Opinion ID: 2192290
Heading Depth: 1
Heading Rank: 2

Heading: Claims Against Union Trust Company

Text: [¶ 24] The parties agree that the claims against Union Trust are governed by 14 M.R.S.A. § 752. Section 752 provides that civil actions must be commenced within 6 years after the cause of action accrues, but does not specify when the cause of action accrues. When the Legislature does not give explicit directions, definition of the time of accrual ... remains a judicial function. Anderson v. Neal, 428 A.2d 1189, 1191 (Me. 1981). Generally, we have defined the time of accrual as the time the plaintiff sustains a judicially cognizable injury. Chiapetta v. Clark Assocs., 521 A.2d 697, 699 (Me.1987). [¶ 25] In some cases we have held that the cause of action does not accrue until the plaintiff discovers or reasonably should have discovered the cause of action. See Myrick v. James, 444 A.2d 987, 996 (Me.1982) (foreign-object surgical malpractice); [6] Anderson, 428 A.2d at 1192 (negligent search of title by attorney). [7] In Anderson, we held that application of the discovery rule is appropriate only when there exists a fiduciary relationship between the plaintiff and defendant, the plaintiff must rely on the defendant's advice as a fiduciary, and the cause of action was virtually undiscoverable absent an independent investigation that would be destructive of the fiduciary relationship. See Anderson, 428 A.2d at 1192. [¶ 26] In its ruling on the motions for a summary judgment, the trial court appeared to attach particular significance to the 1985 date for execution of the corporate documents and the 1988 date for execution of the trust documents. Further, the trial court apparently determined that there were no ongoing duties associated with management of the Corporation or oversight of the trust that were the responsibility of Union Trust. Thus, in the trial court's view, any acts of negligence, breach of contract or breach of fiduciary duty were complete with the execution of the documents. This is also the position taken by Union Trust on this appeal. This narrow view of the extent of Union Trust's duties is not consistent with the record viewed in a light most favorable to the plaintiffs. [¶ 27] Union Trust held itself out to Learned as an entity to whom management of important financial matters could be entrusted. Specifically, a factfinder could find that Union Trust led Learned to believe that it would assure that the necessary accounting, tax and legal responsibilities would be complied with in a manner consistent with its responsibility to exercise the care and skill as a person of ordinary prudence would exercise in the management of the assets. See RESTATEMENT (SECOND) OF TRUSTS § 174 (1959). That management responsibility and duty to the beneficiaries of its trusts not to be negligent did not end once the corporate and trust documents were executed. According to the record, Union Trust had a significant role in the ongoing management of Learned's financial affairs from 1976 forward until her death in 1992. In 1985, Union Trust increased its role in Learned's affairs by recommending creation of the Corporation and the transfer of the real estate to the Corporation. It also took a durable power of attorney giving it authority to manage Learned's business, corporate and financial affairs. Union Trust assumed an even greater role in 1988 with the creation of the irrevocable trust and the transfer of the shares of corporate stock to Union Trust for its management. [¶ 28] By the time of the creation of the trust in 1988, Union Trust had assumed significant and ongoing management responsibilities with respect to the accounting, tax and legal issues regarding management of Learned's assets. Because of the degree of management responsibility it had assumed, it was Union Trust's fiduciary responsibility to assure that the necessary corporate formalities were followed to qualify the real estate assets of her estate for most favorable tax treatment. Had Union Trust properly fulfilled its responsibilities with regard to management of the corporate affairs, including assurance that corporate formalities were complied with, in the period between creation of the Corporation and the power of attorney to Union Trust in 1985, creation of the trust in 1988, and Jennie Learned's death in 1992, the problems with the IRS may have been avoided. The alleged breaches of duty by Union Trust that serve as the basis for the claims of negligence, breach of contract and breach of fiduciary duty were breaches of ongoing trust responsibility that occurred in significant part during Union Trust's management of Jennie Learned's assets in the period 1985 through the stipulated cut-off of actionable claims, February 1, 1989. [¶ 29] Union Trust, in holding itself out to the plaintiffs and to the public, as competent to accept fiduciary responsibility and manage significant assets necessarily holds itself out as capable of insuring compliance with the requisite accounting, tax and legal requirements incident to its responsibilities. [¶ 30] Because Union Trust had assumed a fiduciary responsibility to manage Learned's assets, Learned could not have been expected to discover any negligence in Union Trust's management of her assets. Accordingly, the discovery rule articulated in Anderson, 428 A.2d at 1192, applies to accrual of the action against Union Trust. On this record, the action is not time barred as a matter of law.