IMO Daniel Kloiber Dynasty Trust U/A/D December 20, 2002
98 A.3d 924
Del. Ch.2014Background
- Dynasty Trust in Delaware is a directed irrevocable trust with a Delaware trustee (PNC) and a Special Trustee (Dan) who previously controlled distributions and investments.
- Kentucky Family Court issued status quo orders in the divorce proceedings to prevent dissipation of marital assets and to limit Dan’s actions; the orders extended to the Dynasty Trust and its assets.
- Dan resigned as Special Trustee in May 2014 and Nick became successor Special Trustee; Nick then directed transfers allegedly contrary to status quo orders.
- Beth, Dan’s estranged wife, contends the Dynasty Trust assets are marital property or subject to Kentucky proceedings; Dan and Nick contend Kentucky orders improperly intrude on Delaware trust administration.
- PNC filed petitions in Delaware seeking exclusive Delaware jurisdiction over the Dynasty Trust and to block Kentucky orders; Nick moved for TRO to preclude enforcement of Kentucky orders against the Trust.
- Delaware court denied Nick’s TRO request, holding no irreparable harm and no immediate collision with Kentucky proceedings, while preserving the possibility of future coordination with Kentucky.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there exclusive Delaware jurisdiction over the Dynasty Trust? | Nick argues Delaware’s Qualified Dispositions Act confines action to this court. | PNC contends the act grants this court exclusive jurisdiction over qualified dispositions. | No exclusive world-wide jurisdiction; balance of interests and comity apply. |
| Does the Kentucky intervention threaten irreparable harm requiring a TRO? | Nick asserts imminent contempt and due process harms from Kentucky orders. | Delaware has adequate legal remedies; no irreparable harm shown. | No irreparable harm; TRO denied. |
| Would a TRO prevent interference with Delaware primary supervision by Kentucky? | Nick fears a collision course between courts. | No current collision; Kentucky case can proceed without depriving Delaware of guidance on trusts. | No imminent collision; TRO not warranted. |
| Should the Court exercise primary or permissive jurisdiction over trust administration? | Delaware should assert primary supervision to ensure proper Delaware-law administration. | Primary supervision not established; other states’ proceedings can proceed with comity. | Jurisdiction permissive; this court may address Delaware-law issues without precluding Kentucky actions. |
| Should the court issue an anti-suit injunction or limit enforcement of Kentucky orders? | Antisuit injunction necessary to protect trust administration. | Antisuit relief inappropriate given lack of clear irreparable harm. | Denied; not warranted at this stage. |
Key Cases Cited
- DuPont v. DuPont, 85 A.2d 724 (Del. 1951) ( Delaware constitutional/exceptional jurisdiction principles for equity courts)
- In re Peierls Testamentary Trusts, 77 A.3d 223 (Del. 2013) ( continuing jurisdiction over trusts; Restatement guidance)
- Hughes v. Fetter, 341 U.S. 609 (U.S. 1951) (full faith and credit/comity considerations in inter-state matters)
- Chicot County v. Sherwood, 148 U.S. 529 (U.S. 1893) (original jurisdiction vs. subsequent forum for enforcement)