Source: https://cbaclelegalconnection.com/tag/fiduciary-duty/
Timestamp: 2019-04-20 18:51:05+00:00

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The Colorado Court of Appeals issued its opinion in In re Estate of Foiles: Foiles v. Foiles on Thursday, August 14, 2014.
The trustees of the Clyde Foiles Trust were Ruth Foiles, Larry Foiles, and the Farmers State Bank of Fort Morgan (Bank). Larry Foiles, along with Larry’s two children and his nephew Gregory Foiles, were beneficiaries of the trust. The trust prohibited Larry Foiles from exercising powers as trustee that were directly or indirectly for his own benefit, and required that any such actions be taken solely by the Bank. Gregory Foiles contested two transactions undertaken at least in part by Larry Foiles, alleging that the transactions were a breach of his fiduciary duty. The trial court entered judgment in favor of Larry Foiles.
On appeal, Gregory Foiles contended that the trial court improperly ruled on his breach of fiduciary duty claim. In the absence of a trust provision that would allow ratification by a co-trustee of otherwise invalid actions of a trustee, only the consent of all beneficiaries, with full capacity to give such consent and full knowledge of the relevant facts, could ratify an action of a trustee that is in violation of the express terms of a trust. Here, because Larry Foiles’s undertaking of the 2001 Section 1031 exchange of real property violated the terms of the trust, the Bank, as co-trustee, could not validly ratify that action. Under the terms of the trust, only the Bank would have been authorized to undertake such a transaction. Therefore, Gregory Foiles established a prima facie claim that Larry breached his fiduciary duty, and the trial court erred in ruling that ratification by the Bank precluded Gregory Foiles’s breach of fiduciary duty claim. The judgment was reversed and the case was remanded to the trial court to make additional findings as to whether Larry Foiles met his burden to go forward with some evidence that the questionable transaction was fair and reasonable, and, ultimately, whether he was liable for breach of fiduciary duty in connection with that transaction.
The Colorado Supreme Court issued its opinion in Trujillo v. Colorado Division of Insurance on Monday, March 17, 2014.
Insurance Law—CRS § 10-2-704(1)(a)—Insurance Producer’s Fiduciary Duty to an Insured—Insurance Commissioner’s Authority to Sanction Licensees.
The Supreme Court held that the court of appeals erred in interpreting CRS § 10-2-704(1)(a) to create a fiduciary relationship between a bail bonding agent and a person who was not an insured. Because the Commissioner of Insurance has authority to sanction the bail bonding agent based on the unappealed findings in this case, the Court remanded the case to the court of appeals and ordered that it be returned to the Commissioner for redetermination of the sanction. The Court remanded because it was unclear whether the Commissioner would have exercised his authority to impose the same sanction on the bail bonding agent absent his erroneous interpretation of CRS § 10-2-704(1)(a).
The Colorado Court of Appeals issued its opinion in Van Gundy v. Van Gundy on Thursday, November 8, 2012.
Beneficiary—Trustee—Breach of Contract—Irrevocable Trust—Breach of Fiduciary Duty—Prudent Investor Rule—Discretion.
Defendant Quinton Van Gundy (trustee) appealed a portion of the judgment entered after a bench trial in favor of plaintiff Eldon Van Gundy (beneficiary) on beneficiary’s breach of contract claim, as well as the court’s award of attorney fees to beneficiary. The judgment was affirmed in part and reversed in part, and the case was remanded.
In 2004, beneficiary created an irrevocable trust to be managed by trustee, his son, funding it with real estate and shares of stock in a family business. Beneficiary later filed a complaint against trustee, asserting claims for breach of fiduciary duty, breach of contract, breach of duty to provide a complete accounting, and to quiet title. Following a bench trial, the district court found that trustee had breached his contractual duty to beneficiary by purchasing stocks on margin, which, “under the circumstances,” violated the prudent investor rule. In addition, the court held that trustee was required to diversify trust investments, but had failed sufficiently to do so. The court awarded beneficiary $399,819.24 in damages, plus attorney fees, on his breach of contract claim.
On appeal, trustee contended that the district court erred in applying the prudent investor rule and consequently ruling that he had breached the trust agreement by purchasing stock on margin and failing to sufficiently diversify. If a trustee is empowered to exercise his or her discretion under the terms of the trust in a manner that might otherwise be inconsistent with the prudent investor rule, the trustee’s performance under that power does not give rise to a claim for breach of duty. Here, the trust agreement expressly granted trustee the discretion and power to invest in stocks, “whether or not . . . of the character permissible for investments by fiduciaries under any applicable law, and without regard to the effect [the investment] may have upon the diversity of the investments.” Therefore, the district court erred by deeming trustee’s purchases on margin and failure to diversify investment as breaches of his duty under the trust agreement. The court’s award of attorney fees was reversed and the case was remanded for the court to determine the proper amount of fees to which beneficiary was entitled.

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