6 N.M. 69
N.M. Ct. App.2014Background
- Beneficiaries of two Miller trusts sue Bank of America as trustee for breaches of fiduciary duties and loyalty.
- Bank cross-appeals challenging liability determinations but concedes some duties existed.
- Trusts consisted of a marital trust for Ann and a remainder trust for Beneficiaries; Bank served as trustee from 1985 to 2004.
- Bank invested in an Albuquerque Building that became unproductive, then financed renovations and redeployed assets to prop up value.
- Bank failed to disclose unproductive status and misrepresented Building value; beneficial consent issues disputed.
- District court found liability on multiple duties and awarded damages, later narrowed; on appeal court affirms liability but revises damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Bank breach fiduciary duties by continuing to invest in the Building? | Beneficiaries: yes, Bank breached duties by investing in unproductive property and failing prudence. | Bank: any consent/ratification by Beneficiaries should bar liability. | Yes, Bank breached duties; liability affirmed. |
| Was the inflation adjustment properly included in compensatory damages? | Beneficiaries: inflation adjustment needed to restore real principal value. | Bank: inflation adjustment would double-recover with prejudgment interest. | Inflation adjustment properly included; damages set at $894,000. |
| Was offset for income distributions against principal-damage appropriate? | Beneficiaries: offset reduced restoration unjustly. | Bank: distributions could offset damages under trust law. | Offset inappropriate; restore full inflation-adjusted amount of $894,000. |
| Should disgorgement damages of $540,000 be awarded for self-dealing? | Beneficiaries: entitled to disgorgement for Bank’s profits. | Bank: disgorgement would be a double recovery. | Disgorgement denied; restorative damages already made Beneficiaries whole. |
Key Cases Cited
- Koprian v. Mennecke, 53 N.M. 176 (New Mexico Supreme Court 1949) (substantial-evidence standard of review applies to findings of fact)
- Landavazo v. Sanchez, 111 N.M. 137 (New Mexico Supreme Court 1990) (substantial evidence review; credibility resolved by district court)
- Peters Corp. v. N.M. Banquest Investors Corp., 144 N.M. 434 (New Mexico Supreme Court 2008) (discretion in disgorgement; damages for profits versus restoration)
- State v. Rojo, 126 N.M. 438 (New Mexico Supreme Court 1999) (findings not attacked are conclusive; standard of review)