WOOD V. U.S. BANK, N.A. 828 N.E.2d 1072 (2005) CASE BRIEF

WOOD V. U.S. BANK, N.A.

828 N.E.2d 1072 (2005)

NATURE OF THE CASE: This was a dispute over the duty to diversity trust assets regardless of statements in the trust language. Dana Barth Wood (P), contests the trial court's denial of her motions for a directed verdict, judgment notwithstanding the verdict, and a new trial.

FACTS: P's husband John, a prominent Cincinnati attorney with estate-planning experience, created a trust worth over $8 million. Wood was a beneficiary of the trust. John served as trustee during his lifetime and named Star Bank the successor trustee. U.S. Bank (D) is the successor-in-interest to Star Bank et al. John modified his estate plan several times; the last modification took place shortly before his death. He modified it with the advice of an estate-planning attorney. D, trustees, were permitted to retain, manage, and invest the stock that was in the trust 'as they deem advisable or proper.' The trust included a retention clause that allowed D to retain D stock. The trust did not last long. John had directed the trustee to distribute almost all the trust assets to the beneficiaries after paying the debts and expenses of the estate. Beginning in early 1998, D had custody of the trust assets. Shortly after John's death, D's trust officers and the beneficiaries (including P) met to discuss the estate. The beneficiaries agreed that a September trust controlled. D also recommended selling some stock to pay the debts and expenses of the estate and retaining the remainder pending the eventual distribution to the beneficiaries free of trust. The debts and expenses were nearly $4 million; the trust contained approximately $8 million, of which roughly $6 million was in D stock. This plan did not call for selling any D stock other than what was necessary to cover the taxes and other debts. The original composition of the trust was 82 percent D stock and 18 percent Cincinnati Financial stock. After the sales, the final trust was approximately 86 percent D stock and only 14 percent Cincinnati Financial stock. D estimated that it would take 18 to 20 months to finalize the estate. D held the assets during this time and did not diversify. Because of a merger, D's stock increased from about $21 per share in October 1998 to almost $35 per share in early 1999. In April 1999, P asked D to sell some of the stock. P's advisor, also requested diversification. D did not sell any stock as a result of these requests. D's stock price plunged beginning in mid-1999. And by mid-2000, it was worth only $16 per share. D then made the final distribution to the beneficiaries. D's failure to diversify cost P $771,099. P sued D, asserting that Dr had violated Ohio law by failing to diversify the assets of the trust. The jury returned a verdict against P. Wood moved for judgment notwithstanding the verdict and for a new trial. The trial court denied these motions, and this appeal followed.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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