The plaintiff in Sweeney v. RPD Holdings Group, LLC was the trustee of a trust (the Trust) that held life insurance policies for three brothers, two living (Frank and Steven) and one deceased (Ronald). The plaintiff brought suit on behalf of the trust and the two brothers Frank and Steven against defendant RPD Holdings Group, LLC (RDP) – an entity through which Ronald held his interest in a corporation jointly owned by the brothers – and defendant Sandra, Ronald’s widow, seeking specific performance of the brothers’ Trust Agreement.
At issue in Sweeney were interests in a family company, Dandrea Holdings, Inc. (the Company), which operates in Vineland, New Jersey. The Company was owned jointly by the brothers (comprising 75 shares of stock, with all three brothers beneficially owning 25 shares). Each brother’s shares were held by a separate Delaware limited liability holding company, and each brother was the sole manager of his respective LLC. Each LLC was in turn “owned” by another trust, presumably for the benefit of each brother. In 2007, the brothers entered into the Trust Agreement. The plaintiff’s theory was that the Trust Agreement was entered into to form a tontine-like structure for the stock ownership.
The plaintiff alleged that under the Trust Agreement, the proceeds of each brother’s life insurance policies would, upon his death, be paid to the decedent’s estate in exchange for the decedent’s shares in the jointly owned corporation, which would be held by the trust for the benefit of the surviving brothers. But Ronald had secretly changed the beneficiary of his life insurance policy to his estate, which received the proceeds, and RPD did not transfer Ronald’s shares in the corporation to the Trust. Frank and Steven provided Sandra, as executrix of Ronald’s estate, with notice of their exercise of a putative call right requiring the transfer of Ronald’s shares. Plaintiff brought suit when Sandra refused to make the transfer.
One day before the plaintiff filed the Delaware action, Sandra filed suit in New Jersey seeking trust records and an accounting. According to Sandra, Ronald had sued Frank and Steven for alleged misfeasance involving the jointly owned corporation and then dismissed the action in return for Frank’s and Steven’s promise to acquire Ronald’s stock; this promise was not honored. Sandra was unaware of the Trust Agreement and was surprised to receive Frank’s and Steven’s notice demanding surrender of the shares. She filed suit when Sweeney would not provide information about the Trust. Sandra later amended the New Jersey complaint to seek interpretation and specific performance of the Trust Agreement, claiming the Trust Agreement required payment of the amount Frank and Steve had promised to pay Ronald in settlement of Ronald’s previous lawsuit. RPD moved to dismiss in favor of the New Jersey action.
The court’s decision
The court granted RPD’s motion to dismiss based on forum non conveniens. In its decision, the court held that the Delaware action and the New Jersey action – although filed one day apart –were simultaneously filed, and, therefore, the case did not invoke the McWane first-filed doctrine. “There is no indication that this action is an attempt to frustrate Sandra’s choice of forum, which is the ill that McWane aims to cure. The actions are, as a practical matter, simultaneous.”