Dueck v. Clifton Club Co.
2017 Ohio 7161
| Ohio Ct. App. | 2017Background
- Clifton Park Land & Improvement Co. conveyed a private beach and park (the "Beach") to five trustees in a 1912 Trust Deed to be held "for the sole use and benefit of all of the owners of sub lots, or parts of lots, in the Clifton Park Allotment." Lot owners are beneficiaries.
- The Clifton Club (a for‑profit corporation) acquired four "Club Lots" and holds title as a successor lot owner; club membership includes both resident lot owners and nonresident Club Members.
- For decades the Trustees and Clifton Club operated under an arrangement where the Club (and indirectly its members) paid annual fees for member access to the Beach; Trustees enacted access rules after overcrowding complaints.
- Appellants (lot‑owner Beneficiaries) sued for declaratory relief seeking a ruling that nonresident Club Members are not trust beneficiaries and thus have no legal right to Beach access, and that any Club Deed provision purporting to grant such a right is void.
- Trial court granted summary judgment for Trustees/Clifton Club, concluding the Club and, through it, its members have a legal right to use the Beach; on appeal the court reversed as to Club Members and found (1) Club Members are not direct trust beneficiaries but have permissive access regulated by Trustees, and (2) Trustees breached fiduciary duties of impartiality and to inform/report, warranting an award of appellants’ attorney fees after remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether nonresident Clifton Club members are direct beneficiaries of the 1912 Trust | Appellants: Club Members are not owners and thus not trust beneficiaries; any access is permissive and subject to Trustee regulation | Trustees/Clifton Club: Clifton Club is a beneficiary and membership rights flow through the Club to its members; historical practice supports members’ rights | Held: Club Members are not direct beneficiaries; they have permissive access only, regulated by Trustees; Clifton Club (as lot owner) is a beneficiary |
| Whether extrinsic evidence is admissible to interpret the Trust and clarify members’ rights | Appellants: Trust language is controlling but evidence of historical practice supports permissive access only | Trustees: Trust Deed clear; members’ access follows from Club’s beneficiary status and historical practice | Held: Trust Deed controls for beneficiaries, but extrinsic evidence was admissible to determine scope of Clifton Club’s use; historical practice shows member access was permissive and regulated |
| Whether Trustees breached fiduciary duty of impartiality by advocating for the Club and refusing to seek judicial clarification | Appellants: Trustees sided with Club, withheld legal memo, refused to pursue court clarification — breach of impartiality | Trustees: They were defending the trust and its terms; legally permitted to contest claims against the Trust | Held: Trustees breached duty of impartiality by advocating between beneficiaries and failing to remain neutral; should not be removed but must compensate appellants for fees/costs |
| Whether Trustees violated duty to inform/report and produce trust‑related documents | Appellants: Trustees withheld requested documents and refused disclosure of counsel memorandum, impeding beneficiaries’ ability to protect interests | Trustees: Some materials privileged; they acted in reliance on legal advice and their duty to defend the trust | Held: Trustees violated R.C. 5808.13 and fiduciary disclosure obligations (federal precedent on fiduciary exception persuasive); breach supports fee award though removal not warranted |
Key Cases Cited
- Wallace v. Clifton Land Co., 92 N.E. 940 (Ohio 1915) (discussed historical treatment of Club membership and Clifton Park conveyances)
- Domo v. McCarthy, 66 Ohio St.3d 312 (Ohio 1993) (when trust language is unambiguous, extrinsic evidence is inadmissible to interpret trust terms)
- Long Beach Assn. v. Jones, 82 Ohio St.3d 574 (Ohio 1998) (trust instruments are subject to rules of contract and instrument interpretation)
- United States v. Jicarilla Apache Nation, 564 U.S. 162 (U.S. 2011) (fiduciary exception to attorney‑client privilege may require disclosure when legal advice obtained for trust administration and paid from trust funds)
- Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (U.S. 2001) (corporation is a legal entity distinct from individuals; corporate property is owned by the corporation)