United States District Court, D. Nebraska
SCOTT A. SELDIN, Plaintiff,
THEODORE M. SELDIN, STANLEY C. SILVERMAN, and MARK SCHLOSSBERG, Defendants.
MEMORANDUM AND ORDER
F. Bataillon Senior United States District Judge.
matter is before the Court on defendant Theodore Seldin's
motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1),
Filing No. 17, and a motion by the plaintiff, Scott
Seldin, for an accounting pursuant to Fed. R. of Civ. P. 3,
Filing No. 2. The plaintiff Scott Seldin seeks an
accounting pursuant to Neb. Rev. Stat. § 30-3890(b)(4)
related to a trust in which he was the beneficiary and
Theodore Seldin and Stanley Silverman served as the
trustees. Scott Seldin contends that this matter
arises from the unauthorized and undisclosed self-dealing by
these two trustees of the family trust. Scott Seldin requests
an accounting from 1992 through 2002 of the MSCM trust,
discussed hereinafter. Filing No. 1 and Filing
No. 2. Plaintiff asks this Court to exercise its power
in this case and order the trustees to account for the
properties by allowing access to the records by an
independent third-party auditor. Defendant Theodore Seldin
contends that this Court lacks subject matter jurisdiction,
as there is an agreement to arbitrate that binds the parties.
Filing No. 17.
Stan and Mark Seldin served as trustees for a trust, Millard
Seldin Children's Master Trust (“MSCM
Trust”), created by Scott Seldin's father, Millard
R. Seldin. Scott Seldin is named in the MSCM Trust as a
beneficiary along with his two siblings, Traci Seldin Moser
and Derry Seldin. Scott's father, Millard, established a
trust for Scott and his siblings. Scott's uncles, Ted and
Stan Seldin, now estranged from Millard and Scott, were
designated as two of the trustees (Ted and Stan Seldin will
be collectively referred to as “Trustees”). Among
other things, the Trustees allegedly overcharged on lease
commissions paid to them under management agreements related
to the trust in breach of their fiduciary duties. Also,
according to Scott Seldin, the Trustees never submitted a
trust report to Scott Seldin or any other beneficiary as
required by Nebraska law. Filing No. 1, Complaint,
¶ 8. The MSCM trust required an accounting at least
February 18, 2010, the parties entered into a Separation
Agreement, designed to split the assets in the many trusts
with the help of a mediator. Filing No. 18-2, Ex. 1. The
purpose of the agreement was to (1) help separate out the
interests between the Omaha Seldins and the Arizona Seldins,
(2) establish arbitration as the exclusive remedy.
Seldin, Ted and Stan Seldin, Scott Seldin and others entered
into a Separation Agreement. With regard to the MSCM Trust,
the arbitrator determined that “there is little
meaningful evidence . . . to explain how the Trustees handled
their annual reports” to Scott. (Filing No. 18-44,
Award 1 ¶¶ 15, 16 at 5). The arbitrator found it
“was not until October 2008 that [the Trustees]
provided [Scott] with sufficient detailed financial
information for [him] to reasonably recognize on a per
property basis that the management fee provisions in the
Management Agreements may have been erroneously applied by
Seldin Company over an extended period of time”
(Filing No. 18-47, Award 8 ¶ 1 at 1-2; Filing
No. 18-45, Award 2 ¶ 20 at 5). The arbitrator further
found, on January 27, 2016, that:
“On several occasions, the authorized representatives
of the Seldin Company, including Stan, unilaterally and
erroneously charged the Owners [including Scott or entities
holding his interests] lease fees . . . . The Seldin Company
has breached the Management Agreements by overcharging [Scott
and others] lease commissions . . . Thus, the overcharged
lease commissions paid by [Scott and others] total $257, 392.
“[T]here is no factual, legal or equitable basis to
support findings that . . . the commissions paid to the
Seldin Company . . . for the lease transactions . . . were
the result of a mutual mistake . . .”
Filing No. 18-47, Award 8 ¶ ¶ 11, 13 at
arbitrator further determined that there existed over fifteen
hundred boxes of paper records and an electronic Timberline
financial accounting system used by the Trustees since 1998.
(Filing No. 18-47, Award 8 ¶ 1 at 1-2;
Filing No. 18-44, Award 1 ¶ 29 at 11).
4, 2015, the arbitrator also found that Scott Seldin
“breached . . . fiduciary duties of care and loyalty,
which [he allegedly] owed to SD&M, MTS, Ted and Stan, and
that [Scott allegedly] violated applicable securities
statutes when Millard [allegedly] orchestrated the Sky
Financial Transactions” (Filing No. 18-50,
Award 13 ¶ 73 at 21). The arbitrator found “[Scott
has] failed to meet [his] burden of proving that Millard
properly disclosed the Sky Financial Transactions and . . .
MSCM Trust's investment in SVP Restaurant to SD&M and
MTS . . . (Filing No. 18-50, Award 13 ¶ 46 at
14). The arbitrator further found, despite that
“SD&M and MTS . . . received a 100.043% total
return on . . . the Sky Financial Transactions[, ] . . .
[t]he breach of fiduciary duties and securities law
violations committed by . . . [Scott allegedly has] damaged .
. . [the Trustees]” (Filing No. 18-50, Award
13 ¶¶ 65, 74 at 19, 21). The arbitrator stated:
“On or before August 1, 2016, [Scott] shall provide to
[the Trustees] a reasonably detailed written accounting of
all distributions received directly or indirectly by . . .
the MSCM Trust . . . from or through SVP Restaurant . . .
since November 2000 arising out of or related to the
management of Sky Financial” (Filing No.
18-50, Award 13 at ¶ 75 at 22).
Seldin filed a motion on November 17, 2015, asking the
arbitrator to clarify whether the arbitrator believed he had
no jurisdiction to require an accounting under Nebraska trust
law or whether the trustees were somehow exempt from such an
accounting. The arbitrator replied on November 29, 2015. He
denied the motion, giving no explanation for his decision.
previous lawsuits were filed in this case. First, on April
17, 2012, the Arizona Seldins filed an action in Douglas
County Nebraska District Court. It was dismissed on August 8,
2012. The Arizona Seldins filed a second lawsuit in Douglas
County Nebraska District Court. Following a motion to dismiss
by the Omaha Seldins, the court dismissed this case likewise.
The Arizona Seldins then filed a demand for arbitration. On
December 27, 2012, the Arizona Seldins filed a third lawsuit
in Douglas County Nebraska District Court. On April 1, 2013,
the court again dismissed the lawsuit. The Arizona Seldins
filed 4 appeals. On February 14, 2014, the Arizona Seldins
sued Mr. Tucker and Venable, LLP, (the previous arbitrators)
alleging negligence, breach of contract, tortious
interference. The Douglas County Nebraska District Court
granted summary judgment against the plaintiffs on all
claims. The Omaha Seldins then filed a suggestion of mootness
and motion for summary dismissal with the Nebraska Supreme
Court. The Nebraska Supreme Court granted the motion and
dismissed the appeals on August 13, 2013.
the American Arbitration Association appointed Eugene R.
Commander as the new arbitrator and the arbitration
proceedings recommenced in October 2013. Multiple claims were
bifurcated and hearings held and some decisions entered by
the arbitrator. Some of the claims were still under
advisement as of ...