Opinion ID: 1714159
Heading Depth: 2
Heading Rank: 1

Heading: Duties Arising in Wells Fargo's Capacity as Trustee

Text: ¶19 The parties, and the court of appeals, focused their analyses on Wells Fargo's duties as a trustee. As the court of appeals correctly noted, generally a trustee's duties are explicitly defined in the trust instrument. Hatleberg, 271 Wis. 2d 225, ¶10; see also McGeoch Building Co. v. Dick & Reuteman Co., 253 Wis. 166, 175, 33 N.W.2d 252 (1948) ([T]he instrument creating the trust . . . is to be looked to for stipulations fixing the obligations of the parties); Saros v. Carlson, 244 Wis. 84, 88, 11 N.W.2d 676 (1943) (It is a trustee's paramount duty to . . . comply with the terms of the trust.). ¶20 However, the duties of a trustee go beyond the four corners of the trust document. For example, a trustee has the duty to be vigilant in guarding the trust's assets. In re Revocable Trust of McCoy, 142 Wis. 2d 750, 756, 419 N.W.2d 301 (Ct. App. 1987). The trustee must warn [the grantor] regarding easily identifiable impediments or pitfalls that would thwart the grantor's intent. Id. at 757. This court has recognized the trustee's duty to disclos[e] relevant information. Hammes v. First Nat'l Bank & Trust Co., 79 Wis. 2d 355, 368, 255 N.W.2d 555 (1977). ¶21 This court has also held that trustees are fiduciaries, and as such, have a duty to employ diligence, prudence, and absolute fidelity in managing a trust. Sensenbrenner v. Sensenbrenner, 76 Wis. 2d 625, 635, 252 N.W.2d 47 (1977). Wisconsin has enacted the Uniform Fiduciaries Act, which explicitly defines fiduciary to include a trustee under any trust . . . or any other person acting in a fiduciary capacity for any person, trust, or estate. Wis. Stat. § 112.01(1)(b). ¶22 With these background principles in mind, we turn to the parties' arguments. ¶23 Hatleberg raises three arguments that Wells Fargo breached a duty in its capacity as Erickson's trustee. First, she argues that Wells Fargo, as trustee, had a duty to review the trust to ensure that it worked for its intended purpose. Second, Hatleberg believes that a duty of notification arose when Wells Fargo discovered the deficiency in the trust. Third, she alleges that Wells Fargo violated its fiduciary duty as trustee. ¶24 Hatleberg first argues that because Wells Fargo held itself out as possessing special expertise in trust planning and management, it owed Erickson a duty to review the trust to ensure that it would perform its intended purpose. The court of appeals did not directly decide this question; it disagree[d] with Wells Fargo's contention that it had no duty to examine the document for accuracy, Hatleberg, 271 Wis. 2d 225, ¶10, but later noted that Wells Fargo may have originally had no duty to review the trust for accuracy . . . . Id., ¶15. Ultimately, it appears the court [a]ssum[ed] without deciding that Wells Fargo had no duty originally, [but] it created the duty itself. Id., ¶10. ¶25 Here, the trust instrument contained no language requiring the trustee to review it for effectiveness. In view of the fact that Wells Fargo did not draft the trust, we have serious reservations about Hatleberg's invitation to impose liability for failing to ensure that the trust worked for its intended tax avoidance purpose. In this case, Wells Fargo was involved in Erickson's estate and financial planning from the beginning, and had at the very least a general idea as to her intentions. Some trustees, however, might not be aware of the ultimate purposes of particular trusts. Their activities might be limited to safeguarding a trust's assets and distributing the assets to the beneficiaries. We are reluctant to impose liability on a trustee for not discovering and correcting a defect in a trust resulting from negligence by an unaffiliated drafter, unless that responsibility was assumed by contract. We therefore decline to impose a general duty to review a trust document drafted by another and draw legal conclusions as to its effectiveness. ¶26 We turn now to Hatleberg's second argument. The parties, and the court of appeals, focused on Hatleberg's contention that when Wells Fargo discovered that the trust was defective, it should have notified her. Hatleberg relies on the Restatement (Second) of Torts § 323, commonly known as the Good Samaritan provision. It provides: One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other's person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking, if (a) his failure to exercise such care increases the risk of such harm, or (b) the harm is suffered because of the other's reliance upon the undertaking. Restatement (Second) of Torts § 323 (1976) (emphasis added). ¶27 On its face, this provision requires that the plaintiff suffered physical harm to her person or property. Hatleberg argues that Erickson's estate suffered real physical harm by having its assets reduced. The court of appeals appears to have accepted Hatleberg's argument, but did not specifically cite the Restatement; instead, it relied on Nischke v. Farmers & Merchants Bank & Trust, 187 Wis. 2d 96, 522 N.W.2d 542 (Ct. App. 1994). In turn, the Nischke court directly relied on the Restatement. It stated: Wisconsin has long recognized that liability may be imposed on one who, having no duty to act, gratuitously undertakes to act and does so negligently. Id. at 113. Nischke then cited and quoted the Restatement. ¶28 In Nischke, the physical harm to be remedied was soil and water contamination caused by a leaking underground gasoline storage tank. 187 Wis. 2d at 102. Here, the only harm is the reduction of the estate's assets. Despite the voluminous number of cases applying this section of the Restatement, we have found no casesand Hatleberg has not cited anyholding that purely economic harm satisfies the physical harm requirement. On the contrary, the authority is unanimous: the Good Samaritan provision of the Restatement does not apply to economic harm arising out of an alleged abuse of a contractual relationship. Love v. United States, 915 F.2d 1242, 1248 (9th Cir. 1990); see also Jones & Laughlin Steel Corp. v. Johns-Manville Sales Corp., 626 F.2d 280, 287-88 (3d Cir. 1980) (Neither the rule nor its accompanying commentary and illustrations extends liability for negligence to encompass economic losses); Oregon Laborers-Employers Health & Welfare Trust v. Philip Morris, Inc., 17 F. Supp. 2d 1170, 1183 (D. Or. 1998) ([P]hysical harm is a requisite element of a claim for breach of an assumed duty); Nat'l Crane Corp. v. Ohio Steel Tube Co., 332 N.W.2d 39, 43 (Neb. 1983); Carlotti v. Employees of Gen. Elec. Fed. Credit Union No. 1161, 717 A.2d 564, 566-67 (Pa. Super. Ct. 1998). We discern no justification to depart here from the established interpretation. Purely financial harm does not equal physical harm. We decline to extend the Good Samaritan rule to nonphysical harm, and withdraw any language to the contrary in the court of appeals' opinion. ¶29 Finally, in her third argument, Hatleberg alleges that, as the trustee, Wells Fargo acted as a fiduciary, and had a duty to provide Erickson with information relevant to trust administrationspecifically, its knowledge that the trust was defective due to the lack of Crummey provisions. ¶30 Wells Fargo disputes that it had any such duty, but argues that even if it did have a duty to disclose the information about the lack of Crummey provisions, it adequately satisfied its obligation by disclosing the information to the trust drafter, Attorney Duplessie. Wells Fargo argues that Duplessie was Erickson's agent for purposes of the irrevocable trust. The parties dispute the facts relating to Duplessie's status (or lack thereof) as Erickson's agent. The circuit court made no factual findings about Duplessie's post-drafting relationship with Erickson. As a matter of course, this court is not qualified to make findings of fact. See Wurtz v. Fleischman, 97 Wis. 2d 100, 108, 293 N.W.2d 155 (1980). Accordingly, we could remand for further factual findings. However, in light of our conclusion in Part III.C., infra, we need not decide whether the notice to Duplessie satisfied Wells Fargo's fiduciary duty to disclose relevant information. Therefore, the need for a remand on those grounds is obviated.