298 Ga. 161
Ga.2015Background
- Four plaintiffs were beneficiaries of Subchapter S‑Trusts (S‑Trusts) created by O. Wayne Rollins; Gary Rollins is trustee of the plaintiffs’ S‑Trusts. The trusts hold minority interests in family entities (RHC, LOR) and in the Rollins Investment Fund partnership (RIF).
- In 1993 the RIF partnership agreement was amended to (a) permit non‑pro rata redemptions/distributions and (b) vest exclusive management and distribution authority in Gary and Randall as managing partners. Plaintiffs challenge that amendment and subsequent distribution practices.
- Plaintiffs allege breaches of fiduciary duty and trust (including failure to account, self‑dealing by investing trust assets in illiquid family entities, imposing a conduct‑based distribution code, and obtaining consents by nondisclosure), and seek damages and removal of trustees.
- The trial court granted summary judgment for defendants except on a claim that required periodic trust accountings had not been timely provided pre‑suit. The Court of Appeals (Rollins I and III) found jury issues and ordered accounting; this Court (Rollins II) reversed parts of that analysis and directed application of a corporate fiduciary standard for corporate/entity acts while preserving trustee‑level review for trust acts.
- On the latest certiorari the Supreme Court of Georgia clarified which acts are corporate/partnership acts (to be judged under corporate/partner fiduciary standards) versus trust acts (to be judged under trustee duties), vacated portions of the Court of Appeals opinion, and remanded with instructions for application of the appropriate standards to pending summary‑judgment rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs are entitled to an accounting of family entities held by the trusts | Rollins: trustees control entity information and must disclose entity books because plaintiffs are beneficiaries affected by entity management | Defs: trial court has discretion; minority trust interests do not automatically entitle beneficiaries to entity accounting | Court: trial court discretion controls; Court of Appeals must reconsider accounting claim in light of equitable discretion (Rollins II guidance) |
| Proper fiduciary standard for defendants’ acts at entity level (RHC, LOR) | Rollins: trustee‑level fiduciary duties should govern because trustees control entities and benefited family members were harmed | Gary/ Randall: where trustee controls an entity but only minority interest exists and settlor intended separate corporate control, corporate‑level fiduciary standard applies | Court: apply corporate fiduciary standard to defendants’ corporate/entity decisions under Rollins II; Court of Appeals must apply that standard on remand |
| Whether a jury must decide in what capacity (trustee, partner, manager) defendants acted when amending RIF agreement and adopting conduct‑based distribution code | Rollins: role ambiguity creates factual issues for a jury to decide which duty applies | Defs: record shows many challenged acts were plainly corporate/partnership acts or trustee acts; no jury needed on capacity for those acts | Court: no jury needed where record shows capacity as a matter of law; directed corporate standard for corporate acts, trustee standard for trust acts, and partner duties for partner acts (no preliminary jury determination required) |
| Validity of RIF amendment and non‑pro rata distributions (duties and breaches) | Rollins: amendment and conduct‑based distributions breached trustee/partner duties and resulted from nondisclosure/constructive fraud | Defs: amendment authorized by unanimous partner consent (trustee voted trust interests); amended partnership vested discretion in managing partners and limits liability except for willful misconduct/gross negligence/bad faith | Court: (1) Gary’s vote for the trusts must be judged under trustee duties; (2) the managing partners’ distribution decisions are governed by amended partnership terms and partner duties; Court of Appeals to evaluate summary judgment under these standards on remand |
Key Cases Cited
- Rollins v. Rollins, 321 Ga. App. 140 (2013) (Court of Appeals opinion addressing accounting and fiduciary issues)
- Rollins v. Rollins, 294 Ga. 711 (2014) (Georgia Supreme Court opinion directing application of corporate fiduciary standard for entity acts and vacating certain accounting rulings)
- Rollins v. Rollins, 329 Ga. App. 768 (2014) (Court of Appeals opinion on remand addressing capacity questions and remanding several issues)
- Hasty v. Castleberry, 293 Ga. 727 (2013) (trustee duty principles; trustee must administer trust in good faith and in accordance with its terms)
- Griffith v. First Nat. Bank & Trust Co., 249 Ga. 143 (trust law principle: settlor intent controls administration of a trust)
- Westminster Props., Inc. v. Atlanta Assoc., 250 Ga. 841 (partners’ duties governed by partnership agreement and the intent reflected therein)