Danziger v. University of Louisville et al

Filing 99

ORDER granting in part and denying in part 86 Motion Award of Accrued Interest. See document for complete details. Signed by Judge H Russel Holland on 10/10/19. (MSA)

WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Terry C. Danziger,

)
)
Plaintiff, )
)
vs.
)
)
University of Louisville, et al.,
)
)
Defendants. )
_______________________________________)

No. 2:18-cv-0198-HRH

ORDER
Allocation of Interest
Plaintiff Terry C. Danziger, is the residual beneficiary of her husband, Dr. Franklin
S. Danziger’s revocable living trust IRA. Defendant Merrill Lynch, Pierce, Fenner &
Smith, Inc., administered the Danziger IRA and, a dispute having arisen between
Mrs. Danziger and defendants University of Louisville and University of Louisville
Foundation, Inc., $500,000 was deposited in the Registry of the Court by Merrill Lynch to
fund Dr. Danziger’s gift of $500,000 to the University defendants if they prevailed. In due
course, the parties reached a binding settlement with respect to distribution of the
$500,000 held by the court: the University defendants are to receive $350,000 and
Mrs. Danziger is to receive $150,000.
Funds held in the Registry of the Court earn interest; and, as of September 23,
2019, interest in the amount of $7,464.58 had accrued on the funds held by the court. In
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reaching their settlement, the parties apparently did not realize that funds deposited in the
Registry of the Court would earn interest. The parties have endeavored but have failed to
resolve their differences concerning the earned interest. Each of plaintiff and the
University defendants contend that they should receive all of the interest. A brief
telephonic conference with the court led to the establishment of a briefing schedule with
respect to accrued interest.1 But before taking up the substance of the parties’ briefing,
there are procedural matters which have intervened.
Following the court’s conference with counsel, Terry C. Danziger, pro se trustee,
moved to compel distribution of interest earned on the deposit with the court to
Mrs. Danziger as trustee.2 Mrs. Danziger as trustee would have all the interest disbursed
to seven sub-trusts and eight qualified beneficiaries.3 Mrs. Danizger as trustee moves to
be allowed to file with the court electronically,4 and seeks pro se party electronic
notification.5 The University defendants move to strike6 Mrs. Danziger’s motion as trustee
for distribution of interest. Taking a cue from the latter motion, Mrs. Danziger as trustee
filed a motion to intervene with respect to the interest dispute.7 The latter motion was
followed by a second motion by Mrs. Danziger as trustee, to allow electronic filing.8

1

See Docket No. 81.

2

Docket No. 77.

3

Id. at 10.

4

Docket No. 78.

5

Docket No. 82.

6

Docket No. 83.

7

Docket No. 84.

8

Docket No. 85.

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Mrs. Danziger as trustee next filed a brief9 in support of her motion for distribution of
interest10 and motion to intervene.11 The University defendants have filed a motion to
strike the trustee’s brief,12 and have responded to the trustee’s motion to intervene.13
Mrs. Danziger as trustee opposed the University defendants’ motion to strike.14
Finally, the University defendants request that the court enter a scheduling order
with respect to the foregoing.15 The University defendants seek expedited consideration of
the foregoing request.16 Expedited consideration is granted. However, the University
defendants’ request for a scheduling order is denied. At this point, a scheduling order is
not necessary.
The University defendants’ several motions to strike17 are granted. Mrs. Danziger
as trustee’s motion to compel distribution of interest to her as trustee and to several trusts
and her motion to intervene, as well as the related motions having to do with electronic
filing, are denied.18
A non-lawyer trustee cannot appear pro se to represent a trust or trust beneficiaries.
Alpha Land Co. v. Little, 238 F.R.D. 497, 502 (E.D. Cal. 2006); Knoefler v. United Bank
9

Docket No. 89.

10

Docket No. 77.

11

Docket No. 84.

12

Docket No. 93.

13

Docket No. 94.

14

Docket No. 95.

15

Docket No. 97.

16

Docket No. 98.

17

Docket Nos. 83 and 93.

18

Docket Nos. 77, 84, 78, and 85.

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of Bismark, 20 F 3d 347, 348 (8th Cir. 1994); and C.E. Pope Equity Trust v. United States,
818 F.2d 696, 697 (9th Cir. 1987). The trust and/or trust beneficiaries must be represented
by an attorney. Mrs. Danziger has an obvious interest in these proceedings and is
represented by an attorney with respect to her claim for distribution of interest earned on
funds held in the registry of the court.
Consistent with the briefing schedule established by the court,19 the court has
received statements of position with respect to the interest dispute from the University
defendants,20 plaintiff Terry C. Danziger,21 and the University defendants’ opposition22 to
plaintiff’s position statement. Terry C. Danziger, trustee, pro se, has also filed a response
to the University defendants’ position paper with respect to the distribution of interest,23
and a reply with respect to distribution of interest.24 These filings by Mrs. Danziger as
trustee are stricken for the same reason that the trustee’s other, like filings were stricken.
The court has carefully considered the plaintiff’s and University defendants’
respective arguments concerning the division of accrued interest. Neither party relies upon
any legal authority but, rather, expressly or by inference suggests that an equitable division
of the accrued interest should be accomplished. Plaintiff contends that she should receive
all of the interest money because – but for the deposit of $500,000 with the Registry of the
Court – she would have had the benefit of the earnings of those funds until such time as

19

Docket No. 81.

20

Docket No. 86, styled as a motion.

21

Docket Nos. 87 and 90.

22

Docket No. 91.

23

Docket No. 92.

24

Docket No. 96.

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the dispute with respect to the 500,000 gift was resolved. Similarly, the University
defendants argue that they should receive all of the accrued interest because they should
have received “the $500,000 [gift] from Dr. Danziger’s IRA three years ago.”25
If there had been no disagreement about the $500,000 gift, the University
defendants would have received the $500,000 and would have invested it. The University
defendants would have been entitled to all of those earnings. On the other hand, had there
been no gift to the University defendants, or if the final outcome of this litigation were that
the University defendants should receive no part of the $500,000, plaintiff would have
been in a position to benefit from all of the earnings of the $500,000. This case did not
follow either of those possible courses; and, as a consequence, neither plaintiff nor the
University defendants are entitled to all of the interest which the $500,000 has earned.
If, as the parties apparently supposed, the deposit of funds with the court had not
earned interest, then the parties would presumably proceed with their settlement, with
plaintiff receiving $150,000 and the University defendants receiving $350,000. In fact, the
money available for distribution exceeds the parties’ expectations as to the total amount of
money they would receive as a result of the settlement. In consideration of the foregoing
and the parties’ respective arguments, the University defendants’ motion for an award of
accrued interest26 is granted in part and denied in part. The court concludes that the
equitable resolution here is to divide the interest money earned while the parties negotiated
on the same 70%-30% basis agreed to for the division of the $500,000.
If not already done, the parties shall promptly proceed to document their settlement
and provide the court with specific instructions regarding the payees of the $350,000 and
25

Docket No. 91 at 2.

26

Docket No. 86.

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$150,000. Upon receipt of that information, the court will direct the distribution of the
funds presently held in the Registry of the Court, including accrued interest, 70% to the
University defendants’ designee and 30% to Mrs. Danziger.
DATED at Anchorage, Alaska, this 10th day of October, 2019.

/s/ H. Russel Holland
United States District Judge

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