Wing v. Goldman Sachs Tr. Co.


                                  No. COA19-1007

                               Filed: 20 October 2020

Wake County, No. 18 CVS 5916



GOLDMAN SACHS TRUST COMPANY, N.A., et al., Defendants,

Wake County, No. 18 CVS 5830

RALPH L. FALLS, III, et. al., Plaintiff,


GOLDMAN SACHS TRUST COMPANY, N.A., et al., Defendants.

      Appeal by by plaintiffs from order entered 20 May 2019 by Judge Edwin G.

Wilson, Jr. in Wake County Superior Court. Heard in the Court of Appeals 24

September 2020.

      Womble Bond Dickinson (US) LLP, by Johnny M. Loper, Elizabeth K. Arias
      and Jesse A. Schaefer, for plaintiff-appellant Mary Cooper Falls Wing.

      Penry Riemann PLLC, by J. Anthony Penry, for plaintiff-appellant Ralph Falls,

      Mullins Duncan Harrell & Russell PLLC, by Allison Mullins, Alan W. Duncan,
      and Hillary M. Kies, for defendant-appellee Dianne C. Sellers.

      Ellis & Winters LLP, by Leslie C. Packer, Alex J. Hagan and Michelle A.
      Liguori, for defendant-appellees, Louise Falls Cone, Toby Cone, Gillian Falls
      Cone, and Katherine Lenox Cone.
                         WING V. GOLDMAN SACHS TRUST CO.

                                   Opinion of the Court

      Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., by Eva G.
      Frongello, James K. Dorsett, III, and J. Mitchell Armbruster for defendant-
      appellant Goldman Sachs Trust Company, N.A.

      TYSON, Judge.

                                    I. Background

      Ralph Lane Falls Jr. (“Decedent”) died on 11 May 2015 at the age of seventy-

four. Decedent was survived by his wife, Dianne C. Sellers (“Sellers”), and his three

adult children from his first marriage, daughter Mary Cooper Falls Wing (“Wing”),

son, Ralph Lane Falls III (Falls III), and daughter, Louise Falls Cone (“Cone”).

Decedent is also survived by Falls III’s three children and by Cone’s two children and

her husband.    Goldman Sachs Trust Company (“Goldman Sachs”) is the acting

trustee of Decedent’s trust (“Trust”).

      Decedent created a revocable Trust as trustor in August 2011.         Decedent

signed as both grantor and trustee in the Trust instrument. Wells Fargo Bank, N.A.

was designated as the successor trustee. Wing, her brother, Falls III, and two of his

children were named and designated as the beneficiaries of 90% of the Trust’s assets.

The Trust allocated 40% of the res upon Decedent’s death to Wing, 40% to Falls III,

and 5% each to two of Falls III’s children. Cone’s two children were to receive 5%

each, to equal 100% of the res (“Original Beneficiaries”). Decedent’s other daughter,

                        WING V. GOLDMAN SACHS TRUST CO.

                                  Opinion of the Court

Louise Cone, her husband, and Sellers were not designated as beneficiaries nor listed

to receive any distributions of assets or income from the Trust.

      Decedent executed his September 2012 will, prepared by a different attorney

from the Trust’s drafter, one month prior to scheduled surgery to remove three brain

tumors. Decedent’s September 2012 will named and appointed Falls III as trustee

“of each trust,” and Wing as his successor trustee. Decedent repeatedly acknowledged

his desire for his property to be divided equally between his three children, Wing,

Falls III, and Cone.

      Decedent underwent brain surgery in October 2012. After surgery, he began

to suffer a series of serious physical and mental health problems, resulting in

recurring hospitalization and rehabilitative care.       For the remainder of his life,

Decedent relapsed into heavy drinking, experienced depression, manic episodes, and

complications with bipolar disorder.

      After removal of the brain tumors and beginning in December 2012 until 10

December 2014, Decedent intermittently executed six amendments (“purported

amendments”) to the 2011 Trust.

      The first amendment in December 2012 added Sellers as successor trustee and

Falls III as her successor trustee. Falls III’s share was reduced to 30%, Wing’s share

was eliminated to 0%, Cone was named as a beneficiary of 30%, and the four

previously named grandchildren’s shares were increased to 10% each.

                         WING V. GOLDMAN SACHS TRUST CO.

                                   Opinion of the Court

      The second amendment in January 2013 left Sellers as the first successor

trustee. Successor trustee duties were given to Falls III on behalf of his children, and

to Cone and her husband as subsequent successor trustees on behalf of their children.

Falls III and Cone were named to receive 30% each, Wing’s share remained at 0%,

and the four grandchildren’s shares remained at 10% each.

      The third amendment in January 2014 named Goldman Sachs as successor

trustee. Falls III’s and Cone’s shares were reduced to 20% each, and each of the four

grandchildren’s shares was increased to 15%.

      In February 2014, the Trust was amended again. Goldman Sachs remained

successor trustee, and Sellers and Cone were added as successor trustees after

Goldman Sachs. Goldman Sachs was given discretionary power to distribute to Cone,

her husband and to Sellers. Cone’s share increased to 35% with her husband, Cone’s

two daughters’ share increased to 20% each, Sellers was given 25%. Wing, Falls III,

and his children are not mentioned in this amendment.

      The Trust was again amended in July 2014.           This amendment continued

Goldman Sachs’ discretionary distributions to Sellers and Cone, and Sellers and Cone

were given the power to remove Goldman Sachs as trustee.

      The sixth and final amendment, entitled the “Fifth Amendment” was executed

on 10 December 2014. That same day, Sellers and Decedent applied for a marriage

license and were married. This amendment gave 25% to Sellers, now as Decedent’s

                          WING V. GOLDMAN SACHS TRUST CO.

                                    Opinion of the Court

wife, 35% to Cone and her husband, and 20% each to Cone’s two children. An entire

section benefits Sellers as a surviving spouse. Cone and her husband are designated

to take Sellers’ 25%, should Sellers predecease Decedent. Wing, Falls III, and his

children are not mentioned in the document.

         These amendments did not revoke the Trust nor create a new trust, and each

amendment affirmatively restated and reaffirmed all terms and provisions of the

Trust, not expressly amended.

         Decedent died on 11 May 2015.        On 12 June 2015, Goldman Sachs paid

distributions from the Trust to Sellers and Cone pursuant to the Trust’s Fifth

Amendment. In 2016, Wing and Falls III filed claims and challenged the validity of

the purported amendments and gave Goldman Sachs notice of their claims. Goldman

Sachs continued making distributions, despite being on notice the amendments were

challenged and that Sellers and Cone were not named beneficiaries under the original


         Sellers and Cone filed a Joint Motion to Pay Defense Cost (“Motion to Pay”) to

direct Goldman Sachs to pay the cost of “defending the Trust as amended” on 6

February 2019. Wing filed an amended Motion to Freeze Administration of Revocable

Trust until Beneficiaries are Determined or, alternatively, to Pay Defense Costs for

ALL Purported Beneficiaries (“Motion to Freeze”).           Goldman Sachs did not

independently seek instructions on whether to make distributions to any of the

                          WING V. GOLDMAN SACHS TRUST CO.

                                    Opinion of the Court

purported claimants or seek an interpleader action for the Trust res. See N.C. Gen.

Stat. § 1A-1, Rule 22(a) (2019) (Persons having claims against the plaintiff may be

joined as defendants and required to interplead when their claims expose or may

expose the plaintiff to double or multiple liability . . . . A defendant exposed to similar

liability may obtain such interpleader by way of crossclaim or counterclaim.).

      The trial court granted Defendant’s Motion to Pay and denied Wing’s Motion

to Freeze on 20 May 2019. The order does not contain a Rule 54(b) certification that

the order is immediately appealable. See N.C. R. App. P. 54(b). Plaintiff timely

appealed from the superior court’s order.

                              II. Interlocutory Jurisdiction

      Wing argues this Court possesses jurisdiction over this interlocutory appeal

pursuant to N.C. Gen. Stat. §§ 1-277(a) and 7A-27(b)(3) (2019).

             Ordinarily, an appeal from an interlocutory order will be
             dismissed as fragmentary and premature unless the order
             affects some substantial right and will work injury to
             appellant if not corrected before appeal from final
             judgment . . . Essentially a two-part test has developed[:]
             the right itself must be substantial and the deprivation of
             that substantial right must potentially work injury to
             plaintiff if not corrected before appeal from final judgment.

Goldston v. American Motors Corp., 

326 N.C. 723

, 726, 

392 S.E.2d 735

, 736 (1990)

(citations and internal quotation marks omitted).

             Admittedly the ‘substantial right’ test for appealability of
             interlocutory orders is more easily stated than applied. It
             is usually necessary to resolve the question in each case by

                         WING V. GOLDMAN SACHS TRUST CO.

                                  Opinion of the Court

             considering the particular facts of that case and the
             procedural context in which the order from which appeal is
             sought was entered.

Waters v. Personnel, Inc., 

294 N.C. 200

, 208, 

240 S.E.2d 338

, 343 (1978).

      On a purported appeal from an interlocutory order without the trial court’s

Rule 54(b) certification, “the appellant has the burden of showing this Court that the

order deprives the appellant of a substantial right which would be jeopardized absent

a review prior to a final determination on the merits.” Jeffreys v. Raleigh Oaks Joint


115 N.C. App. 377

, 380, 

444 S.E.2d 252

, 254 (1994) (citations omitted).

      Wing asserts the trial court’s order deprived her of substantial rights in two

ways: (1) it depletes the Trust res and mandates the immediate payment of a

substantial amount of money; and, (2) it risks inconsistent verdicts or outcomes with

the ultimate disposition of the wrongful distribution claim and on any potential

recovery against Goldman Sachs for funds already distributed.

                            A. Substantial Right Affected

      The first part of the interlocutory test is the right affected must be substantial.

Goldman Sachs has distributed more than $2 million dollars from the Trust to Sellers

and Cone for expenses and legal fees they incurred in opposing Wing’s and Falls III’s

claims. In 2016, Wing and Falls III filed suit and distributions ceased in November

2017. The record before us is unclear whether Goldman Sachs resumed distributions

to Sellers and Cone for their legal fees or otherwise after November 2017. Counsel

                          WING V. GOLDMAN SACHS TRUST CO.

                                    Opinion of the Court

for Goldman Sachs assert they have not been paid for defending the Trust since

November 2017.

      This Court has held:

               Remaining claims would jeopardize plaintiff’s substantial
               right not only because it orders plaintiff to pay a not
               insignificant amount—$48,188.15—The Order appealed
               affects a substantial right . . . by ordering [Defendant] to
               make immediate payment of a significant amount of
               money; therefore this Court has jurisdiction over the
               Defendant’s appeal pursuant to N.C. Gen. Stat. 1-277.

Beasley v. Beasley, 

259 N.C. App. 735

, 742, 

816 S.E.2d 866

, 872-873, (2018)

(alterations, citations, and internal quotations omitted.)

      As this Court stated in Beasley, Goldman Sachs has paid out far more than an

“insignificant amount” in Trust funds for Sellers’ and Cone’s legal fees.        The

disbursements for legal fees and expenses already surpass $2 million dollars, more

than forty times the amount this Court referenced in Beasley as “a not insignificant


Id. Secondly, a ruling

“purporting to determine who is entitled to money” affects a

substantial right. State ex rel. Comm’r of Insurance v. N. C. Rate Bureau, 102 N.C.

App. 809, 811, 

403 S.E.2d 597

, 599 (1991). In Rate Bureau, the Commissioner of

Insurance failed to order the release of funds placed in escrow pending judicial

review. “The Commissioner’s order only determine[d] that the funds are not to be

released now.”

Id. The Commissioner had

placed a temporary freeze on the

                          WING V. GOLDMAN SACHS TRUST CO.

                                   Opinion of the Court

distribution of funds while the proper recipients were determined. As the freeze was

temporary, this Court determined no injury had occurred.

Id. The opposite result

occurred here. Wing’s Motion to Freeze, if allowed, would

have had the same temporary impact as the Commissioner’s freeze in Rate Bureau.

“The Commissioner’s order does not purport to determine who is entitled to the

money. For these reasons, we hold that the appeal is interlocutory.”

Id. Unlike Rate Bureau,

Goldman Sachs, as purported trustee, held Trust funds

whose beneficiaries are in dispute, but nonetheless distributed funds to one group,

while the Trust beneficiaries’ case is pending. Wing contends she, Falls III, and his

children are the proper beneficiaries of the Trust under the operative trust terms set

forth in the 2011 Trust Agreement. If Wing and Falls III succeed in their challenges

to the amendments to the Trust, the court’s ruling on Defendants’ Motion to Pay

adversely affects their equitable interests in the disbursed and depleted assets of the


         Wing also relies upon this Court’s precedents in Tanner v. Tanner, 248 N.C.

App. 828, 

789 S.E.2d 888

(2016) and Estate of Redden v. Redden, 

179 N.C. App. 113


632 S.E.2d 794

(2006). In Tanner, the plaintiff-husband moved $300,000 from his

business account to his mother’s bank account and separated from his wife two

months later. 

Tanner, 248 N.C. App. at 829

, 789 S.E.2d at 889. The defendant-wife

alleged the plaintiff had anticipated the marital separation and the money

                         WING V. GOLDMAN SACHS TRUST CO.

                                   Opinion of the Court

distributed was marital property, properly included in equitable distribution.

Id. This Court applied

the two-part test for an immediate appeal of an

interlocutory ruling to determine if the mother-appellant’s substantial rights were

affected by the defendant’s claim of substantial money for which appellant had

ownership and control. Id. at 

831, 789 S.E.2d at 890

. The mother-appellant asserted

her grounds for appellate review, quoting Redden: “The order appealed affects a

substantial right of [mother-appellant] by ordering her to make immediate payment

of a significant amount of money; therefore, this Court has jurisdiction over [mother-

appellant’s] appeal pursuant to N.C. Gen. Stat. § 1-277.” Tanner, 248 N.C. App. at

831, 789 S.E.2d at 891

(citation omitted).

      In Redden, decedent had executed a power of attorney in favor of his wife. He

also designated his wife as the payable-on-death beneficiary of funds in a specific

bank account. Redden, 179 N.C. App. at 

114, 632 S.E.2d at 796

. The wife testified

decedent had instructed her to move $200,000 from the specific account to decedent’s

work account so she could proceed with office work on decedent’s behalf. After the

decedent died, his wife moved the remaining money she had transferred to the work

account, back to her specific bank account.

Id. at 115, 632

S.E.2d at 796. The plaintiff

sued the wife on behalf of Redden’s estate for conversion. The trial court granted

partial summary judgment in favor of the plaintiff, and the wife appealed to this

Court. Id. at 

114, 632 S.E.2d at 797


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                           WING V. GOLDMAN SACHS TRUST CO.

                                   Opinion of the Court

      In both Tanner and Redden, this Court held a substantial right is affected

when a payment is made or required and ownership of the funds is in dispute. See

Tanner, 248 N.C. App at 831, 

789 S.E.2d 890-91

. Like Tanner and Redden, Wing also

contests the payment of Trust funds over which there is a dispute to the rightful


      Defendants and Goldman Sachs rely upon workers’ compensation and other

two-party, duty-to-pay cases to argue no substantial right exists to an immediate

appeal.   This Court has consistently held in interlocutory appeals of workers’

compensation and contract disputes “when a party has been required to make

payments pendente lite, this Court has nonetheless held that no substantial right

exists to justify an interlocutory appeal.” Perry v. N.C. Dep’t of Corr., 

176 N.C. App. 123

, 130, 

625 S.E.2d 790

, 795 (2006). This is not a workers’ compensation or a two-

party, duty-to-pay case.

      Defendants and Goldman Sachs rely on Miller v. Henderson, 

71 N.C. App. 366



322 S.E.2d 594

, 596 (1984) (allowing plaintiff to bring an interlocutory appeal

because plaintiff faced a possibility of inconsistent verdicts and a partial summary

judgment for a monetary sum, plaintiff’s claim was dismissed as meritless and she

was ordered to pay attorney fees). Our Supreme Court permitted the interlocutory

appeal in Miller using the exact same reasoning Wing asserts in this case. The

outcome of Miller required the plaintiff to pay attorney’s fees because the statute

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                         WING V. GOLDMAN SACHS TRUST CO.

                                    Opinion of the Court

required them to do so after allegations were found to be meritless. Id. at 

372, 322 S.E.2d at 598

. For our interlocutory analysis, Miller supports Wing’s assertion, but

the ultimate conclusion in Miller regarding plaintiff’s duty to pay is easily

distinguished from our facts.

Id. Goldman Sachs heavily

relies on Perry, a workers’ compensation case. In

Perry, plaintiff-employee was injured, and defendant-employer paid the employee for

a term, and then unilaterally ceased payment. Perry, 

176 N.C. App. 123


625 S.E.2d 790

. Defendant was ordered to reinstate workers’ compensation benefits to plaintiff,

and defendant appealed with a motion to stay the payment order. The motion was

denied. Defendant appealed to this Court for an interlocutory appeal asserting a

substantial right. Id. at 

127, 625 S.E.2d at 793

. This Court stated: “an order denying

a stay is an interlocutory order not subject to immediate appeal.” Id. at 

129, 625 S.E.2d at 794


      The ruling in Perry is inapplicable to the order before us. Wing and Falls III

are not appealing from a motion to stay, but rather from an order affirmatively

ordering payments by a trustee with distributions from a trust to some purported

beneficiaries, and not others, when the rightful beneficiaries are disputed. This Court

reasoned in Perry that workers’ compensation cases create unique issues:

             These same circumstances arise in almost every case in
             which a workers’ compensation defendant fails to prevail
             in connection with [a] request to terminate benefits. To
             allow a defendant to take an interlocutory appeal from any

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                            WING V. GOLDMAN SACHS TRUST CO.

                                    Opinion of the Court

             requirement that it continue to pay benefits pending
             Commission proceedings would result in precisely the yo-
             yo procedure, up and down, up and down, which this Court
             has held works to defeat the very purpose of the Workers’
             Compensation Act.

Id. at 130, 625

S.E.2d at 794. (alterations in original) (quotation marks omitted).

      Finally, this Court noted: “When an employer meets the requirements of N.C.

Gen. Stat. § 97-42 (2005), it may receive a credit for overpayments.” Perry, 176 N.C.

App. at 

131, 625 S.E.2d at 795

(citation omitted).         This available alterative is

distinguished here, as Goldman Sachs claims it has no liability from distributing

funds. If Wing prevails on her claims of wrongful distribution, no return of funds or

credit to offset future payments is guaranteed. Perry and Miller differ substantially

from the facts before us.

      Further, in cases involving escrow, like Rate Bureau, cases involving

constructive trust, like Tanner, or cases involving disputed distributions, like

Redden, this Court has consistently held a substantial right is affected when the

dispute is between claims of competing owners of funds to be distributed. Two million

dollars was distributed from the Trust to Sellers and Cone, who may be held to be

non-beneficiaries in the pending litigation. The order allowing Defendant’s Motion

to Pay diverts funds from the Trust, which would otherwise be held in the Trust and

recoverable by the Wing, Falls III, and two of his children, if they prevail.

                              B. Deprivation Works Injury

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                         WING V. GOLDMAN SACHS TRUST CO.

                                  Opinion of the Court

      The second part of the test for interlocutory appeals is whether the deprivation

immediate appellate review works injury to the appellant. “[W]e may generally state

that so long as a claim has been finally determined, delaying the appeal of that final

determination will ordinarily affect a substantial right if there are overlapping

factual issues between the claim determined and any claims which have not yet been

determined.” Davidson v. Knauff Ins. Agency, 

93 N.C. App. 20

, 26, 

376 S.E.2d 488


492 (1989).

      Issues overlap whenever “the facts relevant to the resolution overlap in such a

way as to create a risk that separate litigation of those issues might result in

inconsistent verdicts.” Wells Fargo Bank, N.A. v. Corneal, 

238 N.C. App. 192

, 194,

767 S.E.2d 374

, 376 (2014). The overlapping issues will work injury as inconsistent

verdicts could deprive Wing and Falls III of their equitable interest in the Trust.

      The wrongful distribution claim, along with all the pending claims, hinge upon

undue influence and Decedent’s capacity to execute the purported amendments. If

Decedent lacked capacity to execute any or all amendments to the Trust, the

purported amendments, together or singularly, are void; Sellers and Cone take

nothing from the Trust, and Goldman Sachs breached their fiduciary duties to

preserve the Trust res. The order allowing the Motion to Pay and the pending claims

overlap substantially.

      The rightful beneficiaries of the Trust are in dispute. Wing’s and Falls III’s

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                          WING V. GOLDMAN SACHS TRUST CO.

                                     Opinion of the Court

substantial rights are affected by the large sums being distributed from the Trust.

Further, the court’s order does not clearly define the liability of Goldman Sachs. This

creates the possibility of multiple trials on claims involving overlapping issues and

could result in inconsistent verdicts. Immediate appeal to and review by this Court

is proper, as this interlocutory order affects Plaintiffs’ substantial rights. We allow

Plaintiffs’ interlocutory appeal.

                             III. Trustee’s Duty to the Trust

                              A. Interpreting Trust Terms

       “The rules of construction that apply in this State to the interpretation of and

disposition of property by will also apply as appropriate to the interpretation of the

terms of a trust and the disposition of the trust property.” N.C. Gen. Stat. § 36C-1-

112 (2019). A caveat proceeding determines whether the writing purporting to be a

testamentary will or a codicil thereto is in fact the last will and testament of the

decedent. See In re Spinks, 

7 N.C. App. 417

, 423, 

173 S.E.2d 1

, 5 (1970). If “a caveat

is filed the clerk of the superior court shall forthwith issue an order that shall apply

during the pendency of the caveat to any personal representative, having the estate

in charge, as follows: (1) . . . [T]here shall be no distributions of assets of the estate to

any beneficiary.” N.C. Gen. Stat. § 31-36 (2019) (emphasis supplied).

       Our general statutes compel us to interpret wills’ and trusts’ provisions and

dispositions consistently. N.C. Gen. Stat. § 36C-1-112 (2019). N.C. Gen. Stat. § 31-

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                         WING V. GOLDMAN SACHS TRUST CO.

                                   Opinion of the Court

36(a)(1) provides the framework for the case before us. Plaintiff’s’ challenge of the

purported amendments is comparable to a caveat to determine who the rightful

beneficiaries should be. The plain text of the statute directs the clerk of the superior

court to order the executor or administrator to freeze all distributions until the caveat

is resolved.

      Wing filed a will caveat in the superior court on 13 November 2017. Wing also

challenged the probated will on the basis of Decedent’s incapacity and Seller’s

purported undue influence. Upon filing her caveat, “any personal representative,

having the estate in charge . . . shall [make] no distributions of assets of the estate to

any beneficiary.” N.C. Gen. Stat. § 31-36(a)(1) (emphasis supplied).

                                 B. Duty of Neutrality

      In August 2011, Decedent created the Trust and thereafter purportedly

amended the trust six times in less than two years between 2012 and 2014 after

having undergone surgery for multiple brain tumors.             Decedent wrote, “This

amendment amends and restates in its entirety the trust originally executed by me

on August 4, 2011.” This phrase is found at the top of each purported amendment,

incorporating the Trust as purportedly amended.

      Goldman Sachs argues a trustee has a duty to defend the Trust. The first issue

is whether a trustee has a duty to defend the purported amendments during pending

litigation between purported beneficiaries. Wing and Falls III are not challenging

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                                   Opinion of the Court

the underlying validity of the Trust. They are challenging the trustor’s capacity to

execute the amendments thereto and to determine the rightful beneficiaries of their

father’s Trust.

         Aside from the guidance and mandates of N.C. Gen. Stat. §§ 31-36 and 36C-1-

112, the trustee’s duty of and liability for distribution to disputed beneficiaries during

pending litigation is an issue of first impression in North Carolina.              Other

jurisdictions have considered similar factual scenarios.

         In Terry v. Conlan, the trustor’s children challenged their stepmother

regarding the validity of trust amendments. Terry, 

33 Cal. Rptr. 3d 603

(Cal. Ct. App.

2005).      The California Court of Appeals concluded, “The dispute between

[Stepmother] and the Children is over the validity of the various trust instruments

and amendments . . . The trust remains intact, leaving the parties in their original

positions prior to the beginning of litigation.”

Id. at 616.

The court in Terry held,

“[B]ecause the dispute between the parties was related to the benefits of the trust,

rather than an attack on the validity of the trust itself, there was no basis for the

trustee to have taken other than a neutral position in the contest.”

Id. at 615.

         In another case with similar facts to Wing, the decedent and his wife created

a trust which named their niece, Whittlesey, as the trustee and primary beneficiary.

Whittlesey v. Aiello, 

128 Cal. Rptr. 2d 742

, 743 (Cal. Ct. App. 2002). The wife died,

and decedent remarried and amended the trust to make his second wife and her son

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                                   Opinion of the Court

the primary beneficiaries of the trust.

Id. Whittlesey challenged the

validity of the

amendment and opposing attorney’s claim he should be paid from the trust. The

amendment was determined to be void due to undue influence, and the attorney’s fees

incurred during litigation were denied

Id. at 744.

       The California Court of Appeals held: “Where the trust is not benefited by

litigation, or did not stand to be benefited if the trustee had succeeded, there is no

basis for the recovery of expenses out of the trust assets.”

Id. at 748.

    The court

further ruled, “The essence of the underlying action was not a challenge to the

existence of the trust, it was a dispute over who would control and benefit from it.

Whether or not the contest prevailed, the trust would remain intact.”

Id. at 746.


court reasoned the dispute was to determine who was the rightful taker, so the trust

would not be affected negatively, and thus the trustee did not have a duty to take

either position.

Id. at. 748. The

court’s reasoning is persuasive: “[A]n award of fees to [attorney defending

second wife] from the trust would be, in effect, an award from Whittlesey

. . . Whittlesey would be required to finance her own trust litigation and that of her

opponent, despite the fact she prevailed. There can be no equity in that.”

Id. (internal quotations omitted).

       Wing’s position is similar to Whittlesey. Goldman Sachs asserts attorney’s fees

are “costs of administration” and a valid expense if incurred by the trustee while

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                         WING V. GOLDMAN SACHS TRUST CO.

                                   Opinion of the Court

defending the Trust. See Phillips v. Phillips, 

296 N.C. 590

, 603, 

252 S.E.2d 761

, 769

(1979). The Trust does not need defending in the case before us because there is no

contest to the validity of the Trust. This dispute is between the rightful beneficiaries,

and the Trust is not in peril. Goldman Sachs has breached their duty of neutrality

by deciding who the rightful beneficiaries are before pending litigation has resolved

that issue.

      Many other states have also held a trustee has a duty to remain neutral

regarding competing claims between putative beneficiaries. See In re Duke, 305 N.J.

Super. 408, 440, 

702 A.2d 1008

, 1023-24 (Ch. Div. 1995) (holding in a dispute between

two parties claiming to be beneficiaries, a trustee may not advocate for either side or

assume the validity of either side’s position.”); Dueck v. Clifton Club Co., 2017-Ohio-


95 N.E.3d 1032

, 1059 (Ohio Ct. App. 2017) (holding a trustee “breached the

duty of impartiality by engaging in advocacy between the beneficiaries”); In re

Connell Living Trust, 

393 P.3d 1090

, 1094 (Nev. 2017) (holding a trustee breached

fiduciary duties by advocating for a position which benefitted some putative

beneficiaries but not others); Hershatter v. Colonial Trust Co., 

73 A.2d 97

, 101 (Conn.

1950) (“[W]here an attack is being made upon the validity of a trust, the trustee has

the duty of participating actively in its defense . . .[but where] he acts . . . merely as

a defendant stakeholder, he ordinarily has neither duty nor right to so participate”).

We have found no cases arising on similar context and facts, which reach a contrary

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                                     Opinion of the Court


                                      IV. Conclusion

          “A trustee shall administer the trust as a prudent person would, by considering

the purposes, terms, distributional requirements, and other circumstances of the

trust.” N.C. Gen. Stat. § 36C-8-804 (2019). A prudent trustee must act impartially

towards all purported beneficiaries. N.C. Gen. Stat. § 36C-8-803 (2019). Here, the

Trust does not require defending, rather, as purported beneficiaries, Defendants seek

to use Trust assets to maintain their positions. The trustee is not required to pay

attorney fees or legal costs unless the res of the Trust is in peril. See 

Whittlesey, 128 Cal. Rptr. 2d at 743


          Wing’s substantial rights are affected by the large sums distributed to

competing beneficiaries, which could belong to Wing, Falls III and his children with

potentially no way to recover the wrongful payments. The Motion to Pay order

creates the possibility of multiple trials on claims involving overlapping issues, which

might result in inconsistent verdicts. Immediate appeal of this interlocutory order to

this Court is proper.

          The beneficiaries of the Trust are in dispute. There is no final determination

of who are the rightful beneficiaries. In accordance with the general statutes and

precedents, the trial court should have allowed Plaintiff’s motion and ordered a freeze

on distributions of the Trust assets until resolution of the competing claims.

                                            - 20 -
                        WING V. GOLDMAN SACHS TRUST CO.

                                 Opinion of the Court

      The trial court erred by not freezing and by ordering distributions from the

Trust to some putative beneficiaries but not others during pending litigation. We

reverse the Motion to Pay order and remand to the trial court for entry of an order

allowing Wing’s Motion to Freeze. All remaining claims, rights, and defenses are

undisturbed. It is so ordered.


      Chief Judge McGEE and Judge COLLINS concur.

                                        - 21 -
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