Gerschel v. Bank of America , N.A., 1:20-cv-05217

Background

The 1950 Trust, created by Andre Meyer, gives Marianne Gerschel the lifetime right to net income; principal is payable to specified remaindermen (Patrick and Laurent trusts, then a foundation).
Trustees historically included family/friends and a corporate trustee; current co-trustees are Marianne and Bank of America (BOA).
Marianne sued to remove BOA as trustee; intervenors (trustees for the remaindermen) were permitted to intervene to protect remaindermen interests.
BOA moved for summary judgment seeking Court approval to resign as corporate trustee; all parties agree court approval is required for a corporate trustee’s resignation.
Marianne initially sought to be sole trustee and later proposed appointing Frank Baglieri (a CPA) as successor/co‑trustee; intervenors opposed and instead advocated appointment of an independent corporate trustee.
The Court granted BOA’s resignation but conditioned effectiveness on Court approval of an independent corporate successor nominated and consented to by the parties; BOA and Marianne were ordered to submit candidate trust departments and qualifications within 30 days.

Issues

Issue	Plaintiff's Argument	Defendant's / Intervenors' Argument	Held
Whether BOA’s resignation should be accepted and on what conditions	Marianne seeks BOA’s removal without restrictive conditions and proposes Baglieri as successor (or to be sole trustee)	BOA does not oppose conditions; intervenors require appointment of an independent corporate successor to protect remaindermen	BOA’s resignation accepted but effective only after Court approval of an independent corporate successor; parties must submit nominees and qualifications
Whether an individual successor (Baglieri) is an adequate replacement	Baglieri (CPA) is an acceptable independent trustee	Intervenors: Baglieri has prior ties to Marianne and can be removed by her without court approval, so he is not sufficiently independent	Appointment of Baglieri denied as insufficient to protect the trust’s best interests
Whether Marianne serving as sole trustee creates a conflict	Marianne implicitly supports sole trusteeship (and argues trust instrument permits individual appointments)	Intervenors: Marianne is an interested beneficiary entitled to income only; sole trusteeship creates potential self-dealing and risk to principal for remaindermen	Court finds substantial conflict risk and rejects placing Marianne in sole control without an independent corporate trustee
Whether intervenors may seek conditions on BOA’s resignation	Marianne contends intervenors are limited by their intervention	Intervenors: as permitted intervenors they are treated as parties and may seek relief to protect remaindermen	Court permits intervenors to seek conditions; rejects Marianne’s reliance on Washington Elec. as inapposite

Key Cases Cited

Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant’s initial summary judgment burden explained)
Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (standard for genuine issue of material fact)
Nick’s Garage, Inc. v. Progressive Cas. Ins. Co., 875 F.3d 107 (2d Cir. 2017) (summary judgment standard application)
Gilman v. Marsh & McLennan Cos., Inc., 826 F.3d 69 (2d Cir. 2016) (construing evidence in favor of nonmoving party)
Matter of Wallens, 9 N.Y.3d 117 (N.Y. 2007) (fiduciary duty and conflicts of interest principles)
Sankel v. Spector, 33 A.D.3d 167 (N.Y. App. Div. 2006) (trustee prohibited from occupying conflicting positions)
In re Mankin, 88 A.D.3d 717 (N.Y. App. Div. 2011) (trustee’s duty of undivided loyalty)
Matter of Hall, 275 A.D.2d 979 (N.Y. App. Div. 2000) (appoint independent trustee when circumstances warrant)
Washington Elec. Co-op., Inc. v. Mass. Mun. Wholesale Elec. Co., 922 F.2d 92 (2d Cir. 1990) (intervention/limits context addressed and distinguished)
New York Cent. R. Co. v. Lefkowitz, 19 A.D.2d 548 (N.Y. App. Div. 1963) (intervenors treated as original parties once permitted)