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Del. AG can sue DuPont trust to get half its money spent in her state

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Saturday, December 21, 2024

Del. AG can sue DuPont trust to get half its money spent in her state

State AG
Jennings

Kathy Jennings | kathyfordelaware.com

DAYTONA BEACH, Fla. (Legal Newsline) - Delaware Attorney General Kathy Jennings can sue over the administration of the Florida-based Nemours Foundation established by the DuPont family, an appeals court ruled, upholding a decades-old settlement under which Nemours is supposed to expend half its money in Delaware.

In the latest chapter of litigation that has involved multiple Delaware AGs over the years, including President Joe Biden, Florida’s Fifth District Court of Appeal revived Delaware’s claim Nemours has violated its agreement to spend 50% of distributions in Delaware and is putting out misleading financial statements.

Alfred I. duPont set up the Nemours Foundation in his will after he moved to Jacksonville in 1926. The trust is governed by Florida law but Delaware has repeatedly intervened to enforce the 50% provision.

“Being from Delaware, Mr. duPont included in his will and in the trust documents specific, clear direction that the children and elderly of Delaware were to receive priority and were to be taken care of before expending trust funds on children or elderly residing elsewhere,” the appeals court observed. (The trust was established for the “care and treatment of crippled children, but not of incurables, or the care of old men or old women, and particularly old couples, first consideration, in each instance, being given to beneficiaries who are residents of Delaware.”)

The Delaware Attorney General intervened repeatedly on behalf of Delaware residents and in 1970 a Florida court ruled the Delaware AG had standing to sue over how the trust was administered. That case was settled in 1980 with the trust agreeing to spend at least 50% of its distributions in Delaware. Florida, Delaware and the trustees signed off.

Litigation resumed after Delaware argued the trustees had changed their policy to include expenditures in Maryland, New Jersey and Pennsylvania as “Delaware operations.” Delaware said the trust also was improperly accounting for profits from its healthcare facilities in Delaware and was putting out inaccurate financial reports.

A lower court dismissed the claim that trustees were failing to live up to the 1980 settlement, but the appeals court reversed, holding the settlement was an enforceable contract. The appeals court also dismissed as “absurd” the trial court’s ruling that the 1979 court decision applied only to that case and had been superseded by later trust law.

“Almost every appellate decision directly concerns only a single case,” the appeals court said. “However, the principles of law announced in one opinion by a district court are to be applied by trial courts within the district to substantially similar situations.”

Judge James Edwards partially dissented, saying only the trustees agreed to abide by the terms of the 1980 settlement and the trust was free to ignore it.

“A charitable trust whose settlor has died cannot be revised or amended by simple agreement of litigants even if that agreement is in writing,” he said. “Judicial approval in the nature of a judgment is required.”

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