EELEN YOUNG EBLING and ABBY LYON McDONALD, Plaintiffs-Appellees,
SARAH HASKEN, Defendant-Appellant.
from the Iowa District Court for Dubuque County, Thomas A.
former trust advisor appeals from the district court's
decisions, removing the advisor and denying her the right to
appoint her successor. REVERSED AND REMANDED.
P. Moore of Brown, Winick, Graves, Gross, Baskerville &
Schoenebaum, P.L.C., Des Moines, for appellant.
S. Harmon and Kelsey J. Streinz of Kintzinger, Harmon,
Konrardy, P.L.C., Dubuque, for plaintiffs.
by Vaitheswaran, P.J., and Potterfield and McDonald, JJ.
Hasken appeals from the district court's decisions,
removing her as trust advisor and denying her the right to
appoint her successor advisor. Hasken maintains both of the
district court's decisions were in error. Specifically,
Hasken claims her decision not to vote in one meeting and to
"withhold" her vote at a second meeting did not
constitute breaches of her fiduciary duty as a trust advisor,
so the district court was wrong to remove her. In the
alternative, she argues that if the court's decision to
remove her stands, then she has the "inability" to
serve and should be allowed to appoint her successor-as
provided for in the trust instrument.
Background Facts and Proceedings.
George L. McDonald Trust at issue was established in 1970 for
the benefit of the plaintiffs, Eelen Young Ebling and Abby
Lyon McDonald. Ebling and Abby McDonald, adult daughters of
George L. McDonald, are the sole income beneficiaries of the
trust. In the original action, there were a number of named
defendants; all of the defendants except for Hasken are
residuary beneficiaries of the trust. Only Hasken appealed
the district court's rulings. The corpus of the trust is
1250 voting shares of A.Y. McDonald Industries, Inc. The
trust instrument also establishes two trust advisors, each of
whom vote one-half of the trust's shares. The trust
advisors are fiduciaries, and "no advisor shall have any
power or authority under any circumstance to act in a
non-fiduciary capacity." At the time Ebling and Abby
McDonald initiated this action, Sarah Hasken was one of the
trust advisors and Robert McDonald was the other.
August 2014, Hasken was the vice president of and a board
member for A.Y. McDonald Industries, Inc., as well as being
one of the trust advisors.
August 21, Robert McDonald informed Hasken he was eliminating
her position as an officer of A.Y. McDonald Industries.
response, Hasken sent a letter to the other members of the
board of directors, asking them to call a special meeting to
consider the action and informing the board that she did not
believe Robert McDonald or the executive committee had the
authority, under the bylaws, to take such action.
at a September 2014 board meeting, Robert McDonald and the
board of directors removed Hasken from her position as vice
after she was removed as vice president, Hasken sent her
fellow board of directors another letter. In it, she warned
the board of her belief "that [her] purported
termination as an officer of the company is a continuation of
the efforts of the executive committee to subvert the
authority of the board of directors and to marginalize the
duly elected directors of the company." She also
included two "other examples of the executive
committee's improper actions."
next month, Robert McDonald asked for Hasken's
resignation from the board of directors; she refused to
resign. At a December special meeting of the shareholders,
Hasken was removed from the board. Hasken did not attend the
meeting, and she did not vote the 625 shares entrusted to her
as a trust advisor on the question of her removal from the
board. The votes cast were sufficient to remove Hasken. In
her memorandum of authorities, Hasken states:
As a result, since Hasken could not in good conscience vote
for her own removal from the board and subsequent replacement
with Ron [sic] McDonald's inexperienced sister, and since
voting against those actions would have no-doubt led to
accusations by Rob McDonald that voting 'no' created
a conflict of interest, Hasken decided to withhold her vote
upon advice of counsel in an abundance of ...