209 So. 3d 457
Ala.2016Background
- Ladd was beneficiary and individual cotrustee of one trust; Herbert Stockham was individual cotrustee of two trusts that held preferred and common SVI stock; Wells Fargo was corporate cotrustee. Herbert also served as an SVI director/officer.
- SVI sold most assets to Crane in 1997, promised to redeem preferred stock and make a final liquidating distribution; SVI never redeemed the preferred shares and wound up over years, eventually dissolving.
- Ladd sued (2012) alleging Herbert breached fiduciary duties as cotrustee by failing to protect trust assets/ensure redemption of preferred shares; she asserted direct and derivative claims; many derivative claims were earlier dismissed as time-barred.
- The Jefferson Circuit Court granted summary judgment for Stockham (Herbert’s estate), holding Ladd’s trustee-breach claim barred by the two-year limitations rules (and alternatively on the merits). Ladd appealed.
- Stockham sought costs and attorney fees under the Uniform Trust Code (§§ 19‑3B‑708, ‑709) and § 34‑3‑60; the trial court denied fees. Stockham cross‑appealed and the Supreme Court affirmed the summary judgment but reversed and remanded on the fee denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ladd's trustee‑breach claim was time‑barred / whether limitations were tolled | Ladd: limitations tolled because she lacked adequate/accurate financial reports and was not aware of claim until 2011 | Stockham: beneficiary received shareholder reports and knew by 2000 preferred shares were not redeemed; claim accrued on trustee resignation (Nov 2008) or upon adequate report | Court: Claim barred. §19‑3B‑1005(a)/(c) apply; Ladd knew facts by 2000 and received SVI reports; tolled argument fails; summary judgment affirmed |
| Which limitations statute governs trustee breach claims | Ladd: (implicit) earlier law or tolling should save claim | Stockham: Uniform Trust Code §19‑3B‑1005 applies, imposing two‑year limits tied to reports or trustee removal/resignation | Court: §19‑3B‑1005 controls; it creates two separate bars (reports and two‑year post‑resignation) and allows tolling only on equitable grounds; either bar defeats Ladd’s suit |
| Whether trustee (or estate) can recover attorney fees/costs for successful defense under §§19‑3B‑708/709 and §34‑3‑60 | Ladd: (opposed below) argued fees not recoverable here; trial court denied fees | Stockham: trustee entitled to reimbursement from trust for fees defending trust administration; fees may be taxed as costs under §34‑3‑60; recovery not defeated by trustee’s resignation | Court: Reversed trial court re: fees. Under Regions Bank precedents a trustee defending administration of trust assets may be reimbursed from the trust even if sued after resignation; remand to reconsider fee award |
| Whether trustee must be serving at time of litigation to recover fees from trust | Ladd: argued (and trial court held) trustee was not entitled because he was not serving when sued and the suit didn't involve trust administration | Stockham: recovery permissible for litigation defending actions taken while trustee, even after resignation | Held: Court adopts reasoning permissive of post‑resignation reimbursement (following persuasive authorities); remands for trial court to reassess fees and costs under statutes |
Key Cases Cited
- McCormack v. AmSouth Bank, 759 So.2d 538 (Ala. 1999) (two‑year limitations on trustee breach claims run from termination of fiduciary relationship under prior law)
- Tonsmeire v. AmSouth Bank, 659 So.2d 601 (Ala. 1995) (same limitations principle applied pre‑Uniform Trust Code)
- DGB, LLC v. Hinds, 55 So.3d 218 (Ala. 2010) (Alabama law on tolling and fraudulent concealment applying to discovery rule)
- Regions Bank v. Lowrey, 101 So.3d 210 (Ala. 2012) (Regions I) (trustee entitled to reimbursement of litigation expenses under §19‑3B‑709 when defending administration of trust)
- Regions Bank v. Lowrey, 154 So.3d 101 (Ala. 2014) (Regions II) (reiteration that trustee’s defense of trust administration merits reimbursement; remand for proper fee award)
- Farlow v. Adams, 474 So.2d 53 (Ala. 1985) (rationale supporting reimbursement of trustee expenses when defense benefits the trust estate)