Wells Lory Hillblom v. Wilmington Trust Company
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Opinion
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
WELLS LORY HILLBLOM, f/k/a ) NGUYEN BE LORY, ) ) Plaintiff, ) v. ) C.A. No. 2021-1034-MTZ ) WILMINGTON TRUST COMPANY, ) ) Defendant. )
POST-TRIAL MEMORANDUM OPINION
Date Submitted: December 8, 2025 Date Decided: July 8, 2026
Paul D. Brown, Samantha Callejas, CHIPMAN BROWN CICERO & COLE LLP, Wilmington, Delaware, David Z. Ribakoff, RIBAKOFF LAW FIRM, Los Angeles, California, Attorneys for Plaintiff.
Benjamin P. Chapple, John T. Miraglia, REED SMITH LLP, Wilmington, Delaware, John M. McIntyre, PORTER WRIGHT MORRIS & ARTHUR LLP, Attorneys for Defendant.
ZURN, Vice Chancellor An institutional trustee agreed to manage a minor’s sizeable inheritance,
including by resolving and paying claims against it. The minor received the
inheritance after years of litigation, in which he was represented by a guardian ad
litem and counsel under a contingency fee agreement. The guardian’s lawyers were
entitled to a fee on a particular asset that was difficult to value. The trustee and the
lawyers disagreed on the method of calculating that fee.
The dispute between the trustee and the lawyers persisted for over two
decades. The trustee did not try to value the asset or resolve the dispute. As years
passed, the minor grew up and the lawyers lost patience. In 2016, the lawyers
submitted a settlement offer to the trustee; the trustee ignored it, and did not tell its
beneficiary about the dispute or the settlement offer. The lawyers initiated legal
action against the trustee; the trustee ducked that action and pointed the lawyers
towards the beneficiary.
Reluctantly, the lawyers sued the beneficiary, who thought his trustee was
assisting in his defense. Even after the beneficiary asked the trustee for information
about the dispute, the trustee did not disclose the settlement offer. The beneficiary
only learned of the offer when his adversary disclosed it in 2019. In 2020, the
beneficiary settled the claim for roughly five times the offer his trustee had ignored.
The beneficiary sued his trustee in 2021 for breaches of trust and fiduciary
duty. The action went to trial. This post-trial opinion concludes the beneficiary’s
1 claims were timely given his relationship with his trustee and the information he
received; the trustee breached its duties; and the beneficiary is entitled to damages
in the amount by which the settlement exceeded the offer the trustee ignored, as well
as his attorneys’ fees in this action.
I. BACKGROUND1
Plaintiff Wells Lory Hillblom brings breach of fiduciary duty and breach of
trust claims against his trustee, defendant Wilmington Trust Company (“WTC”).2
Those claims were tried over three days, offering the Court 129 joint exhibits and
live testimony from eleven fact witnesses and two expert witnesses.3 The following
facts were stipulated to by the parties or proven by a preponderance of the evidence.4
1 Citations in the form “[last name] Tr. —” refer to trial testimony of the referenced witness, available at docket item (“D.I.”) 163, D.I. 164, and D.I. 165. Citations in the form “PTO ¶ —” refer to the parties’ Amended Joint Pre-Trial Order, available at D.I. 159. Citations in the form “POB —” refer to Plaintiff’s Post-Trial Opening Brief, available at D.I. 169. Citations in the form “DAB —” refer to Defendant Wilmington Trust Company’s Answering Post-Trial Brief, available at D.I. 173. Citations in the form “PRB —” refer to Plaintiff’s Post-Trial Reply Brief, available at D.I. 178. Citations in the form “JX” refer to joint trial exhibits. Citations in the form “MSJ BR” refer to the Telephonic Bench Ruling on Defendant’s Motion for Summary Judgment, available at D.I. 95. 2 D.I. 1 [hereinafter “Compl.”] ¶¶ 57–64. 3 D.I. 160. 4 Reynolds v. Reynolds, 237 A.2d 708, 711 (Del. 1967) (“The side on which the greater weight of the evidence is found is the side on which the preponderance of the evidence exists.”). 2 Larry Hillblom was a founder of DHL, a successful international shipping and
courier company.5 In May 1995, Larry was declared legally dead after having
disappeared at sea.6 When he disappeared, Larry lived in the Commonwealth of the
Northern Mariana Islands (the “CNMI”), an American territory in the South Pacific.7
Probate proceedings for Larry’s large estate (the “Estate”) began in 1997 in the
CNMI.8
Hillblom was born Nguyen Be Lory in Vietnam on December 2, 1994.9
Hillblom pressed a claim he should inherit a share of the Estate as Larry’s biological
son.10 In 1997, the probate court appointed J. Steven Grist as Hillblom’s guardian
ad litem.11 Grist retained John Veague and Garrick Gallagher of Sanders & Parks,
P.C. (“S&P”) as counsel.12 Grist and S&P proved Hillblom’s claim to a share of the
Estate.13 Three other children proved they too were Larry’s biological heirs.14
5 PTO ¶ 5. 6 Id. ¶ 8. In pursuit of clarity, I refer to Larry Hillblom by his first name. I intend no familiarity or disrespect. 7 Id. ¶ 6. 8 Id. ¶ 5, 10–11. 9 Id. ¶ 7; Hillblom Tr. 419–20. 10 PTO ¶¶ 5–11; Gallagher Tr. 93. 11 PTO ¶ 11; Grist Tr. 667–68. 12 JX 2 § I (A); PTO ¶ 13; Grist Tr. 670. 13 Gallagher Tr. 96; PTO ¶ 18. 14 Gallagher Tr. 95–96. 3 S&P’s fee agreement with Hillblom (the “Fee Agreement”) granted S&P thirty
percent of any “Recovery” “received by or for the benefit” of Hillblom.15 The Fee
Agreement was modeled after the agreements between the other successful heir
claimants and their attorneys.16 The Fee Agreement’s 30% fee was the lowest of
those agreements.17 The Fee Agreement sent disputes thereunder to arbitration in
Saipan.18 In January 1998, the Superior Court for CNMI approved the Fee
Agreement as “fair and reasonable[.]”19
A. The Nguyen Be Lory Trust.
On April 21, 1999, the Nguyen Be Lory Trust (the “Trust”) was formed to
hold Hillblom’s inheritance.20 The Trust is governed by the Nguyen Be Lory Trust
Agreement (the “Trust Agreement”).21 The Trust Agreement is governed by
Delaware law.22 WTC agreed to serve as trustee and to administer the Trust in
15 JX 2 § II (A). The Fee Agreement defines “Recovery” as “all payments or distributions of money or assets received by or allocable to or for the benefit of [Hillblom] from the Hillblom Estate by reason of his paternity and heirship claim. The Recovery shall be calculated as [Hillblom’s] allocable share of the Hillblom estate as a pretermitted heir, net of Estate administration expenses and estate liabilities but before payment by the Estate of allocable estate taxes.” Id. 16 Gallagher Tr. 99–101; see JX 129. 17 Gallagher Tr. 113 (explaining the other agreements awarded fees between 36% and 50%). 18 JX 2 § VI (A). 19 JX 3. 20 PTO ¶ 23; JX 5 at Recital. 21 PTO ¶ 24; see generally JX 5. 22 JX 5 § B, Art. III ¶ H (1)–(2). 4 accordance with the Trust Agreement.23 The Trust’s property includes “[a]ll property
and interests in property, [] whether in cash or in kind, distributable to [Hillblom]
from the Estate of Larry Lee Hillblom.”24
The Trust Agreement includes “dispositive provisions” in Section A and
“general provisions” in Section B.25 The dispositive provisions govern Trust
administration, including the distribution of Trust income,26 payments to Hillblom,27
and the use of Trust assets.28
Section B, Article II details WTC’s authority as Trustee and the standard of
care governing that authority.29 WTC is “vested with all rights, powers, and
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
WELLS LORY HILLBLOM, f/k/a ) NGUYEN BE LORY, ) ) Plaintiff, ) v. ) C.A. No. 2021-1034-MTZ ) WILMINGTON TRUST COMPANY, ) ) Defendant. )
POST-TRIAL MEMORANDUM OPINION
Date Submitted: December 8, 2025 Date Decided: July 8, 2026
Paul D. Brown, Samantha Callejas, CHIPMAN BROWN CICERO & COLE LLP, Wilmington, Delaware, David Z. Ribakoff, RIBAKOFF LAW FIRM, Los Angeles, California, Attorneys for Plaintiff.
Benjamin P. Chapple, John T. Miraglia, REED SMITH LLP, Wilmington, Delaware, John M. McIntyre, PORTER WRIGHT MORRIS & ARTHUR LLP, Attorneys for Defendant.
ZURN, Vice Chancellor An institutional trustee agreed to manage a minor’s sizeable inheritance,
including by resolving and paying claims against it. The minor received the
inheritance after years of litigation, in which he was represented by a guardian ad
litem and counsel under a contingency fee agreement. The guardian’s lawyers were
entitled to a fee on a particular asset that was difficult to value. The trustee and the
lawyers disagreed on the method of calculating that fee.
The dispute between the trustee and the lawyers persisted for over two
decades. The trustee did not try to value the asset or resolve the dispute. As years
passed, the minor grew up and the lawyers lost patience. In 2016, the lawyers
submitted a settlement offer to the trustee; the trustee ignored it, and did not tell its
beneficiary about the dispute or the settlement offer. The lawyers initiated legal
action against the trustee; the trustee ducked that action and pointed the lawyers
towards the beneficiary.
Reluctantly, the lawyers sued the beneficiary, who thought his trustee was
assisting in his defense. Even after the beneficiary asked the trustee for information
about the dispute, the trustee did not disclose the settlement offer. The beneficiary
only learned of the offer when his adversary disclosed it in 2019. In 2020, the
beneficiary settled the claim for roughly five times the offer his trustee had ignored.
The beneficiary sued his trustee in 2021 for breaches of trust and fiduciary
duty. The action went to trial. This post-trial opinion concludes the beneficiary’s
1 claims were timely given his relationship with his trustee and the information he
received; the trustee breached its duties; and the beneficiary is entitled to damages
in the amount by which the settlement exceeded the offer the trustee ignored, as well
as his attorneys’ fees in this action.
I. BACKGROUND1
Plaintiff Wells Lory Hillblom brings breach of fiduciary duty and breach of
trust claims against his trustee, defendant Wilmington Trust Company (“WTC”).2
Those claims were tried over three days, offering the Court 129 joint exhibits and
live testimony from eleven fact witnesses and two expert witnesses.3 The following
facts were stipulated to by the parties or proven by a preponderance of the evidence.4
1 Citations in the form “[last name] Tr. —” refer to trial testimony of the referenced witness, available at docket item (“D.I.”) 163, D.I. 164, and D.I. 165. Citations in the form “PTO ¶ —” refer to the parties’ Amended Joint Pre-Trial Order, available at D.I. 159. Citations in the form “POB —” refer to Plaintiff’s Post-Trial Opening Brief, available at D.I. 169. Citations in the form “DAB —” refer to Defendant Wilmington Trust Company’s Answering Post-Trial Brief, available at D.I. 173. Citations in the form “PRB —” refer to Plaintiff’s Post-Trial Reply Brief, available at D.I. 178. Citations in the form “JX” refer to joint trial exhibits. Citations in the form “MSJ BR” refer to the Telephonic Bench Ruling on Defendant’s Motion for Summary Judgment, available at D.I. 95. 2 D.I. 1 [hereinafter “Compl.”] ¶¶ 57–64. 3 D.I. 160. 4 Reynolds v. Reynolds, 237 A.2d 708, 711 (Del. 1967) (“The side on which the greater weight of the evidence is found is the side on which the preponderance of the evidence exists.”). 2 Larry Hillblom was a founder of DHL, a successful international shipping and
courier company.5 In May 1995, Larry was declared legally dead after having
disappeared at sea.6 When he disappeared, Larry lived in the Commonwealth of the
Northern Mariana Islands (the “CNMI”), an American territory in the South Pacific.7
Probate proceedings for Larry’s large estate (the “Estate”) began in 1997 in the
CNMI.8
Hillblom was born Nguyen Be Lory in Vietnam on December 2, 1994.9
Hillblom pressed a claim he should inherit a share of the Estate as Larry’s biological
son.10 In 1997, the probate court appointed J. Steven Grist as Hillblom’s guardian
ad litem.11 Grist retained John Veague and Garrick Gallagher of Sanders & Parks,
P.C. (“S&P”) as counsel.12 Grist and S&P proved Hillblom’s claim to a share of the
Estate.13 Three other children proved they too were Larry’s biological heirs.14
5 PTO ¶ 5. 6 Id. ¶ 8. In pursuit of clarity, I refer to Larry Hillblom by his first name. I intend no familiarity or disrespect. 7 Id. ¶ 6. 8 Id. ¶ 5, 10–11. 9 Id. ¶ 7; Hillblom Tr. 419–20. 10 PTO ¶¶ 5–11; Gallagher Tr. 93. 11 PTO ¶ 11; Grist Tr. 667–68. 12 JX 2 § I (A); PTO ¶ 13; Grist Tr. 670. 13 Gallagher Tr. 96; PTO ¶ 18. 14 Gallagher Tr. 95–96. 3 S&P’s fee agreement with Hillblom (the “Fee Agreement”) granted S&P thirty
percent of any “Recovery” “received by or for the benefit” of Hillblom.15 The Fee
Agreement was modeled after the agreements between the other successful heir
claimants and their attorneys.16 The Fee Agreement’s 30% fee was the lowest of
those agreements.17 The Fee Agreement sent disputes thereunder to arbitration in
Saipan.18 In January 1998, the Superior Court for CNMI approved the Fee
Agreement as “fair and reasonable[.]”19
A. The Nguyen Be Lory Trust.
On April 21, 1999, the Nguyen Be Lory Trust (the “Trust”) was formed to
hold Hillblom’s inheritance.20 The Trust is governed by the Nguyen Be Lory Trust
Agreement (the “Trust Agreement”).21 The Trust Agreement is governed by
Delaware law.22 WTC agreed to serve as trustee and to administer the Trust in
15 JX 2 § II (A). The Fee Agreement defines “Recovery” as “all payments or distributions of money or assets received by or allocable to or for the benefit of [Hillblom] from the Hillblom Estate by reason of his paternity and heirship claim. The Recovery shall be calculated as [Hillblom’s] allocable share of the Hillblom estate as a pretermitted heir, net of Estate administration expenses and estate liabilities but before payment by the Estate of allocable estate taxes.” Id. 16 Gallagher Tr. 99–101; see JX 129. 17 Gallagher Tr. 113 (explaining the other agreements awarded fees between 36% and 50%). 18 JX 2 § VI (A). 19 JX 3. 20 PTO ¶ 23; JX 5 at Recital. 21 PTO ¶ 24; see generally JX 5. 22 JX 5 § B, Art. III ¶ H (1)–(2). 4 accordance with the Trust Agreement.23 The Trust’s property includes “[a]ll property
and interests in property, [] whether in cash or in kind, distributable to [Hillblom]
from the Estate of Larry Lee Hillblom.”24
The Trust Agreement includes “dispositive provisions” in Section A and
“general provisions” in Section B.25 The dispositive provisions govern Trust
administration, including the distribution of Trust income,26 payments to Hillblom,27
and the use of Trust assets.28
Section B, Article II details WTC’s authority as Trustee and the standard of
care governing that authority.29 WTC is “vested with all rights, powers, and
privileges which an outright owner of the same property would have.”30 Article II
23 Id. at Recital. 24 Id. at Schedule of Property. 25 Id. at Recital. 26 Id. § A, Art. III ¶ A. 27 Id. § A, Art. III ¶¶ B, D–E. 28 Id. § A, Art. III ¶ C. 29 Id. § B, Art. II ¶¶ A (1)–(27), B (1)–(2); see id. § B, Art. II at Recital (“[T]he Trustee is vested with the following powers and discretions until final distribution, in addition to any powers and discretions affecting the trust estate now or hereafter conferred by law.”). 30 Id. § B, Art. II ¶ A (1); see id. § B, Art. II ¶ B (1) (“When investing, reinvesting, purchasing, acquiring, exchanging, selling, operating, and managing trust property or otherwise administering the trust estate, the Trustee shall act with the care . . . that prudent persons acting either (a) in the management of their own personal financial affairs or (b) in a like fiduciary capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument.”). 5 makes clear WTC’s “general or implied powers” are not limited by the specific
grants of authority enumerated in the Trust Agreement.31 It grants WTC “the sole
and absolute discretion” to collect, hold, and dispose of Trust property.32 The Trust
Agreement also specifically grants WTC authority to resolve “Contested Matters:”
[t]o pay or contest any claim; to settle a claim by or against the trust by compromise, arbitration, or otherwise; to release in whole or in part any claim belonging to the trust; and to prosecute or defend actions, claims, or proceedings for the protection of trust assets, and of the Trustee in the performance of the Trustee’s duties.33
And the Trust Agreement specifically grants WTC the authority to pay S&P’s fee:
[WTC] shall have the power to use income and principal of the [T]rust to pay debts and expenses of [Hillblom] attributable to the proceedings relating to the estate of Larry Lee Hillblom, including without limitation, legal fees based upon the fee agreements [Hillblom] has with John Veague, Garrick Gallagher, and the law firm of [ ] Sanders & Parks, P.C., and fees and costs of other advisors as approved by the Superior Court of the Commonwealth of the Northern Mariana Islands or by the court supervising the trust’s administration.34
As for WTC’s standard of conduct, the Trust Agreement provides that WTC
is “subject always to the obligations of a fiduciary.”35 WTC must act with the
31 Id. § B, Art. II ¶ A (1). 32 Id. § B, Art. II ¶ A (3). 33 Id. § B, Art. II ¶ A (19). 34 Id. § A, Art. III ¶ F. 35 Id. § B, Art. II ¶ A (1); see id. § B, Art. II ¶ B (1) (“When investing, reinvesting, purchasing, acquiring, exchanging, selling, operating, and managing trust property or otherwise administering the trust estate, the Trustee shall act with the care . . . that prudent persons acting either (a) in the management of their own personal financial affairs or (b) in
6 standard of care exercised by “prudent persons acting either (a) in the management
of their own personal financial affairs or (b) in a like fiduciary capacity” under
similar circumstances.36
B. Grist And The Estate Support Hillblom, And S&P Receives Fees.
After securing Hillblom’s entitlement to assets of the Estate, Grist helped
Hillblom and his extended family create a new life in Virginia.37 Grist ensured the
Trust paid for the family’s home, of course.38 But he went above and beyond to
support Hillblom’s family. Grist helped Hillblom’s aunt get a driver’s license,
assisted the family with buying a vehicle, hosted the family at his home for dinner
“many times,” found an English language tutor for Hillblom’s mother, caused
Hillblom to enroll at the same school as Grist’s children, secured Hillblom United
States citizenship, helped members of his family get student visas, and generally was
“very involved in [Hillblom’s] acclimation to American life[.]”39 Grist treated
Hillblom as a member of his family, taking Hillblom on many Grist family vacations,
a like fiduciary capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument.”). 36 Id. § B, Art. II ¶ B (1). 37 Grist Tr. 708–09. 38 Id. at 710. 39 Id. at 708–09.
7 including to Europe.40 And Hillblom reciprocated that closeness, referring to Grist
as “Uncle Steve.”41
Grist also interfaced with WTC to make sure it paid S&P’s fees. On April 30,
1999, the Trust received its first distribution from the Estate, amounting to
$7,500,000.42 On June 16, Grist wrote to WTC to ensure S&P received payment.43
Grist explained, “According to the terms of the Fee Agreement, Mr. Veague, Mr.
Gallagher and [ ] Sanders & Parks are entitled to 30 percent” of that distribution as
Trust Recovery.44 WTC raised no issue, and paid S&P its 30% fee.45 On October 8,
the Trust received a distribution of $7,972,507.15.46 Again, Grist wrote to WTC
directing it to authorize and remit payment to S&P according to the Fee Agreement.47
WTC did so. By May 2000, the Trust received approximately $44.6 million from
the Estate, and WTC again paid S&P its thirty percent, approximately $13.4
40 Id. 41 Id. at 710; JX 85. 42 PTO ¶ 19; JX 2; Gallagher Tr. 124–25. 43 JX 6. 44 Id. at 2. 45 PTO ¶ 19. 46 Id. ¶ 20; JX 7. 47 PTO ¶ 20. 8 million.48 WTC sought Grist’s approval before paying S&P its fees under the Fee
Agreement.49
In the meantime, in April 2000, Larry’s heirs and their representatives had
reached a court-approved Global Settlement Agreement apportioning the Estate’s
cash and non-cash assets among Larry’s heirs and a charitable trust, with 60% going
to the heirs.50 For non-cash assets, the Global Settlement Agreement called for
liquidation and using a liquidating trust to divide the proceeds.51 On April 22, 2000,
the Estate assigned its non-cash assets to a liquidating trustee.52 This case centers
on one particular non-cash asset: ARW Company, which held interests in two
cellular telecommunications companies, Davenport Cellular Telephone Company
(“Davenport”) and Madison Cellular Telephone Company (“Madison”).53 The ARW
Company’s interests were transferred to ARW, LLC (“ARW”), formed to distribute
those interests to the heirs and charitable trust.54 By April 28, Hillblom’s Trust
48 Id. ¶ 21. 49 Grist Tr. 696. 50 JX 8 at 3; JX 17 at 2–4; JX 10; Gallagher Tr. 97. 51 JX 8 at 5 (identifying the non-cash assets to be placed in the liquidating trust as the non- cash assets listed on “Exhibit B” of the Global Settlement Agreement); id. at Ex. B; JX 10. 52 JX 17 at 3–4. 53 JX 8 at 3; JX 10. 54 JX 20; Gallagher Tr. 122. 9 received a one-time distribution of a 14.85% interest in ARW.55 At that time, the
Trust’s ARW interest was illiquid and difficult to value.56 S&P did not request or
receive any fee on that non-cash distribution.
C. The ARW Fee Dispute On October 3, 2002, ARW sent Gallagher ARW’s 2001 Schedule K-1 and a
check for a $87,615.00 cash distribution to Hillblom’s Trust.57 That check
represented ARW’s first cash distribution.58 Gallagher promptly sent the check and
Schedule K-1 to WTC, and asked that WTC pay S&P thirty percent.59
Thus began eighteen years of disagreement over how to calculate S&P’s fee
on the Trust’s interest in ARW: specifically, whether S&P was entitled to thirty
percent of all ARW cash distributions into the future, or thirty percent of the fair
market value of the Trust’s interest in ARW when the Trust received it in April 2000.
WTC solicited Grist’s opinion on Gallagher’s fee request.60 On October 15, Grist
wrote to Gallagher, copying WTC.61 Grist took the position that the fee should be
calculated as “thirty percent of the fair market valuation of ARW on the date it was
55 JX 10 at 1; JX 29 at 2; Jones Tr. 657. 56 JX 12 at 2. 57 JX 15 at 4, 5. 58 Id.; JX 29 at 1. 59 JX 15. 60 JX 16 at 1. 61 Id.
10 distributed to [Hillblom].”62 Grist acknowledged he was unaware of the then fair
market value of ARW; noted such a valuation “might be difficult to determine;” and
specifically observed “a valuation was assigned to the Estate’s interest in ARW on
the 706 Tax Return, but I would not readily concede that that figure is one we should
rely on.”63 Grist’s letter invited Gallagher to propose an alternative approach if he
disagreed.64
WTC took no action at that time. It did not pay S&P anything on the ARW
interest or cash distribution.65 The parties sporadically exchanged correspondence
on S&P’s ARW fee over the next decade.66
In 2012, WTC acknowledged the Trust still owed S&P’s ARW fee.67 That
fall, WTC began communicating directly with S&P.68 S&P maintained its fee should
be based on ARW’s cash distributions to the Trust, just like other cash distributions.69
Gallagher noted counsel for the other heirs “were paid fees on the interim
distribution received from ARW and then on the sale proceeds when a portion was
62 Id. at 1; see Grist Tr. 721. 63 JX 16 at 1–2. 64 Id. at 1. 65 PTO ¶¶ 26–37. 66 JX 17; JX 21; JX 22; JX 23. 67 JX 26 at 2. 68 Id.; JX 27. 69 JX 26 at 1–2. 11 liquidated.”70 WTC took the position that under the Fee Agreement, S&P’s fee is
“based on the value of assets received from the Estate” and proposed calculating it
using ARW’s K-1.71 WTC punted the issue to January 2013.72
Hillblom turned eighteen in December 2012.73 WTC continued as trustee,
ensuring the Trust provided for his living expenses.74 WTC intimately supported
Hillblom’s financial and personal affairs, including by filing his taxes, preparing his
will, supporting his education, paying legal fees, and providing monthly cash
distributions to support a monthly budget WTC reviewed.75 WTC reviewed
Hillblom’s monthly budget and exercised discretion over his living expenses.76
Hillblom often interacted with Allison Patni at WTC, including when he moved to
Los Angeles and when he needed a will.77 Patni explained certain Trust Agreement
provisions to Hillblom, and ensured Hillblom executed documents necessary for
Trust administration.78 WTC’s role in Hillblom’s life was not limited to financial
70 Id. at 1. 71 Id. at 2. 72 JX 27 at 2. 73 PTO ¶ 32. 74 Hillblom Tr. 425. 75 JX 34; JX 40; JX 42; JX 43; JX 48; Hillblom Tr. 424–25; White Tr. 608–09. 76 White Tr. 609; JX 41 at 2 (denying Hillblom’s request “for a $2 million principal distribution for a personal investment”). 77 Hillblom Tr. 424–25. 78 JX 34; JX 40 at 2; JX 41; Hillblom Tr. 422–26, 448–49.
12 matters.79 When Hillblom went through a particularly difficult period, WTC
instructed him to seek treatment and suggested a specific facility.80
WTC retained ownership of the S&P fee dispute after Hillblom turned
eighteen. In June 2013, WTC informed Gallagher that Grist was no longer
Hillblom’s guardian and instructed Gallagher to direct any future S&P invoices to
WTC.81 In August, WTC Vice President Randi Dlott confirmed Grist “no longer
ha[d] a fiduciary role” and that she had reviewed S&P’s most recent invoices for
WTC “as Trustee.”82 Dlott acknowledged “[WTC] ha[s] not yet compensated you
for your services on ARW” and noted WTC was “internally discussing a proposed
resolution.”83 Correspondence continued into December.84 WTC maintained S&P’s
ARW fee should be based on the fair market value of Hillblom’s interest in ARW at
the time of transfer to the Trust.85 At the same time, WTC acknowledged “[i]t is
very difficult to obtain information necessary to retroactively value an asset that was
received 13 years [ago], but [we] think that with the help of a valuation expert, you
79 JX 48 at 2–8. 80 Hillblom Tr. 451–54. 81 JX 30 at 2. 82 Id. at 3–4. 83 Id. at 4. 84 JX 31; JX 32; JX 33. 85 JX 32 at 1–2. 13 and the bank will need to agree upon such a value.”86 Neither WTC nor S&P
engaged a valuation expert.87
On October 1, counsel to another heir named David Axelrod wrote to WTC
explaining he received his contingency fee on ARW cash distributions to his client’s
trust.88 He explained that ARW had always been difficult to value, and that nobody
seriously considered relying on the Form 706 value.89
On December 10, WTC offered S&P $79,086.00 as its entire ARW fee plus
interest (the “2013 WTC Offer”).90 It calculated that amount based on ARW’s fair
market value when received by the Trust, informed by the Form 706 value.91 It used
the consumer price index for interest.92 The December 2013 Offer concluded:
I understand that your firm will probably not accept the $61,034 amount. As an alternative we could consult with an outside valuation firm to see if they could produce an appraisal as of the year 2000. Your firm and the bank could split the costs of the appraisal. It is possible, of course, that the appraised value could exceed the value of the
86 Id. at 2. 87 Dearman Tr. 495; Gallagher Tr. 213. 88 JX 129 at 2 (“The value of the annual distributions from ARW can vary depending on the profitability of the profitability of the underlying businesses and whether there have been any liquidations of the holdings in which ARW has a minor share interest. At least $1 million has been received by or distributed to the capital account credit of each [heir].”). 89 Id. 90 JX 33. 91 Id. at 2; Dlott Tr. 581. 92 JX 33 at 2; Dlott Tr. 586. 14 distribution, but it would satisfy the bank’s fiduciary duty to pay your firm in accordance with the Fee Agreement as written.93 Dlott included the invitation to retain a valuation professional “based on a concept
of fairness.”94
Gallagher did not respond to the 2013 WTC Offer.95 Neither WTC nor S&P
commissioned an appraisal of ARW. By the end of 2013, the Trust had received
eleven ARW distributions totaling $991,239.96 The dispute went dormant again.97
In August 2016, Gallagher raised the ARW fees again with WTC.98 Patni
resent the 2013 WTC Offer to Gallagher.99 Gallagher noted he had not received it
the first time, positing it had gone to spam or been misfiled.100 Gallagher thought
the 2013 WTC Offer was unacceptable because it was not based on “a real value for
the property” that anyone considered or would have accepted when ARW was
93 JX 33 at 3. 94 Dlott Tr. 594. 95 JX 35 at 1–3. 96 JX 37 at 1. 97 PTO ¶ 37. 98 JX 35. 99 Id. at 2; Gallagher Tr. 215–16; see JX 33. 100 JX 35 at 1. 15 distributed to the Trust.101 In November, Gallagher discussed S&P’s unpaid fee with
WTC, and WTC invited him to share a proposal.102
On December 6, S&P offered to settle the ARW dispute—for all ARW fees
from 2002 into the future—for $300,000 (the “2016 S&P Offer”).103 S&P explained
the offer would expire on December 20.104
The next day, Patni emailed Hillblom seeking his input on certain Trust
decisions.105 She did not mention the S&P fee dispute or the 2016 S&P Offer.106
When S&P made the 2016 S&P Offer, Neil Derman was the WTC attorney
charged with handling the ARW fee dispute; Dlott had left WTC’s legal department
in 2015.107 Derman did not know the history of the dispute.108 He let the 2016 S&P
Offer lapse without acknowledging it.109 Derman understood the 2016 S&P Offer
to be a settlement offer and that typically, a trustee would share a settlement offer
101 Gallagher Tr. 174 (“706 value is never what anyone involved in this estate thought was the value of that asset or someone would have taken it for that amount.”); see also JX 129. 102 Gallagher Tr. 183–84; Dearman Tr. 487–88; JX 38. 103 JX 39. 104 Id. at 2. 105 JX 40 at 2. 106 Id. 107 JX 38 at 2; Dlott Tr. 591. 108 Gallagher Tr. 183–84; Derman Tr. 488–89. 109 Gallagher Tr. 186–87. Derman provided no explanation for his failure to acknowledge the 2016 S&P Offer; he implied he did so because it “was a take-it-or-leave it” offer. Derman Tr. 500. 16 with the beneficiary.110 Yet Derman did not share the 2016 S&P Offer with
Hillblom.111 At trial, Derman took the position that WTC’s duty to Hillblom was
constrained by the Trust Agreement, which did not allow WTC to “negotiate above
what was written within the [F]ee Agreement.”112 He explained the 2016 S&P Offer
was unacceptable to WTC because “the offer exceeded the valuation of the asset,”
making S&P’s offer unreasonable.113 After the 2016 S&P Offer, S&P would not hear
anything from WTC for seven months.114
On May 3, 2017, Derman sent S&P a repackaged version of the 2013 WTC
Offer (the “2017 WTC Offer”).115 Derman explained the 2017 WTC Offer repeated
Dlott’s 2013 use of the Form 706 value because “there was [no] additional evidence
presented to come to any different conclusion than what was written back [] in
110 Derman Tr. 499–500, 539–40. Id. at 537–38, 506–08 (explaining he “would not have sent it to [Hillblom]” and if it 111
were shared it “would have come from the business line’s team members”). 112 Id. at 513–14. 113 Id. at 506. 114 Gallagher Tr. 186–87. Gallagher “was disappointed” but “not surprised” WTC did not respond to the 2016 S&P Offer because he “couldn’t get anyone to deal with me. It was very unusual,” unlike the early years when S&P and WTC “had open communication.” Id. at 187. 115 Compare JX 33 with JX 44; Derman Tr. 490–91; Gallagher Tr. 188 (“This is basically a regurgitation of Randi Dlott’s proposal from three or four years before this. No change, no response, the same mistaken belief that 706 had any reasonable relationship to the value of that asset.”).
17 2013.”116 Derman confirmed WTC had done nothing to determine that value.117
Derman could not explain why the Form 706 valuation was appropriate or required
by the Fee Agreement.118
The 2017 WTC Offer was accompanied by a check for $79,086.00, the exact
figure of the 2013 WTC Offer; the check was drawn from the Trust’s principal,
endorsed by two WTC representatives, and marked “FINAL PAYMENT ON ARW,
LLC.”119 The 2017 WTC Offer relied on the same reasoning undergirding the 2013
WTC Offer, yet did not include any additional interest.120 Derman explained, “I
didn’t feel like it made sense to accrue interest based on [S&P’s] delay.121
WTC did not consult Hillblom before cutting that check from his Trust.122
Derman testified the Trust Agreement gave WTC authority to pay S&P “an amount
that was equal to what was owed by the [Trust]” without involving Hillblom.123
116 Derman Tr. 490–91. 117 Id. at 490–91, 500–01, 512. 118 Id. at 532–33 (“Q: Why did you determine that [the Form 706 value] was appropriate for purposes of calculating a fee? A: Because it referred in the document -- in the fee agreement -- actually, let me correct that. I’m not specifically sure. I think it is in the fee agreement, that it specifically spoke about proceeds from the estate. And a way to value an estate is to utilize a 706 valuation, which would be what you would provide the federal government with in terms of telling them what your estate value was at the time of death.”). 119 JX 44 at 3; see JX 33. 120 Compare JX 33 at 2 with JX 44 1–2. 121 Derman Tr. 512. 122 Id. at 511. 123 Id. 18 S&P did not deposit the check.124 S&P rejected the 2017 WTC Offer because
it was a mere “regurgitation” of WTC’s 2013 Offer and still lacked “any reasonable
relationship to the value of th[e] asset.”125 S&P “had enough” of trying to resolve
the dispute amicably with WTC, and retained counsel.126
D. S&P Initiates Arbitration Against WTC; WTC Loops In Hillblom.
On June 30, 2017, S&P’s counsel, including Axelrod, made an arbitration
demand on WTC (the Arbitration Demand”) seeking approximately $1.3 million
under the Fee Agreement.127 The Arbitration Demand’s cover letter noted that WTC
“repeatedly re-affirmed its obligation” under the Fee Agreement, but its conduct
revealed “no good faith effort to comply” with that obligation.128 Gallagher
explained he served the arbitration demand on WTC, rather than Hillblom, because
he “had no interest in suing [a] client to get money that [he] thought his trust had the
obligation to have taken care of.”129 S&P expressed its desire to meet with WTC,
hoping the dispute could be resolved without formal arbitration proceedings.130
124 Gallagher Tr. 190. 125 Id. at 188. 126 Id. at 190. 127 JX 46 at 3. 128 JX 45 at 1. 129 Gallagher Tr. 192. 130 JX 45 at 2.
19 In November, S&P’s arbitration counsel contacted WTC, expressing dismay
WTC “ha[d] not responded in any way to [] efforts to encourage settlement
communication” or to secure the appointment of an arbitrator.131 WTC blamed its
lack of engagement on its inability “over the last several weeks” to reach Hillblom.132
WTC had never involved Hillblom before, or expressed that it had to involve him.
WTC “never [provided] a substantive proposal” following the Arbitration Demand,
leaving S&P “to conclude that Wilmington has no intention of settling the dispute
and valuation issues.”133
WTC knew it had to pay S&P’s fee from the Trust: the Trust Agreement said
so, and WTC had acknowledged that fact many times over the previous two
decades.134 WTC also knew Hillblom had no funds outside his Trust.135 But it
continued to play games with S&P, ducked the arbitration, and sent S&P to sue
Hillblom.136 On December 27, WTC told the arbitrator WTC is “not a party to the
Fee Agreement and it has not consented to submit to the court’s jurisdiction or to
131 JX 51 at 1. 132 Id.; see JX 52 (“[W]e are open to continuing a dialog and will reach out to you if we are able to get in contact with [Hillblom].”). 133 JX 52 at 2–3. 134 JX 26 at 3; JX 30 at 2; JX 33 at 2–3; JX 38; JX 44. 135 White Tr. 609. 136 Gallagher Tr. 193.
20 arbitrate any issues.”137 WTC told S&P it “had to sue [Hillblom] directly” because
WTC was not a party to the Fee Agreement.138 WTC still had not told Hillblom
about the ARW fee dispute, much less the 2016 S&P Offer or the Arbitration
Demand.139
Two weeks later on January 16, 2018, Derman, Kelly White, and three other
WTC employees called Hillblom, informing him for the first time there was a chance
S&P might sue him for its fees.140 Hillblom had never before spoken with so many
WTC representatives at once.141 WTC explained S&P had demanded WTC pay the
137 JX 53. 138 Gallagher Tr. 193. 139 JX 53 at 2 (acknowledging on December 27, 2017, WTC “has not yet succeed[ed] in contacting [Hillblom] with respect to this matter”). 140 JX 54; JX 55; Hillblom Tr. 436–39, 442. Hillblom’s testimony was vivid and shared specific memories of many “firsts.” Hillblom Tr. 438. He was definitive: “I think a lot would be addressed if I could just say I know that I learned about the Sanders & Park[] and Gallagher situation in full on that [January 2018] phone call . . . . I didn’t think it was important.” Id. at 457. In contrast, Derman and White’s testimony was muddy and conflicting. Derman Tr. 518–19; White Tr. 633. In October 2017, WTC emailed Hillblom “regarding a legal matter relating to your [T]rust’s legal fees, that [WTC] would like to run by you.” JX 49 at 1. WTC and Hillblom had a call on October 31, but Hillblom testified “[n]othing from that call stood out.” Hillblom Tr. 455. Hillblom was emphatic WTC disclosed the nature of S&P’s claim on the January 16 conference call. Id. at 457–58; see id. at 442 (“Q: Did you understand that at any point prior to this phone call on January 16, 2018, that the law firm was making a claim for attorneys’ fees against you personally? A: No -- I knew that they were not. Because I was told they may. . . . Which is a future thing.”). WTC’s counsel represented WTC had “not succeed[ed] in contacting [Hillblom] with respect to” S&P’s fees as of December 27, 2017. JX 53 at 2. 141 Hillblom Tr. 440. 21 requested fees, but WTC “had dismissed the case.”142 WTC told Hillblom “[S&P]
may look to sue” Hillblom himself.143 Hillblom did not recall WTC explaining the
nature of S&P’s possible claim against him, other than that it related to attorneys’
fees.144 Based on WTC’s explanation, Hillblom believed any claims S&P asserted
against him would be “easily dismissible.”145 He recalled being “so confused why
five people had to be on the phone call” because as they explained the situation, “it
just seemed like it was no big deal. [] I couldn’t understand the facts of them easily
dismissing something like this and the unprecedented nature of the phone call.”146
Hillblom added the explanation made a potential suit “sound[] like it was a frivolous
thing that I didn’t need to worry about.”147 WTC did not share the 2016 S&P Offer
with Hillblom.148
Hillblom was overcome with “disappointment” and “heartbreak” by S&P’s
decision to sue him.149 S&P, as counsel to Hillblom’s guardian Grist, had been a
kind and transformational force in his remarkable childhood. Hillblom was
142 Id. 143 Id. at 441; White Tr. 63–34; see Derman Tr. 519. 144 Hillblom Tr. 442. 145 Id. at 440. 146 Id. 147 Id. at 441. 148 Id. at 480–81. 149 Id. at 462–63. 22 devastated that Grist’s attorneys had returned with a hand out, like so many others
in Hillblom’s life.150
On January 19, White sent Hillblom “12 key documents” “concerning the
ARW LLC asset and the fee dispute” to assist in his defense (the “2018
Production”).151 The 2018 Production included the 2013 WTC Offer and the 2017
WTC Offer, but did not include the 2016 S&P Offer or any documents referencing
it.152 Derman’s team compiled the 2018 Production, but on the stand, Derman
deflected responsibility to White’s team as the “business line.”153 White’s email also
included a list of law firms “in the event [Hillblom] independently wish[ed] to start
an evaluation process for an attorney.”154
150 Id. at 440, 462–63. 151 JX 56; White Tr. 638–39 (“Q: Why was Wilmington Trust sending Mr. Hillblom documents that it thought he and his attorneys would need in connection with the legal dispute relating to ARW? A: Because, as Neil Derman conveyed to [Hillblom], he was -- he had to defend this matter or, you know, work through this matter himself as opposed to the trustee of his trust. So he needed that documentation, he needed to get counsel, and he needed to give the documentation to his counsel.”). 152 JX 56 at 19–20, 23–25; MSJ BR at 16 (noting the undisputed fact that the 2018 Production did not include or reference the December 2016 Offer). 153 White Tr. 648–49; JX 56 (White informing Hillblom “I’ve received communications and documents from our Legal group, that they’ve asked me to forward to you.”); Derman Tr. 518–19, 562. 154 JX 56 at 1. 23 E. S&P Files Arbitration Complaint Against Hillblom.
In February 2019, S&P reluctantly filed its arbitration complaint for its ARW
fee (the “Arbitration Complaint”) against Hillblom.155 By July, Hillblom retained
David Ribakoff as counsel.156 Hillblom found Ribakoff by searching for an attorney
located in Century City, California, based on his view that it is “the nicest area” of
Los Angeles with the “best of everything,” including legal professionals.157 Ribakoff
asked WTC for “whatever non-privileged documents you have concerning the
[S&P] Attorneys’ claims.”158 On August 5, WTC’s litigation counsel responded with
five documents WTC “authorized” him to provide.159 WTC’s August production
failed to disclose the 2016 S&P Offer or any documents discussing that offer.160
On September 7, Hillblom was served with S&P’s Arbitration Complaint.161
It alleged:
• “[Hillblom], directly and through his agent, [WTC], has breached the Fee Agreement by failing and refusing to pay to [S&P] the Contingent Fee earned on the value of certain assets and
155 PTO ¶ 44; JX 57; Gallagher Tr. 193. 156 Ribakoff Tr. 5. 157 Hillblom Tr. 467. 158 JX 59 at 2. 159 Id. at 1, 4–25. 160 See generally JX 59. 161 PTO ¶ 45. 24 distributions received by [Hillblom], through the Lory Trust, from the Estate.”162
• “[WTC], acting as [Hillblom]’s agent, repeatedly asked [S&P] to defer its receipt of payment attributable to the ARW asset and distributions between 2010 and 2017 . . . . [WTC’s] conduct has increased the damages incurred by [S&P] and now owed to [S&P] by [Hillblom].”163
• “[WTC] breached [Hillblom’s] performance under the Fee Agreement when it asserted in bad faith that [WTC] would pay [S&P] based only upon a 1995 valuation of a former ARW LLC . . . .”164
• “[Hillblom] directly and through his designated agent, [WTC], breached the Fee Agreement.”165
F. WTC Sends Hillblom Documents In September 2019.
On September 5, Hillblom emailed WTC and WTC’s litigation counsel
requesting “a conference call in regards to the Gallagher situation.”166 Hillblom
explained he and his attorney “would like to discuss and request some information
before [Ribakoff] reaches out to [S&P’s] legal team.”167 That conference call
occurred on September 17.168
162 JX 57 ¶ 8. 163 Id. ¶ 13. 164 Id. ¶ 14. 165 Id. ¶ 16. 166 JX 61. 167 Id. 168 JX 62.
25 On September 26, WTC’s litigation counsel emailed Ribakoff seven
documents “as a courtesy to you and to [Hillblom]” (the “September 2019
Production”).169 The September 2019 Production was simply a partial reproduction
of WTC’s 2018 Production.170 It did not disclose the 2016 S&P Offer.171
The September 2019 Production comprised the following documents:
1. Grist’s October 2002 letter to Gallagher claiming S&P is entitled to “thirty percent of the fair market value of ARW on the date it was distributed to Lory.”172 Grist notes that while he is “certain that a valuation was assigned to the Estate’s interest in ARW on the 706 Tax Return [] I would not readily concede that that figure is one we should rely on, whatever it is.”173
2. The 2013 WTC Offer, which relies on the Form 706 and offers $79,086.174 The 2013 WTC Offer alternatively proposes the possibility S&P and WTC retain a valuation profession to appraise ARW at the time it was distributed to the Trust.175
3. WTC’s May 2017 Offer, which reiterates use of the Form 706 value and includes a $79,086 check for “FINAL PAYMENT ON ARW, LLC”.176
4. Axelrod’s letter dated June 30, 2017, asserting “Wilmington’s current interpretation of the Fee Agreement is wrong.”177
169 JX 63. 170 Compare JX 63 with JX 56. 171 JX 63; see JX 39. 172 JX 63 at 2. 173 Id. at 3. 174 Id. at 4. 175 Id. at 5. 176 Id. at 7–9. 177 Id. at 10. 26 5. S&P’s Arbitration Demand directed to WTC, also dated June 30, 2017.178 The Arbitration Demand notes under the Fee Agreement the “basic fee obligation” is Hillblom’s “direct responsibility” since he reached the age of majority.179 The demand explains WTC is “authorized to honor and perform” Hillblom’s obligation under the Trust Agreement and indeed has done so “as [Hillblom’s] authorized representative in these respects for many years.”180 The demand claims WTC breached the Fee Agreement by failing to satisfy the Trust’s obligations to S&P. S&P’s Arbitration Demand seeks approximately $1.3 million in fees related to ARW distributions, prejudgment interest on the ARW distributions, and prejudgment interest on one other non-cash asset.181
6. Axelrod’s December 2017 letter to the arbitrator.182 The letter informs the arbitrator that Hillblom has reached the age of majority, and that WTC has represented Hillblom “in matters pertaining to [the] [F]ee [A]greement” since the probate proceeding closed.183 Axelrod’s letter states “[t]he principal disputed issue is likely to be the value of Mr. Lory’s (or his Trust’s) interest in a minority interest in . . . ARW, LLC.”184
7. A December 27, 2017 letter from WTC’s litigation counsel to the arbitrator explaining WTC is not a party to the Fee Agreement and “has not consented to submit to the court’s jurisdiction or to arbitrate any issues.”185 The letter also notes “[w]e are not aware of any information which obligates the Lory Trust to defend the claims alleged by the Contingent Fee Attorneys or to participate in any arbitration process.”186 The letter concludes by noting
178 Id. at 12–15. 179 Id. at 12. 180 Id. at 12–13. 181 Id. at 14. 182 Id. at 16–18. 183 Id. at 16. 184 Id. at 17 (“I say ‘likely,’ because Wilmington has not formally provided an Answer to the demand for arbitration despite the passage of many months.”). 185 Id. at 19–20. 186 Id. at 19. 27 WTC “has not succeed[ed] in contacting Mr. Lory with respect to this matter.”187
After Hillblom received the Arbitration Complaint and the September 2019
Production, he expected Ribakoff and WTC would work together to protect his
interests.188 He did not anticipate bringing suit against WTC at that time.189 Ribakoff
also believed he and WTC “we[re] on the same team” in terms of protecting
Hillblom’s interests.190 Ribakoff explained he was “viewing [WTC] as being a
fiduciary to [Hillblom] and . . . equally interested as I was in supporting [Hillblom]
. . . in defending himself.”191
Ribakoff launched into action. On October 2, he informed S&P’s arbitration
counsel and the arbitrator that Hillblom did not consent to arbitration.192 He pressed
that Hillblom was a minor for most of the dispute, with “no ability to perform under
the [F]ee [A]greement.”193 Ribakoff also emphasized the inherent unfairness of
forcing Hillblom to participate in a dispute “between competing fiduciaries—his
187 Id. at 20. 188 Hillblom Tr. 476. 189 Id. at 477. 190 Ribakoff Tr. 66. 191 Id. 192 JX 64. 193 Id. at 1. 28 Guardian ad Litem’s attorneys and his Trustee—which he had no control over.”194
S&P responded: “While we can agree with you that Mr. [] Hillblom was not well
served by his trustee and may well have claims against the trustee for its negligent
handling of this matter and potential breaches of its fiduciary duties during the period
before the trustee disclaim both responsibility and authority to act, that is not a matter
relevant to my clients’ breach of contract claims, and is certainly no defense.”195
In November, Ribakoff met with Gallagher to better understand S&P’s claim
for ARW fees.196 After that meeting, S&P shared its “archive records of
communications with Grist or WTC [since] the time of the distribution of ARW
LLC” to the Trust.197 That production included the 2016 S&P Offer.198 That is how
Hillblom learned S&P had offered to settle the dispute for $300,000.00.199
Gallagher’s trove of records was magnitudes larger than WTC’s September
2019 Production and 2018 Production.200 S&P asked Ribakoff to join their efforts
194 Id. at 3. 195 JX 65 at 1–2. 196 Gallagher Tr. 242; Ribakoff Tr. 27. 197 JX 67 at 1. 198 Id. at 147–48. 199 Hillblom Tr. 480–81. 200 JX 56 at 3 (listing the table of contents of the 2018 Production); see, e.g., JX 67 at 7–11 (November 2004 email from Gallagher to WTC noting ARW has $500,000 to distribute); id. at 13 (October 2005 email from Gallagher to Grist noting a “need to get moving” on resolving the fee dispute); id. at 14–16 (October 2005 email from ARW’s manager to its
29 in requesting WTC’s ARW financial records, explaining “[c]o-operation can’t be
something [WTC] would complain about,” and contemplating ARW’s financials
would “provide a sound basis to resolve this case without a formal arbitration.”201
In early 2020, Hillblom moved to dismiss the Arbitration Complaint for
failure to join WTC as an indispensable party.202 S&P resisted, and the arbitrator
denied that motion.203 S&P and Ribakoff prepared for arbitration and kept working
to find an amicable resolution.204 Ribakoff presented WTC with a subpoena and
members explaining it had received an offer to acquire ARW’s interest in Davenport and Madison for approximately $5 million); id. at 17 (January 2009 email from WTC to ARW explaining ARW’s interests in Davenport and Madison are worth between $7 million and $8 million); id. at 19 (November 2012 email from Gallagher to Grist requesting a list of distributions from ARW to the Trust); id. at 28 (September 2012 email from WTC to Gallagher where WTC noted “we are [] trying to work through the fee on ARW, LLC so we can wrap up the fee arrangement with you do this does not continue to drag on”); id. at 33 (November 2012 email from Patni to Gallagher noting “I cannot tell you why the fee on ARW was not addressed sooner”); id. at 38 (January 2013 email from Gallagher to WTC requesting a schedule of ARW’s distributions to the Trust); id. at 50 (June 2013 email from Gallagher to WTC regarding ARW fees); id. at 52–53 (August 2013 email from WTC to Gallagher noting “[w]e are aware we have not yet compensated you for your services on ARW and are internally discussing a proposed resolution”); id. at 55 (October 2013 email from ARW to Gallagher providing a list of ARW’s cash distributions to the Trust); id. at 65–84 (Madison’s financial records for fiscal year 2010); id. at 89–90 (October 2013 letter from Axelrod to WTC explaining how his firm was compensated on the interim cash distributions from ARW); id. at 91–92 (October 2013 letter to WTC from the attorney who represented the Estate during the probate proceeding explaining during the allocation of non-cash assets “ARW was one of the assets where the parties did not agree on a value”); and id. at 147–48 (the 2016 S&P Offer). 201 JX 67 at 1. 202 JX 78. 203 JX 77; JX 82. 204 E.g., JX 88; JX 92. 30 asked it to accept informal service, which WTC did.205 S&P and Ribakoff each
engaged valuation experts to ascertain ARW’s value and to assess S&P’s claim.206
In November, S&P offered to settle its claim for ARW fees for $1,846,000.207
Ribakoff immediately contacted Derman. Ribakoff proposed that Hillblom pay
$300,000 and WTC pay the rest, on the basis WTC could have settled for $300,000
in 2016.208 WTC responded a week later with a punt: “we need to have further
discussion with the business [team] and [] that takes time.”209
In the meantime, Ribakoff asked a valuation expert he trusted from earlier
work, Stefano Vranca, to review S&P’s expert report and opine on a reasonable
settlement figure.210 Vranca gave Ribakoff his criticism of the methodology
deployed and suggested a reasonable settlement would be in the range of $1,500,000
to $1,579,500.211
In December, Ribakoff counteroffered $1,325,000, and pointed out Hillblom
could assert a statute of limitations defense given S&P’s claim arose in 2002.212 On
205 JX 79; Derman Tr. 521–22. 206 JX 92; JX 100; JX 98. 207 JX 92. 208 Id. 209 JX 96 at 1. 210 Vranca Tr. 285–88; JX 100; see JX 124 at 31–70. 211 JX 100 at 3–4. 212 JX 101 at 1. 31 December 17, S&P and Hillblom agreed to settle S&P’s claims for $1.4 million—
$1.1 million more than the 2016 S&P Offer.213 Hillblom paid that amount from the
Trust.214
G. Procedural History
On November 29, 2021, Hillblom filed his Verified Complaint for breach of
fiduciary duty and breach of trust against WTC (the “Complaint”).215 When
unpacked, the Complaint’s two counts assert five claims: (i) breach of fiduciary duty
and breach of trust for failure to accept the 2016 S&P Offer ( “Failure to Pay
Claim”); (ii) breach of fiduciary duty and breach of trust for failure to inform
Hillblom of the 2016 S&P Offer (“Failure to Disclose Claim”); (iii) breach of
fiduciary duty for claiming WTC was not subject to arbitration under the Fee
Agreement (“Avoiding Arbitration Claim”); (iv) breach of fiduciary duty for failing
to provide Hillblom meaningful assistance in arbitration (“Failure to Assist Claim”);
and (v) breach of trust for failing to pay the fees owed to S&P under the Fee
Agreement (“Failure to Pay Claim”).216
213 PTO ¶ 48; JX 102 (noting settlement payment in the amount of $1,400,000); see JX 39 (offering to resolve S&P’s claim to ARW fees for $300,000). Derman Tr. 522 (explaining the “business line” approved the use of Trust funds to settle 214
S&P’s claim against Hillblom). 215 See generally Compl. 216 Id. ¶¶ 57–64. The “breach of trust claim for failure to accept the [2016 S&P Offer] is legally identical to the breach of fiduciary duty claim for failing to accept the December
32 WTC moved to dismiss the complaint, arguing, among other things, it did not
owe a fiduciary duty to pay S&P’s fees under the Fee Agreement, and that the claims
should be barred under the doctrine of laches.217 I denied that motion.218
WTC answered the Complaint219 and moved for summary judgment.220 That
motion was granted as to the Avoiding Arbitration Claim and the Failure to Assist
Claim; it was otherwise denied.221 Relevant here, WTC argued many of Hillblom’s
claims were time-barred under 12 Del. C. § 3585(a), pressing the 2018 Production
had put Hillblom on inquiry notice of his claims against WTC.222 I rejected this
argument, concluding the 2018 Production provided Hillblom “no reason to distrust
or otherwise be suspicious of WTC” and “did not provide sufficient information such
that Hillblom reasonably should have inquired into a claim against WTC for failing
to accept [the 2016 S&P Offer] or notify Hillblom of it.”223
The parties undertook additional fact discovery into a record spanning thirty
years and two continents, and largely predating modern electronic storage
2016 Offer.” Hillblom v. Wilmington Tr. Co., 2022 WL 17428978, at *10 (Del. Ch. Dec. 6, 2022). 217 D.I. 12 at 13–14. 218 Hillblom, 2022 WL 17428978, at *12. 219 D.I. 61. 220 D.I. 62. 221 MSJ BR at 25–26. 222 D.I. 63 at 16–24; MSJ BR at 11–12. 223 MSJ BR at 16. 33 technology.224 In May 2025, after Ribakoff was listed as a trial witness, WTC moved
to disqualify him as Hillblom’s trial counsel.225 I denied that motion due to lack of
prejudice to WTC.226
Hillblom’s breach of fiduciary duty and breach of trust claims were tried over
three days in July 2025.227 The parties submitted post-trial briefing,228 and presented
post-trial argument on December 8, at which point I took the matter under
advisement.229
II. ANALYSIS
The preponderance of the evidence shows WTC breached its fiduciary duties
to Hillblom. WTC does not dispute that it owed fiduciary duties, the contractual and
fiduciary duty to pay S&P a fee on ARW from the Trust, and the duty to tell Hillblom
about the 2016 S&P Offer.230 WTC does not dispute that it left S&P’s fee unpaid for
224 D.I. 107; D.I 108; D.I. 110; D.I. 115; D.I. 117. 225 D.I. 136; see D.I. 139; D.I. 140; D.I. 141; D.I. 143. 226 Hillblom v. Wilmington Tr. Co., 339 A.3d 753, 756–57 (Del. Ch. 2025); D.I. 147. 227 D.I. 160. 228 POB; DAB; PRB. 229 D.I. 180; see D.I. 181. 230 E.g., JX 26; JX 27; JX 30; JX 32; JX 33; Derman Tr. 503–04; Dlott Tr. 588–90, 595–96 (“We had a fiduciary duty to decide if it was appropriate to pay Garrick Gallagher.”).
34 nearly twenty years, left Hillblom to defend S&P’s claims himself, and left Hillblom
in the dark about the 2016 S&P Offer.231
Against that backdrop, WTC had few defenses. At trial, WTC attempted to
discredit and blame its beneficiary by dredging up personal struggles Hillblom has
worked to overcome.232 On the merits, WTC leads with a specific timeliness
defense: it asserts Section 3585’s one-year statute of limitations bars Hillblom’s
claims.233 It claims the September 2019 Production put Hillblom on inquiry notice
of his claims against WTC.234 WTC more broadly contends Hillblom’s claims fail
because WTC did not act in bad faith.235 WTC contends Hillblom waived his Failure
to Pay Claims.236 Finally, WTC argues Hillblom cannot recover the $1.4 million
because that amount is “not tethered to any valuation of ARW at the time of the
alleged breach of the Fee Agreement in 2000.”237 None of these arguments succeed.
231 Dlott Tr. 595–96; Derman Tr. 537–39; see JX 53. 232 Hillblom Tr. 443–44 (inquiring into irrelevant personal struggles); id. at 446–47 (same); id. at 450–54 (invoking those struggles); id. at 456–58 (implying Hillblom knew about the fee dispute before January 2018 but was unable to comprehend or retain that information). 233 See generally DAB. 234 Id. 235 Id. at 47–48. 236 Id. at 46. 237 Id. at 52–53. 35 A. WTC Breached Its Fiduciary Duties In Bad Faith.
The preponderance of the evidence shows WTC breached its duties to
administer the Trust in accordance with common law fiduciary duties and the Trust
Agreement.
“The elements of a claim for breach of fiduciary duty are: (i) that a fiduciary
duty exists; and (ii) that a fiduciary breached that duty.”238 “Under default principles
of Delaware law, a trustee owes fiduciary duties to a beneficiary.” 239 “At common
law, the duties of a trustee to trust beneficiaries include loyalty, good faith, and due
care.”240
A trustee’s fiduciary duties include the overarching duty to preserve trust
property.241 At common law, a trustee has the duty to take reasonable steps to
238 Hardy v. Hardy, 2014 WL 3736331, at *11 (Del. Ch. July 29, 2014) (citing Heller v. Kiernan, 2002 WL 385545, at *3 (Del. Ch. Feb. 27, 2002)), aff’d, 806 A.2d 164 (Del. 2002). 239 Tigani v. Tigani, 2021 WL 1197576, at *13 (Del. Ch. Mar. 30, 2021), aff’d, 271 A.3d 741 (Del. 2022) (TABLE); see 12 Del. C. §§ 3301(d)–(h)(2)(a). 240 In re Nat’l Collegiate Student Loan Trs. Litig., 251 A.3d 116, 185 (Del. Ch. 2020) (citations and quotations omitted); see Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1134, 1148 (Del. Ch. 1994), aff’d, 663 A.2d 1156 (Del. 1995). 241 Restatement (Third) of Trusts § 76 cmt. d (2007); id. § 77 cmt. a (“In matters relating to the administration of the trust, the trustee has a duty to exercise prudence—that is, to act with care, skill, and caution []—as well as a duty to adhere to the other fiduciary standards . . . .”); see Frederick-Conaway v. Baird, 159 A.3d 285, 299 n.52 (Del. 2017) (“This Court has looked to the Restatement (Third) of Trusts for guidance on other areas of trust law.”); see also Otto v. Gore, 45 A.3d 120, 130 (Del. 2012); Law v. Law, 753 A.2d 443, 448 (Del. 2000).
36 “defend actions which may result in a loss to the trust estate.”242 The exercise of that
duty includes promptly acting on remunerative offers,243 and “not resisting an
unenforceable claim if the costs and risk of litigation make such a decision
reasonable under all the circumstances.”244
A trustee also has the duty to inform the beneficiary of certain matters relating
to the trust.245 That duty creates “an affirmative obligation” and duty that a trustee
242 See Restatement (Second) of Trusts § 178 (1959); id. at cmt. b (“If it reasonably appears to be for the benefit of the beneficiary, the trustee can properly compromise or arbitrate such claims.”); id. § 192 (“The trustee can properly compromise, submit to arbitration or abandon claims affecting the trust property, provided that in so doing he exercises reasonable prudence.”); Restatement (Third) of Trusts § 76 cmt. d (2007) (“The duty of protecting the trust estate includes taking reasonable steps to enforce or realize on other claims held by the trust and to defend actions that may result in a loss to the trust estate. Reasonable steps may include . . . compromise or arbitration of claims by or against the trust . . . .”); see also Cargill, Inc. v. JWH Special Circumstance LLC, 959 A.2d 1096, 1113 n.68 (Del. Ch. 2008) (recognizing a trustee’s duty “to defend actions”). 243 Pennsylvania Co. v. Wilmington Tr. Co., 186 A.2d 751, 777, 781–82 (Del. Ch. 1962). 244 Restatement (Third) of Trusts § 76 cmt. d (2007); see id. § 88 cmt. b (“A trustee is not limited to incurring expenses that are ‘necessary’ or essential, but may incur expenses that, in the exercise of fiduciary judgment, are reasonable and appropriate in carrying out the purposes of the trust, serving the interests of the beneficiaries, and generally performing the functions and responsibilities of the trusteeship. For example, the trustee can properly incur expenses appropriate to the collection and protection of the trust property.”); id. at cmt. a (“The comprehensive powers of a trustee include the power to incur and pay expenses in the course of trust administration, but the exercise of this power is subject to the trustee’s fiduciary duties. Implicit in a trustee’s fiduciary duties is a duty to be cost- conscious.”). 245 Cygnus Opportunity Fund, LLC v. Washington Prime Grp., LLC, 302 A.3d 430, 450 (Del. Ch. 2023) (“The obligation to keep beneficiaries informed is a central aspect of the trustee’s duties at common law.”); McNeil v. McNeil, 798 A.2d 503, 509–10 (Del. 2002); NHB Advisors, Inc. v. Monroe Cap. LLC, 2013 WL 6906234, at *4 (Del. Ch. Dec. 27, 2013); see Restatement (Third) of Trusts § 82(1)(c) (2007); id. § 82 cmt. d (“For various reasons of prudence, loyalty, or impartiality, or simply as a general matter of proper
37 “furnish information” to its beneficiary.246 A trustee owes a duty to inform its
beneficiary “of significant developments concerning the trust and its administration,
particularly material information needed by beneficiaries for the protection of their
interests.”247 “A trustee has a duty to furnish information to a beneficiary upon
reasonable request.”248 And where “a fiduciary chooses to speak [it] must do so
candidly and completely.”249
“A violation by a trustee of a duty the trustee owes to a beneficiary is a breach
of trust.”250 A breach of trust by a trustee violates “a correlative right of the
beneficiary, and gives rise to liability on the part of the trustee and a correlative cause
of action on the part of the beneficiary for any loss to the trust estate. Th[at] rule is
disclosure . . . a trustee’s duty to provide information to beneficiaries may apply when there are . . . developments of which beneficiaries should be made aware and thereby allowed an opportunity to offer suggestions, comments, or information . . . .”); George G. Bogert et al., Bogert’s The Law of Trusts and Trustees § 962 (3d. ed.), Westlaw (database updated May 2026) [hereinafter “Bogert’s”] (“[T]he trustee is under a duty, independent from the duty of care, to inform the beneficiary of important matters concerning the trust . . . .”). 246 In re Thomas Lawrence Reeves Irrevocable Tr., 2015 WL 1947360, at *9 (Del. Ch. Apr. 29, 2015); McNeil, 798 A.2d at 509 (“The duties to furnish information and to act impartially are not subspecies of the duty of care, but separate duties.” (citing Restatement (Second) of Trusts §§ 173, 174, 183 (1959))). 247 Restatement (Third) of Trusts § 82(1)(c) (2007); accord Cygnus, 302 A.3d at 450; McNeil, 798 A.2d at 509; see Globe Woolen Co. v. Utica Gas & Elec. Co., 121 N.E. 378 (N.Y. 1918) (“A beneficiary, about to plunge into a ruinous course of dealing, may be betrayed by silence as well as by the spoken word.”) (Cardozo, J.). 248 McNeil, 798 A.2d at 510. 249 Cygnus, 302 A.3d at 451. 250 12 Del. C. § 3581(a). 38 applicable to positive acts, as well as omissions or negligence which constitute a
breach of duty by the trustee.”251
“A trust agreement may ‘expand, restrict, eliminate, or otherwise vary’ a
fiduciary’s duties.”252 A trust agreement may differentiate between discretionary and
mandatory powers. 253 A mandatory power is generally indicated by the use of terms
“shall,” or “must.”254 Where a power is mandatory, “the trust has a positive duty to
exercise power by performing the act in question, although the exact time and
manner of performance is [] left to the judgement of the trustee.”255
The trust agreement’s terms also delineate the trustee’s affirmative duty to
administer the trust in accordance with those terms.256 A trustee breaches the duty
of trust where it “improperly fail[s] to act” consistent with the terms of the trust
251 Hogg v. Walker, 622 A.2d 648, 653 (Del. 1993) (footnote omitted). 252 Hillblom, 2022 WL 17428978, at *8 (quoting 12 Del. C. § 3303(a)). 253 Bogert’s § 552; see Restatement (Third) of Trusts § 76 cmt. b (2007) (“A trustee has both (i) a duty generally to comply with the terms of the trust and (ii) a duty to comply with the mandates of trust law except as permissibly modified by the terms of the trust.”). 254 Bogert’s § 552. 255 Id. 256 Restatement (Third) of Trusts § 76 (2007).
39 agreement.257 In construing trust agreements, “[t]he language of the entire
instrument, rather than any isolated Article” dictates its interpretation.258
Here, Hillblom’s Trust Agreement does not disclaim any duties; rather, it
reinforces that WTC as trustee is “subject always to the obligations of a fiduciary.”259
It enumerates several specific mandatory powers WTC must exercise in its faithful
and informed discretion. It enumerates the mandatory power to use Trust assets to
pay debts related to the Estate’s probate proceedings, specifically including S&P’s
fee.260 And it grants the mandatory power to “pay or contest any claim,” to settle a
claim against the Trust, and to “defend actions, claims, or proceedings for the
protection of [T]rust assets.”261
WTC did not satisfy those obligations at all, much less with the care and
fidelity expected of a fiduciary. WTC did not pay S&P’s ARW fee. WTC did not
pay S&P’s claim.262 WTC did not contest or defend against S&P’s claim: it let the
257 Id. § 76 cmt. b. 258 Dickinson v. Wilmington Tr. Co., 734 A.2d 605, 609 (Del. Ch. 1999]) (quoting J.P. Morgan Delaware v. Henley-Paradis, 1993 WL 6866, at *3 (Del. Ch. Jan. 13, 1993)), aff’d sub nom. Wilmington Tr. Co. v. Dickinson, 734 A.2d 642 (Del. 1999). 259 JX 5 § B, Art. II ¶ A (1); see id. § B, Art. II ¶ B (1); Hillblom, 2022 WL 17428978, at *8. 260 JX 5 § A, Art. III ¶ F. 261 Id. § B, Art. II ¶ A (19). 262 Hillblom, 2022 WL 17428978, at *8–9 (holding S&P’s demand for payment constitutes a “claim” under Section 19 of the Trust Agreement).
40 matter languish for decades, ducked S&P’s claim in arbitration, then left Hillblom
to do the defending. WTC did not preserve the Trust corpus: due to WTC’s
abdication of its duties and refusal to engage with S&P, the valuation of the Trust’s
ARW stake, and the 2016 S&P Offer, the Trust had to pay five times the 2016 S&P
Offer.263
And WTC failed to give Hillblom the information to which he was entitled at
every opportunity: when the dispute was unfolding, when WTC received and
rejected the 2016 S&P Offer, when WTC left Hillblom to manage his own defense,
and when Hillblom and Ribakoff asked WTC for information.264 WTC chose to
speak when it offered Hillblom the 2018 Production, which it described as the “12
key documents and correspondence that you and your attorney will need”—but
WTC omitted the 2016 S&P Offer.265 WTC omitted it again when Ribakoff asked
for “whatever non-privileged documents you have” after Hillblom was sued, and yet
again in the September 2019 Production when WTC chose to speak “as a courtesy”
to its beneficiary.266
263 Compare JX 102 with JX 39. 264 Dearman Tr. 507–08, 537–39; JX 56; JX 59; JX 61; JX 63. 265 JX 56 at 1. 266 JX 59 at 2; JX 63. 41 WTC clings to the discretion afforded to a fiduciary in performing its duties,
arguing it was within its discretion to refuse to overpay S&P.267 That is so. But the
grant of discretion to a trustee “may not relieve the trustee of liability for imprudent
exercises of [its] fiduciary powers.”268 WTC simply failed to pay, defend, and
inform as the Trust Agreement and common law fiduciary duties required. Those
failures fell outside the range of discretion: they were in bad faith.
A trustee acts in bad faith when it “consciously and intentionally disregard[s]
[its] responsibilities” in the face of a known obligation.269 Put differently, a trustee
acts in bad faith where “a known obligation” arises and it willfully abdicates “that
well-understood duty.”270
WTC persistently acknowledged its obligation to pay S&P’s fee.271 WTC
knew it should have disclosed the 2016 S&P Offer when it was received.272 WTC
knew that ARW was difficult to value when it was distributed to the Trust, that
267 DAB at 47–48. 268 Bogert’s § 542; see McNeil, 798 A.2d at 509–10. 269 In re Walt Disney Co. Deriv. Litig., 906 A.2d 27, 62 (Del. 2006) (quoting In re Walt Disney Co. Deriv. Litig., 825 A.2d 275, 289 (Del. Ch. 2003)); In re Volftsun/Landy Tr. Litig., C.A. No. 4635-VCL, at 721 (Del. Ch. Oct. 24, 2012) (TRANSCRIPT) (finding trustee acted in bad faith where “there was a known obligation to manage and a[n] abdication of that well-understood duty”). 270 Volftsun/Landy, C.A. No. 4635-VCL, at 721. 271 E.g., JX 26; JX 27; JX 30; JX 32; JX 33; JX 56 at 28, 33, 52–53; Derman Tr. 503–04; Dlott Tr. 588–90. 272 Derman Tr. 499–500, 539–40.
42 attorneys with a “substantially similar” fee agreement were paid on cash
distributions, that the value assigned on the Form 706 was not particularly useful,
and that one of its representatives valued ARW’s 2.5% stake in Madison at
approximately $7 million in 2006.273 Yet WTC only offered S&P a fee based on the
Form 706 value and did nothing to value the asset.274 Late in the game, WTC
blamed its inaction on its inability to reach Hillblom, but WTC had the authority to
resolve the issue without him, and indeed cut the 2016 check without his input.275
Put simply, WTC knew it could, and should, pay S&P a fee based on a different
valuation of the ARW asset, and that it should have informed Hillblom of the 2016
S&P Offer. But WTC did the opposite: it left the S&P fee unresolved without any
valuation work; did not accept or act on the 2016 S&P Offer; did not defend S&P’s
claim, leaving S&P to sue Hillblom; and did not tell Hillblom about the 2016 S&P
273 JX 67 at 85–87, 64 (William Pease from Wilmington Trust noting in 2006 that “two minority partners wanted $8 million per 2.5% interest, and I would have been happy with $7 million”); JX 129 (explaining that another heir’s attorneys were paid on the cash distributions from ARW); JX 67 at 91–92 (counsel to Larry’s charitable trust informing WTC in 2013 that “ARW was one of the assets where the parties did not agree on a value”); JX 30 at 2; JX 32 at 2 (WTC noting the difficulty in “retroactively” valuing the Trust’s interest in ARW); JX 33 at 2 (suggesting the possibility of retaining a valuation firm to ascertain the value of the FMW of ARW when distributed to the Trust). 274 Dlott Tr. 579, 584, 594–96 (acknowledging WTC never commissioned an appraisal of the Trust’s interest in ARW); id. at 597 (“Q: And you never had the benefit of a fair market value appraisal; correct? A. No. We didn’t have a copy of the appraisal that was attached to the estate tax return, nor did Mr. Gallagher provide it.”); JX 33; JX 44. 275 Dlott Tr. 591; JX 44; JX 52 at 1; Derman Tr. 540–42; JX 96; see JX 103.
43 Offer at any time, including when it chose to speak on the issue and when Hillblom
asked for information. Those knowing breaches were in bad faith.276
B. Hillblom’s Claims Are Not Time Barred.
WTC argues Hillblom’s claims are time-barred because the September 2019
Production is a “report” under 12 Del. C. § 3585 that put Hillblom on reasonable
inquiry notice of claims against WTC, and started a one-year period that expired
before Hillblom sued.277
Section 3585 provides that if a “report” provides a beneficiary either actual or
reasonable inquiry notice of a claim against a trustee, the action must be filed within
one year.278 It reads, in relevant part:
(a) A person may initiate a judicial proceeding against a trustee for breach of trust or other claim until the first to occur of: (1) One year after the date the person was sent a report that adequately disclosed the facts constituting a claim . . . . (b) For the purpose of subsection (a) of this section, a report adequately discloses the facts constituting a claim if it provides sufficient information so that the person knows of the claim or reasonably should have inquired into its existence.279
276 McPadden v. Sidhu, 964 A.2d 1262, 1274 (Del. Ch. 2008) (“[F]rom the sphere of actions that was once classified as grossly negligent conduct that gives rise to a violation of the duty of care, the Court has carved out one specific type of conduct—the intentional dereliction of duty or the conscious disregard for one’s responsibilities—and redefined it as bad faith conduct, which results in a breach of the duty of loyalty.”); Bogert’s § 542 (“Actions taken in reckless disregard of the beneficiaries’ interests have been held to indicate bad faith and result in refusal to apply the exculpatory clause.”). 277 DAB at 23–44. 278 12 Del. C. § 3535. 279 Id. §§ 3535(a)–(b). 44 Subsection (b) is triggered by inquiry notice.280 A plaintiff is deemed “to have
inquiry notice upon the discovery of facts constituting a basis for the cause of action,
or [where the party] knows facts sufficient to put a person of ordinary intelligence
and prudence on inquiry, which, if pursued, would lead to the discovery of such
facts.”281 Inquiry notice requires a plaintiff to be “objectively aware of the facts
giving rise to the wrong[.]”282 A plaintiff is deemed to be on inquiry notice when
“the information underlying [the] claim is readily available.”283 This Court regularly
declines to find inquiry notice where a plaintiff would have to piece together
information from various documents, reasoning “[s]uch an investigation is beyond
‘reasonable’ diligence.”284
280 Id. § 3535(b) (starting the one-year period after the person was sent a report that “provides sufficient information so that the person . . . reasonably should have inquired into [the claim’s] existence”). 281 Altenbaugh v. Benchmark Builders Inc., 271 A.3d 188, *2 (Del. 2022) (TABLE) (internal quotations omitted and alterations in original); Coleman v. PricewaterhouseCoopers, LLC, 854 A.2d 838, 842 (Del. 2004); Becker v. Hamada, Inc., 455 A.2d 353, 356 (Del. 1982). 282 Weiss v. Swanson, 948 A.2d 433, 451 (Del. Ch. 2008). 283 In re Dean Witter P’ship Litig., 1998 WL 442456, at *8 (Del. Ch. Jul. 17, 1998), aff’d, 725 A.2d 441 (Del. 1999); see Pomeranz v. Museum P’rs, L.P., 2005 WL 217039, at *12 (Del. Ch. Jan. 24, 2005) (“[Plaintiffs] may not simply wait until the details of the harm are provided to them before the statute begins to run. Knowing of a wrong is sufficient to require action to preserve one’s rights.”). 284 Weiss, 948 A.2d at 452; Microsoft Corp. v. Amphus, Inc., 2013 WL 5899003, at *19 (Del. Ch. Oct. 31, 2013). 45 Section 3585’s inquiry notice trigger has a reasonableness modifier.285 As
explained on WTC’s motion for summary judgment, that modifier “requires an
objective consideration of the circumstances.”286 Black’s Law Dictionary defines
the term “reasonable” as “fair and proper under the circumstances.”287 Our Supreme
Court has embraced that approach in the context of claims brought by a lay client
against a trusted professional, repeatedly noting inquiry notice turns on the unique
facts and circumstances of the case.288
285 12 Del. C. § 3535(b). 286 MSJ BR at 12. 287 REASONABLE, Black’s Law Dictionary (12th ed. 2024) (“Reflecting good judgment; fair and proper under the circumstances; sensible.” (emphasis added)); Kenneth Adams, A Manual of Style for Contract Drafting § 13.681 (4th ed.) (“A reasonableness standard is objective—what would a reasonable person have done in the circumstances?”); see also Willey v. State, 1985 WL 189319, at *2 (Del. Super. Nov. 26, 1985) (“[Section 2322(a) of Title 19] obligates an employer to provide reasonable medical services to an injured employee. What constitutes reasonable medical services under § 2322(a) is not defined by statute and, therefore, is left to be determined by the Board on a case-by-case basis.”); Bd. of Pub. Educ. v. DiGiacomo, 1985 WL 189283, at *1 (Del. Super. Sept. 25, 1985) (interpreting 19 Del. C. § 2350(f), which provides the court may “allow a reasonable fee to a claimant’s attorney,” and reasoning the statute requires that the “the Court [to] determine a reasonable fee in its discretion on a case by case basis as to any appeal”); Triumph Mortg. Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 2020 WL 3577839, at *3 (Del. Super. June 30, 2020) (“Reasonableness is a fact-intensive legal conclusion that depends on the circumstances of the case.”). 288 E.g., Coleman, 854 A.2d at 842 (explaining the application of the “discovery rule” where claims are brought against a fiduciary “is necessarily based on the facts of each case”); Isaacson, Stolper & Co. v. Artisan’s Sav. Bank, 330 A.2d 130, 133 (Del. 1974) (“Application of the ‘time of discovery’ rule is limited, and each case must stand or fall on its own facts . . . .”); see also Pack & Process, Inc. v. Celotex Corp., 503 A.2d 646, 651 (Del. Super. 1985) (observing in an action brought by a property owner against a roofer the “relationship between the parties was such that the existence of roof defects and the cause
46 And as I held on summary judgment, “a plaintiff may establish a lack of
inquiry notice by showing justifiable reliance on a professional or expert whom they
have no ostensible reason to suspect of deception.”289 The parties agree the
“appropriate standard” for assessing whether a “report” put a beneficiary on inquiry
notice takes into account whether the beneficiary had reason to distrust or otherwise
be suspicious of the trustee.290 Delaware law recognizes a beneficiary is entitled,
and in fact encouraged, to rely on her trustee.291 “The trust relationship has utility
only if beneficiaries feel at ease confiding in and relying upon the trustee.”292 “Since
trust and good faith are the essence of this relationship, it would be corrosive and
contradictory for the law to punish reasonable reliance on that good faith by applying
the statute of limitations woodenly or automatically to alleged self-interested
of the leaks was the responsibility of the defendant, and, as such, not a condition about which plaintiff should have been knowledgeable”). 289 MSJ BR at 13. 290 DAB at 22 (acknowledging the “appropriate standard for assessing whether a report” under Section 3585 put a beneficiary on inquiry notice must consider the beneficiary’s reasonable reliance on the trustee (citing MSJ BR at 15)); MSJ BR at 15 (“I conclude the Court should consider that a beneficiary plaintiff is entitled to rely on her trustee when assessing whether the beneficiary plaintiff reasonably should have inquired into the existence of any claims.”); see PRB at 26 (“[A] plaintiff may establish a lack of inquiry notice by showing justifiable reliance on a professional or expert whom they have no ostensible reason to suspect of deception.” (quoting MSJ BR at 17)). 291 Reed v. Del. Tr. Co., 1995 WL 317013, at *2 (Del. Ch. May 19, 1995) (“Cestui que trust are encouraged to trust those who have agreed to serve as trustees.”). 292 Id. at *3. 47 violations of trust.”293 A beneficiary is entitled to rely on his trustee “until [he] had
‘reason to know’ that a wrong has been committed.”294
In my view, the considerations informing whether a beneficiary reasonably
should inquire into a claim against his trustee also appear in precedent applying the
discovery rule in the client-professional context.295 Under the discovery rule, the
applicable statute of limitations is tolled where “the injury is inherently unknowable
and the claimant is blamelessly ignorant of the wrongful act.”296 A court determining
whether a lay client has cause to distrust its own trusted professional must consider
“[t]he professional nature of the relationship,” “the plaintiffs’ inability to acquire by
other means [the] information” giving rise to claims against the professional, and
“the need for persons in the plaintiff’s position to rely upon” the professional’s
293 Kahn v. Seaboard Corp., 625 A.2d 269, 275 (Del. Ch. 1993). 294 Dean Witter, 1998 WL 442456, at *5 (quoting Pack & Process, 503 A.2d at 650); see also Volftsun/Landy, C.A. No. 4635-VCL, at 723–24 (concluding “sophisticated” business partners had “no[] good reason . . . to believe that Wilmington Trust was abdicating its fiduciary duties” or failing to operate in accordance with the trust instrument, as the “supersmart guys” “weren’t terribly familiar with the ways and wiles of trust companies and the management of massive wealth,” and were not on notice of a problem until a trust officer informed them). 295 See Coleman, 854 A.2d at 842 (citing Isaacson, 330 A.2d at 132–33). 296 Coleman, 854 A.2d at 842. 48 expertise.297 The Court has recognized whether a lay client had reason to distrust its
trusted professional “must stand or fall on its own facts.”298
In Coleman v. PricewaterhouseCoopers, LLC, the Delaware Supreme Court
found an email “by itself” to be insufficient “to impose upon the plaintiffs a duty to
conduct a further investigation” where the email contained “no ‘red flag’ that clearly
and unmistakably would have led a prudent person of ordinary intelligence to
inquire” whether her accountant violated certain accounting principles.299 Likewise,
in Isaacson v. Artisan’s Savings Bank, the Supreme Court applied the discovery rule
where an accountant changed the plaintiff’s accounting practices, but failed to obtain
the governmental consent required by statute.300 The statute of limitations was tolled
until the plaintiff received actual notice of the deficiency because “the relationship
was one of confidence and reliance by plaintiff on the expertise of defendant[.]”301
The Isaacson Court further explained that application of the discovery rule “is
limited and each case must stand or fall on its own facts.”302
297 Id. 298 Id. at 842–43; Isaacson, 330 A.2d at 134. 299 Coleman, 854 A.2d at 843. 300 Isaacson, 330 A.2d at 132. 301 Id. at 133. 302 Id. 49 The September 2019 Production certainly did not give Hillblom actual notice
that WTC refused to engage with S&P in bad faith, wrongfully left Hillblom to
defend against S&P’s claim himself, and then declined to share that offer with their
beneficiary defending against the same claim.303 WTC does not contend it provided
actual notice; it asserts it gave Hillblom reasonable inquiry notice.304
But the September 2019 Production gave Hillblom no reason to suspect
WTC’s breaches. The September 2019 Production contained seven documents, none
of which discussed or disclosed S&P’s 2016 S&P Offer.305 The September 2019
Production informed Hillblom that WTC twice offered to settle S&P’s demand for
payment, and WTC resisted paying on the distributions based on its interpretation of
the Fee Agreement.306 It painted a picture that WTC was dutifully protecting the
Trust from requests that exceeded what the Fee Agreement allowed.307 It includes
WTC’s acknowledgement that S&P was owed a fee and that WTC had a fiduciary
duty to pay its fee.308 And it includes a check for “final payment on ARW” from the
303 DAB at 20 (arguing “it is irrelevant for purposes of inquiry notice” that the September 2019 Production did not include the 2016 S&P Offer); see generally JX 63 (omitting the 2016 S&P Offer and any discussion of it). 304 DAB at 20, 36, 45. 305 See supra Section I(F). 306 Id. at 4–9. 307 Id. at 19–20. Id. at 5 (acknowledging WTC’s fiduciary duty to pay S&P in accordance with the Fee 308
Agreement); id. at 4–9 (offering to resolve S&P’s claim for $79,086).
50 Trust, indicating WTC was satisfying its obligations.309 Contrary to WTC’s
argument, that information is not a “red flag” that WTC abdicated its duties to
Hillblom; it tends to show an attentive trustee trying to resolve a dispute.
And when Hillblom received the September 2019 Production, he had no
reason to be suspicious of WTC. Throughout Hillblom’s life, WTC had intimately
handled all his financial obligations and ensured he received personal support.310
With respect to S&P’s request for fees, WTC conveyed to Hillblom, in a serious and
deeply staffed conversation, that S&P’s claim against Hillblom was “easily
dismissible.”311 The September 2019 Production’s disclosures of WTC resisting
overpayment and giving lowball offers dovetailed with its explanation that S&P’s
claims were not serious. Hillblom and Ribakoff both reasonably believed WTC, as
Hillblom’s fiduciary, was their partner in resolving this issue—not a potential
adversary in litigation.312
In a remarkable litigation position, WTC contends Hillblom should have been
suspicious of WTC by September 2019. Specifically, WTC contends Hillblom
should have viewed the September 2019 Production with skepticism given the
309 Id. at 9. E.g., Hillblom Tr. 423–25, 451–52; JX 42 (paying Hillblom’s legal fees in an unrelated 310
matter). 311 Hillblom Tr. 440. 312 Id. at 476, 477; Ribakoff Tr. 66. 51 Arbitration Complaint’s harsh words for WTC.313 It points to the Arbitration
Complaint’s allegations that Hillblom through his agent, WTC, breached the Fee
Agreement;314 WTC never intended to value ARW, but only sought to avoid paying
S&P;315 and that WTC asserted in “bad faith” it would pay S&P based on ARW’s
Form 706 valuation.316 But to a dependent, uninformed, and trusting beneficiary,
S&P’s sparse allegations tell a story of a routine breach of contract claim.317 The
Arbitration Demand does not include any reference to S&P’s 2016 offer or the fact
that WTC ignored it, nor any of the details of WTC’s bad faith failure to engage with
S&P on valuing and paying its claim.318 Nor does it allege that WTC concealed or
misrepresented aspects of the dispute from Hillblom. The Arbitration Complaint
gave no reason for Hillblom to become suspicious of his trustee. Particularly given
Hillblom’s complete and intimate trust and dependence on WTC for his livelihood
and life decisions, Hillblom did not have reason to believe WTC had wronged him
or concealed anything from him until S&P shared what it knew, including the 2016
313 DAB at 28–31, 38–45. 314 Id. at 29 (citing JX 57 ¶¶ 7–8). 315 Id. (citing JX 57 ¶¶ 13–14). 316 Id. (citing JX 57 ¶ 14). 317 The Arbitration Complaint asserted a sole breach of contract claim under the Fee Agreement. See generally JX 57. 318 Id.
52 S&P Offer, with Hillblom.319 Even after S&P shared its archive with Hillblom in the
fall of 2019, Ribakoff and Hillblom still reasonably believed they and WTC were on
the “same team.”320
WTC also argues the September 2019 Production should have raised
Hillblom’s suspicions because the production omitted “any communications from
[S&P].”321 That argument is foreclosed by In re Dean Witter Partnership Litigation,
which concluded “where defendant is a fiduciary, a plaintiff is on inquiry notice
when the information underlying plaintiff’s claim is readily available.”322
Hillblom’s claims are based on communications from S&P that WTC failed to make
available to him. The missing communications did not give rise to inquiry notice
about those same communications.
More generally, WTC’s theory relies on inapposite authority: Dean Witter323
and Pomeranz v. Museum Partners.324 Neither case dealt with the special
beneficiary-trustee relationship, but instead addressed whether sophisticated
Dean Witter, 1998 WL 442456, at *5; Pack & Process, 503 A.2d at 650; Volftsun/Landy, 319
C.A. No. 4635-VCL, at 723–25. 320 Ribakoff Tr. 66, 82–83; Hillblom Tr. 476–77. 321 DAB at 30. 322 1998 WL 442456, at *8. 323 Id. 324 2005 WL 217039, at *3. 53 investors were on notice of claims against their fiduciaries.325 In each case the
defendants disclosed to the plaintiffs “red flags” comprising the factual bases of the
plaintiffs’ claims.326 In Dean Witter, the plaintiffs claimed the company’s financial
health was concealed, but the very report relied upon to support plaintiffs’ claims
revealed a financial decline.327 The Court’s conclusion the plaintiffs were on inquiry
notice turned on the disclosure of “inherently contradictory information” blatant
enough to constitute a “red flag to any investor” that was located in the very report
the plaintiffs claimed concealed the malfeasance.328 And in Pomeranz, the Court
found “obvious warning signs” and “red-flags” in reports provided to the plaintiffs,
325 Dean Witter, 1998 WL 442456, at *1–3 (addressing claims brought by plaintiffs that invested in a consortium of limited partnerships that held interests in real property); Pomeranz, 2005 WL 217039, at *12 (“A rational limited partner investor in a single purpose entity . . . should have suspected that the loss of 60% of the Partnership’s available capital very well might endanger that business strategy. . . . Less capital leads to owning fewer shares which, in turn, leads to less pressure which thus calls the whole strategy into question. The plaintiffs, as rational investors, should have begun asking questions.”). 326 Dean Witter, 1998 WL 442456, at *8 (finding “blatant contradiction[s]” in an annual report “should have been a ‘red flag’ to any investor-and should have prompted an inquiry by plaintiffs into the health of their investments.”); Pomeranz, 2005 WL 217039, at *12 (“Plaintiffs must remain alert to red-flags that should prompt an inquiry by plaintiffs into the health of their investments . . . . Here, the plaintiffs were on inquiry notice of the per se breach of the LP Agreement represented by the withdrawal, . . . the difficulty of achieving the Partnerships goals . . . and the drastic and unexplained reduction of the Partnership’s value . . . .”). 327 Dean Witter, 1998 WL 442456, at *8 (“It is not too much to ask investors to read beyond the first page of an annual report . . . and actually look at the cold, hard figures provided to them.”). 328 Id. at *8–*9. 54 so much so the plaintiffs were forced to concede the alleged breach was not
concealed.329
The September 2019 Production did not put Hillblom on inquiry notice that
his trustee had mishandled S&P’s fee request, much less that his trustee had received,
ignored, and not shared a favorable settlement offer for the very claim S&P was
bringing against him. WTC has failed to start the clock as of September 2019. Its
untimeliness defense fails.330
C. Hillblom’s Failure to Pay Claims Are Not Waived.
Next, WTC argues Hillblom’s Failure to Pay Claims are waived.331 WTC
claims Hillblom’s post-trial opening brief failed to brief his Failure to Pay Claims.332
Not so.
329 Pomeranz, 2005 WL 217039, at *14; id. at *11 (“THE COURT: But when your clients got this thing [the March 31, 2000 financials], they might have known that somebody large withdrew. [PLAINTIFFS’ COUNSEL]: That’s correct, Your Honor. They did know. I mean, I can’t argue that looking at this, you don’t know it’s NorthStar.”); id. at *12 (“Having conceded that inquiry notice of NorthStar’s withdrawal existed as early as April 2000, the plaintiffs have attempted to change the focus of their argument to emphasize that although they had inquiry notice of their claims that NorthStar’s demand to withdraw, and Edelman’s acceptance of that demand, were improper under the LP Agreement and under fiduciary principles . . . . [T]he plaintiff is arguing that inquiry notice does not run until it had notice of the full economic impact of the wrong. That is not the law—‘having all the facts necessary to articulate the wrong is not required.’”). 330 Since I find the September 2019 Production did not put Hillblom on inquiry notice, Section 3585’s one-year statute of limitations does not apply. I do not need to reach whether the September 2019 Production constitutes a report under Section 3585. 331 DAB at 46. 332 Id. 55 “The doctrine of waiver operates to ensure fairness by requiring that notice be
given to the adverse party.”333 The first page of Hillblom’s post-trial opening brief
states: “Wilmington Trust had an admitted fiduciary duty to pay the law firm of
[S&P] a fee that the firm earned on behalf of [Hillblom] on an asset of the Trust.”334
That brief then discusses WTC’s admissions, both at trial and over the course of
decades, that it had a fiduciary duty to pay S&P, but failed to do so.335 Hillblom’s
Failure to Pay Claims were the focus of a three-day trial, briefed extensively pre-
trial, and included in the parties’ pretrial order.336 Hillblom’s Failure to Pay Claims
are not waived.
D. Damages
“[O]nce a right to relief in Chancery has been determined to exist, the powers
of the Court are broad and the means flexible to shape and adjust the precise relief
to be granted so as to enforce particular rights and liabilities legitimately connected
333 Lavin v. W. Corp., 2017 WL 6728702, at *12 n.91 (Ch. Dec. 29, 2017) (declining to find an argument waived where it is “squarely” raised in plaintiff’s opening brief). 334 POB at 1. 335 Id. at 11–22, 29, 31, 41. 336 D.I. 163 at 199–210 (cross-examining Gallagher regarding the Fee Agreement); D.I. 164 at 490–520 (examining Dearman regarding WTC’s offers to pay S&P’s ARW fees); D.I. 165 at 568–91 (directing Dlott on the interpretation of the Fee Agreement); D.I. 154 at 6–17, 22–24; D.I. 153 at 12, 15–16, 22–24; PTO ¶¶ 14–41. 56 with the subject matter of the action.”337 “Equity is primarily responsible for the
protection of rights arising under trusts, and will provide the beneficiary with
whatever remedy is necessary to protect him and recompense him for loss.”338 A
court of equity strives to return the beneficiary to “the situation they would have
been in, if no breach of trust had taken place.”339 After a breach of trust, the
aggrieved is “entitled to be restored to the status quo ante as nearly as the facts and
circumstances of each case will permit.”340 By statute, damages against a trustee
for breach of trust may include “the amount required to restore the value of the trust
property and trust distributions to what they would have been had the breach not
337 Wilmont Homes, Inc. v. Weiler, 202 A.2d 576, 580 (Del. 1964); accord Hogg, 622 A.2d at 654 (“[T]he trial court has broad latitude to exercise its equitable powers to craft a remedy.”); Weinberger v. UOP, Inc., 457 A.2d 701, 715 (Del. 1983) (noting “the broad discretion of the Chancellor to fashion such relief as the facts of a given case may dictate”); Bullen v. Davies, 209 A.2d 81, 85 (Del. 1965) (noting that the Court of Chancery “has broad powers to tailor its relief to fit the circumstances and to protect so far as possible the interests of the litigants.”); Parsons v. Mumford, 1989 WL 63899, at *1 (Del. Ch. June 14, 1989) (“[T]his court retains and exercises the ancient power to shape specific remedies where justice requires and the law is silent.”); 1 J. Pomeroy, A Treatise on Equity Jurisprudence § 109 (5th ed. 1941) (“[T]he court of equity has the power of devising its remedy and shaping it so as to fit changing circumstances of every case and the complex relations of all the parties.”). 338 Bogert’s § 861; see Restatement (Third) of Trusts § 95 cmt. a (2012) (“The remedies of, or on behalf of, trust beneficiaries are, with limited exceptions [], equitable in nature . . . and granted against trustees by courts of chancery or other courts exercising equity powers.”). Cahall v. Burbage, 121 A. 646, 648 (Del. 1923) (quoting Freeman v. Cook, 41 N.C. 373, 339
377 (N.C. 1849)). 340 Cahall, 121 A. at 648–49.
57 occurred.”341 “The measure of damages for a breach of trust is the difference
between the value of the beneficiary’s rights before and after the breach.”342
Delaware does not “require certainty in the award of damages where a wrong
has been proven and injury established.”343 “Responsible estimates of damages that
lack mathematical certainty are permissible so long as the court has a basis to make
such a responsible estimate.”344 At the same time, the Court may not award damages
based on “speculation or conjecture”; a plaintiff must demonstrate the defendant
caused the harm and its basis for damages must be factually supported.345
“Here has been a continued series of bad faith, and it is requisite to the
character of public justice, and for example’s sake, that the injured party should be
completely indemnified.”346 The equitable remedy here is a monetary judgment to
restore Hillblom to the situation he would have been in if WTC had fulfilled its
341 12 Del. C. § 3582(1). 342 Reed, 1996 WL 255903, at *2. 343 Del. Express Shuttle, Inc. v. Older, 2002 WL 31458243, at *15 (Del. Ch. Oct. 23, 2002) (quoting Red Sail Easter Ltd. P’rs, L.P. v. Radio City Music Hall Prods., Inc., 1992 WL 251380, at *7 (Del. Ch. Sept. 29, 1992)). 344 Beard Rsch., Inc. v. Kates, 8 A.3d 573, 613 (Del. Ch. 2010), aff’d sub nom. ASDI, Inc. v. Beard Rsch., Inc., 11 A.3d 749 (Del. 2010). 345 Medek v. Medek, 2009 WL 2005365, at *12 n. 78 (Del. Ch. July 1, 2009). 346 Cahall, 121 A. at 648 (quoting Hart v. Ten Eyck, 2 Johns. Ch. 62, 116 (N.Y. Sup. Ct. 1816)).
58 duties: if it had paid or defended S&P’s ARW claim, or disclosed the 2016 S&P
Offer to Hillblom in time for him to act on it.347
Hillblom learned of the 2016 S&P Offer when S&P shared its archive of WTC
communications with Ribakoff in fall of 2019.348 By the time Hillblom and Ribakoff
learned S&P had offered to resolve its claim for $300,000, that offer was of no value
due to WTC’s dilatory conduct. After WTC failed to even acknowledge the 2016
S&P Offer, S&P served the Arbitration Demand on WTC, then the Arbitration
Complaint against Hillblom; S&P had already incurred over $400,000 in fees in
prosecuting its claim against Hillblom.349
I believe the remedy here must cover Hillblom’s costs in paying S&P’s ARW
fee over and above the 2016 S&P Offer.350 Hillblom’s costs amount to the $1.4
million the Trust paid S&P minus the $300,000 2016 S&P Offer, and the value the
Trust lost from missing the excess $1.1 million.351
12 Del. C. § 3582(b)(3); Mennen v. Wilmington Tr. Co., 2015 WL 1914599, at *35 (Del. 347
Ch. Apr. 24, 2015). 348 JX 67 at 147–48; see Hillblom Tr. 480–81. 349 JX 46; JX 57; JX 88 at 2 (noting S&P incurred attorney’s fees and costs of $400,0000 in August of 2019). 350 See E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436, 447 n.21 (Del. 1996) (“For example, Buyer may have paid $1,000 for 1,000 widgets. If Seller breaches and refuses to deliver the widgets, Buyer can cover by buying 1,000 widgets from someone else. Buyer may pay more than $1,000, but the breaching party must pay Buyer’s costs of cover.”). 351 JX 102; JX 39.
59 The first piece of those costs is the $1.1 million in lost Trust principal. WTC
argues that amount is not recoverable because the $1.4 million settlement is “not
tethered to any valuation of ARW at the time of the alleged breach of the Fee
Agreement in 2000.”352 But the task is not to appraise S&P’s ARW fee; it is to
calculate Hillblom’s damages, namely the excess he paid given WTC’s breaches.353
Hillblom paid what he did due to WTC’s failures: he suffered a loss specifically
because WTC did not act on its view of how to value S&P’s ARW fee, or defend
S&P’s claim, or give Hillblom notice of the 2016 S&P Offer. Further, the
preponderance of the evidence demonstrated the $1.4 million price tag was
I believe these costs also include the fees and costs Hillblom incurred in defending S&P’s claims in the arbitration. Restatement (Third) of Trusts § 100 (2012) (“A trustee who commits a breach of trust is chargeable with: (a) the amount required to restore the values of the trust estate and trust distributions to what they would have been if the portion of the trust affected by the breach had been properly administered; or (b) the amount of any benefit to the trustee personally as a result of the breach.”); id. at cmt. a (“The goal of making the trust and beneficiaries whole is not always taken literally, however, either as a floor or as a ceiling. For example, an award of attorney fees and other costs incurred by the trust or the beneficiaries in remedying the breach is not automatic but a matter of judicial discretion.”). But the trial record provides no basis from which to reasonably estimate those fees and costs. Any award would be “speculative and insufficiently reliable.” Paradee v. Paradee, 2010 WL 3959604, at *13 (Del. Ch. Oct. 5, 2010); Medek, 2009 WL 2005365, at *12 n. 78; Acierno v. Goldstein, 2005 WL 3111993, at *6 (Del. Ch. Nov. 16, 2005) (holding “Delaware law does not permit the fact finder to supply a damages figure based on ‘speculation or conjecture’ where the plaintiff has failed to meet its burden of proof on damages.”); Henne v. Balick, 146 A.2d 394, 396 (Del. 1950) (holding proof of injury alone is insufficient to allow an award of damages without evidence of the amount of damages). 352 DAB at 52. 353 E.g., Reed, 1996 WL 255903, at *2; Cahall, 121 at 648–49.
60 reasonable.354 Ribakoff agreed to it after obtaining Vranca’s trusted expert
opinion.355 At trial, Hillblom’s damages expert Dwight Duncan offered reliable
testimony that it was reasonable.356 And the Fee Agreement includes a prevailing
party provision.357 When Hillblom settled for $1.4 million, S&P had incurred fees
in excess of $400,000.358
Where a breach of trust has been established, a beneficiary is entitled to
interest sufficient “to give them the net amount that they would otherwise have
received as income and to restore to the trust estate any amounts expended from
corpus.”359 This amount should approximate what the Trust could have earned on
354 JX 100; Vranca Tr. 296 (concluding an amount between $1,500,000 and $1,579,500 was a “conservative settlement amount”). Before trial, WTC argued at length that Ribakoff should not have settled S&P’s claim because it was time-barred, and that he otherwise mishandled his representation of Hillblom in the arbitration. D.I. 153 at 24–33; see D.I. 136. WTC abandoned that attack after trial. DAB at 49–55. Any argument as to the adequacy of Ribakoff’s representation or its intervening effects is waived. Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”). 355 Vranca Tr. 288–94; JX 100. 356 Duncan Tr. 346. At trial, Duncan fell below this Court’s expectations when he was confronted with handwritten notes he had on the stand. Id. at 374–75. The Court reallocated trial time to allow WTC to examine Duncan on those notes. It is not necessary to strike his testimony. DAB at 56–57. 357 JX 2 § IV ¶ A (“Any dispute arising out of the performance of this [Fee] Agreement shall be resolved by binding arbitration. . . . The prevailing party shall be awarded its reasonable attorneys’ fees and litigation expenses incurred in the proceeding.”). 358 JX 88 at 2 (providing S&P had incurred $400,000 of fees in prosecuting its claim against Hillblom by August 2020). 359 Pennsylvania Co., 189 A.2d at 682; Cahall, 121 A. at 648; see Compl. at Prayer (D). 61 lost principal if not for the breaches of trust.360 “Whether a trustee will be liable for
interest on damages to the trust, at what rate and from what date, are factors wholly
within the discretion of the Court.”361 Where departing from a legal rate of interest,
“our courts have considered concepts such as the realities of the relationship between
the parties, whether a particular party was the primary cause for a delay in the
litigation, as well as general “fundamental economic realit[ies].”362
The record is thin on the Trust’s rate of return. One financial statement reveals
the Trust received 10% in interest on cash in 2001.363 According to Axelrod,
Hillblom’s portfolio had a large stake in general market funds during a period in
which such funds enjoyed an average 11.3% return.364 And Duncan testified as to
360 Mennen, 2015 WL 1914599, at *35; see Bogert’s § 862 (explaining upon a finding a breach occurred damages can include “recovery of profit that would accrued to the trust had there been no breach of trust.”); Gentile v. Rossette, 2010 WL 3582453, at *2 (Del. Ch. Sept. 10, 2010) (“Often, courts have sought to award the plaintiff the return a prudent investor would have realized during the relevant period.” (internal quotation omitted)). Hogg v. Walker, 1993 WL 263504, at *2 (Del. Ch. June 30, 1993) (observing “Delaware 361
does not statutorily address the issue of interest awards in breach of trust situations”). 362 Gentile, 2010 WL 3582453, at *2 (internal quotations omitted and alteration in original); see Brandin v. Gottlieb, 2000 WL 1005954, at *29 (Del. Ch. July 13, 2000) (observing “the rote application of the statutory rate would ignore the realities of the relationship between [the parties]”); Onti, Inc. v. Integra Bank, 751 A.2d 904, 926 (Del. Ch. 1999) (noting the sophistication of the plaintiff’s investment portfolio justified daily compound interest). 363 JX 14 at 6; id. at 5. 364 JX 88 at 2.
62 WTC’s ability to earn above-market returns.365 It appears the 3.75% legal rate would
not restore full value to Hillblom’s Trust.366 WTC’s SEC filings tout its investment
portfolios are benchmarked against the S&P 500, as well as the Russell 1000 Growth
Index.367 I will use the S&P 500 total return benchmark to inform a compound
annual growth rate (“CAGR”).
The Trust paid the $1.4 million on December 18, 2020.368 The CAGR for the
S&P 500 total return index from that date to now is 15.2%. WTC shall pay an
additional $167,200.
365 Duncan Tr. 331–32 (opining he “would be shocked” if WTC’s returns “couldn’t beat the S&P 500”); see also id. at 330–35. 366 6 Del. C. § 2301(a) (defining Delaware’s legal rate as 5% over the Federal Reserve discount rate). The Federal Reserve discount rate is 3.75%. Board of Governors of the Federal Reserve System: Selected Interest Rates (Daily), https://www.federalreserve.gov/releases/h15/ (last accessed July 8, 2026). 367 Wilmington Trust Investment Advisors, Inc., Form ADV Part 2A, at 14–15 (the “Form ADV”). The Court can take judicial notice of this public filing, which offers facts that are not reasonably disputed. Delaware Rule of Evidence 201 governs judicial notice of adjudicative facts. D.R.E. 201(b). “Applying Rule 201, Delaware courts have taken judicial notice of publicly available documents that are required by law to be filed, and actually are filed, with federal or state officials.” In re Rural Metro Corp. S’holders Litig., 2013 WL 6634009, at *7 (Del. Ch. Dec. 17, 2013); see also Lebanon Cnty. Emps.’ Ret. Fund v. Collis, 311 A.3d 773, 798–99 (Del. 2023); Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 n.28 (Del. 2004); In re Santa Fe Pac. Corp. S’holder Litig., 669 A.2d 59, 70 n. 9 (Del. 1995). The ADV provides the core equity strategy “seeks superior risk-adjusted returns versus the S&P 500 Index over a full market cycle,” a period of “three to five years.” Form ADV at 14. The ADV also notes the industrial revolution equity strategy “seeks risk- adjusted returns over a multiyear investment horizon superior to the Russell 1000 Growth Index.” Id. at 15. The Trust’s financial statement in the record reflects most of the Trust was invested in S&P 500 companies. JX 14 at 7–8; see JX 88 at 2. 368 JX 102 at 1; PTO ¶ 48.
63 E. WTC Shall Bear Hillblom’s Attorneys’ Fees In This Action.
Under the American rule, litigants are generally responsible to bear the cost
of their attorneys’ fees.369 “In judicial proceedings involving breaches of trust, the
court, as justice and equity may require, may award costs and expenses, including
reasonable attorneys’ fees, to any party, to be paid by another party or from the trust
that is the subject of the controversy.”370 Feeshifting is warranted when the trustee’s
conduct was “grossly negligent or inexcusable.”371 The decision to depart from the
American rule rests within the trial court’s discretion.372
Here, justice and equity require that WTC pay Hillblom’s attorneys’ fees.
WTC dragged its feet on its explicit and known obligation to pay S&P’s fees for
decades. It could not have done less to resolve the issue; it resorted to a Form 706
valuation everyone knew was useless, then recycled that valuation rather than dig in
to solve the problem. When S&P understandably ran out of patience after decades,
rather than resolve the issue, WTC threw its beneficiary to the wolves. Worse, WTC
told its beneficiary the claims were easily dismissable, while knowing S&P was
owed the fee; left its beneficiary to find his own counsel; and repeatedly omitted the
fact that S&P had offered to settle the matter, once and for all, for $300,000. It did
369 Brice v. State Dept. of Correction, 704 A.2d 1176, 1178 (Del. 1998). 370 12 Del. C. § 3584. 371 Hogg, 1993 WL 263504, at *3. 372 McNeil, 798 A.2d at 514. 64 all of this after years of intimately assisting Hillblom with the decisions of his daily
life; the contrast in WTC’s course of dealing with Hillblom is stark. And then, once
Hillblom sought equity, WTC preyed on his personal struggles to paint him as an
unserious person unworthy of this Court’s attention. Hillblom should not have faced
any of this; it was WTC’s explicit fiduciary duty to handle the S&P fee dispute for
him, rather than exacerbate the issue and abandon him in bad faith.
III. CONCLUSION
Hillblom is entitled to judgment in his favor on all claims tried. Within twenty
days, Hillblom shall submit an affidavit under Court of Chancery Rule 88 for the
attorneys’ fees incurred in this action. Once those fees are resolved, the parties shall
submit an implementing final order and judgment.
Related
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