Waldo Forbes v. Forbes

509 P.3d 888 (2022)

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Nature of the Case

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Facts

The Beckton Ranch Trust (BRT) had 21 beneficiaries, which included P and Ds, and 1,188 outstanding shares. P gifted one share to his son-in-law Jeff Durkin, two shares to his stepson Geoffrey Scott, and two shares to his stepson Jeremy Scott. P gifted one share to his son-in-law Jeff Durkin, two shares to his stepson Geoffrey Scott, and two shares to his stepson Jeremy Scott. In February 2018, P wrote a letter to the Trustees informing them of his gift to Jeff Durkin and his belief that, based on the annual [ reports, the value of a single BRT share was $21,600. In March 2018, P attempted to gift five shares to the Sheridan College Foundation. Then in June 2018, P informed the Trustees of the gifts to his stepsons. Under Article Twelfth of the BRT, trustees are given the option to purchase shares held by non-descendants of William Hathaway Forbes at 'fair value.' Pursuant to Article Twelfth, Ds decided to exercise their option to purchase the shares P gifted to the Scotts. On June 29, 2018, Ds notified the Scotts they would be exercising their option to purchase the shares. Within the written notice, the Trustees stated the shares' fair value would be determined through a sealed bidding process. In this process, each of the current and past adult beneficiaries of the BRT would be given the opportunity to bid on the shares. Ds sent requests for bids which included P and his biological children. Ds stated in the request that a minimum bid price was set at $4,000 per share. The request indicated the minimum bid price did not reflect Ds' opinion on the 'fair value' of each share. A total of seven bids was received with a low of $4005 and a high of $6000. Ds determined the fair value for all nine shares would be $53,750 by using the two highest bids at 4 shares each or a value of $5,972.22 per share. The unsuccessful bidders had the opportunity to match the winning bids. Stephen and Tallie both decided to match Edith's bid of $6,000 for one share each, and Shelley matched Donald's bid of $5,950 for one share. The Trustees tendered a second check to the Sheridan College Foundation for $9,861.10, which accounted for the difference between the $4,000 per share previously offered by the Trustees and the amount of the winning bids that had established the value of $5,972.22 per share. The Trustees also notified the Scotts of the winning bid value and sent each of them a check for $11,944.44. The Sheridan College Foundation rejected P's gift of BRT shares and returned the two checks tendered to it. On January 14, 2019, P filed a complaint seeking declaratory relief from Ds' valuation of the gifted shares and alleged Ds breached their fiduciary duty of loyalty. P also sought damages and an accounting. Ds filed a motion for judgment on the pleadings. P filed a motion for summary judgment. The district court first found P lacked standing to litigate the transactions over the Scotts' shares.

It found that under the terms of the BRT, Ds had not breached their fiduciary duty of loyalty by using the sealed bidding process as a method to appraise the 'fair value' of BRT shares. It held that Ds did not engage in impermissible self-dealing because Ds took steps to disadvantage themselves in the bidding process, all past and current beneficiaries were allowed to bid, and the terms of the BRT allowed Ds to purchase the shares. P appealed.