Williamson v. Brooks, 1/31/17 CA2/6
Plaintiff sued former trustees for breaching various fiduciary duties, including duty to keep her informed. Plaintiff alleged that if she had been better informed by the trustees she could have received trust distributions earlier and would have been able to save her house. The trial court rejected all of her claims, and further held that a beneficiary cannot recover for lost opportunity as part of damages. Held: Affirmed.
Her theories in the case didn’t match reality: Father created a family trust and distributed a certain number of shares in his company to subtrusts in favor of each of his adult children, including plaintiff. He made his attorney and accountant the initial trustees. Plaintiff was informed of the subtrust by her father as early as 2008 and 2009, but she didn’t act to gather more information. Moreover, in 2012, father realized if plaintiff became an owner of the company she might harm the company. He fired her for refusing to perform any work and also exercised his right to purchase the shares back from plaintiff’s subtrust. His company replaced the shares with a handsome promissory note, which called for monthly payments of over $6k.
After plaintiff was terminated, she wasn’t able to keep her home, at least on the terms that she preferred. She quitclaimed the home to her sister, who had helped her buy the house, and moved to a place that she had always wanted to live. Also in 2012, she contacted the then-trustees, who provided her with documents and worked with her to begin making monthly payments under the promissory note. After they resigned as trustees, the successor trustee sued them, alleging that they failed to keep plaintiff informed. If they had done what they were supposed to do, plaintiff says she could have kept her home.
The court rejected all of her claims. Even if the trustees had breached a duty to keep her informed (which the court said didn’t happen), plaintiff didn’t want to keep the house because she thought it was toxic, she rejected offers by the family that would have allowed her to keep it, and the house was underwater. Substantial evidence supported the trial’s court’s decision. Plaintiff claims that the trustees should have provided more information also fell flat: The basic duty of the trustee is to inform the beneficiary of the existence of the trust and their status as beneficiaries so they can exercise their rights to secure more information. Finally, no California case says that beneficiaries can recover the value of lost opportunities to the beneficiary.
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