Douglas W. du Pont v. Wilmington Trust Company
CA 12836-VCS
| Del. Ch. | Oct 6, 2017Background
- Five unitrusts created in the 1940s–1950s appoint Wilmington Trust as sole trustee; the instruments are silent on trustee removal.
- In 2013 Wilmington Trust and the beneficiary, Douglas W. du Pont, modified the trusts to make du Pont the Investment Direction Advisor and limit Wilmington Trust to an administrative, directed-trustee role (no investment discretion).
- Du Pont alleges historical misadministration (miscalculated distributions, limited adviser contact, denial of a 2015 payout request) and that Wilmington Trust also acted as his lender and estate planner, which he claims harmed him financially and caused family hostility.
- Du Pont demanded Wilmington Trust resign in Feb 2016; Wilmington refused. Du Pont filed a petition to remove Wilmington Trust under 12 Del. C. § 3327(3) and appoint Charles Schwab or another successor trustee.
- Wilmington Trust moved to dismiss under Chancery Rule 12(b)(6). The court accepted du Pont’s well-pled facts as true but dismissed the petition with prejudice, finding du Pont failed to state a claim under § 3327(3).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there has been a "substantial change in circumstances" warranting removal under § 3327(3)(a) | Du Pont: Wilmington Trust’s corporate changes, government investigations, M&T acquisition, and altered relationship with the du Pont family amount to a substantial change. | Wilmington: Corporate changes and acquisition did not affect trustee services; 2013 role-limiting modification was agreed to by du Pont and doesn’t justify removal. | Court: Not reasonably conceivable — no pleaded connection between corporate events and trustee services; 2013 modifications were at du Pont’s instance and preserve settlor intent. |
| Whether Wilmington Trust is unfit, unwilling, or unable under § 3327(3)(b) | Du Pont: Alleged misadministration, lending/estate-planning conflicts, overextended credit, collateralization, forced sales, and reduced unitrust payments show unfitness/unwillingness/inability. | Wilmington: Allegations are conclusory or isolated; loans and estate planning were by consent and not shown unfair; no well-pled breach or pattern of indifference. | Court: Not reasonably conceivable — allegations insufficient to show unwillingness, inability, or unfitness; no breach pleaded; lending/estate-planning conduct not shown to have harmed trustee performance. |
| Whether hostility threatens efficient administration under § 3327(3)(c) | Du Pont: Loss of confidence created hostility between him and Wilmington Trust that impedes administration. | Wilmington: Any friction is ordinary and does not prevent performance of the mostly ministerial trustee duties. | Court: Not reasonably conceivable — mere lack of confidence or friction is insufficient; no allegation that hostility makes performance impossible. |
| Whether du Pont pleaded facts sufficient to survive a Rule 12(b)(6) motion | Du Pont: The petition alleges specific incidents and structural changes supporting removal. | Wilmington: Pleadings are conclusory, lack factual nexus, and fail to show statutory grounds for removal. | Court: Grant dismissal with prejudice — plaintiff failed to state a claim under § 3327(3) and did not seek or obtain leave to amend. |
Key Cases Cited
- Savor, Inc. v. FMR Corp., 812 A.2d 894 (Del. 2002) (standards for Rule 12(b)(6) motions in Chancery Court)
- In re Mary R. Latimer Trust, 78 A.3d 875 (Del. Ch. 2013) (consulting Uniform Trust Code to interpret Delaware Trust Code)
- In re Trust Under Will of Flint for the Benefit of Shadek, 118 A.3d 182 (Del. Ch. 2015) (settlor’s expressed intent controls over living beneficiaries)
- In re Unfunded Ins. Trust Agreement of Capaldi, 870 A.2d 493 (Del. 2005) (trustee removal requires more than mere negligence)
- Malpiede v. Townson, 780 A.2d 1075 (Del. 2001) (courts accept only reasonable inferences from well-pled facts)
- Solomon v. Pathe Commc’ns Corp., 672 A.2d 35 (Del. 1996) (conclusory allegations will not be accepted without supporting facts)
- Broeker v. Ware, 29 A.2d 591 (Del. Ch. 1942) (mere differences of opinion between trustee and beneficiary do not justify removal)