John Bruce Wilson Separate Property Trust, et al v. Wilson, et al

Filing 51

MEMORANDUM OPINION OF THE COURT. Signed by District Judge Todd J. Campbell on 12/8/2015. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(eh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
IN RE: JOHN BRUCE WILSON
SEPARATE TRUST
DEBORAH LAVERNE FRENCH,
et al.
v.
BENNETT GORDON SCOTT
WILSON, et al.

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) NO. 3-15-0520
) JUDGE CAMPBELL
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MEMORANDUM

Pending before the Court are Plaintiffs’ Motion for Partial Summary Judgment as to Choice
of Law (Docket No. 20) and Defendants’ Cross-Motion for Partial Summary Judgment as to Choice
of Law (Docket No. 34). For the reasons stated herein, Plaintiff’s Motion is GRANTED, and
Defendants’ Motion is DENIED.
FACTS
This action involves administration of the John Bruce Wilson Separate Property Trust (“the
Trust”). The parties agree that John Bruce Wilson executed the Trust on May 2, 2000, in Brevard
County, Florida. The parties also agree that John Bruce Wilson died on September 9, 2014, and that
the Trust is being administered in Tennessee.
The Trust includes a provision which directs that the validity, construction, and all rights
under the Trust are to be determined by the laws of the state of California. Specifically, this
“Governing Law” provision states:
It is the Grantor’s express intent, unless otherwise provided in this instrument, [that]
this Trust’s validity, construction and all rights under it shall be governed by the laws
of California. This section shall apply regardless of the current legal residence of the
Trustee, any change of the residence of the Trustee or any beneficiary or the
appointment or substitution of a Trustee residing or doing business in another state.

The appropriate court of the state of California shall have jurisdiction over any and
all disputes regarding the interpretation of the provisions of the Trust.
Regardless of the jurisdiction selected above, the Trustee may choose an alternative
jurisdiction for administration of this Trust as long as the change of governing law
does not adversely affect the interests of the Trust beneficiaries.
Docket No. 34-3, ¶ 7.18. The parties dispute whether this governing law provision is valid and
controlling in this case. The parties do not dispute that the Trust is being administered in the state
of Tennessee.
ANALYSIS
First, the Court must address Plaintiffs’ arguments concerning admissions by the Defendants.
The Magistrate Judge has found no bad faith on the part of Defendants with regard to the delays in
discovery responses. Docket No. 48. Defendants’ former counsel withdrew, and Defendants’ new
counsel promptly acted to seek extensions of time and promptly met the new deadlines. Moreover,
the Magistrate Judge allowed Defendants to amend their Answer and held that parties may not
stipulate to the legal conclusions to be reached by the Court. Id. This Court affirms the Magistrate
Judge’s Order, and Plaintiffs’ arguments related thereto are moot.
Under Tennessee law, the validity, construction and administration of a trust are determined
by the law of the jurisdiction designated in the terms of the trust instrument, in the “state jurisdiction
provision.” Tenn. Code Ann. § 35-15-107(a). The comments to Tennessee’s Uniform Trust Code
(Tenn. Code Ann. §§ 35-15-101, et seq.) state: “It is a primary objective of the Tennessee trust
statutes that a settlor’s intent be the lodestar by which a trust is interpreted, that such intent be
carried out and that settlors have the freedom to dispose of their assets to whom and in the manner
they wish, all to the greatest extent constitutionally allowable.” Tenn. Code Ann. § 35-15-101, 2013
restated comments.
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In order to be valid and controlling, a state jurisdiction provision must have a sufficient
nexus, pursuant to Tenn. Code Ann. § 35-15-108, to the designated jurisdiction. That statute
provides, in part:
Without limiting or precluding other means for establishing a
sufficient connection with a jurisdiction, the terms of a trust
designating that jurisdiction’s laws in a state jurisdiction provision
are valid and controlling if:
(1) A trustee’s principal place of business is located in or a trustee is
a resident of the designated jurisdiction; or
(2) All or part of the administration occurs in the designated
jurisdiction; which such administration, includes but is not limited to:
(A) Maintenance of some trust records physically in
the designated jurisdiction; and
(B) Wholly or partly preparing or arranging for the
preparation, either on an exclusive or a nonexclusive
basis, in the designated jurisdiction of an income tax
return that must be filed by the trust; or
(3) Some or all of the trust assets are deposited in the designated
jurisdiction or physical evidence of such assets is held in the
designated jurisdiction and the trust is being administered by a person
defined in subdivision (a)(1).
Tenn. Code Ann. § 35-15-108(a).
In the absence of a valid state jurisdiction provision, the laws of the jurisdiction where the
trust was executed determine the validity of the trust and the laws of descent, while the laws of the
principal place of administration determine the administration of the trust. Tenn. Code Ann. § 3515-107(c). Tennessee law also specifically provides that, except as otherwise expressly provided by
the terms of a governing instrument specifically addressing the governing law for trust

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administration by court order, the laws of Tennessee shall govern the administration of a trust while
the trust is administered in this state. Tenn. Code Ann. § 35-15-108(b).
Plaintiffs maintain that the state jurisdiction provision in the Trust is not valid or controlling
because the Trust has no connection to California. They assert that the law of the state of Florida,
as the place where the trust was executed, should govern. Defendants argue that the Trust has a
sufficient nexus to California and, therefore, California law applies.
The alleged connections to California cited by Defendants are as follows. A California-based
company drafted the trust agreement and the amendments thereto and mailed them to the Grantor
in Florida. A California resident borrowed $1,750,000 from Grantor and conveyed Tennessee
property to him in trust as collateral for the loan. She signed the relevant documents for this
transaction in California. Ultimately, the California resident transferred the Tennessee property to
Grantor in lieu of foreclosure.
The Trust makes the Grantor’s intent clear: “It is the Grantor’s express intent, unless
otherwise provided in this instrument, this Trust’s validity, construction and all rights under it shall
be governed by the laws of California.” In addition, the Trust provides that California law shall
apply “regardless of the current legal residence of the Trustee, any change of the residence of the
Trustee or any beneficiary or the appointment or substitution of a Trustee residing or doing business
in another state.”
The Trustee’s principal place of business is not located in California; neither is the Trustee
a resident of that state. The trust records are not physically maintained in California, and there is no
evidence of an income tax return for the Trust being prepared there. None of the Trust assets is in
California, and there is no physical evidence of any Trust assets being held in California. Thus, this

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state jurisdiction provision does not meet the specific requirements of Tenn. Code Ann. § 35-15108(a) to be valid and controlling.
Defendants argue that subsection (a) is not exclusive, and the Court agrees. The statute
begins with the words “Without limiting or precluding other means for establishing a sufficient
connection with a jurisdiction.” If Defendants could establish a sufficient connection with
California through another means, the Court could find the state jurisdiction provision to be valid
and controlling.
Defendants’ alleged connections, however, are not sufficient. The connections to California
alleged by Defendants are de minimus. Documents signed and mailed from California do not create
the substantive connections to that state which the Tennessee statutes contemplate. Even though the
Grantor’s intent weighs heavy in the Court’s consideration, there is simply not enough connection
to the state of California for that state’s laws to apply.
Accordingly, the provision of Tenn. Code Ann. § 35-15-107(c) dictates that Florida law, as
the place where the Trust was executed, should determine the validity of the trust and the laws of
descent, while the laws of the Tennessee determine the administration of the trust.
CONCLUSION
For these reasons, Plaintiffs’ Motion for Partial Summary Judgment as to Choice of Law
(Docket No. 20) is GRANTED, and Defendants’ Cross-Motion for Partial Summary Judgment as
to Choice of Law (Docket No. 34) is DENIED.
IT IS SO ORDERED.
___________________________________
TODD J. CAMPBELL
UNITED STATES DISTRICT JUDGE

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