Paula Christy L. Schmidt; Holly Woprice Plaintiffs - Appellants
Richard Newland, Trustee of the Michael Allen Lasiter Trust, Amended and Restated February 19, 2016; John Doe, as Personal Representative of the Estate of Michael Allen Lasiter, Deceased Defendants Newland & Associates PLLC, Trustee of the Michael Allen Lasiter Revocable Trust, Amended and Restated February 19, 2016; Relyance Bank N.A., as Personal Representative of the Estate of Michael Allen Lasiter, Deceased Defendants - Appellees
Submitted: April 16, 2019
from United States District Court for the Eastern District of
Arkansas - Little Rock
SHEPHERD, MELLOY, and GRASZ, Circuit Judges.
SHEPHERD, CIRCUIT JUDGE.
Schmidt and Holly Woprice filed an action in United States
District Court for fraud and breach of fiduciary duty against
Newland & Associates, PLLC, trustee of the Michael Allen
Lasiter Revocable Trust, and Relyance Bank, N.A., personal
representative of Michael Lasiter's estate. The district
court,  sitting in diversity pursuant to 28 U.S.C.
§ 1332, dismissed Christy and Holly's claims as
barred by the applicable Arkansas statute of limitations. We
have jurisdiction pursuant to 28 U.S.C. § 1291, and we
Lasiter founded and was the chief operating officer of
Lasiter Construction, Inc. (formerly Lasiter Asphalt
Maintenance Company) from the Company's incorporation in
1985 until 2000. While Mannie originally held all of the 1,
000 outstanding shares of stock in the Company, he
transferred 176 of his shares to his son Michael between 1985
and 1992. Mannie's 1999 Federal Gift Tax Return, signed
by the preparer on October 16, 2002, shows that Mannie gave
Michael 314 more shares of the Company in 1999.
September 15, 2000, Mannie and Michael entered into a
succession agreement that determined the fate of the Company
once Mannie retired as COO. The agreement laid out terms for
Mannie's continued employment with the Company; provided
for transfer of all Mannie's stock to Michael through
gifts, sale, and inheritance; and ensured Mannie would be
released from liability on certain loans. On October 19,
2000, pursuant to the succession agreement, Mannie and
Michael signed a stock purchase agreement by which Mannie
agreed to sell Michael "controlling interest" in
the Company for $50, 000. Michael also agreed to purchase the
remainder of Mannie's Company stock when Mannie retired.
That same day, Mannie purportedly transferred 410 shares of
Company stock to Michael.
and Michael also signed an employment agreement, which
guaranteed Mannie employment with the Company until July 31,
2005 at a salary of $110, 000 annually. The employment
agreement additionally guaranteed Mannie five further years
of employment at $65, 000 annually. Mannie continued to work
for the Company until a few months before his death in 2004.
His income tax returns for the relevant period consistently
show annual compensation from the Company that falls short of
the promised $110, 000.
September 17, 2002, Mannie created the Mannie Lasiter Trust,
for which he served as trustee until his death. The Trust
provided that, after Mannie's death, all his stock in the
Company would go to Michael. The remainder of Mannie's
estate would be split between Michael, Mannie's
grandchildren, and Mannie's daughters, Christy and Holly.
Mannie also executed a will, which left his entire estate to
the Trust and named Michael as trustee.
died on June 28, 2004. On July 2, Mannie's attorney,
Richard Newland, met with Holly, Christy, and Michael for a
reading of the will. Holly and Christy were provided with an
abridged version of the Trust and a list of Trust property.
Mannie's will was never admitted to probate.
15, 2004, Holly emailed Newland requesting a copy of
Mannie's will and a complete copy of the Trust. Newland
provided Christy and Holly with the requested copies and told
them that all legal fees for the estate would be paid from
the Trust. Newland also informed Christy and Holly that he
was Mannie's attorney and that it was his job to carry
out Mannie's wishes, but he assured them that he could
answer questions for them as long as those questions would
not harm any other beneficiary of the Trust. Christy and
Holly responded by asking specific questions about the Trust,
the employment agreement, and the will, and by expressing
concern that Michael had a conflict of interest by acting as
trustee when he was a beneficiary of the Trust. Despite their
concerns, Christy and Holly never hired independent counsel
or took any legal action.
February 2016, Michael transferred 824 shares of his Company
stock to his own trust, the Michael Allen Lasiter Trust (the
MALT). Michael died on May 31, 2016, and the MALT contracted
to convey away 750 shares of Company stock the next month.
and Christy allege they discovered the employment agreement,
succession agreement, and stock purchase agreement at some
unspecified point after Michael's death. In October 2017,
they filed suit against Michael's estate and the MALT.
They later amended their Complaint, identifying the
defendants as Newland & Associates, trustee of the MALT,
and Relyance Bank, personal representative of Michael's
estate. Holly and Christy alleged Michael had breached his
fiduciary duty as trustee of Mannie's trust by
misrepresenting trust assets and intentionally failing to
disclose those assets to them. They further claimed that
Michael received 724 shares of Company stock from Mannie
through fraudulent transfers,  that these shares actually
belonged to Mannie's estate, and that Mannie died
intestate. Because Mannie owned ...