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Hill v. Schilling

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

June 1, 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 are: Washburne and Summers' Emergency Motion to Enforce the Final Judgment and Settlement Agreement, and Application for Temporary Restraining Order, Preliminary Injunction, and Permanent Injunction (Doc. 1876), filed under seal on May 29, 2018; and Albert G. Hill III's (“Hill III”) Emergency Application for Temporary Restraining Order and Injunctive Relief to Enforce Global Settlement Agreement and Final Judgment and for Preservation of Assets and Records, filed May 17, 2018 (Doc. 1877).[1]

         After considering the motions, responses, [2] replies, evidence submitted by the parties with respect to the relief sought, pleadings, record, and applicable law, the court denies Washburne and Summers' Application for Temporary Restraining Order; denies Hill III's Application for Temporary Restraining Order; and defers ruling on the remainder of the relief requested pending its consideration of the parties' respective applications for preliminary injunction and related relief. If the court determines that a hearing on preliminary injunctive relief is necessary, it will conduct a hearing; otherwise, the matter will be decided on the written filings.

         I. Background[3]

         In December 2007, 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.[4] 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 4) and provided, among other things, that the MHTE would be divided, pro rata, into separate subtrusts 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, and Hill Jr., as beneficiary of the MHTE - Albert G. Hill Jr. Trust and the HLHTE - Albert G. Hill Jr. Trust. Each subtrust 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, AGH, NHH, and CMH (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).

         In the Settlement Agreement, Hill III also agreed to waive his standing and his right to demand information, seek accountings, or assert any claim or cause of action in connection with any trust for the primary benefit of a descendant of Margaret Hunt Hill (that is, Hill Jr.) of which Hill III is not a current beneficiary:

(b) Waiver of Standing: During such time as an Agreeing Party is not a current beneficiary of a trust for the primary benefit of a descendant of MHH (an “MHH Trust”) and any other descendant of MHH is living, such Agreeing Party hereby waives (1) his or her status as an interested person in such trust and (2) all rights that he or she may have as a future or contingent beneficiary of such trust under the instrument establishing such MHH Trust, under applicable common law, or under applicable state law, including but not limited to the right to demand information, seek an accounting or assert any claim or cause of action in connection with any such trust. Each Agreeing Party further agrees that the waivers in this subparagraph shall not apply to an MHH Trust during any period in which he or she is a current beneficiary of that MHH Trust, although the waivers in this subparagraph shall continue to apply to any actions taken or omitted by any other person or entity during the period that he or she was not a current beneficiary. For purposes of this paragraph, “current beneficiary” means a person who, at the time a current beneficiary is determined, is then entitled to receive, or is then, in an exercise of discretion by the trustee of such trust, a possible recipient of, income or principal of such trust.

Id. § III(5)(b).

         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 (id. ¶ 5); divided the MHTE and HHTE into separate sub-trusts in accordance with the parties' agreement resulting in, among other subtrusts, the MHTE - Albert G. Hill Jr. Trust and the HLHTE - Albert G. Hill Jr. Trust (id. ¶¶ 6-9); incorporated Hill III's waiver of standing and his waiver of his right to demand information, seek accountings, or assert any claim or cause of action in connection with, any trust for the primary benefit of a descendent of Margaret Hunt Hill of which Hill III was not a current beneficiary (id. ¶ 28); and ordered Hill III not to contest Hill Jr.'s will or challenge the disposition of Hill Jr.'s property (id. ¶ 29).

         Finally, consistent with the Settlement Agreement, Judge O'Connor retained continuing jurisdiction over the implementation and enforcement of the Final Judgment:

IT IS ORDERED that, without affecting the finality of this Final Judgment, the Court hereby retains continuing jurisdiction over the implementation of the [Settlement] Agreement, the Final Judgment, and the Parties for purposes of implementing and enforcing the [Settlement] Agreement and this Final Judgment. IT IS FURTHER ORDERED that any controversy or claim arising after the date of execution of the [Settlement] Agreement and arising out of the [Settlement] Agreement or the Documentation shall be resolved by this Court. Each of the Agreeing Parties agrees and ...

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