In the Interest of Delluomo v. Cedarblade
2014 Colo. App. LEXIS 604
Colo. Ct. App.2014Background
- Dell-uomo creates revocable living trust with himself as trustee and Wells Fargo as co-trustee; Cedarblade is a trust beneficiary.
- Dell-uomo transfers five parcels from the trust to joint tenancy with Cedarblade via warranty deeds.
- Reports to Adult Protective Services lead to court appointment of Eder as conservator for Dell-uomo.
- Eder files suit to quiet title and seek damages for undue influence and breach of fiduciary duty; court sets aside transfers to Cedarblade.
- Jury finds undue influence and fiduciary breach; awards plaintiffs $315,000 in attorney fees; district court enters judgment.
- On appeal, Cedarblade challenges whether attorney fees can be awarded as damages under the breach of trust exception to the American rule; she does not challenge fee reasonableness or other findings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breach of fiduciary duty fits the breach of trust exception for fee recovery. | Delluomo argues breach fits exception to allow fees. | Cedarblade argues exception applies only to breach of trust, not general fiduciary breach. | Not applicable; exception narrowly limited to breach of trust or closely analogous breaches. |
| Scope of the breach of trust exception in Colorado law. | Bernhard/Ellipses suggest broader applicability to fiduciary breaches. | Exception should be limited to trust-like contexts. | Exception requires breach of trust or fiduciary duties closely resembling a breach of trust. |
| Whether Cedarblade's conduct was sufficiently analogous to a breach of trust. | Exception should extend to fiduciaries who manage trust assets. | Confidential relationship breach is not the same as mismanaging funds. | Not sufficiently analogous; she was a beneficiary, not a trustee/custodian of funds. |
| Did Klarner/Buder/Bernhard require a finding of breach of trust before fees can be awarded? | Decision supports broader reading of breach of fiduciary duty. | Supreme Court cautioned narrow interpretation; not all fiduciary breaches qualify. | Supreme Court guidance narrows to breach of trust or closely analogous cases. |
Key Cases Cited
- Heller v. First Nat'l Bank of Denver, N.A., 657 P.2d 992 (Colo. App. 1982) (breach of trust exception recognized for beneficiaries against trustee)
- Buder v. Sartore, 774 P.2d 1383 (Colo. 1989) (custodian breach of fiduciary duty treated as breach of trust when akin to trust mismanagement)
- In re Estate of Klarner, 113 P.3d 150 (Colo. 2005) (narrow interpretation; requires breach of trust before fee awards)
- Bernhard v. Farmers Ins. Exch., 915 P.2d 1285 (Colo. 1996) (caution against liberally creating new exceptions to American rule)
- Stevens v. Moore & Co. Realtor, 874 P.2d 495 (Colo. App. 1994) (breach of fiduciary duty not involving funds not within breach of trust exception)
- Anstine v. Alexander, 128 P.3d 249 (Colo. App. 2005) (breach of fiduciary duty not satisfying breach of trust when not managing funds)
- Moore v. Edwards, 111 P.3d 572 (Colo. App. 2005) (fee recovery limited to beneficiaries or fund-related breaches)
- Smith v. Mehaffy, 30 P.3d 727 (Colo. App. 2000) (limits on applying breach of trust exception to fiduciary breaches)
- Huizar, 52 P.3d 816 (Colo. 2002) (lists common-law exceptions to American rule; breach of fiduciary duty context)
- First Citizens Bank & Trust Co. v. Stewart Title Guar. Co., 320 P.3d 406 (Colo. App. 2014) (status of fee awards; interpretive standard for fee recoveries)