Alotech Ltd., L.L.C. v. Barnes, 2017 Ohio 5569

Alotech sued John Black for embezzlement and also named several women alleged to have received gifts purchased with misappropriated funds; Audrey Black (Ms. Black) was one defendant.
Ms. Black’s mother established the Inez Urbancic Living Trust naming Ms. Black’s daughter Courtney as sole beneficiary; Ms. Black later became successor trustee.
On April 11, 2016, Alotech and Ms. Black signed a handwritten settlement: Alotech would dismiss claims against Ms. Black in exchange for (1) transfer of the trust real property to Alotech, (2) $15,000 within 15 days, and (3) $150/month for 100 months; Courtney’s signature block on the agreement was unsigned.
The next day Courtney refused to permit the transfer; Ms. Black asserted Courtney’s approval was a condition precedent to settlement performance.
Alotech moved to enforce the settlement; the trial court ordered enforcement, concluding the trust gave Ms. Black authority to transfer trust property without beneficiary consent.
The appellate court reversed, holding enforcement would violate public policy because as trustee Ms. Black owed fiduciary duties and could not transfer trust assets to settle her personal liabilities to the detriment of the sole beneficiary.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the handwritten settlement is enforceable	Alotech: Ms. Black had authority under the trust to transfer the property; settlement should be enforced.	Ms. Black: Agreement required Courtney’s approval; trustee cannot transfer beneficiary property to satisfy personal obligations.	Reversed: settlement unenforceable because enforcement would violate trustee’s fiduciary duties and public policy.
Whether trustee’s discretionary trust clause permits transfer absent beneficiary consent	Alotech: Paragraph 7(E) grants broad authority to sell or convey trust property without consent.	Ms. Black/Courtney: Trustee’s discretion is limited by fiduciary duty and trust’s purpose; transfers harming beneficiary are impermissible.	Held: The discretionary clause does not override trustee’s duty to act in beneficiary’s best interest.
Whether enforcement would be against public policy/statutory law	Alotech: Freedom to contract and favoring settlement should control.	Ms. Black: R.C. 5808.02(A) and fiduciary principles make enforcement contrary to public policy.	Held: Enforcement would contravene public policy and statutory trustee duties; settlement unenforceable.
Whether any other defenses (revocation, impossibility) were dispositive	Alotech: N/A at appellate stage.	Ms. Black: Raised other assignments (revocation, impossibility) below/appeal.	Moot: Appellate court did not address because public-policy ruling disposed of case.

Continental W. Condo. Unit Owners Assn. v. Howard E. Ferguson, Inc., 74 Ohio St.3d 501 (1996) (settlement agreements are contracts and enforceable).
Shifrin v. Forest City Ents., Inc., 64 Ohio St.3d 635 (1992) (contracting parties’ intent is found in the agreement language).
Cincinnati City School Dist. Bd. of Edn. v. Conners, 132 Ohio St.3d 468 (2012) (freedom to contract is important but subject to public-policy limits).
In re Trusteeship of Stone, 138 Ohio St. 293 (1941) (trustee owes highest fiduciary duty and utmost fidelity).
Caswell v. Lenihan, 163 Ohio St. 331 (1955) (trustee must avoid diverting trust funds for personal gain).