DOUGLAS W. DU PONT, Petitioner,
WILMINGTON TRUST COMPANY, Respondent.
Submitted: August 28, 2017
Matthew P. D'Emilio, Esquire and Thomas A. Uebler,
Esquire of Cooch and Taylor, P.A., Wilmington, Delaware,
Attorneys for Petitioner.
S. Saunders, Esquire of Skadden, Arps, Slate, Meagher &
Flom LLP, Wilmington, Delaware, Attorney for Respondent.
SLIGHTS, VICE CHANCELLOR.
case concerns the trusteeship of five "total
return" unitrust trusts (the "Trusts").
Petitioner, Douglas W. du Pont ("Mr. du Pont" or
"Petitioner"), is the current beneficiary of the
Trusts. Respondent, Wilmington Trust Company
("Wilmington Trust" or "Respondent"), is
the trustee of the Trusts.
February 2016, Mr. du Pont requested that Wilmington Trust
resign as trustee. Wilmington Trust refused. Mr. du Pont then
filed a "Petition to Remove Wilmington Trust Company as
Trustee and Appoint Charles Schwab Trust Company of Delaware
as Trustee" ("Petition") with this Court. The
Petition seeks an order removing Wilmington Trust as trustee
pursuant to 12 Del. C. § 3327(3) and appointing
a successor trustee-either Charles Schwab Trust Company of
Delaware ("Charles Schwab") or a "suitable
alternate successor trustee."Wilmington Trust has filed a
motion to dismiss the Petition pursuant to Court of Chancery
reasons that follow, Respondent's motion to dismiss is
GRANTED, and the Petition is dismissed with prejudice.
facts are drawn from allegations in the Petition, documents
integral to the Petition and those matters of which the Court
may take judicial notice. I have assumed as true all
well-pled factual allegations in the Petition.
Pont is the current beneficiary of the Trusts. He is married
to Sarah du Pont and has four children, all of whom are
sui juris. Wilmington Trust is a Delaware
non-depository trust company headquartered in Wilmington,
Delaware, and is a wholly-owned subsidiary of M&T Bank
Corporation ("M&T Bank"), a New York business
Trusts were created pursuant to four trust agreements and one
will (collectively, the "Trust Agreements"). The
Trust Agreements appoint Wilmington Trust as lone trustee of
the Trusts, and Wilmington Trust has served in that role
since the Trusts were created in the 1940s and 1950s. The
Trust Agreements are silent regarding removal of the trustee
or appointment of a successor trustee.
2013, Wilmington Trust agreed to petition the Court of
Chancery to modify the Trust Agreements to insert provisions
that authorize an "Investment Direction Advisor" to
direct all investment decisions for the Trusts. The modification
was prompted in part because Mr. du Pont was dissatisfied
with Wilmington Trust's administration of the Trusts.
While Wilmington Trust did not agree with Mr. du Pont's
criticisms, it agreed to petition for the modification, which
this court granted.
the modified Trust Agreements, Mr. du Pont is designated as
the Investment Direction Advisor for the Trusts and
Wilmington Trust is "relegated . . . to a purely
administrative directed-trustee role." In this reduced
role, Wilmington Trust now "has no investment authority
or discretion over the Trusts'
Wilmington Trust's Alleged Misadministration of the
alleges that "[f]or years, Wilmington Trust has
improperly administered the Trusts, to the detriment of the
Trusts and their beneficiaries." As particular examples,
■ Wilmington Trust "miscalculated] the amount of
Mr. du Pont's unitrust distribution";
■ There has been "minimal contact by trust
advisers (few in-person meetings and infrequent
■ Wilmington Trust rejected Mr. du Pont's
"reasonable request in 2015 for money to cover tax
further alleges, "Wilmington Trust's improper
administration [of the Trusts] has resulted in a loss of
confidence by the du Ponts in Wilmington Trust and,
unfortunately, created hostility between
Wilmington Trust as Lender and Estate Planner
from its role as trustee, Wilmington Trust has also acted as
lender and estate planner to Mr. du Pont. "As lender,
Wilmington Trust . . . overextended credit to Mr. du Pont,
collateralized his personal assets, including his revocable
trust and cash account, and reduced his unitrust
payout." When Mr. du Pont struggled to repay the
Wilmington Trust loan, Wilmington Trust "caused [him] to
liquidate low-basis assets to pay down a portion of the loan,
resulting in millions of dollars of otherwise-unnecessary
estate planner, Wilmington Trust did not inform Mr. du Pont
that the Trusts would bypass his wife upon his death. Based
on Wilmington Trust's provision of incomplete or
incorrect information, Mr. du Pont and his wife made
"substantial irrevocable gifts . . . to trusts for their
children naming Wilmington Trust as trustee . . .
." Mr. du Pont would not have made such
gifts had Wilmington Trust advised him that his wife would
not benefit from the Trusts after his death.
Changes at Wilmington Trust Since the Creation of the
alleges that "[t]he Wilmington Trust that is a party to
this action is not the same Wilmington Trust that the du
Ponts entrusted in the 1940s and 1950s to serve as trustee of
the Trusts." In the 1940s and 1950s, Wilmington Trust
"was closely associated with the du
Ponts." And for many years thereafter,
"Wilmington Trust [remained] an independent
Delaware-based bank, managed, in part, by members of the du
Pont family . . . ."
wake of the 2008 financial crisis, Wilmington Trust's
"business nearly collapsed, which led to
federal-government investigations, lawsuits, and indictments
. . . ." Following the near-collapse of its
business, Wilmington Trust was acquired by a New York-based
bank-M&T Bank. Today, Wilmington Trust is a wholly-owned
M&T subsidiary and its "chairman and most of its
other directors are longtime M&T officers and
directors." "Not a single member of the du Pont
family remains on the [Wilmington Trust]
board." Thus, Petitioner alleges,
"Wilmington Trust's governance, business, culture,
and du Pont relationship would be unrecognizable to the
trustors of the Trusts. The Wilmington Trust once trusted by
Mr. du Pont's forebears is gone."
February 2016, Mr. du Pont requested that Wilmington Trust
resign as trustee of the Trusts. Wilmington Trust refused.
Mr. du Pont responded on October 19, 2016, by filing the
Petition. In his Petition, Mr. du Pont asks the Court to
remove Wilmington Trust as trustee of the Trusts pursuant to
12 Del. C. § 3327(3) ("Section
3327(3)") and to appoint a successor trustee-either
Charles Schwab or a "suitable alternate successor
trustee." As grounds for removal, the Petition
1. Since the creation of the Trusts and the appointment of
Wilmington Trust as trustee, a substantial change in
circumstances has occurred;
2. Wilmington Trust is unfit, unwilling, or unable to
administer the Trusts properly; and
3. Hostility between Wilmington Trust and Mr. du Pont
threatens the efficient administration of the
Trust filed a motion to dismiss the Petition pursuant to
Court of Chancery Rule 12(b)(6) on December 2, 2016. The
Court heard oral argument on that motion on August 28, 2017.
standards governing a motion to dismiss for failure to state
a claim are well settled: (i) all well-pleaded factual
allegations are accepted as true; (ii) even vague allegations
are 'well-pleaded' if they give the opposing party
notice of the claim; (iii) the court must draw all reasonable
inferences in favor of the nonmoving party; and (iv)
dismissal is inappropriate unless the plaintiff would not be
entitled to recover under any reasonably conceivable set of
circumstances susceptible of proof."
noted, I have accepted as true all well-pled factual
allegations in Mr. du Pont's Petition and have drawn all
reasonable inferences in his favor. Even so, for reasons I
explain below, I cannot reasonably conceive how Section
3327(3) would warrant the removal of Wilmington Trust as
trustee of the Trusts.
3327(3) sets forth certain bases for judicial removal of a
trustee despite the absence of a breach of trust;
i.e., judicial removal of a trustee even where the
trustee has not violated a duty owed to the
beneficiary. Under Section 3327(3), the Court of
Chancery may remove a trustee on the petition of a
beneficiary if the court, "having due regard for the
expressed intention of the trustor and the best interests of
the beneficiaries, " determines that, despite the
absence of a breach of trust-
(a) there has been "a substantial change in
(b) the trustee is unfit, unwilling, or unable to administer