Latest 3 Cases This Week: He Depu v. Yahoo! Inc. (D.C. Cir.), Estate of Ashlock (Cal. Ct. App.), Bowen v. Savoy (Ga.)

Which Laws Apply to Broker-Dealers? Federal Laws? State Laws? Both? General Principles Leading to an Answer

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel explains the law of preemption as it pertains to broker-dealers and their investor clients. She predicts, among other things, that either the clients will demand that broker-dealers adhere to a fiduciary duty, or else that states will impose that duty on them.

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He Depu v. Yahoo! Inc.

Court: US Court of Appeals for the District of Columbia Circuit

Docket: 18-7161

Opinion Date: February 28, 2020

Judge: Merrick B. Garland

Areas of Law: Constitutional Law, Trusts & Estates

Plaintiffs, Chinese citizens who were imprisoned for expressing dissent on the internet, filed suit alleging that, as part of an earlier settlement, Yahoo established a charitable trust to provide humanitarian and legal assistance to imprisoned Chinese dissidents and that defendants improperly depleted the trust's funds, terminating it altogether. The DC Circuit reversed the district court's dismissal of the complaint, holding that plaintiffs plausibly alleged that Yahoo established a charitable trust and that plaintiffs' "special interest" in the trust was sufficient to give them standing to enforce it. In this case, the Settlement Agreement created a charitable trust. Furthermore, plaintiffs' allegations satisfied the two prongs of the Hooker special interest standing test, because plaintiffs challenged an extraordinary measure threatening the existence of the trust, raising an issue that could only be tried once, and they plausibly satisfied the requirement that they belong to a class of potential beneficiaries that was sharply defined and limited in number. Accordingly, the court remanded for further proceedings.

Estate of Ashlock

Court: California Courts of Appeal

Docket: F078083(Fifth Appellate District)

Opinion Date: March 3, 2020

Judge: Rosendo Peña, Jr.

Areas of Law: Trusts & Estates

Probate Code section 856 clearly and unambiguously grants the probate court the power not only to order a conveyance or transfer to the person entitled to the property in question, but also to grant other appropriate relief. In this consolidated probate matter involving Stacey Carlson and Gabriel Ashlock, Stacey challenged a judgment entered in a bifurcated proceeding on issues of damages and remedies. In the published portion of the opinion, the Court of Appeal applied de novo review and held that the proper interpretation of section 859 is reflected in Estate of Kraus, supra, 184 Cal.App.4th 103, and not Conservatorship of Ribal, (2019) 31 Cal.App.5th 519. The court affirmed in part, reversed in part, and remanded for further proceedings.

Bowen v. Savoy

Court: Supreme Court of Georgia

Docket: S19G0278

Opinion Date: February 28, 2020

Judge: Robert Benham

Areas of Law: Civil Rights, Trusts & Estates

In 2016, Priscilla Savoy, individually and as executor of her mother’s estate, filed suit against her sisters Eleanor Bowen and Margaret Innocenti (collectively “defendants”) contending that they colluded to appropriate funds from their mother’s estate for their own use. The defendants were served with the summons and complaint on June 20 and 22, 2016. On July 20, 2016, the defendants filed in the trial court a motion to dismiss the complaint for lack of personal jurisdiction, which was supported by a sworn affidavit executed by Bowen denying the factual allegations raised in the complaint. When the defendants did not answer the complaint within 30 days of service, as required by OCGA § 9-11-12 (a), the case “automatically [became] in default,” OCGA 9-11-55 (a). The Georgia Supreme Court granted certiorari in this case to address the following question: To show a proper case for opening default under OCGA 9-11-55 (b), must the defendant provide a reasonable explanation for the failure to file a timely answer? The Court answered that question in the negative and reversed the judgment of the Court of Appeals which held to the contrary. The matter was remanded for further proceedings.