Suit over historic mansion and estate dismissed

Where a non-profit corporation alleged another non-profit corporation was failing to meet its funding obligations for preservation of a historic mansion and estate in Leesburg, as required by the parties’ co-stewardship agreements, but the breach of contract claims were premised on alleged rights that are inconsistent with the actual terms of the parties’ agreements, these claims were dismissed.

Background

This is a contract dispute between two non-profit corporations, Oatlands Inc. and the National Trust for Historic Preservation in the United States, concerning the preservation of a historic mansion and estate in Leesburg. Oatlands alleges that the National Trust and its trustees failed to meet their obligations under the co-stewardship agreements. Defendants have filed a motion to dismiss.

Breach of contract

The first five counts in the complaint request relief for defendants’ alleged breaches of the co-stewardship agreements. Defendants first argue that all five of these claims should be dismissed because they are premised on alleged rights that are inconsistent with the actual terms of the parties’ co-stewardship agreements. The court agrees.

Paragraph 13 provides, in pertinent part: “the Parties agree to use their best efforts to secure the placement of a mutually-acceptable conservation easement on the Historic Core.” This plain language envisions that the parties would still have to negotiate and agree on “mutually acceptable” terms for a conservation easement. The agreement is devoid of any terms or conditions for the conservation easement, other than that it would have to pass muster with state tax authorities under the Virginia Land Preservation Tax Program. Accordingly, plaintiff’s breach of contract claims concerning the conservation easement (Counts One-Three) are dismissed.

Counts Four and Five are based on plaintiff’s allegation that the National Trust has failed to pay plaintiff the full endowment draws that it is owed under the co-stewardship agreements. Paragraph six, however, contains no language specifying a particular amount to be paid out each quarter. If the parties had intended to fix the endowment draw rate, they could have said so in the agreement.

Nevertheless, plaintiff theorizes that the National Trust is obligated to continue paying plaintiff the spending rate authorized by the National Trust Board at the time that the co-stewardship agreements were signed. But such a conclusion contradicts the plain language of paragraph 6(b), under which the National Trust appears to retain “sole discretion” to decide what percentage of its endowment funds to provide Oatlands each fiscal year, with the only limit on its discretion being that the “payout” be “authorized by the National Trust Board, with administrative costs applied on the same basis as for other National Trust endowments.”

Plaintiff asserts that the “sole discretion” language applies only to fund management and investment composition, not endowment draws. This court is unpersuaded. Plaintiff next contends that, even if the National Trust has discretion to change the spending rate, it has exercised that discretion in a manner that is inconsistent with its own spending policy. This argument fails because it is based on a flawed interpretation of the cooperative agreement.

Plaintiff’s contention that the National Trust failed to apply the spending policy’s two percent floor for fiscal year 2019 fares no better. The court finds that the spending policy’s two percent floor did not apply to the National Trust’s 2019 endowment payout because the spending policy was not yet in effect at that time.

Therefore, as a matter of law, defendants could not have violated the spending policy’s two percent floor in 2019 because, as the complaint itself alleges, the policy was not adopted until the following year. Finally, the court finds that Count Five fails for a separate, independent reason — that plaintiff’s request for declaratory relief is duplicative of its breach of contract claim.

Breach of trust

Turning to plaintiff’s breach of trust claims, the court finds that no beneficiary-trustee relationship exists between plaintiff and the National Trust and its Board. Furthermore, that the National Trust’s Board Members have the title “general trustees” does not change the National Trust’s corporate status, as plaintiff argues. Accordingly, plaintiff’s breach of trust claims will be dismissed. Finally, plaintiff’s breach of trust claims against the National Trust’s individual Board Members are dismissed for the additional reason that the members are statutorily immune from suit or liability.

Defendants’ motion to dismiss granted.

Oatlands Inc. v. National Trust for Historic Preservation in the United States, Case No. 1:23-cv-344, Nov. 6, 2023. EDVA at Alexandria (Alston). VLW 023-3-715. 20 pp.