Swendsen et al v. Corey et al

Filing 141

MEMORANDUM DECISION AND ORDER granting 137 Motion to Dismiss All Claims Not Personal to Sean Swendson for Lack of Standing. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

SEAN MICHAEL SWENDSEN,
Individually as a Remainder Beneficiary
of and Derivatively on behalf of the
Richard I. Swendsen Trust,
Plaintiff,

Case No. 4:09-cv-229-BLW
MEMORANDUM DECISION AND
ORDER

v.
RICHARD I. COREY, Trustee of the
Richard I. Swendsen Trust; and
CLAYNE I. COREY, an Individual in
possession of assets of the Richard I.
Swendsen Trust and accountant and
attorney to the Trust and Trustee,
Defendant.

INTRODUCTION
The Court has before it Defendant Richard Corey’s Motion to Dismiss For Lack of
Standing (Dkt. 137) pursuant to Federal Rule of Civil Procedure 12(b). The motion is
fully briefed and at issue. For the reasons expressed below, the Court will GRANT the
Motion to Dismiss all claims not personal to Plaintiff Sean Swendsen for lack of standing.
ANALYSIS
The question before the Court is whether Plaintiff Sean Swendsen has standing to
pursue derivative claims on behalf of the Swendsen Trust. Def.’s Br. at 1, Dkt. 137-1.
MEMORANDUM DECISION AND ORDER - 1

Generally, trust law does not allow beneficiaries to bring a suit on behalf of the trust. See
Glanton ex. rel. ALCOA Prescription Drug Plan v. AdvancePCS Inc., 465 F.3d 1123,
1125 n. 2 (9th Cir. 2006) (citing Restatement (Second) of Trusts § 214 cmt. b (2011).
Specifically, a beneficiary may not sue in the name of the trust because he is not the real
party in interest. See Orr v. U.S., 358 F.3d 1137, 1148 (9th Cir. 2004) (internal citation
omitted). There is an exception to the general rule, however. In situations where a trustee
“cannot or will not enforce a valid cause of action that the trustee ought to bring against a
third person a trust beneficiary may seek judicial compulsion against the trustee.” Id.
(Citing Rest.2d Trusts, § 282.)1
In this case, as Plaintiff stated himself, the issue of trust management now rests in
the hands of the current trustee, Norm Reece. Pl.’s Resp. at 10 (Dkt. 138). Thus, Mr.
Reece can bring an action on behalf of the trust. But “[i]n order to prevent loss of or
prejudice to a claim, the beneficiary may bring an action in equity joining the third person
and the trustee.” Orr, 358 F.3d at 1148. Plaintiff cannot simply assert the claim on behalf
of the trustee himself. There is no indication in the record, however, that Plaintiff sought
judicial compulsion against the current trustee to sue on behalf of the Swendsen Trust.
Accordingly, he may not sue on behalf of the Trust “in the shoes” of the current trustee.
See id. at 1149.

1

Although the Idaho Supreme Court has not had an opportunity to specifically adopt the
Rest. 2d Trusts, § 282, its references to the Rest. 2d Trusts in many other areas suggests that it
would adopt it if the opportunity arose.
MEMORANDUM DECISION AND ORDER - 2

For all the reasons stated above, the Court finds that Plaintiff does not have
standing to bring a derivative suit on behalf of the Swendsen Trust against Richard Corey.
Plaintiff may only maintain a suit on his own behalf.
ORDER
IT IS ORDERED:
1.

Defendant Richard Corey’s Motion to Dismiss All Claims Not Personal to
Sean Swendsen for Lack of Standing (Dkt. 137) is GRANTED.

DATED: February 22, 2012

B. LYNN WINMILL
Chief U.S. District Court Judge

MEMORANDUM DECISION AND ORDER - 3