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The FPE Found. v. Cohen

United States Court of Appeals, First Circuit

September 2, 2015

THE FPE FOUNDATION, Plaintiff, Appellant/Cross-Appellee,
v.
LEWIS COHEN, as co-trustee of the Qualified Terminable Interest Property Trust, Defendant, Appellant/Cross Appellant, MARTIN P. SOLOMON, as co-trustee of the Qualified Terminable Interest Property Trust; BETSY A. SOLOMON, as trustee of the LLLB Trust; J. ROBERT CASEY; BETSY A. SOLOMON and MARTIN P. SOLOMON, as co-trustees of the Cohen-Solomon Family Foundation, Defendants, Appellees/Cross-Appellees

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon George A. O'Toole, Jr., U.S. District Judge.

Page 26

[Copyrighted Material Omitted]

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Joseph D. Whelan, with whom Matthew H. Parker and Whelan, Kinder & Siket LLP were on brief, for cross-appellee FPE Foundation.

Sean T. Carnathan, with whom O'Connor Carnathan and Mack, LLC was on brief, for cross-appellant Lewis C. Cohen.

Robert S. Frank, Jr., with whom Anita M.C. Spieth and Choate, Hall & Stewart LLP were on brief for appellee Robert Casey.

Rosanna Sattler, with whom James E. Kruzer and Posternak Blankstein & Lund LLP were on brief, for appellees Martin P. Solomon, as co-trustee of the Qualified Terminable Interest Property Trust, and Betsy A. Solomon and Martin P. Solomon, as cotrustees of the Cohen-Solomon Family Foundation.

Before Howard, Chief Judge, Souter,[*] Associate Justice, and Lipez, Circuit Judge.

OPINION

Page 28

HOWARD, Chief Judge.

Federal court involvement in this case turns on whether an arbitration clause in a trust agreement applies to the claims asserted here and whether the appellees have waived their right to arbitration. Concluding that there had been no waiver, and that all of the counts were arbitrable, the district court dismissed the action. Agreeing with both conclusions, we affirm.

I.

The litigation resulting in these consolidated appeals stems from disputes within the Cohen family. At the top of that family tree were Maurice and Marilyn Cohen. They were married and had two children: Lewis and Betsy. Betsy eventually married Martin Solomon, another lead in this saga.

In 1989, Maurice created the Maurice M. Cohen Revocable Trust (" Maurice Trust" ). After he died in 1995, assets from the trust were passed to a Qualified Terminable Interest Property Trust (" QTIP Trust" ) and to a charitable organization, the Fund for Philanthropy and Education (" Fund" ). Lewis and Martin, co-trustees of the Maurice Trust, the QTIP trust, and the Fund, were tasked with distributing the income and principal of the QTIP Trust to Marilyn during her lifetime. J. Robert Casey served as an advisor to the co-trustees with respect to the QTIP Trust.

In 2010, Marilyn died. At this point, pursuant to the terms of the Maurice Trust, all remaining assets of the QTIP Trust rolled over to the Fund. Disputes quickly emerged between Lewis and Martin respecting the administration of the Fund. In September 2010, the two trustees signed a settlement agreement pursuant to which roughly half of the Fund's assets were to be given to a new charity managed by Betsy -- the C-S Foundation (" C-S" ). Martin was to then resign as co-trustee of the Fund, leaving Lewis to manage the Fund and its successor, the FPE Foundation (" FPE" ).

In addition to quarreling over the Fund, the parties began tussling over yet another trust (one that Marilyn had created during her lifetime: the " Marilyn Trust" ). This dispute sparked a lawsuit by Betsy and Casey against Lewis in July 2011 in the Suffolk County Probate and Family Court (" Suffolk suit" ), along with a nearly identical case that Lewis initiated against Betsy and Casey in the Norfolk Division of the Superior Court of Massachusetts (" Norfolk suit" ).

Lewis subsequently expanded the scope of the Norfolk suit. Specifically, he argued that the trustees of the QTIP Trust (himself included) distributed assets from it to Marilyn in violation of their authority. Lewis added FPE (which he manages) as a defendant. FPE then counter-claimed, contending that any improper transfer was to the detriment of its remainder interest.

The Norfolk suit was eventually dismissed, and FPE (again, remember, managed by Lewis) thereafter filed the present federal case against Martin, Lewis, Betsy, and Casey. Similar to its counter-claim in the Norfolk suit, FPE alleged that Lewis and Martin exceeded their powers as co-trustees of the QTIP Trust. FPE further claimed that Casey breached his fiduciary duty to that trust. Lewis ...


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