Fidelity Charitable Denied Summary Judgment in Promises Case

Date01 May 2020
Published date01 May 2020
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.
View this newsletter online at
Analysis of current developments in tax
and related law for nonprofit organiza-
tions and their professional advisors.
Volume 37 Number 5
May 2020
Also in This issue...
IRS Creates Promoter
Investigations Coordinator
Position 4
TIGTA Criticizes TE/GE for Lack
of Pursuit of Promoter Penalties 4
Case Made for Jettisoning
Proposal to Change Public
Support Regulation 5
Supreme Court Perspective 6
Recent IRS Private Letter Rulings 7
Higher Education Corner 7
Other Developments 8

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT