Court of Appeals of Ohio, Eighth District, Cuyahoga
Appeal from the Cuyahoga County Court of Common Pleas Case
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.
BEFORE: E.A. Gallagher, A.J., Boyle, J., Laster Mays, J.
JOURNAL ENTRY AND OPINION
A. GALLAGHER, ADMINISTRATIVE JUDGE.
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.
and Procedural Background
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.
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.
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
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.
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.
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.
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