duty to administer the Trust by liquidating the Trust’s assets.
This issue was similarly preserved by Worrall’s oral objection to the liquidation
9 This section states, in full:
No trustee trust [sic] shall request that any beneficiary indemnify
the trustee against loss in exchange for the trustee forgoing a request to
the court to approve its accounts at the time the trust terminates or at
the time the trustee is removed or resigns, except as agreed upon by the
parties pursuant to paragraph (b)1. or 2. of subsections (1) and (2) of this
section.
10 We must note the irony of Bank counsel’s letter asserting “Option two” as
“court intervention and use of all legal avenues available” since the Bank pursued
avenues NOT legally available, i.e., failure to comply with statutory requirements and
liquidation of trust assets.
12
and request for an in-kind distribution. We agree with Worrall that the Bank
violated its fiduciary duties in administering the Trust.
As noted by Professor Scott, “[t]he extent of the duties and of the powers
of a trustee depends primarily upon the terms of the trust.” 2 Austin
Wakeman Scott, Scott on Trusts § 164 (3d ed. 1967); see KRS 386B.1-030(2)
(providing that “[t]he terms of the trust prevail over any provision of this
chapter[]”); KRS 386B.8-010 (requiring the trustee to “administer the trust in
good faith, in accordance with its terms and purposes and the interests of the
beneficiaries[]”). Mr. Thompson’s will, in the provisions of Article Seventh,
directed the trustee “at the death of my said daughter, . . . said shares of stock
shall in that event be paid over to her estate.” Obviously, the Trust’s corpus
had been diversified over Mrs. Worrall’s lifetime,11 but Mr. Thompson’s
direction was to distribute the Trust’s assets in kind. While authority may
exist that distribution in cash was permissible, in Lucas v. Mannering, 745
S.W.2d 654, 655-56 (Ky. App. 1987), the court held that notwithstanding a
fiduciary’s power to sell real estate, the fiduciary’s authority to do so was not
unqualified and could not override the beneficiaries’ desire to receive
distributions in-kind.
The record discloses absolutely no reason justifying liquidation of the
Trust’s corpus to cash. From the Bank’s point of view, Worrall very well may
have been difficult to deal with. He apparently sought removal of the Bank as
11 The original trust corpus was 8,000 shares of the Class B common stock of
Glenmore Distilleries Company.
13
trustee and then failed to follow through to secure his own appointment as
trustee. He may have procrastinated in securing his own appointment as
executor under Mrs. Worrall’s will. He may have indicated his agreement to
sign the Bank’s “simple release” and then reneged. He may have done all those
things and been unpleasant to deal with. But those failings do not justify the
punitive and vindictive actions of the Bank in seeking a liquidation of the
Trust’s assets, again, when the legislature has provided an adequate
mechanism and remedy for the settlement and distribution of trust assets.
3. Remedies. The question remains, what may be the remedies for
the Bank’s statutory and fiduciary violations? KRS Chapter 386B.10 provides
a number of remedies that may be applicable. “A violation by a trustee of a
duty the trustee owes to a beneficiary is a breach of trust.” KRS 386B.10-
010(1). Remedies for breach of trust may include “redress a breach by paying
money, restoring property, or other means[,]” KRS 386B.10-010(2)(c);
“order[ing] a trustee to account[,]” KRS 386B.10-010(2)(d); “reduc[ing] or
deny[ing] compensation to the trustee[,]” KRS 386B.10-010(2)(h). In addition to
the specific remedies as set out in KRS 386B.10-010, KRS 386B.10-020(1)
provides as a remedy, “the greater of: (a) [t]he amount required to restore the
value of the trust property and trust distributions to what they would have
been had the breach not occurred; or (b) [t]he profit the trustee made by reason
of the breach.” The beneficiary may also be entitled to “costs and expenses,
including reasonable attorney’s fees.” KRS 386B.10-040.
14
The remedies to which Worrall is entitled are to be addressed by the
Jefferson District Court on remand. At a minimum, we anticipate that Worrall
is entitled to an accounting for the Bank’s actions as trustee for the five years
prior to Mrs. Worrall’s death, as well as following her death.12 In addition, as
monetary damages, Worrall is entitled to reimbursement for any capital gains
tax he was required to pay;13 denial and reimbursement of the Bank’s trustee’s
and attorney’s fees during calendar year 2019 and thereafter; reimbursement
of any commissions incurred by the Bank in liquidating the Trust’s assets;
reimbursement of the Receiver’s fee, $5,000; and payment of Worrall’s
attorney’s fees. The district court is also to calculate Worrall’s entitlement to
reimbursement for any loss in the value of the investments to which he was
entitled and wrongfully deprived. In other words, as to the Trust’s assets
existing on December 31, 2019, i.e., prior to liquidation, the district court is to
ascertain the value of those assets as of the date of this opinion (“current
value”). In the event the current value exceeds the value Worrall was paid
12 If this accounting discloses violations of the Bank’s duties, Worrall may be
entitled to damages for those violations in addition to the remedies set forth in this
opinion.
13 We find curious the Bank’s claim that Worrall would not be entitled to
reimbursement of capital gains tax since “these taxes would eventually have to be
paid.” Capital gains tax under the current tax code is only payable following the sale
of a capital asset. See IRS Topic No. 409, Capital Gains and Losses
(https://www.irs.gov/ taxtopics/tc409) (last accessed Mar. 25, 2022) (stating that
upon the sale of “a capital asset, the difference between the adjusted basis in the asset
and the amount . . . realized from the sale is a capital gain or a capital loss[]”). But for
the Bank’s malfeasance, Worrall may have delayed indefinitely the sale of any trust
assets and thereby delayed or avoided payment of any such taxes, or perhaps sold any
appreciated assets in a year when he had offsetting capital losses from other assets.
15
following the extrajudicial liquidation in January 2020, that value represents
the damage Worrall has suffered as a result of the Bank’s breach of its duties.
As to the Bank’s arguments that “[a] trustee does not breach any duty by
following a Court’s instruction[,]” and it cannot “be held liable in any way, for
costs that flow from it following a court order directing it how to distribute
Trust assets[,]” we note that this matter was one involving neither competing
interests of two or more beneficiaries, nor a novel or questionable course of
action fairly debatable under either the law or facts. Under such scenarios,
yes, a trustee should request court intervention and decision pursuant to KRS
386B.2-010.14 This matter, by contrast, involved a routine termination of a
trust and a single beneficiary who merely objected to signing an overly broad
release and indemnification agreement proffered by the trustee, seeking
insulation from any possible liability in its administration of the trust. In other
words, it arose from the Bank, as trustee, placing its corporate interests above
those of its beneficiary. In KRS 386B.8-180, the legislature has sought to
provide a fair and balanced mechanism for resolving an impasse such as
occurred here, protecting the interests of both the trustee and the
beneficiary(ies). The Bank’s clear remedy was not the action taken; rather, it
14 In matters involving trust termination or removal of a trustee, the more
specific statute, KRS 386B.8-180, governs over the general statute, KRS 386B.2-010,
which authorizes court intervention in trust administration. See Commonwealth v.
Phon, 17 S.W.3d 106, 107 (Ky. 2000) (holding that “[w]hen there appears to be a
conflict between two statutes, as here, a general rule of statutory construction
mandates that the specific provision take precedence over the general[]”). In PNC Bank,
we addressed the interplay between KRS 386B.8-180 and KRS 386B.2-030, another
general jurisdictional statute. 590 S.W.3d at 821-23.
16
was to give the notice and information required in KRS 386B.8-180(1)(a) and
follow the procedure set out in subsection (1)(b) of that statute. If the Bank
had merely followed the statutory procedure, its interests and those of Worrall
would have been protected. This procedure was available to the Bank at all
times following Worrall’s appointment as executor under Mrs. Worrall’s will.
Because the Bank chose to ignore the statutory remedy, to disregard the trust
terms for distribution, and to lead the district court to clear error, it justifiably
bears responsibility for any and all damages suffered and proven by Worrall.
Finally, the Bank’s argument that reversal would result in reinstating the
Trust, reappointing Bank as trustee and restoring the Trust’s assets to the
Bank is unavailing. Worrall sought an accounting from the Bank and an in-
kind distribution. The district court is to order an accounting, KRS 386B.10-
010(2)(d), and appropriate damages. KRS 386B.10-010(2)(c), KRS 386B.10-
020(1)(a). The district court is neither compelled to nor should it reinstate the
Trust or reappoint the Bank as trustee.
B. Denial of Due Process.
Because we have resolved this matter on the basis of Worrall’s claims of
statutory violations and breaches of fiduciary duties, we do not address
Worrall’s arguments concerning the district court’s denial of due process, other
than to note the January 8 hearing was woefully inadequate to address
Worrall’s concerns. That said, we understand that district judges all over the
Commonwealth deal with a voluminous number of cases and that their time to
do so is often limited. District courts in various counties are set up for this
17
volume and have devised various ways to “transact business,” in order to save
time and address all the important matters assigned to them. We understand
that resolution of trust and/or estate disputes can be taxing and require
extraordinary dedication of judicial time and resources. Furthermore, we
recognize that these disputes are not such as district courts are accustomed to
resolving. However, a district judge simply cannot order the liquidation of an
approximate $900,000 trust with less consideration than what the judge might
give to a default judgment on a $2,500 credit card debt. The legislature, as the
maker of public policy in this Commonwealth, has established subject matter
jurisdiction in the district courts not only in matters of the sort presented here,
KRS 386B.8-180(6), but also on numerous similarly contested issues. See PNC
Bank, 590 S.W.3d at 822 (holding that district court had jurisdiction to resolve
disputes under KRS 386B.8-180(2)); Privett v. Clendenin, 52 S.W.3d 530, 531
(Ky. 2001) (interpreting district court jurisdiction over a custodian’s accounting
under KRS 385.192(1)); Maratty v. Pruitt, 334 S.W.3d 107, 111 (Ky. App. 2011)
(interpreting jurisdictional requirements of KRS 395.617). Thus, district judges
are not to give these matters short shrift but are to accord them appropriate
and due consideration.
IV. Conclusion.
Based on the foregoing, the Jefferson District Court’s Order liquidating
the Trust’s assets constituted a clear abuse of discretion in that it was
arbitrary, unreasonable, unfair, and unsupported by sound legal principles.
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For the foregoing reasons, the Opinion and Order of the Jefferson Circuit Court
is reversed. This matter is remanded to the Jefferson District Court for
appropriate proceedings consistent with this Opinion.
All sitting. All concur.
COUNSEL FOR APPELLANT:
Allen P. Dodd, III
Dodd & Dodd Attorneys, PLLC
COUNSEL FOR APPELLEE:
Christopher Wilson Brooker
Wyatt Tarrant & Combs LLP
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