GILL et al v. HARTSHORN et al

Filing 222

ORDER denying 179 Motion to Void Settlement; granting 201 Motion to Approve Settlement; denying 180 and 209 Motions to Dismiss; granting 176 Motion for Leave to File; granting 199 Motion to Dismiss; terminating 187 , 189 , and 195 Motions in Limine. Ordered by U.S. District Judge CLAY D LAND on 04/14/2014. (CGC)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
KAREN GILL, et al.,

*

Plaintiffs,

*

vs.

*

KEVIN HARTSHORN, et al.,

*

Defendants.

CASE NO. 4:12-CV-77 (CDL)

*
O R D E R

Plaintiffs,

beneficiaries

of

the

Gill

Family

Cornerstone

Trust, seek Court approval of their settlement with one of the
trustees of the Gill Family Cornerstone Trust, Kevin Hartshorn,
and one of the trustees of the trusts that benefit the Cornerstone
Trust, Daniel Van Gasken.

Other individuals who contend that they

are trustees of the Cornerstone Trust or related trusts object to
the settlement.

Defendants Loren Gill and Elm Leasing, LLC argue

that if the settlement is approved over their objection, the Court
will no longer have subject matter jurisdiction, so this action
should

be

dismissed.

For

the

following

reasons,

the

Court

approves the settlement and finds that it still has subject matter
jurisdiction

over

the

remaining

controversy.

Accordingly,

the

motion to void the settlement (ECF No. 179) is denied, the motion
to

approve

the

settlement

(ECF

No.

201)

is

granted,

motions to dismiss (ECF Nos. 180 & 209) are denied.

and

the

In addition

to

the

issues

related

to

the

settlement,

Kevin

Hartshorn

and

Daniel Van Gasken (“Hartshorn Defendants”) seek leave to answer
the Intervenor Complaint out of time.

That motion (ECF No. 176)

is granted.
FACTUAL BACKGROUND
Fifteen years ago, a local businessman named John Gill took a
vow of poverty designed to separate him from his substantial real
estate holdings for tax purposes but leave him in control of those
assets for all practical purposes.
placed

into

a

single

asset

Each piece of property was

property

trust,

and

the

sole

beneficiary of all of the single asset trusts is the Gill Family
Cornerstone Trust.

The original beneficiaries of the Cornerstone

Trust included John Gill’s children and an organization called the
Healing Water Ministries Integrated Auxiliary of the Order of the
International

Academy

of

Lymphology.

John

Gill

became

a

missionary, minister, and health educator of the Order of the
International
business

Academy

associates,

transferred

to

the

of

Lymphology

continued
trusts

to

(and

and,

manage

received

assisted
the

by

property

remuneration

several
he

had

for

his

efforts) until he was convicted of a felony in Florida and fled
the

country

as

a

fugitive

from

justice

shortly

before

he

was

supposed to report to prison in 2009.
John Gill attempted to manage the trusts and real estate as a
fugitive, but he lost his grasp over them.

2

In his absence, John

Gill’s former business associates, Kevin Hartshorn and Daniel Van
Gasken, who are trustees of the trusts, took over management of
the trusts and rental properties.

John Gill’s brother Loren Gill

attempted to assume control over the trusts and rental properties,
but his efforts failed.
Hartshorn continues to serve as trustee of the Cornerstone
Trust.

Under the Cornerstone Trust, Hartshorn is permitted to

establish “charitable Trusts or other organizations . . . for
purposes of beneficial distribution.”

Hartshorn Defs.’ 1st Mot.

for Summ. J. Ex. A, Decl. of Trust for the Gill Family Cornerstone
Trust (“Cornerstone Trust Decl.”) at 9 ¶ 12.1, ECF No. 60–3.1
Hartshorn established The Compassionate Order of Service of The
Church of Compassionate Service—an organization of which he is a
minister—and designated it as a beneficiary of the Cornerstone
Trust.
are

Again, the other beneficiaries of the Cornerstone Trust

Plaintiffs

and

the

Healing

Water

Ministries

Integrated

Auxiliary of the Order of the International Academy of Lymphology.
The Cornerstone Trust provides that “distributions will be at the
sole discretion of the Trustees” and “will be handled under a
sprinkling provision” that permits the trustees to decide which
beneficiaries will receive a distribution and the amount of each
distribution.

Id. at 11 ¶ 12.12.

1

The Cornerstone Trust Declaration does not contain page numbers. For
the sake of simplicity, the Court refers to the page numbers of the
electronic version of the Cornerstone Trust Declaration, which is in the
present record at ECF No. 60–3.

3

For several years, John Gill’s children, brothers, and former
business

associates

have

feuded

over

control

of

the

trusts.

Plaintiffs in this action are John Gill’s children, Lauren Gill
and

K.G.,

a

minor.

They

accused

the

Hartshorn

Defendants

of

mismanaging the trusts and diverting trust assets to themselves or
to entities with which they are affiliated, including The Church
of Compassionate Service.2

Plaintiffs also accused their uncle

Loren Gill of defrauding the Hartshorn Defendants into diverting
trust assets to a company Loren Gill owns called Elm Leasing, LLC.
Van Gasken accused Loren Gill of conversion based on the diversion
of single asset trust assets to Elm Leasing.

Loren Gill accused

the Hartshorn Defendants, who managed Elm Leasing for a while, of
pocketing Elm Leasing revenue instead of giving it to him.

More

recently, John Gill’s other brother, Michael Gill, and two former
business associates, Steve Thomas and Wallace Whitten, joined the
feud, contending that they are trustees and/or beneficiaries of
the trusts and accusing

the Hartshorn Defendants

of breach of

trust.
After
Gill’s

obtaining

children

and

legal

counsel,

beneficiaries

Plaintiffs,
of

the

who

are

Cornerstone

John

Trust,

approached counsel for the Hartshorn Defendants in an attempt to
2

The Hartshorn Defendants also include Jay Nicol and several entities
controlled by Hartshorn and Van Gasken: Eastern Property Development,
LLC, South East Enterprises Group, LLC, EPD 1 Holding Trust, EPD 2
Holding Trust, SEE Holding Trust, The Church of Compassionate Service,
and The Compassionate Order of Service of The Church of Compassionate
Service.

4

extricate themselves from the problems created by the confusing
Cornerstone Trust while protecting their beneficial interests in
the trust consistent with John Gill’s intentions in creating the
trust.

Those efforts resulted in a settlement agreement with the

Hartshorn

Defendants.

Plaintiffs’

breach

The

of

settlement

trust

claims

agreement

against

the

resolves
Hartshorn

Defendants and provides that 40% of the assets that are currently
in single asset trusts that benefit the Cornerstone Trust will be
placed into a separate trust for the benefit of Plaintiffs.

Once

the settlement is fully completed, Plaintiffs will waive their
right to the remaining 60% of trust assets.

The settlement does

not purport to extinguish any breach of trust claims by other
individuals or entities who have standing to pursue such claims.
It

also

does

not

release

Plaintiffs’

right

to

pursue

claims

against Loren Gill and Elm Leasing for the misappropriation of
trust assets.
DISCUSSION
I.

The Settlement Agreement is Reasonable and Permissible
Plaintiffs

their

and

settlement

the

pursuant

Hartshorn
to

Defendants

O.C.G.A. §

seek

29-3-3,

approval

which

of

requires

court approval for the settlement of a minor’s claim under certain
circumstances.
object

to

Defendants.

the

Loren

Gill,

settlement

Michael

between

Gill,

Thomas,

Plaintiffs

and

and

the

Whitten

Hartshorn

They argue that the settlement agreement amounts to

5

impermissible self-dealing by the Hartshorn Defendants and should
be rejected on that basis.

They further contend that the trust

documents do not give the Hartshorn Defendants authority to take
the actions contemplated by the settlement.

The Court addresses

each argument in turn.
First, the Court must determine whether the settlement was
entered

into

in

good

faith,

is

in

the

best

interest

of

the

beneficiaries, and is consistent with the trust settlor’s intent.
See

O.C.G.A. §

53-12-261(b)(22)(A)-(B)

(permitting

trustee

to

settle claims involving the trust as long as there is no “fraud,
bad

faith,

or

gross

negligence”

on

the

part

of

the

Under this standard, the settlement should be approved.

trustee).
The Court

previously concluded that Plaintiffs, the only children of John
Gill,

are

undisputedly

beneficiaries

of

the

Cornerstone

Trust.

Gill v. Hartshorn, No. 4:12-CV-77, 2014 WL 29450, at *7 (M.D. Ga.
Jan.

3,

2014)

(“[T]he

Cornerstone

Trust

Declaration

clearly

manifests John Gill’s intention to give a beneficial interest in
the trust property to his children.”).
benefit from the settlement.
trust

assets

that

will

be

Plaintiffs will clearly

They are provided with substantial
used

for

their

sole

benefit,

and

Plaintiffs will be extricated from the Cornerstone Trust and its
two

other

(dubious)

beneficiaries:

The

Compassionate

Order

of

Service of The Church of Compassionate Service and the Healing
Water

Ministries

Integrated

Auxiliary

6

of

the

Order

of

the

International Academy of Lymphology.
the

Church

of

Compassionate

Even if Healing Water and

Service

are

legitimate,

Plaintiffs

will benefit because their interests are potentially in conflict
with those other beneficiaries; under the settlement, Plaintiffs
will no longer be subject to the Cornerstone Trust’s “sprinkling
provision” that permits all of the distributions to be given to
the other beneficiaries and none to Plaintiffs.
also

makes

adequate

provision

for

the

The settlement

interests

of

the

beneficiaries by leaving 60% of the assets for their benefit.

other
And

the Court notes the Hartshorn Defendants are closely identified
with

these

other

beneficiaries

and

have

settlement is also in their best interest.
the

settlement

is

clearly

in

the

concluded

that

the

The Court finds that

best

interest

of

all

beneficiaries and is consistent with the trust settlor’s intent.
Second, the Court rejects any argument that the Hartshorn
Defendants
settlement.

did

not

The

have

the

Cornerstone

authority
Trust

and

to
single

enter
asset

into

the

property

trusts provide the trustees, Hartshorn and Van Gasken, with broad
discretion.

See, e.g., Cornerstone Trust Decl. at 14 ¶ 14.1e.3

(giving trustees “power to create other organizations, including
Trust[s]: both revocable and irrevocable, using all or part of the
Gill Family Cornerstone Trust organization’s assets to fund such
organizations”); Hartshorn Defs.’ 1st Mot. for Summ. J. Ex. C,
Decl. of Trust for the 202 Oakridge Commercial Real Estate Holding

7

Trust at 7 ¶ 15d.10, ECF No. 60-6 (giving trustees of single asset
property trust “power . . . to transfer [trust] assets to the
[Cornerstone]

Trust”).

The

broad

discretion

conferred

by

the

trust declarations allows for this settlement.
Third, the Court finds that the settlement does not amount to
impermissible self-dealing.

Although Plaintiffs initially brought

this action against the Hartshorn Defendants alleging that they
had breached their fiduciary duties to Plaintiffs and although the
settlement does not require the Hartshorn Defendants to make any
payments from their personal assets to consummate the settlement,
the Court nevertheless finds the settlement to be appropriate and
not

the

result

of

impermissible

self-dealing.

Generally,

a

trustee “must not place himself in a position where his personal
interest

will

conflict

with

the

interest

of

the

beneficiary.”

Hanson v. First State Bank & Trust Co., 259 Ga. 710, 711, 385
S.E.2d 266, 267 (1989) (internal quotation marks omitted).

But

where the trustee is also a beneficiary and the settlor knows of
this conflict, the trustee may continue to act in that capacity as
long as he operates within the discretion conferred by the trust
declaration.

See Lovett v. Peavy, 253 Ga. 79, 81, 316 S.E.2d 754,

757

(finding

(1984)

remainderman

as

that

trustee

where

knowing

settlor
that

the

designated
trustee’s

trust’s
interests

conflicted with the beneficiary’s, that conflict did not justify
removal of the trustee).

8

Here, John Gill knew that there was a potential conflict when
he drafted the Cornerstone Trust so that the trustee was permitted
to establish new beneficiaries.

John Gill also knew there was a

potential conflict when he drafted the Cornerstone Trust so that
the trustee could make distributions to one or some but not all of
the beneficiaries.

One of Plaintiffs’ main complaints is that

Hartshorn used trust assets for the benefit of the Church of the
Compassionate Service and its members.

Therefore, at least some

of Plaintiffs’ claims concern actions that were permitted by the
Cornerstone Trust declaration, and the Court cannot conclude that
the settlement of such claims in exchange for a distribution of
trust property is impermissible.

See Heiman v. Mayfield, 300 Ga.

App. 879, 882-83, 686 S.E.2d 284, 287-88
release

of

distribution

negligence
of

trust

claims

against

assets

was

not

(2009)

trustee
against

in

(finding that
exchange

public

for

policy).

Based on the foregoing, the Court approves the settlement between
Plaintiffs and the Hartshorn Defendants.
II.

The Court Has Subject Matter Jurisdiction
The

Court

previously

concluded

that

federal

question

jurisdiction exists in this action based on Plaintiffs’ claims
under the federal Racketeer Influenced and Corrupt Organizations
Act (“RICO”), 18 U.S.C. §§ 1962, 1964.

Loren Gill and Elm Leasing

(“Elm Defendants”) contend that the Court cannot exercise subject
matter

jurisdiction

in

light

of

9

the

settlement

because

(1)

Plaintiffs lost standing to pursue their federal RICO claims and
(2) Plaintiffs failed to state a federal RICO claim against the
Elm Defendants.
A.

The Court addresses each issue in turn.

Plaintiffs Have Standing to Pursue RICO Claims

The Elm Defendants argue that in light of the settlement,
Plaintiffs are no longer beneficiaries of the Cornerstone Trust,
and they contend that under Nalley v. Langdale, 319 Ga. App. 354,
734 S.E.2d 908 (2012), Plaintiffs do not have standing to pursue
their claims.

In Nalley, the Georgia Court of Appeals concluded

that a former trustee who had resigned from his position could no
longer pursue claims on behalf of the trust’s beneficiaries for
return of funds to the trust.
S.E.2d at 918.

Nalley, 319 Ga. App. at 367, 734

The Court of Appeals noted that “the right to

pursue an action concerning the wrongful distribution of trust
funds belongs exclusively to the trust beneficiaries or to one
with the authority to act on behalf of the trust beneficiaries.”
Id.
Though

they

settled

their

claims

against

the

Hartshorn

Defendants, Plaintiffs reserved their claims against Loren Gill
and Elm Leasing.

Those claims allege that Loren Gill fraudulently

obtained assets from the Cornerstone Trust for the benefit of his
company, Elm Leasing, and that he should be required to return
those assets to the Cornerstone Trust.

Plaintiffs maintain that

they have a sufficient beneficial interest in the return of those

10

assets because under their settlement agreement, they are entitled
to 40% of any recovered assets.
separate

themselves

from

the

Though Plaintiffs are seeking to
Cornerstone

Trust,

they

will

not

waive their beneficiary status until all of the claims between the
Elm Defendants and the Cornerstone Trust are resolved.
if

the

Court

agreed

with

the

Elm

Defendants’

And even

position

that

Plaintiffs have waived their right to continue as beneficiaries of
the

Cornerstone

Trust,

Plaintiffs

have

a

contractual

agreement

that entitles them to 40% of the assets that are restored to the
Cornerstone
pursuing

Trust.

the

Plaintiffs

recovery

of

thus

these

have

a

keen

misappropriated

trust

Their interest is not hypothetical or speculative.
If

they

are

benefit.

successful,

They

have

they

every

are

entitled

incentive

to

to

interest

in

assets.

It is real.
a

pursue

significant
the

claims

vigorously.
Moreover, Plaintiffs are the only parties with the incentive
and motivation to seek recovery of those assets pursuant to RICO.
Hartshorn and Van Gasken have not asserted a RICO claim against
the

Elm

Defendants.

Therefore,

unlike

the

former

trustee

in

Nalley, Plaintiffs are arguably the only ones with a sufficient
interest to have standing to pursue the RICO claims against the
Elm Defendants.
contingent

The Court rejects Defendants’ argument that the

nature

of

Plaintiffs’

standing to pursue their claims.

11

interest

deprives

them

of

For all of these reasons, the

Court

concludes

that

Plaintiffs

have

standing

to

pursue

their

federal RICO claims against the Elm Defendants.
B.

Plaintiffs Stated a Claim Under RICO

The

Elm

Defendants

argue

that

even

if

Plaintiffs

have

standing to pursue the federal RICO claims, they failed to state a
claim upon which relief may be granted.

Plaintiffs allege that

Loren Gill conspired with John Gill to defraud Hartshorn and Van
Gasken into diverting Cornerstone Trust assets and single asset
property

trust

assets

to

Elm

Leasing

via

the

mail

and

wires.

Plaintiffs contend that they, as beneficiaries of the Cornerstone
Trust, were injured by this fraudulent diversion of trust assets.3
The Court is satisfied that these contentions sufficiently allege
conduct
activity

of
and

racketeering

an

enterprise

injury

to

through

business

activity.

See,

or

e.g.,

a

pattern

property
Corcel

of
by

racketeering

reason

Corp.

v.

of

the

Ferguson

Enters., Inc., No. 13-13284, 2014 WL 1230299, at *4 (11th Cir.
Mar. 24, 2014) (per curiam) (setting forth requirements of federal
civil RICO claim).

Therefore, Plaintiffs did not fail to state a

federal RICO claim against the Elm Defendants.
jurisdiction

exists,

and

the

Court

3

may

Federal question

exercise

supplemental

The Court is convinced that the present allegations sufficiently state
a RICO claim against Elm Leasing and Loren Gill.
There is apparently
some confusion among the parties regarding the precise nature of
Plaintiffs’ RICO claims against the Elm Defendants, however, so to avoid
any contention at trial that Defendants were not on notice of the claims
against them, the Court requires Plaintiffs within 14 days of today’s
order to supplement their RICO interrogatory responses to explain the
exact contentions supporting their RICO claims.

12

jurisdiction over the remaining state law claims, which arise out
of the same common nucleus of operative fact.

The Elm Defendants’

motions to dismiss (ECF Nos. 180 & 209) are denied.
III. Hartshorn Defendants’ Motion to File Out-of-Time Answer
The Hartshorn Defendants seek leave to file an out-of-time
answer to the Intervenor Complaint (ECF No. 176).

In late 2012,

Intervenors Wallace Whitten, Steve Thomas, and Michael Gill sought
leave to intervene in this action.

The Court granted Intervenors’

motion to intervene on February 19, 2013.

Intervenors filed their

Complaint on February 22, 2013—in the middle of discovery and
while two summary judgment motions were in the briefing stage.
Counsel for the Hartshorn Defendants inadvertently failed to file
an answer to the Intervenors’ Complaint on behalf of the Hartshorn
Defendants.
mistake.

The Hartshorn Defendants now seek to correct that

Intervenors oppose the motion for leave to file answer

and request entry of a default judgment against the Hartshorn
Defendants.

The Hartshorn Defendants’ Motion for Leave to File

Answer Out of Time (ECF No. 176) is granted.
The
against

Intervenor
Defendants

Complaint
Kevin

asserts

Hartshorn

Intervenor Compl. ¶¶ 25-29, ECF No. 82.

breach
and

of

Daniel

trust
Van

claims
Gasken.

The Intervenor Complaint

also seeks (1) a declaration that Wallace Whitten and Steve Thomas
are trustees of the Cornerstone Trust, (2) an order requiring
Hartshorn and Van Gasken to return funds they allegedly diverted

13

from the Cornerstone Trust and related trusts, and (3) removal of
Hartshorn and Van Gasken from their trustee positions.
24, 28.

Id. ¶¶ 15-

The relief sought in the Intervenor Complaint is nearly

identical to the relief sought in the cross-claim of Defendant
Loren Gill against the Hartshorn Defendants—which Wallace Whitten
and Michael Gill attempted to join before they intervened in this
action.

See generally Answer & Cross-cl. of Loren Gill & Elm

Leasing, LLC, ECF No. 31.

Specifically, the cross-claim seeks (1)

removal of Hartshorn and Van Gasken from their trustee positions,
(2) damages caused by the alleged breaches of trust by Hartshorn
and

Van

Gasken,

and

(3)

appointment

of

additional

trustees.

Answer & Cross-cl. 23-27, ECF No. 31; 2d Am. Cross-cl. ¶ 1, ECF
No. 48.
Loren

The Hartshorn Defendants did answer the cross-claim of

Gill,

which Whitten and Michael

Answer to Cross-cl., ECF No. 49.

Gill attempted to join.

The Hartshorn Defendants also

sought partial summary judgment on Whitten’s claims against them,
which was granted in part and denied in part.
Under Federal Rule of Civil Procedure 6(b), the Court may
extend

the

time

for

filing

an

answer

after

the

deadline

has

expired “if the party failed to act because of excusable neglect.”
Fed. R. Civ. P. 6(b)(1)(B).
four

factors

to

guide

neglect has occurred.”
(11th Cir. 2010).

courts

“The Supreme Court has identified
in

determining

whether

excusable

Staley v. Owens, 367 F. App’x 102, 105

Those factors are: (1) “the danger of prejudice

14

to

the

[other

party],”

(2)

“the

length

of

the

delay

and

its

potential impact on judicial proceedings,” (3) “the reason for the
delay, including whether it was within the reasonable control of
the movant, and” (4) “ whether the movant acted in good faith.”
Id.

(internal

quotation

marks

omitted).

The

most

important

factors are absence of prejudice and the interest of efficient
judicial administration.

Id. (citing Pioneer Inv. Servs. Co. v.

Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 396-98 (1993)).
It has never been a secret that the Hartshorn Defendants
oppose

the

relief

sought

in

the

Intervenor

Complaint.

The

Intervenor Complaint seeks relief that is largely identical to
relief

sought

by

Loren

Gill

in

his

cross-claim

against

the

Hartshorn Defendants, which Michael Gill and Whitten attempted to
join.

The Hartshorn Defendants did answer the cross-claim.

They

also sought partial summary judgment on Whitten’s claims that are
predicated on his status as a trustee of the Cornerstone Trust—a
claim that was made in the Intervenor Complaint, not in the crossclaim.

In

sum,

as

Intervenors

acknowledge,

the

parties

have

litigated this case as though the Hartshorn Defendants answered
the Intervenor Complaint and denied its allegations.

Resp. to

Hartshorn Defs.’ Mot. for Leave to File Answer 1, ECF No. 184
(agreeing that “the parties and the Court have treated some issues
raised in the Intervenors’ Complaint as contested”).

15

For these reasons, the Court finds that there would be no
danger of prejudice and no delay if the Hartshorn Defendants were
permitted to file an out-of-time answer to Intervenors’ Complaint.
The Court also finds that the Hartshorn Defendants’ failure to
file a timely answer was an inadvertent mistake and that there is
no

indication

of

bad

faith.

The

Court

therefore

grants

the

Hartshorn Defendants’ Motion for Leave to File Answer Out of Time
(ECF

No.

176).

The

Hartshorn

Defendants

shall

answer

the

Intervenor Complaint on or before April 25, 2014.
IV.

Remaining Motions
The Court declines to rule on the pending motions in limine

at this time and instructs the Clerk to terminate those motions
(ECF Nos. 187, 189 & 195).

The parties may refile those motions

in limine if necessary prior to the trial of this action, which
will take place in September 2014.

Plaintiffs’ motion to dismiss

Counts 1-5, 7-8, and 13 against Loren Gill and Elm Leasing (ECF
No.

199)

is

granted,

and

those

claims

are

dismissed

with

prejudice.
CONCLUSION
As discussed above, the motion to void the settlement (ECF
No. 179) is denied, and the motion to approve the settlement (ECF
No. 201) is granted.
are denied.

The motions to dismiss (ECF Nos. 180 & 209)

The Hartshorn Defendants’ motion for leave to file

out-of-time answer (ECF No. 176) is granted.

16

Plaintiffs’ motion

to dismiss Counts 1-5, 7-8, and 13 against Loren Gill and Elm
Leasing is granted (ECF No. 199).

The Clerk is instructed to

terminate the motions in limine (ECF Nos. 187, 189 & 195).

IT IS SO ORDERED, this 14th day of April, 2014.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

17