Full Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE WELLS LORY HILLBLOM, f/k/a ) NGUYEN BE LORY, ) ) Plaintiff, ) v. ) C.A. No. 2021-1034-MTZ ) WILMINGTON TRUST COMPANY, ) ) Defendant. ) POST-TRIAL MEMORANDUM OPINION Date Submitted: December 8, 2025 Date Decided: July 8, 2026 Paul D. Brown, Samantha Callejas, CHIPMAN BROWN CICERO & COLE LLP, Wilmington, Delaware, David Z. Ribakoff, RIBAKOFF LAW FIRM, Los Angeles, California, Attorneys for Plaintiff. Benjamin P. Chapple, John T. Miraglia, REED SMITH LLP, Wilmington, Delaware, John M. McIntyre, PORTER WRIGHT MORRIS & ARTHUR LLP, Attorneys for Defendant. ZURN, Vice Chancellor An institutional trustee agreed to manage a minor’s sizeable inheritance, including by resolving and paying claims against it. The minor received the inheritance after years of litigation, in which he was represented by a guardian ad litem and counsel under a contingency fee agreement. The guardian’s lawyers were entitled to a fee on a particular asset that was difficult to value. The trustee and the lawyers disagreed on the method of calculating that fee. The dispute between the trustee and the lawyers persisted for over two decades. The trustee did not try to value the asset or resolve the dispute. As years passed, the minor grew up and the lawyers lost patience. In 2016, the lawyers submitted a settlement offer to the trustee; the trustee ignored it, and did not tell its beneficiary about the dispute or the settlement offer. The lawyers initiated legal action against the trustee; the trustee ducked that action and pointed the lawyers towards the beneficiary. Reluctantly, the lawyers sued the beneficiary, who thought his trustee was assisting in his defense. Even after the beneficiary asked the trustee for information about the dispute, the trustee did not disclose the settlement offer. The beneficiary only learned of the offer when his adversary disclosed it in 2019. In 2020, the beneficiary settled the claim for roughly five times the offer his trustee had ignored. The beneficiary sued his trustee in 2021 for breaches of trust and fiduciary duty. The action went to trial. This post-trial opinion concludes the beneficiary’s 1 claims were timely given his relationship with his trustee and the information he received; the trustee breached its duties; and the beneficiary is entitled to damages in the amount by which the settlement exceeded the offer the trustee ignored, as well as his attorneys’ fees in this action. I. BACKGROUND1 Plaintiff Wells Lory Hillblom brings breach of fiduciary duty and breach of trust claims against his trustee, defendant Wilmington Trust Company (“WTC”).2 Those claims were tried over three days, offering the Court 129 joint exhibits and live testimony from eleven fact witnesses and two expert witnesses.3 The following facts were stipulated to by the parties or proven by a preponderance of the evidence.4 1 Citations in the form “[last name] Tr. —” refer to trial testimony of the referenced witness, available at docket item (“D.I.”) 163, D.I. 164, and D.I. 165. Citations in the form “PTO ¶ —” refer to the parties’ Amended Joint Pre-Trial Order, available at D.I. 159. Citations in the form “POB —” refer to Plaintiff’s Post-Trial Opening Brief, available at D.I. 169. Citations in the form “DAB —” refer to Defendant Wilmington Trust Company’s Answering Post-Trial Brief, available at D.I. 173. Citations in the form “PRB —” refer to Plaintiff’s Post-Trial Reply Brief, available at D.I. 178. Citations in the form “JX” refer to joint trial exhibits. Citations in the form “MSJ BR” refer to the Telephonic Bench Ruling on Defendant’s Motion for Summary Judgment, available at D.I. 95. 2 D.I. 1 [hereinafter “Compl.”] ¶¶ 57–64. 3 D.I. 160. 4 Reynolds v. Reynolds, 237 A.2d 708, 711 (Del. 1967) (“The side on which the greater weight of the evidence is found is the side on which the preponderance of the evidence exists.”). 2 Larry Hillblom was a founder of DHL, a successful international shipping and courier company.5 In May 1995, Larry was declared legally dead after having disappeared at sea.6 When he disappeared, Larry lived in the Commonwealth of the Northern Mariana Islands (the “CNMI”), an American territory in the South Pacific.7 Probate proceedings for Larry’s large estate (the “Estate”) began in 1997 in the CNMI.8 Hillblom was born Nguyen Be Lory in Vietnam on December 2, 1994.9 Hillblom pressed a claim he should inherit a share of the Estate as Larry’s biological son.10 In 1997, the probate court appointed J. Steven Grist as Hillblom’s guardian ad litem.11 Grist retained John Veague and Garrick Gallagher of Sanders & Parks, P.C. (“S&P”) as counsel.12 Grist and S&P proved Hillblom’s claim to a share of the Estate.13 Three other children proved they too were Larry’s biological heirs.14 5 PTO ¶ 5. 6 Id. ¶ 8. In pursuit of clarity, I refer to Larry Hillblom by his first name. I intend no familiarity or disrespect. 7 Id. ¶ 6. 8 Id. ¶ 5, 10–11. 9 Id. ¶ 7; Hillblom Tr. 419–20. 10 PTO ¶¶ 5–11; Gallagher Tr. 93. 11 PTO ¶ 11; Grist Tr. 667–68. 12 JX 2 § I (A); PTO ¶ 13; Grist Tr. 670. 13 Gallagher Tr. 96; PTO ¶ 18. 14 Gallagher Tr. 95–96. 3 S&P’s fee agreement with Hillblom (the “Fee Agreement”) granted S&P thirty percent of any “Recovery” “received by or for the benefit” of Hillblom.15 The Fee Agreement was modeled after the agreements between the other successful heir claimants and their attorneys.16 The Fee Agreement’s 30% fee was the lowest of those agreements.17 The Fee Agreement sent disputes thereunder to arbitration in Saipan.18 In January 1998, the Superior Court for CNMI approved the Fee Agreement as “fair and reasonable[.]”19 A. The Nguyen Be Lory Trust. On April 21, 1999, the Nguyen Be Lory Trust (the “Trust”) was formed to hold Hillblom’s inheritance.20 The Trust is governed by the Nguyen Be Lory Trust Agreement (the “Trust Agreement”).21 The Trust Agreement is governed by Delaware law.22 WTC agreed to serve as trustee and to administer the Trust in 15 JX 2 § II (A). The Fee Agreement defines “Recovery” as “all payments or distributions of money or assets received by or allocable to or for the benefit of [Hillblom] from the Hillblom Estate by reason of his paternity and heirship claim. The Recovery shall be calculated as [Hillblom’s] allocable share of the Hillblom estate as a pretermitted heir, net of Estate administration expenses and estate liabilities but before payment by the Estate of allocable estate taxes.” Id. 16 Gallagher Tr. 99–101; see JX 129. 17 Gallagher Tr. 113 (explaining the other agreements awarded fees between 36% and 50%). 18 JX 2 § VI (A). 19 JX 3. 20 PTO ¶ 23; JX 5 at Recital. 21 PTO ¶ 24; see generally JX 5. 22 JX 5 § B, Art. III ¶ H (1)–(2). 4 accordance with the Trust Agreement.23 The Trust’s property includes “[a]ll property and interests in property, [] whether in cash or in kind, distributable to [Hillblom] from the Estate of Larry Lee Hillblom.”24 The Trust Agreement includes “dispositive provisions” in Section A and “general provisions” in Section B.25 The dispositive provisions govern Trust administration, including the distribution of Trust income,26 payments to Hillblom,27 and the use of Trust assets.28 Section B, Article II details WTC’s authority as Trustee and the standard of care governing that authority.29 WTC is “vested with all rights, powers, and privileges which an outright owner of the same property would have.”30 Article II 23 Id. at Recital. 24 Id. at Schedule of Property. 25 Id. at Recital. 26 Id. § A, Art. III ¶ A. 27 Id. § A, Art. III ¶¶ B, D–E. 28 Id. § A, Art. III ¶ C. 29 Id. § B, Art. II ¶¶ A (1)–(27), B (1)–(2); see id. § B, Art. II at Recital (“[T]he Trustee is vested with the following powers and discretions until final distribution, in addition to any powers and discretions affecting the trust estate now or hereafter conferred by law.”). 30 Id. § B, Art. II ¶ A (1); see id. § B, Art. II ¶ B (1) (“When investing, reinvesting, purchasing, acquiring, exchanging, selling, operating, and managing trust property or otherwise administering the trust estate, the Trustee shall act with the care . . . that prudent persons acting either (a) in the management of their own personal financial affairs or (b) in a like fiduciary capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument.”). 5 makes clear WTC’s “general or implied powers” are not limited by the specific grants of authority enumerated in the Trust Agreement.31 It grants WTC “the sole and absolute discretion” to collect, hold, and dispose of Trust property.32 The Trust Agreement also specifically grants WTC authority to resolve “Contested Matters:” [t]o pay or contest any claim; to settle a claim by or against the trust by compromise, arbitration, or otherwise; to release in whole or in part any claim belonging to the trust; and to prosecute or defend actions, claims, or proceedings for the protection of trust assets, and of the Trustee in the performance of the Trustee’s duties.33 And the Trust Agreement specifically grants WTC the authority to pay S&P’s fee: [WTC] shall have the power to use income and principal of the [T]rust to pay debts and expenses of [Hillblom] attributable to the proceedings relating to the estate of Larry Lee Hillblom, including without limitation, legal fees based upon the fee agreements [Hillblom] has with John Veague, Garrick Gallagher, and the law firm of [ ] Sanders & Parks, P.C., and fees and costs of other advisors as approved by the Superior Court of the Commonwealth of the Northern Mariana Islands or by the court supervising the trust’s administration.34 As for WTC’s standard of conduct, the Trust Agreement provides that WTC is “subject always to the obligations of a fiduciary.”35 WTC must act with the 31 Id. § B, Art. II ¶ A (1). 32 Id. § B, Art. II ¶ A (3). 33 Id. § B, Art. II ¶ A (19). 34 Id. § A, Art. III ¶ F. 35 Id. § B, Art. II ¶ A (1); see id. § B, Art. II ¶ B (1) (“When investing, reinvesting, purchasing, acquiring, exchanging, selling, operating, and managing trust property or otherwise administering the trust estate, the Trustee shall act with the care . . . that prudent persons acting either (a) in the management of their own personal financial affairs or (b) in 6 standard of care exercised by “prudent persons acting either (a) in the management of their own personal financial affairs or (b) in a like fiduciary capacity” under similar circumstances.36 B. Grist And The Estate Support Hillblom, And S&P Receives Fees. After securing Hillblom’s entitlement to assets of the Estate, Grist helped Hillblom and his extended family create a new life in Virginia.37 Grist ensured the Trust paid for the family’s home, of course.38 But he went above and beyond to support Hillblom’s family. Grist helped Hillblom’s aunt get a driver’s license, assisted the family with buying a vehicle, hosted the family at his home for dinner “many times,” found an English language tutor for Hillblom’s mother, caused Hillblom to enroll at the same school as Grist’s children, secured Hillblom United States citizenship, helped members of his family get student visas, and generally was “very involved in [Hillblom’s] acclimation to American life[.]”39 Grist treated Hillblom as a member of his family, taking Hillblom on many Grist family vacations, a like fiduciary capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument.”). 36 Id. § B, Art. II ¶ B (1). 37 Grist Tr. 708–09. 38 Id. at 710. 39 Id. at 708–09. 7 including to Europe.40 And Hillblom reciprocated that closeness, referring to Grist as “Uncle Steve.”41 Grist also interfaced with WTC to make sure it paid S&P’s fees. On April 30, 1999, the Trust received its first distribution from the Estate, amounting to $7,500,000.42 On June 16, Grist wrote to WTC to ensure S&P received payment.43 Grist explained, “According to the terms of the Fee Agreement, Mr. Veague, Mr. Gallagher and [ ] Sanders & Parks are entitled to 30 percent” of that distribution as Trust Recovery.44 WTC raised no issue, and paid S&P its 30% fee.45 On October 8, the Trust received a distribution of $7,972,507.15.46 Again, Grist wrote to WTC directing it to authorize and remit payment to S&P according to the Fee Agreement.47 WTC did so. By May 2000, the Trust received approximately $44.6 million from the Estate, and WTC again paid S&P its thirty percent, approximately $13.4 40 Id. 41 Id. at 710; JX 85. 42 PTO ¶ 19; JX 2; Gallagher Tr. 124–25. 43 JX 6. 44 Id. at 2. 45 PTO ¶ 19. 46 Id. ¶ 20; JX 7. 47 PTO ¶ 20. 8 million.48 WTC sought Grist’s approval before paying S&P its fees under the Fee Agreement.49 In the meantime, in April 2000, Larry’s heirs and their representatives had reached a court-approved Global Settlement Agreement apportioning the Estate’s cash and non-cash assets among Larry’s heirs and a charitable trust, with 60% going to the heirs.50 For non-cash assets, the Global Settlement Agreement called for liquidation and using a liquidating trust to divide the proceeds.51 On April 22, 2000, the Estate assigned its non-cash assets to a liquidating trustee.52 This case centers on one particular non-cash asset: ARW Company, which held interests in two cellular telecommunications companies, Davenport Cellular Telephone Company (“Davenport”) and Madison Cellular Telephone Company (“Madison”).53 The ARW Company’s interests were transferred to ARW, LLC (“ARW”), formed to distribute those interests to the heirs and charitable trust.54 By April 28, Hillblom’s Trust 48 Id. ¶ 21. 49 Grist Tr. 696. 50 JX 8 at 3; JX 17 at 2–4; JX 10; Gallagher Tr. 97. 51 JX 8 at 5 (identifying the non-cash assets to be placed in the liquidating trust as the non- cash assets listed on “Exhibit B” of the Global Settlement Agreement); id. at Ex. B; JX 10. 52 JX 17 at 3–4. 53 JX 8 at 3; JX 10. 54 JX 20; Gallagher Tr. 122. 9 received a one-time distribution of a 14.85% interest in ARW.55 At that time, the Trust’s ARW interest was illiquid and difficult to value.56 S&P did not request or receive any fee on that non-cash distribution. C. The ARW Fee Dispute On October 3, 2002, ARW sent Gallagher ARW’s 2001 Schedule K-1 and a check for a $87,615.00 cash distribution to Hillblom’s Trust.57 That check represented ARW’s first cash distribution.58 Gallagher promptly sent the check and Schedule K-1 to WTC, and asked that WTC pay S&P thirty percent.59 Thus began eighteen years of disagreement over how to calculate S&P’s fee on the Trust’s interest in ARW: specifically, whether S&P was entitled to thirty percent of all ARW cash distributions into the future, or thirty percent of the fair market value of the Trust’s interest in ARW when the Trust received it in April 2000. WTC solicited Grist’s opinion on Gallagher’s fee request.60 On October 15, Grist wrote to Gallagher, copying WTC.61 Grist took the position that the fee should be calculated as “thirty percent of the fair market valuation of ARW on the date it was 55 JX 10 at 1; JX 29 at 2; Jones Tr. 657. 56 JX 12 at 2. 57 JX 15 at 4, 5. 58 Id.; JX 29 at 1. 59 JX 15. 60 JX 16 at 1. 61 Id. 10 distributed to [Hillblom].”62 Grist acknowledged he was unaware of the then fair market value of ARW; noted such a valuation “might be difficult to determine;” and specifically observed “a valuation was assigned to the Estate’s interest in ARW on the 706 Tax Return, but I would not readily concede that that figure is one we should rely on.”63 Grist’s letter invited Gallagher to propose an alternative approach if he disagreed.64 WTC took no action at that time. It did not pay S&P anything on the ARW interest or cash distribution.65 The parties sporadically exchanged correspondence on S&P’s ARW fee over the next decade.66 In 2012, WTC acknowledged the Trust still owed S&P’s ARW fee.67 That fall, WTC began communicating directly with S&P.68 S&P maintained its fee should be based on ARW’s cash distributions to the Trust, just like other cash distributions.69 Gallagher noted counsel for the other heirs “were paid fees on the interim distribution received from ARW and then on the sale proceeds when a portion was 62 Id. at 1; see Grist Tr. 721. 63 JX 16 at 1–2. 64 Id. at 1. 65 PTO ¶¶ 26–37. 66 JX 17; JX 21; JX 22; JX 23. 67 JX 26 at 2. 68 Id.; JX 27. 69 JX 26 at 1–2. 11 liquidated.”70 WTC took the position that under the Fee Agreement, S&P’s fee is “based on the value of assets received from the Estate” and proposed calculating it using ARW’s K-1.71 WTC punted the issue to January 2013.72 Hillblom turned eighteen in December 2012.73 WTC continued as trustee, ensuring the Trust provided for his living expenses.74 WTC intimately supported Hillblom’s financial and personal affairs, including by filing his taxes, preparing his will, supporting his education, paying legal fees, and providing monthly cash distributions to support a monthly budget WTC reviewed.75 WTC reviewed Hillblom’s monthly budget and exercised discretion over his living expenses.76 Hillblom often interacted with Allison Patni at WTC, including when he moved to Los Angeles and when he needed a will.77 Patni explained certain Trust Agreement provisions to Hillblom, and ensured Hillblom executed documents necessary for Trust administration.78 WTC’s role in Hillblom’s life was not limited to financial 70 Id. at 1. 71 Id. at 2. 72 JX 27 at 2. 73 PTO ¶ 32. 74 Hillblom Tr. 425. 75 JX 34; JX 40; JX 42; JX 43; JX 48; Hillblom Tr. 424–25; White Tr. 608–09. 76 White Tr. 609; JX 41 at 2 (denying Hillblom’s request “for a $2 million principal distribution for a personal investment”). 77 Hillblom Tr. 424–25. 78 JX 34; JX 40 at 2; JX 41; Hillblom Tr. 422–26, 448–49. 12 matters.79 When Hillblom went through a particularly difficult period, WTC instructed him to seek treatment and suggested a specific facility.80 WTC retained ownership of the S&P fee dispute after Hillblom turned eighteen. In June 2013, WTC informed Gallagher that Grist was no longer Hillblom’s guardian and instructed Gallagher to direct any future S&P invoices to WTC.81 In August, WTC Vice President Randi Dlott confirmed Grist “no longer ha[d] a fiduciary role” and that she had reviewed S&P’s most recent invoices for WTC “as Trustee.”82 Dlott acknowledged “[WTC] ha[s] not yet compensated you for your services on ARW” and noted WTC was “internally discussing a proposed resolution.”83 Correspondence continued into December.84 WTC maintained S&P’s ARW fee should be based on the fair market value of Hillblom’s interest in ARW at the time of transfer to the Trust.85 At the same time, WTC acknowledged “[i]t is very difficult to obtain information necessary to retroactively value an asset that was received 13 years [ago], but [we] think that with the help of a valuation expert, you 79 JX 48 at 2–8. 80 Hillblom Tr. 451–54. 81 JX 30 at 2. 82 Id. at 3–4. 83 Id. at 4. 84 JX 31; JX 32; JX 33. 85 JX 32 at 1–2. 13 and the bank will need to agree upon such a value.”86 Neither WTC nor S&P engaged a valuation expert.87 On October 1, counsel to another heir named David Axelrod wrote to WTC explaining he received his contingency fee on ARW cash distributions to his client’s trust.88 He explained that ARW had always been difficult to value, and that nobody seriously considered relying on the Form 706 value.89 On December 10, WTC offered S&P $79,086.00 as its entire ARW fee plus interest (the “2013 WTC Offer”).90 It calculated that amount based on ARW’s fair market value when received by the Trust, informed by the Form 706 value.91 It used the consumer price index for interest.92 The December 2013 Offer concluded: I understand that your firm will probably not accept the $61,034 amount. As an alternative we could consult with an outside valuation firm to see if they could produce an appraisal as of the year 2000. Your firm and the bank could split the costs of the appraisal. It is possible, of course, that the appraised value could exceed the value of the 86 Id. at 2. 87 Dearman Tr. 495; Gallagher Tr. 213. 88 JX 129 at 2 (“The value of the annual distributions from ARW can vary depending on the profitability of the profitability of the underlying businesses and whether there have been any liquidations of the holdings in which ARW has a minor share interest. At least $1 million has been received by or distributed to the capital account credit of each [heir].”). 89 Id. 90 JX 33. 91 Id. at 2; Dlott Tr. 581. 92 JX 33 at 2; Dlott Tr. 586. 14 distribution, but it would satisfy the bank’s fiduciary duty to pay your firm in accordance with the Fee Agreement as written.93 Dlott included the invitation to retain a valuation professional “based on a concept of fairness.”94 Gallagher did not respond to the 2013 WTC Offer.95 Neither WTC nor S&P commissioned an appraisal of ARW. By the end of 2013, the Trust had received eleven ARW distributions totaling $991,239.96 The dispute went dormant again.97 In August 2016, Gallagher raised the ARW fees again with WTC.98 Patni resent the 2013 WTC Offer to Gallagher.99 Gallagher noted he had not received it the first time, positing it had gone to spam or been misfiled.100 Gallagher thought the 2013 WTC Offer was unacceptable because it was not based on “a real value for the property” that anyone considered or would have accepted when ARW was 93 JX 33 at 3. 94 Dlott Tr. 594. 95 JX 35 at 1–3. 96 JX 37 at 1. 97 PTO ¶ 37. 98 JX 35. 99 Id. at 2; Gallagher Tr. 215–16; see JX 33. 100 JX 35 at 1. 15 distributed to the Trust.101 In November, Gallagher discussed S&P’s unpaid fee with WTC, and WTC invited him to share a proposal.102 On December 6, S&P offered to settle the ARW dispute—for all ARW fees from 2002 into the future—for $300,000 (the “2016 S&P Offer”).103 S&P explained the offer would expire on December 20.104 The next day, Patni emailed Hillblom seeking his input on certain Trust decisions.105 She did not mention the S&P fee dispute or the 2016 S&P Offer.106 When S&P made the 2016 S&P Offer, Neil Derman was the WTC attorney charged with handling the ARW fee dispute; Dlott had left WTC’s legal department in 2015.107 Derman did not know the history of the dispute.108 He let the 2016 S&P Offer lapse without acknowledging it.109 Derman understood the 2016 S&P Offer to be a settlement offer and that typically, a trustee would share a settlement offer 101 Gallagher Tr. 174 (“706 value is never what anyone involved in this estate thought was the value of that asset or someone would have taken it for that amount.”); see also JX 129. 102 Gallagher Tr. 183–84; Dearman Tr. 487–88; JX 38. 103 JX 39. 104 Id. at 2. 105 JX 40 at 2. 106 Id. 107 JX 38 at 2; Dlott Tr. 591. 108 Gallagher Tr. 183–84; Derman Tr. 488–89. 109 Gallagher Tr. 186–87. Derman provided no explanation for his failure to acknowledge the 2016 S&P Offer; he implied he did so because it “was a take-it-or-leave it” offer. Derman Tr. 500. 16 with the beneficiary.110 Yet Derman did not share the 2016 S&P Offer with Hillblom.111 At trial, Derman took the position that WTC’s duty to Hillblom was constrained by the Trust Agreement, which did not allow WTC to “negotiate above what was written within the [F]ee Agreement.”112 He explained the 2016 S&P Offer was unacceptable to WTC because “the offer exceeded the valuation of the asset,” making S&P’s offer unreasonable.113 After the 2016 S&P Offer, S&P would not hear anything from WTC for seven months.114 On May 3, 2017, Derman sent S&P a repackaged version of the 2013 WTC Offer (the “2017 WTC Offer”).115 Derman explained the 2017 WTC Offer repeated Dlott’s 2013 use of the Form 706 value because “there was [no] additional evidence presented to come to any different conclusion than what was written back [] in 110 Derman Tr. 499–500, 539–40. Id. at 537–38, 506–08 (explaining he “would not have sent it to [Hillblom]” and if it 111 were shared it “would have come from the business line’s team members”). 112 Id. at 513–14. 113 Id. at 506. 114 Gallagher Tr. 186–87. Gallagher “was disappointed” but “not surprised” WTC did not respond to the 2016 S&P Offer because he “couldn’t get anyone to deal with me. It was very unusual,” unlike the early years when S&P and WTC “had open communication.” Id. at 187. 115 Compare JX 33 with JX 44; Derman Tr. 490–91; Gallagher Tr. 188 (“This is basically a regurgitation of Randi Dlott’s proposal from three or four years before this. No change, no response, the same mistaken belief that 706 had any reasonable relationship to the value of that asset.”). 17 2013.”116 Derman confirmed WTC had done nothing to determine that value.117 Derman could not explain why the Form 706 valuation was appropriate or required by the Fee Agreement.118 The 2017 WTC Offer was accompanied by a check for $79,086.00, the exact figure of the 2013 WTC Offer; the check was drawn from the Trust’s principal, endorsed by two WTC representatives, and marked “FINAL PAYMENT ON ARW, LLC.”119 The 2017 WTC Offer relied on the same reasoning undergirding the 2013 WTC Offer, yet did not include any additional interest.120 Derman explained, “I didn’t feel like it made sense to accrue interest based on [S&P’s] delay.121 WTC did not consult Hillblom before cutting that check from his Trust.122 Derman testified the Trust Agreement gave WTC authority to pay S&P “an amount that was equal to what was owed by the [Trust]” without involving Hillblom.123 116 Derman Tr. 490–91. 117 Id. at 490–91, 500–01, 512. 118 Id. at 532–33 (“Q: Why did you determine that [the Form 706 value] was appropriate for purposes of calculating a fee? A: Because it referred in the document -- in the fee agreement -- actually, let me correct that. I’m not specifically sure. I think it is in the fee agreement, that it specifically spoke about proceeds from the estate. And a way to value an estate is to utilize a 706 valuation, which would be what you would provide the federal government with in terms of telling them what your estate value was at the time of death.”). 119 JX 44 at 3; see JX 33. 120 Compare JX 33 at 2 with JX 44 1–2. 121 Derman Tr. 512. 122 Id. at 511. 123 Id. 18 S&P did not deposit the check.124 S&P rejected the 2017 WTC Offer because it was a mere “regurgitation” of WTC’s 2013 Offer and still lacked “any reasonable relationship to the value of th[e] asset.”125 S&P “had enough” of trying to resolve the dispute amicably with WTC, and retained counsel.126 D. S&P Initiates Arbitration Against WTC; WTC Loops In Hillblom. On June 30, 2017, S&P’s counsel, including Axelrod, made an arbitration demand on WTC (the Arbitration Demand”) seeking approximately $1.3 million under the Fee Agreement.127 The Arbitration Demand’s cover letter noted that WTC “repeatedly re-affirmed its obligation” under the Fee Agreement, but its conduct revealed “no good faith effort to comply” with that obligation.128 Gallagher explained he served the arbitration demand on WTC, rather than Hillblom, because he “had no interest in suing [a] client to get money that [he] thought his trust had the obligation to have taken care of.”129 S&P expressed its desire to meet with WTC, hoping the dispute could be resolved without formal arbitration proceedings.130 124 Gallagher Tr. 190. 125 Id. at 188. 126 Id. at 190. 127 JX 46 at 3. 128 JX 45 at 1. 129 Gallagher Tr. 192. 130 JX 45 at 2. 19 In November, S&P’s arbitration counsel contacted WTC, expressing dismay WTC “ha[d] not responded in any way to [] efforts to encourage settlement communication” or to secure the appointment of an arbitrator.131 WTC blamed its lack of engagement on its inability “over the last several weeks” to reach Hillblom.132 WTC had never involved Hillblom before, or expressed that it had to involve him. WTC “never [provided] a substantive proposal” following the Arbitration Demand, leaving S&P “to conclude that Wilmington has no intention of settling the dispute and valuation issues.”133 WTC knew it had to pay S&P’s fee from the Trust: the Trust Agreement said so, and WTC had acknowledged that fact many times over the previous two decades.134 WTC also knew Hillblom had no funds outside his Trust.135 But it continued to play games with S&P, ducked the arbitration, and sent S&P to sue Hillblom.136 On December 27, WTC told the arbitrator WTC is “not a party to the Fee Agreement and it has not consented to submit to the court’s jurisdiction or to 131 JX 51 at 1. 132 Id.; see JX 52 (“[W]e are open to continuing a dialog and will reach out to you if we are able to get in contact with [Hillblom].”). 133 JX 52 at 2–3. 134 JX 26 at 3; JX 30 at 2; JX 33 at 2–3; JX 38; JX 44. 135 White Tr. 609. 136 Gallagher Tr. 193. 20 arbitrate any issues.”137 WTC told S&P it “had to sue [Hillblom] directly” because WTC was not a party to the Fee Agreement.138 WTC still had not told Hillblom about the ARW fee dispute, much less the 2016 S&P Offer or the Arbitration Demand.139 Two weeks later on January 16, 2018, Derman, Kelly White, and three other WTC employees called Hillblom, informing him for the first time there was a chance S&P might sue him for its fees.140 Hillblom had never before spoken with so many WTC representatives at once.141 WTC explained S&P had demanded WTC pay the 137 JX 53. 138 Gallagher Tr. 193. 139 JX 53 at 2 (acknowledging on December 27, 2017, WTC “has not yet succeed[ed] in contacting [Hillblom] with respect to this matter”). 140 JX 54; JX 55; Hillblom Tr. 436–39, 442. Hillblom’s testimony was vivid and shared specific memories of many “firsts.” Hillblom Tr. 438. He was definitive: “I think a lot would be addressed if I could just say I know that I learned about the Sanders & Park[] and Gallagher situation in full on that [January 2018] phone call . . . . I didn’t think it was important.” Id. at 457. In contrast, Derman and White’s testimony was muddy and conflicting. Derman Tr. 518–19; White Tr. 633. In October 2017, WTC emailed Hillblom “regarding a legal matter relating to your [T]rust’s legal fees, that [WTC] would like to run by you.” JX 49 at 1. WTC and Hillblom had a call on October 31, but Hillblom testified “[n]othing from that call stood out.” Hillblom Tr. 455. Hillblom was emphatic WTC disclosed the nature of S&P’s claim on the January 16 conference call. Id. at 457–58; see id. at 442 (“Q: Did you understand that at any point prior to this phone call on January 16, 2018, that the law firm was making a claim for attorneys’ fees against you personally? A: No -- I knew that they were not. Because I was told they may. . . . Which is a future thing.”). WTC’s counsel represented WTC had “not succeed[ed] in contacting [Hillblom] with respect to” S&P’s fees as of December 27, 2017. JX 53 at 2. 141 Hillblom Tr. 440. 21 requested fees, but WTC “had dismissed the case.”142 WTC told Hillblom “[S&P] may look to sue” Hillblom himself.143 Hillblom did not recall WTC explaining the nature of S&P’s possible claim against him, other than that it related to attorneys’ fees.144 Based on WTC’s explanation, Hillblom believed any claims S&P asserted against him would be “easily dismissible.”145 He recalled being “so confused why five people had to be on the phone call” because as they explained the situation, “it just seemed like it was no big deal. [] I couldn’t understand the facts of them easily dismissing something like this and the unprecedented nature of the phone call.”146 Hillblom added the explanation made a potential suit “sound[] like it was a frivolous thing that I didn’t need to worry about.”147 WTC did not share the 2016 S&P Offer with Hillblom.148 Hillblom was overcome with “disappointment” and “heartbreak” by S&P’s decision to sue him.149 S&P, as counsel to Hillblom’s guardian Grist, had been a kind and transformational force in his remarkable childhood. Hillblom was 142 Id. 143 Id. at 441; White Tr. 63–34; see Derman Tr. 519. 144 Hillblom Tr. 442. 145 Id. at 440. 146 Id. 147 Id. at 441. 148 Id. at 480–81. 149 Id. at 462–63. 22 devastated that Grist’s attorneys had returned with a hand out, like so many others in Hillblom’s life.150 On January 19, White sent Hillblom “12 key documents” “concerning the ARW LLC asset and the fee dispute” to assist in his defense (the “2018 Production”).151 The 2018 Production included the 2013 WTC Offer and the 2017 WTC Offer, but did not include the 2016 S&P Offer or any documents referencing it.152 Derman’s team compiled the 2018 Production, but on the stand, Derman deflected responsibility to White’s team as the “business line.”153 White’s email also included a list of law firms “in the event [Hillblom] independently wish[ed] to start an evaluation process for an attorney.”154 150 Id. at 440, 462–63. 151 JX 56; White Tr. 638–39 (“Q: Why was Wilmington Trust sending Mr. Hillblom documents that it thought he and his attorneys would need in connection with the legal dispute relating to ARW? A: Because, as Neil Derman conveyed to [Hillblom], he was -- he had to defend this matter or, you know, work through this matter himself as opposed to the trustee of his trust. So he needed that documentation, he needed to get counsel, and he needed to give the documentation to his counsel.”). 152 JX 56 at 19–20, 23–25; MSJ BR at 16 (noting the undisputed fact that the 2018 Production did not include or reference the December 2016 Offer). 153 White Tr. 648–49; JX 56 (White informing Hillblom “I’ve received communications and documents from our Legal group, that they’ve asked me to forward to you.”); Derman Tr. 518–19, 562. 154 JX 56 at 1. 23 E. S&P Files Arbitration Complaint Against Hillblom. In February 2019, S&P reluctantly filed its arbitration complaint for its ARW fee (the “Arbitration Complaint”) against Hillblom.155 By July, Hillblom retained David Ribakoff as counsel.156 Hillblom found Ribakoff by searching for an attorney located in Century City, California, based on his view that it is “the nicest area” of Los Angeles with the “best of everything,” including legal professionals.157 Ribakoff asked WTC for “whatever non-privileged documents you have concerning the [S&P] Attorneys’ claims.”158 On August 5, WTC’s litigation counsel responded with five documents WTC “authorized” him to provide.159 WTC’s August production failed to disclose the 2016 S&P Offer or any documents discussing that offer.160 On September 7, Hillblom was served with S&P’s Arbitration Complaint.161 It alleged: • “[Hillblom], directly and through his agent, [WTC], has breached the Fee Agreement by failing and refusing to pay to [S&P] the Contingent Fee earned on the value of certain assets and 155 PTO ¶ 44; JX 57; Gallagher Tr. 193. 156 Ribakoff Tr. 5. 157 Hillblom Tr. 467. 158 JX 59 at 2. 159 Id. at 1, 4–25. 160 See generally JX 59. 161 PTO ¶ 45. 24 distributions received by [Hillblom], through the Lory Trust, from the Estate.”162 • “[WTC], acting as [Hillblom]’s agent, repeatedly asked [S&P] to defer its receipt of payment attributable to the ARW asset and distributions between 2010 and 2017 . . . . [WTC’s] conduct has increased the damages incurred by [S&P] and now owed to [S&P] by [Hillblom].”163 • “[WTC] breached [Hillblom’s] performance under the Fee Agreement when it asserted in bad faith that [WTC] would pay [S&P] based only upon a 1995 valuation of a former ARW LLC . . . .”164 • “[Hillblom] directly and through his designated agent, [WTC], breached the Fee Agreement.”165 F. WTC Sends Hillblom Documents In September 2019. On September 5, Hillblom emailed WTC and WTC’s litigation counsel requesting “a conference call in regards to the Gallagher situation.”166 Hillblom explained he and his attorney “would like to discuss and request some information before [Ribakoff] reaches out to [S&P’s] legal team.”167 That conference call occurred on September 17.168 162 JX 57 ¶ 8. 163 Id. ¶ 13. 164 Id. ¶ 14. 165 Id. ¶ 16. 166 JX 61. 167 Id. 168 JX 62. 25 On September 26, WTC’s litigation counsel emailed Ribakoff seven documents “as a courtesy to you and to [Hillblom]” (the “September 2019 Production”).169 Th