Fidelity Charitable Denied Summary Judgment in Promises Case

• Date: 01 May 2020
• DOI: http://doi.org/10.1002/npc.30718
• Published date: 01 May 2020

THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

FIDELITY CHARITABLE

DENIED SUMMARY

JUDGMENT IN

PROMISES CASE

The US District Court for the Northern District of California, by decision

dated March 2, denied the motion for summary judgment filed by the Fidelity

Investments Charitable Gift Fund in the litigation against it, which asserts breaches

of promises made to two donors who contributed to one of this sponsoring organ-

ization’s donor-advised funds (Fairbairn v. Fidelity Investments Charitable Gift Fund).

The essence of Fidelity Charitable’s position was that the donors’ judicial

admissions have pleaded them out of court, coupled with the contention that the

plaintiffs cannot recall with requisite precision what the promises were. The court

granted the plaintiffs summary judgment on an allegation of unclean hands in

connection with an insider trading issue.

Basic Facts

Emily and Malcolm Fairbairn contributed stock to Fidelity Charitable, claiming

a charitable contribution deduction in the amount of $52 million. They claim

in their lawsuit that, in the language of Fidelity Charitable’s brief supporting its

motion, they “were induced to make that donation by a series of promises [by an

agent of Fidelity Charitable] that gave them legally enforceable control over the

time, manner, and volume of liquidation of their donated shares — promises, they

say, that Fidelity Charitable breached.” The Fairbairns brought claims for breach

of contract, misrepresentation, estoppel, and violation of state unfair competition

law (the alleged control promises). A claim for negligent liquidation of the stock

was not at issue in connection with this motion.

In essence, the complaint alleges that the control promises committed Fidelity

Charitable to certain legally enforceable restrictions on the manner, volume, and

timing of the sale of the contributed stock. A summary of the complaint in this

case is in the September 2019 issue.

Fidelity Charitable’s Principal Argument

Fidelity Charitable’s principal argument, in pursuit of summary judgment, was

that the Fairbairns’ admissions foreclose enforcement of the control promises. It © 2020 Wiley Periodicals, Inc.

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DOI:10.1002/npc

Analysis of current developments in tax

and related law for nonprofit organiza-

tions and their professional advisors.

Volume 37 Number 5

May 2020

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Higher Education Corner 7

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