Williamson v. Brooks
213 Cal. Rptr. 3d 388
| Cal. Ct. App. | 2017Background
- William Morgan created an irrevocable trust (2008 Trust) with a subtrust for daughter Beverly funded with $67,500 and used to buy 18 shares of KMDSI via a promissory note secured by the shares. Cotrustees were Thomas Brooks (accountant) and Barton Clemens (attorney).
- Trust distributions paid taxes and reduced the promissory note principal; the subtrust equity rose from $67,500 to over $725,000 under cotrustees’ management.
- Beverly learned of the subtrust from William (email March 2009 and a later beach conversation) but did not pursue details until 2012; she was fired from KMDSI in 2010 and later quitclaimed her house to her sister Connie to avoid mortgage payments.
- Beverly (through successor trustee Joanne Williamson) sued cotrustees and others alleging breach of fiduciary duty and damages for loss of the Via Rosa house, claiming she would have used trust funds to keep the house if timely informed.
- Trial court found Beverly had been informed, that she would have relinquished the house regardless, and that the subtrust suffered no loss; judgment for defendants and attorney fees awarded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether cotrustees breached duty to keep beneficiary reasonably informed | Clemens and Brooks failed to adequately inform Beverly of the subtrust and its terms | William informed Beverly; cotrustees reasonably relied on William and provided information when asked; Beverly had opportunities to inquire | Court found Beverly was informed and cotrustees did not trigger liability for failing to provide more detail |
| Whether any breach caused recoverable damages to Beverly (loss of house) | Beverly would have withdrawn subtrust funds to save the Via Rosa Property if timely informed | Even if a breach occurred, Beverly would have relinquished the house voluntarily and suffered no compensable loss | Court found no damages—Beverly would not have kept the house; no compensable loss to beneficiary |
| Whether trustee liability can include lost personal opportunities of beneficiaries | Lost opportunity to use distributed funds for personal investments is recoverable | Trustees are liable only for losses to the trust corpus or profits lost to the trust from the breach, not beneficiaries’ personal lost opportunities | Court held such ‘‘opportunities lost’’ to a beneficiary are not actionable against trustees; damages must relate to trust loss |
| Standard of review on appeal | Appellant urged de novo review of legal application | Respondents urged substantial-evidence review for trial court factual findings | Court applied substantial-evidence review to findings of fact and independent review to legal conclusions |
Key Cases Cited
- People v. Mickey, 54 Cal.3d 612 (factual findings reviewed for substantial evidence)
- Westfour Corp. v. California First Bank, 3 Cal.App.4th 1554 (distinguishing findings of fact and conclusions of law on appeal)
- In re Eiteljorg, 951 N.E.2d 565 (Ind. Ct. App.) (lost personal opportunities of beneficiaries are not recoverable against trustee; damages must be to trust)
- Estate of Kampen, 201 Cal.App.4th 971 (trust/estate fiduciary not liable for beneficiary lost opportunity damages from delayed distribution)
- Karpf v. Karpf, 481 N.W.2d 891 (Neb.) (statute violation found but no damages where beneficiary would not have exercised withdrawal rights)