Frederick-Conaway v. Baird

Jesse Frederick-Conaway (“Jesse”) and Janice Russell-Conaway (“Janice”) were the original co-executors of the Estate of Everett T. Conaway (“Conaway”) and cosuccessor trustees of the Everett T. Conaway Revocable Trust (respectively, the “Estate” and the “Trust”). Janice was Conaway's widow, and Jesse was Conaway's adult son from another marriage. After intractable disputes arose, the Court of Chancery removed Janice and Jesse and appointed Kevin M. Baird, Esq. (“Baird”) as an independent successor administrator and trustee. Baird petitioned the court for instructions on whether certain of Jesse and Janice's transactions were proper. The Court of Chancery issued a Rule 54(b) order from which Jesse appealed and Janice cross-appealed. Jesse argued: (1) the Court of Chancery did not properly merge the administration of Conaway's Estate and Trust; and (2) the Court of Chancery erred in holding the Trust's interest in a limited partnership could be used to satisfy specific gifts where that the interest was subject to a contractual restriction on transfer and passed to Jesse as residuary beneficiary of the Trust. Janice's cross-appeal raised a question of whether the Court of Chancery abused its discretion by: (1) finding Janice liable for interest at the legal rate on $150,000 that the court determined she had received properly but prematurely; and (2) finding Janice liable for $77,987 she had improperly removed from the Estate, plus interest at the legal rate. After review, the Supreme Court affirmed those portions of the Court of Chancery's Order: (1) directing Jesse to return the Trust's 69% EJKC Limited Partnership interest, together with all interest and dividends paid thereon, to the Trust, to be treated as part of the residue of the Trust; and (2) finding Janice liable for amounts totaling $77,987 with interest at the legal rate. The Supreme Court reversed the determination that Janice's receipt of $150,000 in deferred payments owed to Conaway was proper. The Court also reversed the portion of the Court of Chancery's Order finding Janice liable for interest at the legal rate (as opposed to a rate applicable to funds on deposit) on the $150,000 she received. View "Frederick-Conaway v. Baird" on Justia Law