Tuesday, August 12, 2014
Yesterday, the Eighth Circuit Court of Appeals rendered a decision in Brown v. Brown-Thill, which deals with the arbitration of various types of internal trust disputes, including the ability to remove a trustee. Although this case involved an arbitration agreement that was separate from the trust itself, the matter concerns a number of issues that have traditionally been considered to be beyond the scope of a tribunal's powers, thus providing an important precedent in the growing field of trust arbitration.
A significant aspect of the decision is the way in which the Eighth Circuit drew analogies to the scope of judicial authority to undertake certain acts, such as removing a trustee. Although the court held that the arbitrator had exceeded his authority by relying solely on statutory authority rather than on language found in the trust itself (an issue that was eventually mooted by the subsequent unconditional resignation of the trustee), this technique suggests that matters relating to the removal of a trustee are not non-arbitrable as a matter of law. In fact, the opinion could be read as indicating that arbitral powers in the area of trust disputes are co-extensive with that of a court, if the parties so provide. Although the Eighth Circuit based this part of its decision on the Uniform Trust Code, the underlying principle appears sound as a matter of arbitration law and may be applicable in trust disputes arising in other jurisdictions and contexts.
Special thanks to Stacie Strong (University of Missouri School of Law) for bringing this case to my attention.