Susan Gore, heiress to the W.L. Gore fortune, will not have to bear the cost of attorney fees and expenses for the litigation that resulted after she legally adopted her ex-husband, Jan C. Otto, in order to increase the size of her children's inheritance.
The Delaware Court of Chancery spared Susan Gore the costs, saying the adoption was not a bad-faith attempt to subvert the trust Gore's parents established for their grandchildren. Instead, the court ordered litigation fees be allocated from the trust under Title 12, Section 3584 of the Delaware Code, which permits a court to deduct attorney fees and expenses from a trust if the lawsuit is considered reasonable and necessary for its administration.
"Susan's conduct may have been manipulative, but without condoning it, the court concludes that it was not in bad faith, even under the arguably more relaxed standards of 12 Del C. 3584," wrote Vice Chancellor John W. Noble in IMO Trust for Grandchildren of Wilbert L. and Genevieve W. Gore.
Noble issued the 14-page letter opinion Feb. 27, in which he noted that his decision resolved litigation over the trust, dubbed the Pokeberry trust by its creators, Wilbert and Genevieve Gore. The trust, which was established in October 1972, was funded with 7,000 shares of privately held Gore company stock, according to court documents. Although court papers redacted the actual per share value of the Gore stock, published reports have estimated that a single share is worth more than $66,000.
Upon the Gores' deaths, the trust would distribute the shares to their grandchildren. The shares would be divided according to the size of their five children's families, so the larger the family, the more money each grandchild would receive, according to court documents. The Gores created the formula with the expectation that the grandchildren in the larger families would receive a larger inheritance than their parents. Because Susan Gore only had three children, her offspring would each receive 95 shares of stock. However, Wilbert and Genevieve Gore's children each had four children, resulting in each of those grandchildren receiving 420 shares, according to court documents.
Wilbert Gore died in 1986, followed by Genevieve Gore in 2005. In 2002, when Genevieve Gore's health began to fail, Susan Gore began mulling several options to increase her children's share of the trust, according to court documents. Eventually, Susan Gore decided to legally adopt her 67-year-old ex-husband, Otto, under Wyoming law. Her siblings objected to the adoption, arguing that she would be using the adoption to unfairly and illegally increase her children's share of the trust.
Gore's siblings challenged the adoption in the Chancery Court while Gore asked the court to change the trust to create a fairer distribution. In that litigation, Noble ruled in favor of Gore's siblings and also invalidated Otto's adoption under Delaware law.
Gore appealed Noble's decision to the Delaware Supreme Court, which denied her motion to change the Pokeberry trust so that it provides all grandchildren with equal shares. The other Gore grandchildren, who objected to Susan Gore's effort to increase her family's share in the Pokeberry trust, filed a motion in the Chancery Court seeking to have her pay their attorney fees and expenses. The objecting grandchildren sought to shift attorney fees under the bad-faith exception to the "American rule," which prescribes that all parties pay their own lawyers and shoulder their own costs.
The objecting grandchildren contended that Gore's decision to wait until after Genevieve Gore's death to announce Otto's adoption was in bad faith. Furthermore, the objecting grandchildren also claimed that if the adoption was disclosed, they could have taken steps to confirm Genevieve Gore's intent and avoided or reduced ensuring litigation. They also argued that if Genevieve Gore did believe the Pokeberry trust formula's methodology was appropriate, then Susan Gore sought to frustrate her parents' intent. Noble disagreed, however, ruling that Susan Gore did not act in bad faith.
"Susan's and the Otto grandchildren's motivations were undoubtedly mixed, and the strategy of hiding the adoption was tactically important to them," Noble said. "Nonetheless, the court does not find that their conduct warrants imposing large attorneys' fees on them. The objecting grandchildren's optimism that an early disclosure of Jan C.'s adoption would have materially facilitated resolution of this dispute seems unwarranted. Complex, drawn out litigation is likely to have been inevitable."