Court Opinion

ID: 4200310
Source: CourtListenerOpinion
Date Created: 2017-08-31 06:06:24.269585+00
Date Added: 2024-06-11T07:46:55.645144
License: Public Domain

COLORADO COURT OF APPEALS                                     2017COA114

Court of Appeals No. 16CA1598
Logan County District Court No. 11PR17
Honorable Carl S. McGuire, III, Judge

In the Interest of Kylee Becker, Protected Person,

and

Aaron Becker, Conservator for Kylee Becker,

Petitioner-Appellee,

v.

Wells Fargo Bank, N.A.,

Appellant.

              ORDER AFFIRMED IN PART, REVERSED IN PART,
                AND CASE REMANDED WITH DIRECTIONS

                                   Division I
                         Opinion by JUDGE TAUBMAN
                       Román and Lichtenstein, JJ., concur

                          Announced August 24, 2017

No Appearance for Petitioner-Appellee

Brown Dunning Walker P.C., David C. Walker, Denver, Colorado, for Appellant
¶1    In this conservatorship case, appellant, Wells Fargo Bank,

 N.A. (Wells Fargo), appeals the trial court’s denial of its motion for

 reconsideration of the order to restore funds to a conservatorship

 account. We affirm in part, reverse in part, and remand to the trial

 court for further factual findings.

                                I. Background

¶2    In June 2011, the trial court ordered Wells Fargo to establish

 a conservatorship account for the benefit of eleven-year-old Kylee

 Becker (the beneficiary) to be maintained by her father, Aaron

 Becker (Becker). It was intended to be a restricted account for the

 beneficiary’s settlement funds obtained as a result of a personal

 injury claim. In its order, the court stated that no funds could be

 withdrawn from the account except by “separate certified order of

 this court.” In August 2011, Wells Fargo complied with this order

 and deposited funds into the account. In August 2014, Becker

 reported to the trial court that the account had a balance of

 $56,642.46. The court approved this report.

¶3    In May 2012, Wells Fargo allowed Becker to make

 unauthorized transfers from the account until it had a negative

                                       1
 balance of $11.98. Wells Fargo closed the account in November

 2015.

¶4    In August 2016, the trial court issued a show cause order to

 Wells Fargo and Becker related to the removal of funds without a

 court order. The court required “Wells Fargo to show cause why [it]

 had not opened a restricted account. . . . And for Aaron Becker to

 show cause why he has not been complying with the court’s orders

 of filing annual reports to account for the money to the court, and

 to otherwise show he has not breached his fiduciary duty to the

 ward[.]” At the show cause hearing, Becker testified that he took

 funds from the account for his personal expenses, as well as to pay

 rent, groceries, utilities, sports activities expenses, and other

 expenses for the beneficiary. The trial court ordered Becker to file

 an accounting of how the funds were used from August 2013 to the

 date that the account was emptied and closed. Becker agreed.

¶5    A representative for Wells Fargo testified that Becker was able

 to withdraw funds from the account without a court order because

 the account was not opened as a restricted account. Instead, due

 to a “coding error,” it was opened as an unrestricted fiduciary

                                    2
 account. The court then ordered Wells Fargo to provide additional

 bank statements from the conservatorship account.

¶6    A week after the hearing, the court ordered Becker and Wells

 Fargo to restore funds taken from the depleted account and found

 them jointly and severally liable for breach of fiduciary duty.

 Accordingly, the court ordered Wells Fargo to restore $56,642.46,

 the amount last reported to the court, to a new restricted

 conservatorship account.

¶7    Wells Fargo moved to reconsider the order to restore funds,

 arguing that no evidence suggested that Wells Fargo was 100%

 liable, and that the trial court should have considered the

 percentage of fault attributable to Wells Fargo and Becker as

 required by section 13-21-111.5, C.R.S. 2016. It further requested

 that the court set a hearing to determine the relative degrees of

 liability between it and Becker regarding the mismanagement of the

 account and that the court determine the amount of the depleted

 funds actually spent for the benefit of the beneficiary so as not to

 afford her a double recovery.

¶8    The trial court denied this motion, concluding that its order

 was based on the court’s powers under sections 15-10-501 to -505,

                                    3
  C.R.S. 2016, and that section 13-21-111.5 did not apply. The trial

  court further stated that Wells Fargo had had the power to correct

  the coding error, and that but for Wells Fargo’s negligence ab initio,

  Becker would not have been able to drain the account. Further, it

  stated that Wells Fargo could exercise its rights to seek contribution

  and comparative negligence from Becker by filing a separate civil

  action.

¶9     The trial court certified its order to restore funds and its order

  denying Wells Fargo’s motion pursuant to C.R.C.P. 54(b) in

  September 2016.

                           II. Section 13-21-111.5

¶ 10   Wells Fargo contends that the trial court erred when, in

  denying the motion for reconsideration, it determined that section

  13-21-111.5 did not apply to this proceeding and therefore did not

  apportion liability between Wells Fargo and Becker. We disagree.

                            A. Standard of Review

¶ 11   We review questions involving statutory interpretation de novo.

  Jefferson Cty. Bd. of Equalization v. Gerganoff, 241 P.3d 932, 935

  (Colo. 2010).

                              B. Applicable Law

                                     4
¶ 12    According to the joint liability statute on which Wells Fargo

  relies,

             [i]n an action brought as a result of death or
             injury to a person or property, no defendant
             shall be liable for an amount greater than that
             represented by the degree or percentage of the
             negligence or fault attributable to such
             defendant that produced that claimed injury,
             death, damage, or loss, except as provided in
             subsection (4) of this section.

  § 13-21-111.5(1). The exception states that joint liability shall be

  imposed on “two or more persons who consciously conspire and

  deliberately pursue a common plan or design to commit a tortious

  act.” § 13-21-111.5(4). In that event, defendants will only be held

  responsible for the degree or percentage of fault assessed to each of

  them. See id.

¶ 13    As the trial court’s order noted, it based its order on the power

  granted to trial courts to supervise fiduciary administration of

  estates. See § 15-10-501. As relevant here, if a court, after a

  hearing on its own motion, determines that a breach of fiduciary

  duty has occurred or an exercise of power by a fiduciary has been

  improper, it may order any one or more of the following: (1) a

  surcharge or sanction of the fiduciary pursuant to section 15-10-

                                     5
  504; (2) the removal of a fiduciary; or (3) such further relief as the

  court deems appropriate to protect the ward or protected person or

  the assets of the estate. § 15-10-503(g), (h), (i).

¶ 14   The trial court may surcharge the fiduciary for any damage or

  loss to the estate, beneficiaries, or interested persons. Such

  damages may include compensatory damages, interest, and

  attorney fees and costs. § 15-10-504(2)(a). It can also order such

  other sanctions as it deems appropriate. § 15-10-504(4).

¶ 15   When interpreting statutes, we must read them as a whole to

  ascertain legislative intent and to give consistent, harmonious, and

  sensible effect to all their parts. See Taylor v. Taylor, 2016 COA
100, ¶ 27, 381 P.3d 428, 433. To determine legislative intent, we

  first look to the words of the statute and give effect to their common

  meanings. Id. If those words are clear and unambiguous, we apply

  the statute as written. Id. We also must read the language at issue

  in context and in the context of the entire statutory scheme.

  Jefferson Cty. Bd. of Equalization, 241 P.3d at 935.

                                   C. Analysis

¶ 16   We conclude that the trial court correctly determined that

  section 13-21-111.5 does not apply in this case, based on a plain

                                      6
  reading of the statutes and their interpretation in appellate

  decisions.

¶ 17   Based on a reading of the other sections surrounding the

  section at issue, title 13 was intended to contemplate limitations on

  damages in only those actions brought as a result of negligence or

  another tort. See § 13-21-111, C.R.S. 2016 (“Negligence cases--

  comparative negligence as a measure of damages”); § 13-21-111.6,

  C.R.S. 2016 (“In any action by any person or his legal

  representative to recover damages for a tort resulting in death or

  injury to person or property . . . .”) (emphasis added); see also

  Schwankl v. Davis, 85 P.3d 512, 514 (Colo. 2004) (relying on

  surrounding statutes to support statutory interpretation). In this

  context, the plain language of section 13-21-111.5(1) demonstrates

  that it does not contemplate surcharge proceedings, since it applies

  to those actions brought “as a result of a death or an injury to

  person or property.”

¶ 18   Indeed, section 13-21-111.5 references “defendants” in

  outlining the limitations on liability. No defendants are present in

  this case, because it is a surcharge proceeding that arises from the

  supervisory power of the court over parties that include, but are not

                                     7
  limited to, personal representatives, special administrators,

  guardians, conservators, trustees, agents under a power of

  attorney, and custodians. See § 15-10-501(3).

¶ 19   On the other hand, the plain language of section 15-10-504

  shows that the surcharge proceeding it creates is distinct from a

  tort proceeding. Pursuant to its authority under 15-10-504, the

  court initiated proceedings to evaluate the administration of the

  trust by both Wells Fargo and Becker, and then surcharged, or

  fined, Wells Fargo for its liability in the mismanagement of the

  account. While the court determined that Becker and Wells Fargo

  were jointly and severally liable for a breach of fiduciary duty, such

  a determination was not made as a result of an action in tort; it was

  instead an evaluation that prompted remedial measures by the

  court under 15-10-504.

¶ 20   We further note that, under People v. Bagby, 734 P.2d 1059,

  1061-62 (Colo. 1987), the adoption of a comprehensive regulatory

  program, with detailed attention to various types of regulation for

  different reasons thereof, evinces an intent on the part of the

  General Assembly that, unless otherwise indicated by specific

  provisions of the relevant code, regulation should be limited to

                                     8
  those specific provisions. While Bagby referred specifically to

  general and specific criminal statutes, we nevertheless conclude

  that the probate code, a comprehensive regulatory program with

  detailed attention to the regulation of fiduciary duties and other

  probate interests, was intended to preclude the application of other

  regulatory schemes — in this instance, the portion of the code

  dedicated to limitations on damages in tort actions.

¶ 21   Case law supports our analysis. In its determination of the

  applicability of section 15-10-504 to a tort proceeding, another

  division of this court has concluded that “section 15-10-504 does

  not create remedies or procedures for adjudicating tort claims.

  Rather, it is part of a broader section of law dealing with judicial

  ‘oversight’ or ‘supervision’ of fiduciaries in the administration of

  estates.” Taylor, ¶ 28, 381 P.3d at 433. The division further

  concluded that subsection 504(2) authorizes the court to impose

  surcharges on a fiduciary after a hearing. Id. at ¶ 29, 381 P.3d at

  433. The use of “surcharge” in this section “suggest[s] that it was

  intended, in its verb form, to mean something like ‘([o]f a court) to

  impose a fine on a fiduciary for breach of duty’ [and] does not

                                     9
  purport to apply to trials resulting in jury determinations of tort

  claims.” Id. (quoting Black’s Law Dictionary 1670 (10th ed. 2014)).

¶ 22   Although the division in Taylor was not examining the

  applicability of section 13-21-111.5 to the case, it concluded that “a

  trial on a tortious breach of fiduciary duty claim is not a ‘surcharge

  proceeding’ under section 15-10-504.” Id. at ¶ 30, 381 P.3d at

  433-34. As a result, remedies and procedures in tort, like those in

  section 13-21-111.5 would not apply.

¶ 23   Wells Fargo nevertheless argues that judicial interpretations of

  section 13-21-111.5 have concluded that the statute applies to “any

  action,” including proceedings not sounding in tort. See Loughridge

  v. Goodyear Tire & Rubber Co., 207 F. Supp. 2d 1187, 1191 (D.

  Colo. 2002); Harvey v. Farmers Ins. Exch., 983 P.2d 34, 38 (Colo.

  App. 1998), aff’d and remanded sub nom. Slack v. Farmers Ins.

  Exch., 5 P.3d 280 (Colo. 2000). However, these cases refer

  specifically to the application of section 13-21-111.5 to product

  liability claims, which are beyond the realm of probate matters.

  Wells Fargo also cites Resolution Trust Corp. v. Heiserman, 898 P.2d
1049 (Colo. 1995), as clear evidence that the supreme court has

  already applied section 13-21-111.5 to cases involving a breach of

                                    10
  fiduciary duty. However, Resolution Trust is also easily

  distinguishable, since the breach of fiduciary duty claim there arose

  in a tort action rather than in a probate proceeding initiated by the

  court to supervise fiduciary administration of a trust.

¶ 24   Accordingly, we conclude that the court did not err in

  determining that section 13-21-111.5 is inapplicable to proceedings

  under section 15-10-504. We thus affirm the court’s order finding

  Wells Fargo jointly and severally liable for the mismanagement of

  the conservatorship account.

                  III. Denial of Hearing to Apportion Liability

¶ 25   Wells Fargo next contends that the trial court erred by holding

  it jointly and severally liable for the mismanagement of the account

  without any record support for such a finding. Wells Fargo bases

  this argument on the applicability of section 13-21-111.5(4) to the

  matter, under which a court can hold parties jointly and severally

  liable only if it finds that the parties “consciously conspire[d] and

  deliberately pursue[d] a common plan or design to commit a

  tortious act.” Because we have already concluded that section 13-

  21-111.5 does not apply here, we need not address this issue.

                  IV. Denial of Hearing to Determine Benefit

                                     11
¶ 26   Wells Fargo contends that the trial court erred by ordering it

  to restore the full amount of $56,642.46 to the restricted account

  because, based on the evidence produced at trial, Becker withdrew

  some of those funds to pay for food, schooling, and other necessities

  for the beneficiary. As a result, Wells Fargo argues, requiring it to

  restore 100% of the funds without any determination of the amount

  actually used for the beneficiary could result in a double recovery in

  her favor. We agree.

                            A. Standard of Review

¶ 27   As stated above, the trial court’s authority to surcharge Wells

  Fargo arises from section 15-10-504(2). The proper measure of

  damages involves a question of law we review de novo. See In re

  Estate of Sandstead, 2016 COA 49, ¶ 31, ___ P.3d ___, ___ (cert.

  granted Nov. 21, 2016). We review the trial court’s factual findings

  for clear error. Van Gundy v. Van Gundy, 2012 COA 194, ¶ 12, 292
P.3d 1201, 1204.

                              B. Applicable Law

¶ 28   If the trial court determines that a personal representative has

  breached his or her fiduciary duty or exercised his or her power

  improperly, the court may surcharge the fiduciary for any damage

                                    12
  or loss to the estate, beneficiaries, or interested persons. § 15-10-

  504(2)(a). In other words, the court may order a personal

  representative to reimburse the estate for the losses caused by his

  or her mismanagement. Sandstead, ¶ 32, ___ P.3d at ___ (citing

  §§ 15-10-501(2)(c), (3), -504(2)). To justify a surcharge, the court

  must find that the personal representative caused loss to the estate

  and prejudice to the persons in interest. See Blanpied’s Estate v.

  Robinson, 155 Colo. 133, 137-38, 393 P.2d 355, 357 (1964); In re

  Estate of McKeen, 541 P.2d 101, 103 (Colo. App. 1975) (not

  published pursuant to C.A.R. 35(f)).

                                  C. Analysis

¶ 29   We agree that the court was required to make findings

  regarding the amount of funds actually used for the beneficiary.

¶ 30   Wells Fargo does not dispute the court’s determination that it

  was liable for the mismanagement of the account. However, at the

  hearing, Becker testified that, in the course of his spending, he had

  used some of the funds from the conservatorship account to pay for

  the beneficiary’s schooling, food, housing, and other needs. The

  trial court ordered that Becker file an accounting of his expenses to

  determine the amount that actually went to the beneficiary, but

                                    13
  Becker never filed this accounting. As a result, the court could not

  determine what portion of the funds were appropriately spent on

  the beneficiary and what portion of the funds was misused.

  Without this calculation, the court simply required Wells Fargo to

  restore all the funds. As Well Fargo asserts, this may have allowed

  the beneficiary an impermissible double recovery. See

  Lexton-Ancira Real Estate Fund, 1972 v. Heller, 826 P.2d 819, 823

  (Colo. 1992) (“Generally, a plaintiff may not receive a double

  recovery for the same wrong.”).

¶ 31   Accordingly, we reverse the court’s order that Wells Fargo

  restore 100% funds in the trust account. We remand the case for

  the trial court to determine the amount spent for the benefit of the

  beneficiary, based on the existing record and any additional

  evidence received within the court’s discretion.

                                     V. Conclusion

¶ 32   Therefore, the court’s order is affirmed in part and reversed in

  part, and the case is remanded for further factual findings, and

  based on those findings, entry of an order regarding the amount of

  Wells Fargo’s liability, if any.

       JUDGE ROMÁN and JUDGE LICHTENSTEIN concur.

                                        14