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Millstein v. Millstein

Court of Appeals of Ohio, Eighth District, Cuyahoga

June 14, 2018

NORMAN MILLSTEIN PLAINTIFF-APPELLANT
v.
KEVAN MILLSTEIN, ET AL. DEFENDANTS-APPELLEES

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-17-883760

          ATTORNEYS FOR APPELLANT Terry M. Brennan Kendall C. Kash Daniel R. Lemon Kevin G. Robertson Baker & Hostetler L.L.P. Key Tower.

          ATTORNEYS FOR APPELLEES Damond R. Mace Steven A. Friedman Squire, Patton Boggs (US) L.L.P 4900 Key Tower Fred N. Carmen.

          BEFORE: E.A. Gallagher, A.J., Boyle, J., Laster Mays, J.

          JOURNAL ENTRY AND OPINION

          EILEEN A. GALLAGHER, ADMINISTRATIVE JUDGE.

         {¶1} Plaintiff-appellant Norman Millstein appeals the decision of the Cuyahoga County Court of Common Pleas wherein his petition for declaratory and equitable relief pursuant to Civ.R. 12 was dismissed. We affirm.

         Facts and Procedural Background

         {¶2} On July 28, 2017, appellant filed a petition for declaratory and equitable relief in the Cuyahoga County Court of Common Pleas. Appellant's petition states that he is the grantor of two irrevocable trust agreements established for the benefit of his children: the "Al-Jo" trust created on December 29, 1987, and the "Kevan Millstein" trust created May 2, 1988. Appellant did not attach the trust documents to his complaint.

         {¶3} Appellant alleged that defendant-appellee Kevan Millstein (hereinafter "Kevan") is the sole trustee of the trusts and one of the beneficiaries of the Kevan Millstein trust. Appellant alleged that under federal income tax law, the two trusts were designed so appellant would personally report the federal taxable income, deductions and credits realized from the investments of trusts under the "grantor trust" rules of the Internal Revenue Code sections 671 et seq. Although appellant is responsible for reporting any net taxable income associated with the trusts, he retained no rights as a beneficiary of the trusts.

         {¶4} Norman alleged that, in 2010, he requested that Kevan provide him reimbursement from the trusts for "substantial income taxes" owed by him due to the taxable income generated by the trusts. Kevan declined but reached an agreement whereby the assets of a third, unrelated trust were used to defray appellant's personal income tax liabilities.

         {¶5} In 2013, Kevan informed appellant that the third trust no longer had liquid assets available to defray appellant's income tax liabilities resulting from the trusts at issue in this case. Appellant alleged that Kevan took steps with respect to the Kevan Millstein trust such that appellant would no longer be taxed on the income attributable to the investments of that trust beginning in 2014. No alteration was made to the "Al-Jo" trust.

         {¶6} Appellant alleged that, as a result of his tax obligations under the terms of these irrevocable trusts, he paid federal and state income taxes of $5, 225, 837 for the "Kevan Millstein" trust in 2013 and $1, 261, 068 for the "Al-Jo" trust for the tax years of 2013, 2014 and 2015. Appellant remains liable for future income taxes arising from the "Al-Jo" trust.

         {¶7} Appellant's petition sought "equitable reimbursement of income taxes" from the two trusts as well as a "virtual representation" finding of the relevant beneficiaries of the two trusts for the purpose of effectuating such reimbursement.

         {¶8} Kevan and the trust beneficiaries named as defendants in appellant's petition moved for the petition to be dismissed pursuant to Civ.R. 12, arguing that 1) appellant lacked standing to request that the trusts make any payment to him, 2) that there is no cognizable claim in Ohio for equitable reimbursement to a grantor for tax liability incurred under the terms of a trust the grantor created, 3) appellant's claim was inequitable and 4) appellant's ...


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