WELLS FARGO BANK, N.A. v. COOK Et Al.; And Vice Versa
332 Ga. App. 834
| Ga. Ct. App. | 2015Background
- In 2000 Gail Cook and Lance Lipman funded a charitable remainder annuity trust (CRAT) with 12,000 shares of Analog Devices; Wells Fargo (successor to Wachovia) was named trustee and the plaintiffs were lifetime annuity beneficiaries.
- The Trust fixed the annuity at 7.5% of initial fair market value ($142,818 annually) and authorized payments from income and, if income was insufficient, from principal.
- Wells Fargo sold the stock days after funding, invested proceeds, and made annual 7.5% payments; Trust statements from 2000–2011 showed recurring declines in corpus.
- Plaintiffs raised concerns to Wells Fargo beginning in 2002, retained counsel in 2003, and met bank officials through 2004; Wells Fargo denied any guaranty to pay after corpus exhaustion.
- The Trust was exhausted in September 2011 after which distributions ceased; plaintiffs sued in April 2012 for breach of fiduciary duty and breach of contract (claiming a guaranteed lifetime annuity).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fiduciary-duty claims are time‑barred | All claims accrued only when plaintiffs suffered full damage (Sept 2011) so suit timely | Periodic trust statements were "reports" triggering the 2‑year limitations period; claims before Apr 2010 are barred | Statute bars fiduciary claims accruing before Apr 2010; only acts within Apr 2010–Apr 2012 survive limitations review |
| Whether post‑Apr 2010 fiduciary claims survive summary judgment on the merits | Mismanagement continued through exhaustion and Wells Fargo breached duties causing depletion | Plaintiffs produced no expert or evidence showing specific breaches or causation for Apr 2010–Sept 2011 period | Plaintiffs failed to prove an essential element (breach/proximate cause) for post‑Apr 2010 claims; summary judgment for trustee warranted |
| Whether Trust created a contractual guaranty to pay annuity after corpus exhaustion | Trust language and trustee representations created an obligation to pay $142,818 for life even if corpus exhausted | Trust expressly permits payments from income and, if insufficient, from principal; it does not obligate trustee to fund distributions from its own funds once corpus is exhausted | Plain Trust language precludes a contractual guaranty; breach of contract claim fails as a matter of law |
| Whether plaintiffs were entitled to partial summary judgment on contract claim | The contract unambiguously guarantees lifetime annuity payments | Trust text negates such a guarantee; no ambiguity exists | Trial court correctly denied plaintiffs' partial summary judgment; defendant entitled to summary judgment on contract claim |
Key Cases Cited
- Smith v. Suntrust Bank, 325 Ga. App. 531 (Ga. Ct. App. 2014) (defines when trustee "report" triggers two‑year limitations period)
- Hasty v. Castleberry, 293 Ga. 727 (Ga. 2013) (construes "report" and required detail for limitations tolling)
- Hamburger v. PFM Capital Mgmt., 286 Ga. App. 382 (Ga. Ct. App. 2007) (quarterly account statements can trigger limitations for mismanagement claims)
- Lau’s Corp. v. Haskins, 261 Ga. 491 (Ga. 1991) (summary judgment standard when plaintiff lacks proof of an essential element)
- C & S Nat. Bank v. Haskins, 254 Ga. 131 (Ga. 1985) (trustee is not guarantor of trust value; liability requires breach causing loss)