TN COA: Trustee Lacked Authority To Enter Pre-Dispute Arbitration Agreement

The Tennessee Court of Appeals recently held that a trustee's signature of brokerage account agreement containing a pre-dispute arbitration clause did not bind the trust's minor beneficiary. The Court held that an "all powers allowed by law" clause in the trust agreement did not authorize the Trustee to enter a pre-dispute arbitration agreement. Instead, another more specific clause providing the "Trustee may settle, by compromise, arbitration or otherwise any and all claims" limited the grant of that authority only to claims that have arisen. See Tenn. Code Ann. § 35-15-816(b)(14). Gladden v. Cumberland Trust & Inv. Co., No E2015-00941-COA-R9 (Tenn. App., Knoxville March 24, 2016).

Thomas K. Potter, III ( is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Tom is licensed in Tennessee, Texas and Louisiana. He has over 30 years' experience representing financial institutions in litigation, regulatory and compliance matters. See attorney profile. © 2016 by Thomas K. Potter, III (all rights reserved).

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