EDWARDS v. INVESTRUST
487 P.3d 837
| Okla. Civ. App. | 2021Background
- Patricia Bowers Edwards, the primary beneficiary, sought to remove InvesTrust as corporate trustee and appoint Jackson Hole Trust Company (located in Wyoming) as successor under the trust's remove-and-replace clause.
- The trust expressly allows the beneficiary to remove a corporate trustee by 30 days' written notice but is silent on authority to change the trust's situs. The remainder beneficiary is an Oklahoma entity.
- InvesTrust twice advised Edwards that court approval was the prudent course before changing situs to Wyoming and resisted a unilateral nonjudicial change; Edwards filed suit to remove InvesTrust and appoint Jackson Hole.
- Parties entered an Agreed Judgment: InvesTrust would resign, Jackson Hole would be appointed, and the court approved the change of situs to Wyoming — but reserved the question whether InvesTrust may charge its litigation attorney fees to the trust principal.
- Edwards moved to deny payment of InvesTrust's attorney fees from the trust, arguing the trustee may only expend trust assets for administration (60 O.S. § 175.24(A)(9)) and that § 175.57(D) (judicial discretion in awarding fees in trust litigation) controls and disfavors awarding fees to the trustee. InvesTrust moved for summary judgment asserting the trust instrument and § 175.24 authorize payment of reasonable attorneys' fees incurred to preserve the trust.
- The trial court granted InvesTrust's counter motion for summary judgment, authorizing payment of attorney fees from the trust; Edwards appealed. The Court of Civil Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trustee may pay litigation attorney fees from the trust principal without prior court authorization | Edwards: Fees here are incurred defending removal and changing situs and are not "administration" expenses under §175.24(A)(9) or the trust; §175.57(D) governs and equity disfavors charging her for InvesTrust's fees | InvesTrust: Trust expressly authorizes employment of attorneys; trustee may incur reasonable fees to preserve/administer the trust under §175.24(A)(9) and trust terms, so payment from trust is permitted | Held: Trustee may pay reasonable litigation fees from the trust; trust language and §175.24 authorize such payments without advance court approval |
| Whether §175.57(D) — allowing courts to award fees in judicial proceedings involving a trust — governs and bars trustee recovery here | Edwards: §175.57(D) applies and, balancing factors, justice and equity do not require awarding trustee's fees from the trust | InvesTrust: This case is not a breach-of-trust proceeding; §175.24 is the applicable authority for trustee-incurred administration expenses | Held: §175.57(D) is a breach-of-trust provision and does not apply to this non-breach dispute; it does not preclude application of §175.24 or the trust's grant of authority |
Key Cases Cited
- Carmichael v. Beller, 914 P.2d 1051 (1996 OK 48) (de novo review applies to summary judgment and legal issues)
- Atwood v. Atwood, 25 P.3d 936 (2001 OK CIV APP 48) (strict construction of authority to charge fees; context of §175.57 relates to breach of trust)
- Matter of Home-Stake Prod. Co. Deferred Comp. Tr., 598 P.2d 1193 (1979 OK 81) (interpretation of trust instrument is a question of law)
- Bankers Trust Co. v. Hudson, 245 N.E.2d 405 (N.Y. 1969) (change of situs not permissible absent express or implied provision unless administration benefits)
- In re Hudson's Trust, 29 A.D.2d 145 (N.Y. App. Div. 1968) (court may refuse beneficiary's remove-and-replace if substitution changes situs or is not for benefit of trust)