Most of the Alabama Supreme Court ruled on Friday a special fiduciary appointed by Montgomery County Circuit Judge Greg Griffin could temporarily take possession of the Mabel Amos Trust Fund as a lawsuit alleging wrongdoings by Regions Bank and the fund's board members continues.
The ongoing lawsuit alleges self-dealing among those overseeing a scholarship fund for needy children created by former Alabama Secretary of State Mabel Amos.
The Mabel Amos Trust Fund was estimated to be worth about $8.2 million last year, mostly due to oil and gas wells being on its property in South Alabama. Amos was Alabama Secretary of State from 1967 to 1975 and died in 1999.
Allen Dodd, an appointed deputy Alabama Attorney General, said in a hearing in Montgomery County Circuit Court in July that the state, the fund's board members and the trust fund's trustee Regions Bank recently settled the case. The fund's board members are John Bell, Drew McNeese and Alabama Ethics Commission executive director Tom Albritton. However, the settlement still has to be approved by Griffin for the litigation to conclude.
Griffin appointed James White, a certified public accountant (CPA), as a temporary special fiduciary to audit and investigate the finances of the Mabel Amos Trust Fund in August. Griffin's order was appealed by Dodd to the Alabama Supreme Court.
Byron Mathews, an attorney representing Tyra Lindsey, a 10th-grade student at Hillcrest High School in Evergreen, and her mother, Denese Rankin, requested Griffin appoint the special fiduciary.
“While the opinion is generally exhaustive in its consideration of this matter, there are still unanswered questions about the exact nature of the account that the Special Fiduciary is to prepare. The circuit court will have to address these questions when it takes up this matter again. Overall, I am pleased that the Supreme Court allowed the appointment of a Special Fiduciary to stand,” Mathews told 1819 News on Friday.
The Alabama Supreme Court ruled by a 7-1 margin that White could take possession and administer the trust pending litigation but couldn't make factual findings and legal determinations. Justice Greg Cook recused himself, and Justice Will Sellers dissented in part.
"The circuit court had before it pleadings alleging that Regions Bank had breached the terms of the trust (Marshall, himself, alleged that Regions Bank had breached the terms of the trust in various respects) and documentary evidence indicating that Regions Bank had made distributions from the trust that are in violation of the terms of the trust. Accordingly, circuit court determined that the appointment of a special fiduciary was necessary to protect the assets of the trust pending the litigation concerning the trust," the majority of justices wrote in their ruling released on Friday. "Such an appointment is clearly one appointing a special fiduciary under § 19-3B-1001 for the purpose of protecting the assets of the trust from mismanagement; it is not, as Marshall alleges, a "warmed-over [Rule 53] special master order …." Therefore, as it relates to the appointment of White as a special fiduciary, we reject Marshall's premise that the circuit court's order is the one appointing a special master under Rule 53. Accordingly, Marshall's argument pertaining to the appointment of White as a special fiduciary under § 19-3B-1001 for the purpose of taking possession of the trust property and administering the trust fails; the circuit court had before it evidence indicating that Regions Bank had breached the terms of the trust, and the circuit court and did not exceed its discretion in appointing White as a special fiduciary to take possession of the trust property and administer the trust."
The majority of the court also concluded, "Marshall has, however, demonstrated that the circuit court exceeded its discretion by abdicating its judicial function by ordering White to make all the factual findings and dispositive legal determinations in these cases; it appears that that aspect of the circuit court's order was an attempt to, once again, appoint a special master under Rule 53 and refer to him the dispositive legal issues of these cases. Therefore, we order the circuit court to vacate that aspect of its order."
Sellers wrote in his partial dissent, "Appointing a receiver is a drastic step that can cause protracted litigation and irreparable damage to the trust corpus and the beneficiaries of a trust. That step should not be taken simply as a matter of course."
"In my view, before appointing a special fiduciary, the trial court should hold a proper evidentiary hearing so that all parties may present relevant evidence and testimony, subject to crossexamination, on the issue whether duties owed to the trust have been, or likely will be, violated," Sellers wrote. "Although the respondents filed some of the trust's tax returns with the trial court, tax returns show calculations that are derived by subjective decisions that take into consideration any number of matters undisclosed by the returns themselves. And the opposing parties in this dispute have not been given a sufficient opportunity to submit their own evidence and explain at an evidentiary hearing the information contained in the tax returns and to provide context regarding how that information was used in reaching conclusions as reported on the returns. In short, the tax returns by themselves do not reveal sufficient raw data to justify appointing a special fiduciary. Only after holding a proper evidentiary hearing and making findings of fact, based on the evidence and testimony submitted during that hearing, that a breach of the trust has, or is likely to, occur should the extraordinary step of appointing a special fiduciary be taken. I respectfully dissent to the extent the main opinion concludes otherwise."
State Attorney General Steve Marshall said in a filing in April 2023 in the lawsuit that Regions and the board members "engaged in acts of self-dealing, or breached their fiduciary and other duties to the trust by failing to prevent or prohibit self-dealing, or by permitting and acquiescing in self-dealing, and engaging in other acts and omissions in violation of statutory and common law duties owed to the Trust."
"The Trustee and the Board, jointly and severally, impermissibly awarded scholarships or grants to Albritton's children and paid or caused to be paid scholarships or grant money from the Mabel Amos Fund totaling $135,000 for his children to attend college at the University of Texas at Austin," Marshall said in the filing.
Mabel Amos Sc Decision by Caleb Taylor on Scribd
To connect with the author of this story or to comment, email caleb.taylor@1819News.com.
Don't miss out! Subscribe to our newsletter and get our top stories every weekday morning.
