Deborah Simon on Monday filed court papers seeking to remove her stepmother, Bren, from overseeing and administering a trust holding the late Melvin Simon’s fortune.

The move is the latest salvo in an escalating battle over an estate that could be worth $2 billion. Deborah, one of three children of Melvin’s first wife, on Jan. 7 filed a lawsuit challenging changes to his estate plan executed in February 2009 that boosted the portion of Melvin’s estate going directly to Bren from one-third to one-half.

Deborah contends Melvin was suffering from dementia at the time, and she alleges the changes stemmed from Bren’s undue influence, duress and fraud. Bren, on the other hand, contends the revisions fully reflected Melvin’s wishes and stemmed from his concern over the declining stock price of Simon Property Group, his principal holding.

In Monday’s filing, Deborah said it’s inappropriate for Bren to remain as trustee of The Melvin Simon Family Enterprises Trust while that lawsuit plays out. She’s seeking appointment of a third-party corporate trustee “to ensure that the assets of the trust and the interests of all beneficiaries are adequately protected.”

That step also is necessary, the filing asserts, because of “the level of distrust and animosity that exists between Bren Simon and [Deborah]” and her siblings, Cynthia Simon-Skjodt and David Simon, the CEO and chairman of Simon Property Group.

Furthermore, the filing says Bren’s recent efforts to convert part of Melvin’s ownership stake in the mall giant into common shares or cash casts doubt on her ability to properly carry out her duties as trustee.

Bren Simon notified Simon Property Group on Jan. 12 that she was electing to convert 6.5 million so-called partnership units held by her late husband into common shares or cash, at the company's discretion. The units are worth about $460 million based on recent trading in the company's shares.

The company responded that it could not convert the partnership units because of Deborah’s legal challenge. The company filed suit against Bren last week asking a judge to settle the dispute.

Deborah’s filing Monday suggests Bren’s behavior was reckless.

“Even if the trustee wanted to diversify the trust’s assets, the decision to potentially divest more than 6.5 million shares of stock in one day—at whatever average price the stock happened to be trading at for the previous five days—cannot conceivably be viewed as consistent with the duties of a prudent fiduciary to preserve the value of the trust’s assets for all beneficiaries,’’ the filing said.

“Any sensible investment adviser seeking to diversify assets would do so in a prudent, planned manner over a significant period of time.”
Melvin Simon, who died Sept. 16 at age 82, co-founded Simon Property Group and was one of Indiana’s richest men.

In addition to giving Bren more of Melvin’s fortune, the revised estate plan wiped out a share that was to go Deborah, David and Cynthia, and leaves charitable giving to Bren’s discretion. The prior plan specifically earmarked one-third of the estate for charity.

An attorney for Bren Simon, 66, was not immediately available Monday night to comment on the latest filing.