A Florida appeals court has ruled that the Delaware attorney general can pursue a lawsuit about whether Delaware is being shortchanged due to Nemours children's hospitals in Florida and other states. | Nemours Children's Health
Published on June 4, 2024 at 10:45 am
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When the industrialist Alfred I. duPont died in 1935, his will directed setting aside money to provide medical care to children and seniors, resulting in Nemours pediatric hospitals and facilities in Florida and other states.
But nearly nine decades later, a Florida appeals court has ruled that the Delaware attorney general can pursue a lawsuit about whether Delaware — duPont’s native state — has been shortchanged.
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A panel of the 5th District Court of Appeal on Friday overturned Duval County circuit court decisions that rejected the lawsuit. The appellate ruling was part of decades of legal wrangling about a duPont charitable trust and the nonprofit Nemours Foundation, which was created with money from the trust.
DuPont moved to Jacksonville in the 1920s, and the trust and the Nemours Foundation were established in Florida. But Friday’s main opinion said “Mr. duPont included in his will and in the trust documents specific, clear direction that the children and elderly of Delaware were to receive priority and were to be taken care of before expending trust funds on children or elderly residing elsewhere.”
In addition, a lawsuit filed in the late 1970s led to a settlement that limited how much of the trust money distributed each year to Nemours could be spent outside Delaware. That limit was 50%.
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“Under this ‘50% requirement,’ if the trust distributed $100 million of funds annually, no more than $50 million could be distributed in states other than Delaware,” appeals court Judge Scott Makar wrote in a concurring opinion Friday. “The trust could, of course, decide to spend the entire $100 million in Delaware, but it could not distribute $75 million in Florida and $25 million in Delaware; the latter would be a breach of the agreement the parties — which included the trust — had reached.”
Then-Delaware Attorney General Matthew Denn filed a lawsuit in 2017 against the trust and the Nemours Foundation, alleging breach of contract and breach of trust duties. The lawsuit alleged that the 50% limit on distributions to states other than Delaware had been breached.
Florida intervened in the case on the side of the trust and the foundation. Separate circuit court rulings dismissed the breach-of-contract claim and granted summary judgment to the trust and foundation on the breach-of-trust claim.
But the appeals-court panel Friday overturned those rulings, effectively allowing now-Delaware Attorney General Kathleen Jennings to move forward with the case.
In part, the defendants argued that the Delaware attorney general did not have legal standing to pursue the case. But the appeals court panel pointed to a 1979 decision by Florida’s 1st District Court of Appeal that said the Delaware attorney general had legal standing to sue in a similar lawsuit. That ruling helped lead to the settlement, which was reached in 1980.
“It is clear then that (the 1979 ruling by the 1st District Court of Appeal) was neither legislatively nor judicially overruled,” Friday’s main opinion said. “Despite its best efforts, the trial (circuit) court was powerless to overrule those decisions. While a trial court may certainly question the soundness of a district court of appeal’s decision, it clearly has no authority to do anything other than follow those decisions which are on point.”
Duval County cases were heard in the past by the 1st District Court of Appeal but are now heard by the 5th District Court of Appeal, after a reorganization of the appellate system.
Makar and Judge John Harris agreed fully that the breach–of-contract claim should move forward, while Chief Judge James Edwards dissented. All three judges agreed on the breach-of-trust claim.
In his 32-page concurring opinion, Makar went into extensive detail about duPont and the history of the issues. He emphasized that duPont’s will specified only money going to Delaware.
“Unlike Delaware, no other state — including Florida — was mentioned as having resident beneficiaries,” Makar wrote. “Like all other states, Florida’s residents might be eligible for pediatric and geriatric services or facilities, but only if Delaware beneficiaries were ‘properly provided for’ in the first instance.”
Nemours operates children’s hospitals in Orlando and Wilmington, Delaware. It also has facilities and partnerships in other parts of Florida, Delaware, Pennsylvania and New Jersey.
As an example, Nemours physicians care for patients at Wolfson Children’s Hospital in Jacksonville, according to the Wolfson website. As another example, Nemours has a partnership with HCA Florida West hospital in Pensacola.
