(FILED IN CLERYS OFF,
JEFFERSON Gl cUIT
CASE NO. 16-CI-01164 UIT CT, JEFFERSON CIRCUIT COURT
Pe pene a7 DIVISION FIVE (5)
7°" JUDGE MARY M. SHAW
MARY J. MOSELEY, ETAL. 7 PETITIONERS
aA
ve NOTICE-MOTION-ORDER
CHRISTE COE, ET AL. RESPONDENTS
eee
f TAKE NOTICE that on Monday, March 14, 2016, at the hour of 10:45 a.m.,
at the foot of the docket of the Court’s regular motion hour, in the above Court, Respondents
Nancy O’Hearn (“Nancy”) and Christe Coe (“Christe”) (individually, “Respondent” and
collectively, “Respondents”), who are primary income beneficiaries of the Alton John Schneider
(Mr, Schneider”) Restated Revocable Trust Agreement dated January 30, 1985, as amended
(the “Trust”), by counsel, will make the following emergency Motion,
EMERGENCY MOTION TO DISMISS
AND REMAND FOR LACK OF JURISDICTION
Respondents Nancy O’Heam and Christe Coe move this Court: (i) to dismiss the Petition
for Declaratory Judgment (the “Petition”) that was filed by Mary J. Moselely, Dawn M. Hitron,
R. Joseph Mittel and Michael B, Mountjoy (collectively, the “Plaintiffs” or “Co-Trustees”) in
this Court on March 11, 2016, for lack of jurisdiction pursuant to KRS 386B,2-030(2); and (ii) to
remand the matter to the Jefferson District Court, which has exclusive jurisdiction over this
dispute. In the alternative, Respondents request that the Court issue a Restraining Order and
‘Temporary Injunction pursuant to KRS 386.B.10-010 and/or Civil Rule 65.!
' Respondents reserve their right to assert all available defenses to this action under Rule 12.BACKGROUND
Plaintiffs’ Petition is a blatant attempt to forum-shop and avoid a Restraining Order in
Jefferson District Court, where the subject Trust has been adjudicated for over a decade at
Plaintiffs” request. After more than two hours of oral argument on Thursday, March 10, 2016,
Jefferson District Court Judge David L. Holton made clear that he intended to issue a restraining
order to enjoin certain conduct by the Plaintiffs, and that such order would issue on Friday,
March 11, 2016 (“Impending Restraining Order”). In an effort to escape the Impending
Restraining Order, Plaintiffs filed the instant Petition on Friday, March 11, 2016. In doing so,
Plaintiffs misconstrue KRS 386B,2-030(2), and omit vital facts from their Petition which make
lear that the Jefferson District Court has exclusive jurisdiction of the subject trust dispute,
Indeed, the underlying circumstances in dispute arose on October 8, 2015. It was at that
time that Plaintiffs filed an initial Petition (the “Initial Petition”) in District Court, seeking to
modify the subject Trust in a manner that would give them continued control over the Trust,
through the end of 2016 ~ even though the plain language of the Trust requires the Co-Trustees
to distribute the assets of the Trust amongst the 21 primary income “Beneficiaries” on May 31,
2016. The Respondents opposed the Initial Petition in a February 12, 2016 District Court filing,
and oral argument was held on February 17, 2016. At that time, the District Court made clear
that it would not grant Plaintiff's Initial Petition, instructed the parties to work on an agreed
order based on the outcome of that hearing, and also advised the Respondents to file thei own
Petition, to memorialize the affirmative relief they sought during the February 17, 2016 hearing,
Indeed, within Respondents’ February 12 District Cour filing, and during the February
17 hearing, Respondents raised concerns regarding objections made by the Beneficiaries to the
Co-Trustees’ proposed liquidation of over $300 million in Trust assets on the eve of Trusttermination, which would be a breach of their fiduciary duties, Such assets include all of the
voting stock in the Al J. Schneider Company (the “Company”), as well as its vast real estate
holdings ~ including the Galt House Hotel.
At the February 17 hearing, the District Court ruled to extend the termination of the Trust
on a limited basis subject to various conditions, including, but not limited to, restrictions on the
sale, transfer, conveyance or pledging of the Company or the Galt House, In fact, the Court
asked the parties in that action to draft an Order agreeable to all the parties and submit it to the
Court for the Court’s consideration. That Order is still being negotiated with counsel for
Plaintiffs and one of the few sticking points in negotiating that Order is whether or not the
conditions relayed by the Court is just the stock or also the “stock assets”—in other words,
whether the Order restricts not just the sale or conveyance of the Company but also Company
assets like the Galt House. Counsel for Plaintiffs recently sent their most recent version of the
Order to Defendants which strikes the word “assets” from the draft Order, among other changes.
See March 8, 2016 E-
ail from Amy Cubbage, attached as Exhibit 1.
After the hearing on the Initial Petition on February 17, 2016, the Respondents believed
that the Co-Trustees would abandon their efforts to liquidate the Company and its assets,
including the Galt House. Specifically, it was hoped that the Co-Trustees understood that even
though the Jefferson District Court had ruled that the termination and winding up of the Trust
were extended for a limited time and a limited purpose, that the Court had indicated that
distribution and sale of T
st assets (specifically, the Company and the Galt House) were not to
be effected by this limited extension, As it tumed out, Plaintiffs did not deserve the benefit of
the doubt, Rather, the Respondents were forced to lea through the media that the Plaintiffs
were forging ahead in their efforts to hastily liquidate the Company and the Galt House, rightunder the nose of the Trust's Beneficiaries. See Caitlin Bowling, Insider Louisville, February 5,
2016, at hitp://insiderlouisville com/business/al-j-schneider-co-lists-waterfront-plaza
This led the Respondents to file for an emergency injunction in the Jefferson District Court on
sale/.?
March 9, 2016, to prevent the sale of the Company or its assets, including the Galt House. ‘The
Court heard the parties (including counsel for Plaintiffs) at an expedited hearing on March 10,
2016, and strongly indicated that a restraining order would be issued the following day, on
Friday March 11, 2016, Respondents will provide the Court with a video transcript of that
hearing as soon as possible.
‘The Co-Trustees are upset with the outcome of the March 10" hearing, and plainly filed
the subject Petition to see if they can stall the relief granted by the Jefferson District Court, or
obtain a different ruling in a different Court. This is the definition of forum shopping and it
should not be allowed. The case should be dismissed and remanded to the District Court which,
under the foregoing circumstances, now has exclusive jurisdiction over this matter pursuant to
KRS 386B.2-030.
In the alternative, if this Court determines that the District Court no longer has
jurisdiction, the Court should review the video transcript of the March 10, 2016 injunction
hearing, and enter the Restraining Order filed herewith (which was previously tendered to the
Jefferson District Court). ‘There is no need to re-invent the whee! here, given what has transpired
in District Court. As set forth in the Respondents’ Verified Petition (filed with the District Court
2 The Courier-Journal recently reported on February 23, 2016 that “(a deal appears to have been struck forthe sale
of the iconic, nearly 1,300-room Galt House Hotel overlooking Louisville's downtown riverfront tothe large
Columbia Sussex hotel chain based in Crestview Hills, Ky, a firm that also has vast gaming interests.” Sheldon S,
Shafer, Courier-loumal, February 23, 2016, a htp:/fvww.courier-journal,comistoryinews/local/2016/02/23)
ouisville-galt-house-sale-possible/80794580), The report goes on to confirm that Columbia Sussex published a
notice in the Courier-Journal on Friday February 19, 2016 of that eompany's intention to apply for a liquor license
for the Galt House. Id.and attached to the Co-Trustees’ Petition in this Court, the Co-Trustees intend to breach their
fiduciary duties to the Beneficiaries of the Trust, and cause them irreparable harm, Such conduct
is equivalent to fraud under Kentucky law, and should be stopped pursuant to KRS 386B.10-010,
ARGUMENT
1. _ KRS 386B.2-030 REQUIRES THAT JURISDICTION REMAIN WITH THE
JEFFERSON DISTRICT COUR‘
Under KRS 386B.2-030, “[i]fa proceeding is initially brought in District Court
concerning any trust matter, the jurisdiction of the District Court shall become exclusive with
respect to such matter unless, within twenty (20) days of receipt of notice of such proceeding, a
party files an action in Circuit Court relating to the same trust matter...” In other words, ifa
party files an action in Jefferson District Court and the District Court exercises jurisdiction over
‘the matters raised in that action for at least 20 days, the jurisdiction becomes exch Such is
the case here.
‘As noted above, the Initial Petition filed by the Plaintiffs has been pending before the
Jefferson District Court since October of last year. In fact, the Initial Petition was filed on
October 8, 2015 in the same Trust matter which has been open with the Jefferson District Court
since at least 2005 (matter number 05-P-002737). Moreover, the February 12" response brief in
opposition to the Initial Petition, the February 17" hearing concerning the Initial Petition, the
March 8" redlined Order stemming from the Initial Petition, and the March 10" injunetion
hearing all pertained to whether the Co-Trustees have the legal authority to liquidate all Trust
assets, including the Company real estate and the Galt House, Never once did the Co-Trustees
claim the District Court lacked jurisdiction, or that they would seek relief in this Court, until the
dust settled from the March 10" injunction hearing.With 20 days having passed since the subject dispute first arose in District Court, the
District Court now has exclusive jurisdiction over this dispute. Accordingly, this Court should
dismiss the Petition filed on March 11" for lack of jurisdiction, so that Judge Holton may issue
the Impending Restraining Order.
II, THE CO-TRUSTEES SHOULD NOT BE PERMITTED TO FORUM SHOP FOR
A MORE FAVORABLE RESULT.
“Forum-Shopping,” is “against the public policy of Kentucky.” State Farm Mut, Auto,
Ins. Co. v. Marley, 151 $W.3d 33, 41 (Ky. 2004), Where an action has been ruled upon in one
court, itis improper to try a different forum on the same issue. Tackett v, Tackett, 2003-CA-
001742-MR, 2004 WL 2011289, at *2 (Ky. App. Sept. 10, 2004) (citing Likins v. Logsdon, 793
S.W.2d 118, 120 (Ky. 1990)). Moreover, forum-shopping after a court has already ruled is
especially improper because it allows a party to test the waters and then switch forums if they
don’t like how the Court will rule:
We lack the authority to interpret Michael's “reservation” as permitting the
assertion of the improper venue defense beyond the time allotted by the Civil
Rules. Were we to do so, we would enable a form of forum shopping,
allowing a party to subjectively assess how the litigation is progressing before
seeking a different venue. The defense of improper venue, if allowed to be
unilaterally “reserved” but not asserted until after the pleading phase, would
become a mere guise for objection to the manner in which the forum is
adjudicating the case.
Stipp.v. St. Charles, 291 $.W.3d 720, 725 (Ky. App. 2009).
This is the case here. The Jefferson District Court was hours away from issuing the
Impending Restraining Order. Seeing the writing on the wall, the Co-Trustees filed their Petition
with this Court in hopes that this Court might not see their “guise.” This type of manipulation of
the Court system should not be permitted. Nor is it permissible under well-established law in
other analogous circumstances.Indeed, a case may not be “removed” to federal court iff defendant takes up arguments
on the merits in a state trial court proceeding. See e.g., Bolivar Sand Co., Inc. v. Allied
Equipment, Inc., 631 F. Supp. 171 (W.D. Tenn, 1989) (holding that a party may waive a tight to
remove to federal court by actions indicating that he has submitted to the jurisdiction of the state
court.). “The basis for this rule of law is that it is unfair to permit a party to experiment with his
case in state court, and, upon adverse decision, remove the case for another try in federal court.”
Rose v. Giamatti, 721 F. Supp. 906, 922 (8.D. Ohio 1989) (citing Bolivar Sand Co,, supra). See
also McKinnon v. Doctor's Assoc., Inc., 769 F. Supp. 216, 220 (E.D. Mich. 1991) (Holding that
defendant waived right to remove case by taking affirmative action to argue the merits of its,
“defense” in response to an injunction pleading in state court).
Likewise here, the Co-Trustees voluntarily sought relief in the District Court for months
on the issues at hand, and addressed the Respondents’ injunction and breach of fiduciary duty
arguments, on the merits, for over two hours in oral arguments before the District Court on.
March 10, 2016, Never once was there a mention of seeking to “remove” the case to Circuit
Court. Given the passage of time since the instant dispute arose in District Court, and the fact
that the Co-Trustees have repeatedly availed themselves of the District Court’s jurisdiction over
this trust dispute, itis clear under the foregoing authorities that they waived any right to now try
and “remove” the case to Circuit Court. The Court should not permit this blatant forum
shopping.
I. EVEN IF THIS COURT FINDS IT HAS JURISDICTION, IT TOO SHOULD
ISSUE A TEMPORARY RESTRAINING ORDER AND INJUNCTION.
As set forth in detail within the Respondents’ March 9, 2016 “Verified Petition”, filed in
Jefferson District Court and attached to Petitioners’ March 11, 2016 Petition for Declaratory
Judgment, the Respondents are entitled to emergency injunctive relief in order to prevent a clearbreach of fiduciary duty by the Co-Trustees. The facts and arguments set forth therein are
incorporated by reference here, as if fully rewritten,
Indeed, the Jefferson District Court was prepared to issue a restraining order based on the
arguments in Respondents’ Verified Petition, and the oral argument on March 10, 2016. Nothing
has changed, except that the Petitioners seek to evade an adverse ruling in District Court, by
filing the instant Petition. For the same reasons set forth by the Respondents in the District Court
proceeding, this Court should likewise enter a Restraining Order if it finds that Circuit Court
jurisdiction is proper here,
CONCLUSION
For the foregoing reasons, this Court lacks jurisdiction over the instant dispute. Under
the foregoing circumstances, the Jefferson District Court has exclusive jurisdiction pursuant to
KRS 386.2-030. The Court should dismiss the Co-Trustees* Petition, so that the matter may be
remanded back to District Court.
In the alternative, if this Court finds that it has jurisdi
tion, an emergency Restraining
Order should be issued immediately — in view of the record that was already created in the
District Court during oral arguments on March 10, 2016, Or, if the Court prefers, the
Respondents would request that an(other) emergency hearing be held on their Motion for a
Restraining Order (contained within their Verified Petition which the Co-Trustees filed with this
Court on March 11, 2016).Respectfully submitted, Respectfully submitted,
Nib Arig yoni) <=
Norbert J. Arrington V Jeffrey A McKenzie
MASTERS, MULLINS & ARRINGTON Steven R. Wilson
1012 South Fourth Street Benjamin J. Lewis
Louisville, Kentucky 40203 BINGHAM GREENBAUM DOLL LLP
(502) 582-2900 3300 National City Tower
nja@aol.com 101 South Fifth Street
Louisville, Kentucky 40202-3197
Counsel for Nancy O'Hearn (502) 587-3594/3616
Jimckenzie@bsdlegal.com
swilson@bgdlegal.com
blewis@bedlegal.com
Counsel for Christe Coe
173478931. doox: UIT CT.
CASE NO. 16-CI-01164 | JEFFERSON CIRCUIT COURT
BN ER VA AM IE 27 DIVISION FIVE (5)
JUDGE MARY M. SHAW
CLERK 6
MARY J. MOSELEY, ET AL. PETITIONERS
de,
v. STRAINING ORDER
CHRISTE, RESPONDENTS
On the Verified Petition of Nancy O*Heam and Christe Coe, for injunctive relief against
the Co-Trustees of the Alton John Schneider Restated Revocable Trust Agreement dated January
30, 1985 (“Trust”), Mary J. Moseley, Dawn M. Hitron, R. Joseph Mittel and Michael B,
Mountjoy (collectively the “Co-Trustees”),
IT IS HEREBY ORDERED, as follows:
4. The Plan of Liquidation of Al J. Schneider Company, attached to the Verified Petition at
Exhibit 2 (the “Plan of Liquidation”), is hereby suspended and of no force or effect;
5. The Co-Trustees shall not, in any capacity (individual or otherwise), sell or attempt to sell,
convey, pledge, encumber, impair, devalue or transfer any asset out of the Trust, or any
real property or business concerns of the Al J. Schneider Company (the “Company”),
including but not limited to the Galt House Hotel;
6. The Co-Trustees shall not direct or permit any officer or director of the Company to pursue,
advance, or otherwise undertake any action relative to the Plan of Liquidation, other than
abandoning the Plan of Liquidation and any and all variations thereof;
7. Allattomeys, officers and directors of and for the Company are hereby deemed to be agents
and/or individuals acting in concert with the Co-Trustees for purposes of this Restraining
Order, and shall be informed of this Restraining Order and its limitations on their conduct;This Restraining Order shall not be sealed from public view and may be circulated to all
other individuals and entities who may be affected or have an interest or concern relative
to this proceeding;
‘The Restraining Order shall expire on » 2016, at which time
ahearing on the Verified Petition shall be held at min the Courtroom
of the above Court.
Entered this__day of 2016.
JUDGE MARY M. SHAW
JEFFERSON CIRCUIT COURT
7Tendered by:
Let hon tind) ‘Se
lorbert J. Arrit mn
Tefliey A. McKenzie
‘MASTERS, MULLINS & ARRINGTON Steven R. Wilson
1012 South Fourth Street Benjamin J. Lewis
Louisville, Kentucky 40203 BINGHAM GREENEBAUM DOLL LLP
(502) 582-2900 3500 National City Tower
nja@aol.com 101 South Fifth Street
Louisville, Kentucky 40202-3197
Counsel for Nancy O’Hearn (502) 587-3594/3616
jmekenzie@bgdlegal.com,
swilson@bgdlegal.com
blewis@bgdlegal.com
Counsel for Christe Coe
17347893_1.doox
18CASE NO. 16-CT-00164 IEFFERSON CIRCUIT COURT
i MEQ MY I: 27, DIVISION FIVE (5)
JUDGE MARY M. SHAW
AICS
MARY J. MOSELEY, ET AL. La “ PETITIONERS
v. NOTICE OF FIFING OF IVES
CHRISTE COE, ET AL. RESPONDENTS
Respondent Christe Coe (“Coe”), by counsel and in her capacity Co-Trustee of the Alton
John Schneider Restated Revocable Trust wa dated January 30, 1985, as amended (the “Trust”),
hereby gives notice of filing of directives from 15 of the 21 primary income beneficiaries of the
Trust. Such directives are collectively attached at Tab A, and reflect that the majority of the
equitable owners of the outstanding voting shares in the Al J. Schneider Company (“Company”)
have directed the five Co-Trustees of the Trust, in pertinent part, as follows:
[We] object to the “Plan of Liquidation” that the Co-Trustees purportedly
approved and authorized for the Company. [We] do not want the Galt House
Hotel or any other assets of the Company to be sold before the termination of the
Trust, and do not want [our] voting stock or such assets 10 be compromised, sold,
liquidated, conveyed, pledged or transferred in the interim.
[We] direct the Co-Trustees to abandon and withdraw the Plan of Liquidation,
and hereby request that [our] stock (and any other Trust assets) be distributed to
[us] in-kind and as soon as possible.
See Directives attached hereto at Tab A.
‘There are currently 360,000 voting shares outstanding in the Company, all of which are
scheduled to be distributed amongst the 21 beneficiaries of the Trust in less than three months’
time, on May 31, 2016. The 15 beneficiaries who executed and delivered the attached Directives
hold equitable title to 228,000 of the outstanding voting shares, which represents a 63.3%
majority, as follows:Beneficiary and
Equitable Shareholder Voting Shares Held
Nancy O’Hearn 60,000
Christe Coe 60,000
David J. Oetken 8,571.43
Timothy Todd Oetken, Sr. 8,571.43
Daniel L. Octken 8,571.43
Gerri L. Fihe 8,571.43
Kevin A. Oetken 8,571.43
Kerri Teresa Sullivan 8571.43
Christopher Oetken Catt 8,571.43
Alton J. Schneider, IIL 12,000
Candice Schneider Polio 4,500
Olivia Schneider Lanning 4,500
Rebecca Richardson 3,000
Michael A. Schneider 12,000
Connie Schilffarth 12,000
TOTAL SHARES 228,000
Under Kentucky trust law, and in view of the Directives attached hereto, the Co-Trustees
have a fiduciary obligation to distribute the voting stock in the Company to the Beneficiaries in-
kind, and may not liquidate the Company's assets or otherwise impair the stock or transform the
‘Company in the meantime, especially when the Co-Trustees have conflicts of interest in the
proposed transactions at-issue, See Lucas v. Mannering, 745 8.W. 2d 654 (Ky. App. 1987) (a
fiduciary should convey real property in-kind to the beneficiaries pursuant to their wishes);
Osborn v, Griffin, 50 F. Supp. 34 772, 801-02 (E.D. Ky. 2014) (holding that trustees breached
their fiduciary duties by liquidating stock and real estate at/near the termination of a trust,
without giving the beneficiaries the choice to receive those assets in-kind). See also,
RESTATEMENT (THIRD) OF TRUSTS § 89 (2007), Comments ¢ and e (2) (noting that, in developing
a distribution plan, the trustees should be fair and reasonable, and consider a number of factors
including the preferences, concerns and circumstances of the benefiCoe is prepared to honor the clear Directives of the Beneficiaries, and filed a Verified
Pe
ion in District Court to prevent a breach of fiduciary duties by her four Co-Trustees — who
are attempting to hastily and recklessly liquidate the entire Company and its assets, including the
Galt House, despite objections from the Beneficiaries and without regard for their individual
best-interests. For the reasons set forth in the Verified Petition filed by Coe in Jefferson District
Court, emergency injunctive relief is critically necessary under the circumstances, to prevent an
impending breach of fiduciary duty and irreparable harm to the Beneficiaries.
Jeffrey AA
Steven R. Wilson
Benjamin J. Lewis
BINGHAM GREENEBAUM DOLL LLP
3500 National City Tower
101 South Fifth Street
Louisville, Kentucky 40202-3197
(502) 587-3594/3616
imckenzie@bgdlegal.com,
swilson@bgdlegal.com
blewis@bgdlexal.com
Counsel for Christe Coe, Co-Trustee