United States District Court, N.D. Alabama, Southern Division
KATHERINE M. RUDD, individually, and as Co-Trustee of the J.W. Goodwin and Virginia M. Goodwin Grandchildren's Trust, and as Co-Trustee of the Joy Goodwin Adams Irrevocable Trust dated July 19, 1989, et al., Plaintiffs,
BRANCH BANKING & TRUST COMPANY, Co-Trustee of the Joy Goodwin Adams Irrevocable Trust dated January 2, 1987 and the Joy Goodwin Adams Irrevocable Trust dated July 19, 1989, Defendant/Third-Party Plaintiff,
JOY G. ADAMS, Third-Party Defendant.
MEMORANDUM OPINION & ORDER
E. OTT CHIEF UNITED STATES MAGISTRATE JUDGE.
action, Plaintiffs Katherine M. Rudd (“Kate”) and
Tiffany Rudd Atkinson (“Tiffany”) (collectively
“Plaintiffs”), bring claims under Alabama state
law for breach of fiduciary duty based upon allegations of
malfeasance in the administration of family trusts and
related business organizations. (See
1-1 at 5-31 (“Complaint” or
“Compl.”); Doc. 31, Amended Complaint
(“Amended Complaint” or “Amd.
Compl.”)). The cause comes to be heard on a motion
filed by previously-dismissed defendant Wells Fargo Bank,
N.A. (“Wells Fargo”) seeking $83, 484.50 in
attorney's fees and $455.77 in expenses from out of the
res of certain trusts that the parties and the court
have referred to as the “Marital Trust” and the
“Shares Trusts, ” “to the extent those
trusts might be determined to still exist and/or to have any
traceable assets.” (Doc. 91). Plaintiffs opposes the
motion (Doc. 94), and Wells Fargo has filed a reply in
support. (Doc. 95). Upon consideration, the
court will grant Wells Fargo's fee
application in total.
originally filed this action on September 27, 2013, in the
Circuit Court of Jefferson County, Alabama (the “state
court”) against two defendants, Branch Banking and
Trust Company (“BB&T”) and Wells Fargo.
Broadly stated, Plaintiffs alleged those defendants and their
respective, predecessor-in-interest financial institutions
had engaged in wrongdoing while serving as co-trustees of
certain trusts created by Plaintiffs' grandparents. The
parties and the court have referred to the trusts involved in
this action by the shorthand designations the “Share I
Trust, ” the “Share II Trust” (collectively
the “Shares Trusts”), the “1989 Trust,
” the “Marital Trust, ” and the
“Grandchildren's Trust.” Plaintiffs asserted
that BB&T and Wells Fargo as co-trustees, and another
company appointed in some instances to serve in their stead
as a trust “custodian, ” Arlington Trust Company
(“Arlington”), enabled Plaintiffs' mother,
Joy G. Adams (“Joy”), the life beneficiary and
the then-“other” co-trustee of the relevant
trusts, to obtain distributions and trust property in
contravention of the governing trust instruments. Plaintiffs
charged that in so doing BB&T and Wells Fargo breached
obligations as a co-trustee to protect the interests of
remainder beneficiaries, which Plaintiffs alleged to include
themselves individually or certain of the other family trusts
of which Plaintiffs claimed to be trustees, beneficiaries, or
both. Plaintiffs further contended that Joy, BB&T, Wells
Fargo, and Arlington kept Plaintiffs in the dark about their
interests in the respective trusts by failing to send them
notices and disclosures about the existence and operation of
and Wells Fargo removed the action to this court based on
diversity jurisdiction. (Doc. 1). Some of Plaintiffs'
claims against BB&T remain pending but are not material
to the instant motion. As to Wells Fargo, following removal,
it filed an alternative motion for a dismissal or a stay,
arguing that Plaintiffs had entered into a forum-selection
agreement by which they had stipulated to litigate their
claims against Wells Fargo within the confines of another,
related civil action that Plaintiffs had previously filed in
the state court against Wells Fargo and others. (Doc. 9). The
court granted Wells Fargo's motion to dismiss, concluding
that Plaintiffs were bound by the forum-selection agreement
providing that they would bring their claims against Wells
Fargo, if it all, in a related proceeding then pending in the
Circuit Court of Jefferson County, Alabama, Birmingham
Division, before the Hon. Judge Robert S. Vance, Jr., case
number CV-2012-900915.00 (hereinafter the “State-Court
Action”). (Doc. 27 at 21-29). Accordingly, the court
dismissed those claims without prejudice to Plaintiff's
right to re-file them in the State-Court Action. Plaintiffs
subsequently took the opportunity to do so. Wells Fargo then
moved this court to certify as final, pursuant to
Fed.R.Civ.P. 54(b), that portion of its Memorandum Opinion
and Order that dismissed Plaintiffs' claims against Wells
Fargo without prejudice. (Doc. 32). Plaintiffs later joined
in that motion (Doc. 42), which the court granted. (Doc. 44).
No. appeal followed, however.
Fargo moved, pursuant to Ala. Code § 19-3B-709, to be
reimbursed from out of the property held by the Shares
Trusts, the Marital Trust, or both, in the amount of $39, 331
for attorney's fees and expenses incurred in this court.
(Doc. 29). The court initially denied that motion. (Doc. 45).
In so doing, the court determined that it could not order
payment of fees from out of the res of either trust because
it did not appear from the record that the court possessed
jurisdiction over the current co-trustees of either the
Shares Trusts or the Marital Trust, who would, the court
concluded, be necessary parties to any such adjudication.
Wells Fargo moved for reconsideration of that denial. (Doc.
48). The court agreed to do so and ultimately held that Wells
Fargo could recover fees and expenses from the trust property
under § 19-3B-709. (Doc. 90 at 56-85). As such, the
court ordered Wells Fargo to file an application and evidence
itemizing, documenting, or otherwise supporting the specific
amount of fees and expenses claimed and the reasonableness
thereof. (Id. at 84).
Fargo has now filed such materials. (Doc. 91). Specifically,
Wells Fargo claims entitlement to $83, 484.50 in
attorneys' fees and $455.77 in expenses, “to be
paid out of the estates of the Shares Trusts and/or the
Marital Trust to the extent those trusts might be determined
to still exist and/or to have any traceable assets.”
(Id. at 1). Wells Fargo also claims that it will be
entitled to recover additional fees incurred in litigating
its fee motion. (Id., ¶¶ 2, 11). Wells
Fargo contends that its fees and expenses have been
“properly incurred” for purposes of Ala. Code
§ 19-3B-709(a)(1), and are reasonable. In support of its
fee application, Wells Fargo has declarations from two of its
attorneys of record in the case (Docs. 91-1, 91-3) and
itemized billing records (Doc. 91-2).
oppose the motion. (Doc. 94). They first argue that Wells
Fargo is judicially estopped from seeking fees and expenses
from out of the res of the Shares Trusts or the
Marital Trust. (Id. ¶¶ (I)(4) -(8)).
Specifically, Plaintiffs point to summary judgments Judge
Vance entered in the State-Court Action on March 7, 2017, in
which he accepted contentions that Plaintiffs cannot prevail
on claims involving administration of the Shares Trusts or
the Marital Trust because those trusts no longer exist.
(Id. ¶ (I)(5)). Plaintiffs note that they filed
a motion to alter, amend, or vacate Judge Vance's summary
judgment order in favor of Wells Fargo. (Id. at p. 4
n. 2). A review of documents in the state-court case file
available on www.Alacourt.com indicate, however,
that Judge Vance summarily denied that motion on December 18,
2018 (Doc. 1205 in the State-Court Action). Those documents
also indicate that Plaintiffs filed a notice of appeal on
February 8, 2019, with Wells Fargo cross-appealing from an
order by Judge Vance denying its request for attorneys'
fees in the State-Court Action. As far as this court can
tell, that appeal remains pending in the Alabama Supreme
Court. In addition to its judicial-estoppel claim, Plaintiffs
press a host of arguments urging that the amount of fees that
Wells Fargo seeks is excessive and unreasonable. (Doc. 94 at
pp. 5-13). In a related vein, Plaintiffs also contend that
Wells Fargo's “limited success” in this court
“warrants a low or no fee award.” (Id.
at p. 13).
court first considers Plaintiffs' argument that Wells
Fargo is judicially estopped from seeking attorneys' fees
and expenses. Generally speaking, under the doctrine of
judicial estoppel, “where a party assumes a certain
position in a legal proceeding, and succeeds in maintaining
that position, he may not thereafter, simply because his
interests have changed, assume a contrary position,
especially if it be to the prejudice of the party who has
acquiesced in the position formerly taken by him.”
New Hampshire v. Maine, 532 U.S. 742, 749 (2001)
(quoting Davis v. Wakelee, 156 U.S. 680, 689
(1895)). Because this is a diversity case, the court is bound
to apply judicial estoppel as interpreted under Alabama state
law. See Original Appalachian Artworks, Inc. v. S.
Diamond Assocs., Inc., 44 F.3d 925, 930 (11th Cir.
1995); Nationwide Prop. & Cas. Co. v. Phillip Hunt
& Cmty., & S. Bank, Inc., 2014 WL 2698637, at *2
(N.D. Ala. June 13, 2014) (Ott, M.J.). For determining the
applicability of judicial estoppel, the Alabama Supreme Court
has embraced the factors set forth in the United States
Supreme Court's decision in New Hampshire v.
Maine, 532 U.S. 742 (2001). See Ex parte Jackson
Hosp. & Clinic, Inc., 167 So.3d 324, 332
(Ala. 2014); Ex parte First Ala. Bank, 883 So.2d
1236, 1246 (Ala. 2003). Under that formulation, a court
generally looks for the following elements:
(1) a party's later position must be clearly inconsistent
with its earlier position; (2) the party must have been
successful in the prior proceeding so that judicial
acceptance of an inconsistent position in a later proceeding
would create the perception that either the first or second
court was misled; and (3) the party seeking to assert an
inconsistent position would derive an unfair advantage or
impose an unfair detriment on the opposing party if not
Hamm v. Norfolk So. Ry. Co., 52 So.3d 484, 494 (Ala.
2010) (internal quotation marks and citations omitted).
support of their claim that these requirements are met,
Plaintiffs highlight that Wells Fargo maintained throughout
the course of the State-Court action that both the Shares
Trusts and the Marital Trusts had already terminated even
prior to the commencement of that litigation. Plaintiffs
further emphasize that, on March 7, 2017, Judge Vance granted
summary judgment in favor of Wells Fargo, holding that the
Marital Trust had terminated and “ended for all
purposes” in August 2013, thereby precluding Plaintiffs
from having standing to pursue claims as its trustees.
(See Doc. 65-1 at 4-5, Doc. 981 in the State-Court
Action). And “on the same date, ” Plaintiffs say,
“Judge Vance [likewise] concluded that the Shares
Trust[s] had terminated in April 2011 and that Plaintiffs
lacked standing to bring claims with respect to the Shares
Trust[s].” (Doc. 94 ¶ 5, citing Doc. 983 in the
State-Court Action, Doc. 66-1 in this action). As such,
Plaintiffs contend that, by seeking to recover fees from out
of these trusts that Judge Vance ...