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Sean Michael Swendsen, Individually As A Remainder Beneficiary v. Richard I. Corey
February 22, 2012
SEAN MICHAEL SWENDSEN, INDIVIDUALLY AS A REMAINDER BENEFICIARY
OF AND DERIVATIVELY ON BEHALF OF THE RICHARD I. SWENDSEN TRUST,
RICHARD I. COREY, TRUSTEE OF THE RICHARD I. SWENDSEN TRUST; AND CLAYNE I. COREY, AN INDIVIDUAL IN POSSESSION OF ASSETS OF THE RICHARD I. SWENDSEN TRUST AND ACCOUNTANT AND ATTORNEY TO THE TRUST AND TRUSTEE, DEFENDANT.
The opinion of the court was delivered by: B. Lynn WINMILLChief U.S. District Court Judge
MEMORANDUM DECISION AND ORDER
The Court has before it Defendant Richard Corey's Motion to Dismiss For Lack of Standing (Dkt. 137) pursuant to Federal Rule of Civil Procedure 12(b). The motion is fully briefed and at issue. For the reasons expressed below, the Court will GRANT the Motion to Dismiss all claims not personal to Plaintiff Sean Swendsen for lack of standing.
The question before the Court is whether Plaintiff Sean Swendsen has standing to pursue derivative claims on behalf of the Swendsen Trust. Def.'s Br. at 1, Dkt. 137-1.
Generally, trust law does not allow beneficiaries to bring a suit on behalf of the trust. See Glanton ex. rel. ALCOA Prescription Drug Plan v. AdvancePCS Inc., 465 F.3d 1123, 1125 n. 2 (9th Cir. 2006) (citing Restatement (Second) of Trusts § 214 cmt. b (2011). Specifically, a beneficiary may not sue in the name of the trust because he is not the real party in interest. See Orr v. U.S., 358 F.3d 1137, 1148 (9th Cir. 2004) (internal citation omitted). There is an exception to the general rule, however. In situations where a trustee "cannot or will not enforce a valid cause of action that the trustee ought to bring against a third person a trust beneficiary may seek judicial compulsion against the trustee." Id. (Citing Rest.2d Trusts, § 282.)*fn1
In this case, as Plaintiff stated himself, the issue of trust management now rests in the hands of the current trustee, Norm Reece. Pl.'s Resp. at 10 (Dkt. 138). Thus, Mr. Reece can bring an action on behalf of the trust. But "[i]n order to prevent loss of or prejudice to a claim, the beneficiary may bring an action in equity joining the third person and the trustee." Orr, 358 F.3d at 1148. Plaintiff cannot simply assert the claim on behalf of the trustee himself. There is no indication in the record, however, that Plaintiff sought judicial compulsion against the current trustee to sue on behalf of the Swendsen Trust. Accordingly, he may not sue on behalf of the Trust "in the shoes" of the current trustee. See id. at 1149.
For all the reasons stated above, the Court finds that Plaintiff does not have standing to bring a derivative suit on behalf of the Swendsen Trust against Richard Corey. Plaintiff may only maintain a suit on his own behalf.
1. Defendant Richard Corey's Motion to Dismiss All Claims Not Personal to Sean Swendsen for Lack of ...
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