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Hill v. Schilling

United States District Court, N.D. Texas, Dallas Division

May 15, 2018

ALBERT G. HILL, III, Plaintiff,
v.
WILLIAM SCHILLING, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Sam A. Lindsay United States District Judge

         Before the court is the Temporary Administrator of the Estate of Albert G. Hill, Jr.'s (“Hill Jr.”) Motion to Substitute (Doc. 1839), filed April 17, 2018. Having considered the motion, response, reply, supplemental briefing concerning the effect of Hill Jr.'s death on his pending claims, record, and applicable law, the court grants the Temporary Administrator of the Estate of Albert G. Hill, Jr.'s Motion to Substitute (Doc. 1839), and substitutes Margaret Keliher (“Keliher”), the duly appointed Temporary Administrator of the Estate of Hill Jr., in the place of decedent Hill Jr.

         I. Factual History & Procedural Background

         The court assumes the parties' familiarity with the protracted and contentious eleven-year litigation history in this family dispute and limits its discussion to those background facts related to the relief sought. In December 2007, Albert G. Hill, III (“Hill III”) brought a lawsuit in Texas state court in his individual capacity and on behalf of the Margaret Hunt Trust Estate (“MHTE”) and the Haroldson Lafayette Hunt, Jr. Trust Estate (“HHTE”) against specific beneficiaries of the MHTE and HHTE, including his father (Hill Jr.), Hill Jr.'s siblings, and the trustees and members of the advisory boards of the MHTE and HHTE. Among other things, Hill III alleged wrongdoing in the management and administration of the MHTE and HHTE by their respective trustees and violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C § 1961, et seq. He also sought a declaration that he was a direct and vested beneficiary of the MHTE as a consequence of his father's disclaimer of various interests he held in the MHTE.[1] Following removal to federal court on December 3, 2007, the case was randomly assigned to United States District Judge Reed C. O'Connor.

         A. The Settlement Agreement

         Ultimately, Hill III agreed to a settlement of the dispute. On May 13, 2010, the parties entered into the Global Settlement and Mutual Release Agreement (the “Settlement Agreement”) (Doc. 879) that settled this action and related state court actions. The Settlement Agreement affirmed Hill Jr.'s 2005 disclaimer (see supra note 1) and provided, among other things, that the MHTE would be divided, pro rata, into separate sub-trusts for all beneficiaries, including Hill III, who would become the sole beneficiary to one of the new subdivided trusts containing his individual interest, the MHTE-Albert G. Hill III Trust. Each sub-trust was to be separately administered by a new successor trustee. Pursuant to the Settlement Agreement, Hill Jr. also agreed to make installment payments totaling $30, 675, 000 to Hill III between 2010 and 2015 to be used by Hill III to establish trusts for Hill Jr.'s grandchildren, namely, Albert G. Hill, IV, Nance H. Hill, and Caroline M. Hill (the “Grandchildren's Trusts”). Doc. 879 at 18-19.

         The parties also agreed that monetary damages might not adequately recompense the parties for every breach and that, therefore, specific performance and injunctive relief would be available for any breach of any term of the Settlement Agreement. Id. § III(5)(r). Section III(5)(r) provides:

(r) Specific Performance: The Parties agree that monetary damages alone may not be adequate recompense for any breach of this Agreement. In the event any Party breaches any of the obligations or responsibilities places upon such Party in this Agreement, then any other Party may seek any legal or equitable remedy that may be available for such breach . . . . The Parties agree that the remedy of specific performance and/or injunctive relief (whether mandatory or by restraint) shall be available for the breach of any term, condition, covenant, or warranty of this Agreement.

Id. § III(5)(r).

         Further, Hill III agreed not to contest Hill Jr.'s will:

(f) No Contest of Al Jr.'s Last Will and Testament: Al III, Erin, the Grandchildren, and all of their descendants and heirs agree not to contest the Last Will and Testament of Al Jr. or file any additional action, lawsuit, or legal proceeding challenging the disposition of his property.

Id. § III(1)(f). The parties additionally agreed that the rights, obligations, and benefits under the Settlement Agreement would survive their death:

(m) Binding Successors: This Agreement shall inure to the benefit of, and shall be binding upon the Agreeing Parties hereto, their heirs, executors, administrators, successors, employees, transferees, trustees, agents, and assigns.

Id. § III(5)(m). Finally, the parties agreed that this court would have continuing jurisdiction over any claim or controversy arising out of the Settlement Agreement:

(c) Federal Court's Continuing Jurisdiction: Any controversy or claim arising after the date of execution of this Agreement arising out of this Agreement and the Documentation shall be resolved by the Federal Court, the Honorable Reed O'Connor, who shall retain continuing jurisdiction over this Agreement.

Id. § III(5)(c).

         B. The Final Judgment

         On November 8, 2010, Judge O'Connor issued a final judgment (the “Final Judgment”) implementing and memorializing the parties' Settlement Agreement. See Final J. (Doc. 999). Among other things, the Final Judgment: affirmed Hill Jr.'s 2005 disclaimer of a portion of his interest in the MHTE (see supra note 1) (id. ¶ 5); divided the MHTE and HHTE into separate sub-trusts in accordance with the parties' agreement (id. ¶¶ 6-8); required Hill Jr. to make four annual installment payments of $7.5 million each into the court's registry (id. ¶ 21); and required Hill III to establish the Grandchildren's Trusts, which were separate irrevocable trusts for Hill Jr.'s grandchildren, and to irrevocably assign his rights to receive the installment payments to the Grandchildren's Trusts. Id. ¶¶ 19, 22.

         The trust document that governs the Grandchildren's Trusts is “The Albert G. Hill, III 2010 Gift Trust, ” which is Exhibit 5 to the Final Judgment (the “Trust Instrument”). The Trust Instrument provides that until the primary beneficiary reaches the age of twenty-five, the income and principal of the Grandchildren's Trusts may only be used for the “health and education of the primary beneficiary . . . .” Doc. 999-1, ¶ 2.01. The Trust Instrument also provides that the Donor (Hill III) is required to provide support for his children.

3.04 Donor's Support Obligation. Despite any other trust provision of this instrument, the trustee shall make no payment to any beneficiary that would directly or indirectly discharge the legal ...

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