Filed 1/31/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

JOANNE WILLIAMSON, as 

Successor Trustee, etc.,

 Plaintiff and Appellant,

v.

THOMAS BROOKS et al., 

 Defendants and Respondents.

2d Civil No. B265745

(Super. Ct. No. 1457582)

(Santa Barbara County)

The beneficiary of a trust seeks the value of 

“opportunities lost” resulting from the trustees’ refusal or neglect 

to distribute trust assets to the beneficiary. Here we conclude

that such conduct is not actionable. There is a difference between 

such a claim and an actionable claim for losses to the trust 

resulting from the trustees’ breach of fiduciary duty.

William Morgan (William) created an irrevocable 

subtrust for the benefit of his daughter, Beverly Morgan 

(Beverly).1 At its creation, the subtrust had an equity value of 

 

1 We refer to the Morgan family by their first names to 

avoid confusion. No disrespect is intended. 
2

$67,500. Over the next four years, the cotrustees, Barton E. 

Clemens, Jr., and Thomas Brooks, increased the subtrust’s equity 

value to over $725,000. Claiming that she did not receive timely 

notice of the subtrust, Beverly caused the successor trustee, 

Joanne Williamson, to sue Clemens, Brooks, Connie Morgan 

(Connie) and William (collectively “respondents”) for damages. 

Williamson alleges that if Beverly had been made aware of the 

subtrust, she would have used its assets to prevent the loss of her 

home. 

Following a four-day trial, the trial court entered 

judgment in favor of respondents. It found that Clemens and 

Brooks did not breach their fiduciary duties and that neither the 

subtrust nor Beverly suffered any harm as a result of 

respondents’ actions. We affirm. 

FACTS AND PROCEDURAL BACKGROUND

William founded Kirby Morgan Dive Systems, Inc. 

(KMDSI), a successful business which designs and manufactures 

commercial-grade diving helmets. KMDSI is a closely held 

company with 200 shares of stock. Before creating his estate 

plan, William owned 155 shares. His daughter Connie owned the 

remaining 45 shares. 

In December 2008, William established the Morgan 

2008 Irrevocable Trust (Trust), which contains five separate 

subtrusts benefiting five of his adult children, including Beverly. 

William selected Brooks, his accountant, and Clemens, his 

attorney, to serve as cotrustees. The purpose of Beverly’s 

subtrust was to allow William to transfer 18 shares of KMDSI 

stock to Beverly in a tax-advantaged manner. William

accomplished this by funding her subtrust with a gift of $67,500. 

The cotrustees then purchased the 18 shares of KMDSI stock for 
3

$675,000 by using the $67,500 cash as a down payment and 

issuing a promissory note to William for the remaining $607,500 

of the purchase price. The cotrustees secured their obligations 

under the note by pledging the 18 shares of stock. Monetary 

distributions authorized by KMDSI’s board were used to pay the 

income taxes due on the stock and also to pay down the 

promissory note, thereby increasing the equity value of the 

subtrust. The subtrust allowed Beverly to withdraw certain 

portions of the principal at 40, 50 and 60 years of age. 

After the Trust was created, William, Brooks and 

Clemens discussed the need to inform William’s children about 

the Trust. William said he wanted to tell them himself and it 

was agreed he would do so. William wished “to caution [the 

children] that it was not for purchases [for which] it wasn’t 

intended.” William informed Beverly about her subtrust on at 

least two occasions. The first was in an email dated March 22, 

2009, in which William responded to an inquiry from Beverly 

regarding whether Brooks should file her 2008 taxes. William 

advised: “Tom Brooks and Bart Clemens set up Trusts that do 

not require you to change any of your tax stuff. File with anyone 

you like and the Trust Income has no effect on your taxes since 

each Trust is a separate entity and is taxed on its own. I pay the 

tax on the Trust. I need to sit with you sometime this year to 

explain it all.” The second occasion occurred in late spring of 

2009 on the beach at Hollister Ranch in Santa Barbara. William 

again informed Beverly of her subtrust and told her she would be 

taken care of in the event of his death. 

Beverly was on the payroll at KMDSI until 2010, 

when William fired her for refusing to perform any work. 

William subsequently became concerned that if she gained an 
4

ownership interest in KMDSI, she would harm the company. To 

ameliorate that concern, William exercised his right under the 

subtrust to substitute assets of equal value in place of the 18 

shares of KMDSI stock. Effective November 1, 2012, William 

reacquired the 18 shares by substituting a promissory note in the 

amount of $799,000, representing the value of the shares. The 

note, as amended, requires William to pay Beverly’s subtrust 

$6,258.01 per month through November 2022, followed by a 

balloon payment of $133,919.28 in December 2022. 

After William fired Beverly from KMDSI, she was 

unable to make the $2,800 total monthly payments on her home 

at 1419 Via Rosa in Santa Maria (the “Via Rosa Property”). 

William and Connie had helped her purchase the home several 

years earlier. KMDSI gave her a $50,000 bonus to serve as a 

down payment. Connie paid the remainder of the down payment, 

and Connie and Beverly took out a $312,000 mortgage loan. 

Connie already had a home and did not reside at the Via Rosa 

Property. Her only goal was to help her sister buy a house. 

Beverly told Connie she could pay approximately half

of the monthly mortgage payments, but could not pay the rest. 

Connie offered Beverly three alternatives: (1) Connie could loan 

Beverly the other half of the monthly payments, but Beverly 

would be obligated to repay the loan; (2) Connie could quitclaim 

her interest in the Via Rosa Property to Beverly and Beverly 

could then do whatever she wanted with the property; or (3) 

Beverly could quitclaim her interest in the property to Connie, 

after which Connie would rent it to Beverly for $1,000 per month. 

Beverly did not want to accept the loan from Connie 

because it did not make economic sense. At that time, the Via 

Rosa Property was worth approximately $100,000 less than the 
5

outstanding mortgage. After discussing the matter with William 

and Connie, Beverly elected to quitclaim her interest in the 

property to Connie. Although Beverly was still obligated to the 

lender, Connie made the monthly payments and William assured 

her he would deal with any “underwater” issues. At that point, 

Clemens prepared a simple quitclaim deed to effectuate the 

transfer. 

Instead of renting the Via Rosa Property from Connie 

for $1,000 per month, Beverly chose to move into Williamson’s 

guest room at Hollister Ranch. Beverly testified that her dream 

was to live at Hollister Ranch and that her dream came true 

when she moved in with Williamson. 

Connie continued to make the payments on the Via 

Rosa Property until she sold it in August 2012 for $226,495. The 

remaining mortgage was approximately $48,000 higher than the 

sales price. To close the transaction, William contributed over 

$61,000 to cover this difference as well as the closing costs. 

In 2012, Beverly contacted Brooks for the first time to 

discuss the subtrust. Brooks promptly responded, providing the 

information and documents requested. When Beverly made a 

request to withdraw assets from the subtrust in September 2012, 

“Brooks worked with her to begin making monthly distributions.” 

After Clemens and Brooks resigned as cotrustees, 

M. Jude Egan, the successor trustee, filed a first amended 

petition against respondents for damages suffered as a result of 

Beverly’s loss of the Via Rosa Property. The petition alleged 

claims for (1) formal accounting, (2) to compel delivery of trust 

assets, (3) breach of trust (fiduciary duty), (4) fraudulent transfer, 

(5) conversion, and (6) common count. Egan averred, among 

other things, that Clemens and Brooks breached their fiduciary 
6

duties to Beverly by failing to inform her of the subtrust and by 

failing to supervise William’s conduct. He also alleged that 

Clemens improperly delegated the trust administration to 

Brooks. Before trial, Williamson was substituted in as petitioner 

in her capacity as the second successor trustee. 

The trial court rejected each of Williamson’s claims. 

It determined that Beverly was aware of the subtrust and that, to 

the extent she lacked specific information about the subtrust, “it 

was [Beverly’s] lack of due diligence and not the failure of 

fiduciary duty responsibilities by Clemens or Brooks.” The court 

further found that there were no damages to the subtrust and 

that “there are no compensable damages of any kind related to 

the [Via Rosa Property].” It awarded respondents their attorney 

fees and costs of over $500,000. Williamson appeals. 

DISCUSSION

A. Standard of Review

The parties dispute the applicable standard of 

review. Williamson contends a de novo standard applies: that 

this court should review as a question of law the trial court's 

application of law to undisputed facts. Respondents contend 

Williamson’s challenge is governed by the substantial evidence 

standard of review, as the trial court made findings of fact on 

conflicting evidence. 

The trial court's statement of decision contains both 

findings of fact and conclusions of law. We review the court's 

findings of fact for substantial evidence. (People v. Mickey (1991) 

54 Cal.3d 612, 649; Westfour Corp. v. California First Bank 

(1992) 3 Cal.App.4th 1554, 1558 (Westfour).) Under that 

standard, our review begins and ends with a determination as to 

whether there is any substantial evidence, contradicted or 
7

uncontradicted, to support the findings below. (Morgan v. 

Imperial Irrigation District (2014) 223 Cal.App.4th 892, 916; see 

Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429.) In 

assessing whether any substantial evidence exists, we view the 

record in the light most favorable to respondents, giving them the 

benefit of every reasonable inference and resolving all conflicts in 

their favor. (Crawford, at p. 429.) “[I]t is not our role to reweigh 

the evidence, redetermine the credibility of the witnesses, or 

resolve conflicts in the testimony, and we will not disturb the 

judgment if there is evidence to support it.” (Morgan, at p. 916; 

In re Casey D. (1999) 70 Cal.App.4th 38, 52-53.)

Where the trial court used findings of fact in drawing 

conclusions of law, we independently review the conclusions of 

law. (Westfour, supra, 3 Cal.App.4th at p. 1558; M&F Fishing,

Inc. v. Sea-Pac Ins. Managers, Inc. (2012) 202 Cal.App.4th 1509, 

1519.)

B. Claim for Breach of Fiduciary Duty

“The elements of a cause of action for breach of 

fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of 

the fiduciary duty; and (3) damage proximately caused by the 

breach.” (Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086; 

Knox v. Dean (2012) 205 Cal.App.4th 417, 432.) Williamson 

asserts that Clemens and Brooks breached their fiduciary duties 

to Beverly and that the breach resulted in damages. We disagree 

on both counts. 

1. Lack of Damages

Probate Code section 16060 provides that “[t]he 

trustee has a duty to keep the beneficiaries of the trust 

reasonably informed of the trust and its administration.” 

Williamson asserts that if Clemens and Brooks had not abdicated 
8

that particular duty to William, Beverly would have been aware 

of her rights under the subtrust and would have withdrawn 

money from the subtrust to maintain her ownership interest in 

the Via Rosa Property. The trial court found, however, that even 

assuming there was a breach of fiduciary duty, Beverly would not 

have elected to maintain that ownership interest. The court 

explained: “Beverly intentionally elected to sell the house. There 

was no intimidation. She believed the house was toxic. Her 

protestations at trial to the contrary were not persuasive. She 

was given reasonable options by which she could have stayed an 

owner, but decided she no longer wanted to live there or own the 

house. Moreover, even assuming for the sake of argument that 

she did not ‘know’ of the terms of her trust, the Court finds she 

would not have elected to stay. Even now she would only keep 

the house ‘as an investment.’ At the time they owed far more for 

the house than it was worth; the house was underwater and she 

knew it. The fact is, she wanted to live at Hollister Ranch. Thus, 

there are no compensable damages of any kind related to the 

house.” 

Substantial evidence supports the trial court’s 

findings. William and Connie both testified that Beverly said she 

did not want to live at the Via Rosa Property because it was 

underwater, because she believed it was toxic, and because she 

had always wanted to live at Hollister Ranch. They also testified 

that Beverly chose to leave the Via Rosa Property after she 

quitclaimed it to Connie, even though she could have stayed 

there for only $1,000 per month, which was less than the 

$1,062.67 she said she could afford. 

Beverly herself testified to these same facts. She 

admitted that she had concerns about the toxicity of the Via Rosa 
9

Property and that it was her dream to live at Hollister Ranch. 

She stated that even if she had an opportunity to take back the 

Via Rosa Property, she would maintain it as an investment 

rather than move from Hollister Ranch. This evidence supports 

the trial court’s findings that “she would have quitclaimed her 

interest in the Via Rosa [Property] even if she thoroughly 

understood all the assets available from her trust,” and that “it 

may be that she is better off not having an interest in the house, 

at least in the short term, especially since she would only rent it 

out and is satisfied with living at the Ranch. I cannot quantify 

any damages for her, even if she were to prevail on liability.” 

Beverly’s reliance on the Nebraska Supreme Court’s 

decision in Karpf v. Karpf (Neb. 1992) 481 N.W.2d 891 is not 

persuasive. The court in that case did conclude that the trustees 

had violated a Nebraska statute requiring that the trustees 

inform the current beneficiaries in writing of the trust. But, as in 

this case, the court found a lack of damages because there was no 

evidence that the beneficiary would have exercised her 

withdrawal rights even if she had known of them. (Id. at p. 897.) 

Furthermore, trustees accused of breaches of 

fiduciary duty may only be held liable for losses to the trust itself, 

not for personal damages to beneficiaries. “There must be a 

causal connection supporting any monetary award that the 

trustee is ordered to pay. [Citation.] Thus, the trustee is only 

liable for loss or depreciation resulting from the breach of trust, 

for profits that the trustee made through the breach of trust, or 

for any profits that would have accrued to the trust but for the 

breach of trust. Prob. C § 16440 (a).” (2 Cal. Trust and Probate 

Litigation (Cont.Ed.Bar 2016) § 21.65, p. 21-38, italics added.) 
10

Although there appears to be no California case 

directly on point, In re Eiteljorg (Ind. Ct.App. 2011) 951 N.E.2d 

565 is instructive. In that case, the Indiana Court of Appeals 

discussed whether a beneficiary may recover the value of 

opportunities lost when a trustee refuses or neglects to distribute 

assets from the trust. (Id. at pp. 571-574.) The court answered 

“no,” based on Indiana Code section 30-4-3-11(b), which mirrors 

Probate Code section 16440 and, like Probate Code section 16440, 

is premised on the Restatement Second of Trusts, section 205 

(1959). (Eiteljorg, at pp. 571-574.) The court explained: “The . . . 

commentary [to section 205(c) of the Restatement] clarifies that 

the lost profits contemplated by Restatement section 205(c) and 

corresponding Indiana Code section 30-4-3-11(b)(3) are those 

profits lost to the trust corpus due to a trustee’s misuse of or 

failure to acquire trust property. Sections 205(c) and 30-4-3-

11(b)(3) are not addressed to the scenario where, as here, a 

trustee has withheld trust property from a beneficiary, and we do 

not read these provisions to allow compensation for individual 

profits that beneficiaries allegedly would have generated on their 

personal shares but for a trustee’s failure to timely distribute.” 

(Id. at p. 572; see also Estate of Kampen (2011) 201 Cal.App.4th 

971, 991-993 [holding that lost opportunity damages are not 

available as a remedy against a personal representative who had 

failed to timely distribute estate assets].)

Thus, we agree with the trial court that, even if a 

breach of fiduciary duty did occur, Beverly suffered no 

compensable loss with respect to the Via Rosa Property. Beverly 

also failed to prove that the cotrustees’ actions resulted in 

damage to the subtrust itself. To the contrary, the equity value 

of the subtrust increased from $67,500 to over $725,000 during 
11

the time of the cotrustees’ management. The court found that the 

use of KMDSI distributions to pay down the principal due on the 

promissory note given by the cotrustees “was reasonable, avoided 

significant risks to the trusts’ assets, minimized interest 

expenses, and resulted in the best net financial benefit for the 

trusts.”2 In the absence of any damage, Beverly has not 

established her claim for breach of fiduciary duty.

2. No Breach of Fiduciary Duties

Although it is not necessary to our decision, we 

conclude the record also supports the trial court’s conclusion that 

the cotrustees did not breach their fiduciary duties to Beverly. 

Williamson emphasizes the testimony of Kenneth Moes, an 

attorney who testified that Clemens and Brooks breached their 

fiduciary duties to keep Beverly reasonably informed of the 

subtrust and its contents. The trial court found Moes to be a 

credible witness, but did not find the testimony “to be 

preponderating in light of the facts of the case . . . .” 

Moes opined that Clemens and Brooks breached their 

fiduciary duties by failing to inform Beverly about her subtrust. 

The trial court found, however, that “Beverly was informed of her 

trust[] shortly after it was created.” William told Beverly about 

the subtrust in an email and also told her about again in late 

spring 2009 during a walk on the beach at Hollister Ranch. 

 

2 William testified that if the co-trustees had held money in 

the subtrust for disbursement to Beverly, instead of making 

principal payments on the promissory note, the KMDSI board 

would have ceased making distributions to the subtrust. In that 

event, the co-trustees would have defaulted on the promissory 

note, which required the payment of interest, and William would 

have foreclosed on the note, taking back the 18 shares of stock 

and leaving no money in the subtrust. 
12

Beverly knew that Clemens and Brooks had set up the subtrust 

and were the cotrustees. Clemens testified that he confirmed 

with William that he had informed Beverly of the subtrust. 

Williamson maintains that William was required to 

tell Beverly every detail of her subtrust. We disagree. Beverly 

was entitled to be informed about her subtrust so that she could 

take action to gain more information. As stated in Williamson’s 

opening brief, “The most basic action required of a trustee under 

the duty to inform is to promptly inform the beneficiary of the 

existence of the trust and their status as beneficiaries, so that the 

beneficiary may exercise their rights to secure information about 

the trust.” The cotrustees fulfilled this duty by ensuring that 

William informed Beverly of the subtrust, and when Beverly 

eventually asked Brooks for information regarding the subtrust, 

he promptly provided it. The trial court found that it was 

Beverly’s “lack of due diligence” that prevented her from learning 

the details earlier. The court stated: “I think [Beverly] had real 

opportunities to inquire about her trust and what income or 

assets it had. No one appeared to have been hiding the facts from 

her. She appears to be a very bright and articulate person and 

the fact that she did not investigate or explore her options [is] 

inexplicable; that militates against her position.” 

Williamson cites no California authority suggesting 

that a trustee may be held liable for breach of trust or fiduciary 

duties under the factual scenario presented here. The trial court 

found that Beverly was made aware of the subtrust shortly after 

it was created. She understood that Brooks and Clemens were 

the cotrustees and she had ample opportunity to obtain more 

information about the subtrust while she was negotiating with 

Connie and William over the fate of the Via Rosa Property. That 
13

she failed to do so does not make Clemens and Brooks liable for 

breach of fiduciary duty. The trial court “accepted Brooks’ and 

Clemens’ explanation of why they did not communicate directly 

with Beverly about their appointment as cotrustees; their 

testimony was buttressed by William’s testimony.” It also 

accepted their explanation regarding the management of the 

subtrust. The court properly concluded “[t]he facts do not trigger 

liability under the Probate Code or in a court of equity.” 

DISPOSITION

The judgment is affirmed. Respondents shall recover 

their costs on appeal. 

CERTIFIED FOR PUBLICATION. 

PERREN, J.

We concur:

GILBERT, P. J.

YEGAN, J.
Thomas P. Anderle, Judge

Superior Court County of Santa Barbara

______________________________

Snyder Law, Barry Clifford Snyder and Joseph R. 

Billings, for Plaintiff and Appellant.

Seed Mackall, Peter A. Umoff and Alan D. Condren, 

for Defendants and Respondents Barton E. Clemens, Jr., William 

Morgan and Connie Morgan.

Mullen & Henzell and Jana S. Johnston, for 

Defendant and Respondent Thomas Brooks.