On Tuesday the Miss. Court of Appeals affirmed a $144,865 verdict in Cassibry v. Cassibry. The Court also remanded the case for a hearing on the issue of attorney’s fees. Here is the Court’s opinion.
The case originated in the Bolivar County Chancery Court with Judge Catherine Farris-Carter presiding.
Judge Barnes wrote the Court’s unanimous opinion.
The case involved a family trust in which one family member was named trustee. The beneficiaries were the testator’s wife and three children, one of whom was trustee. The testator set the trust up as a support trust for his wife with his children as remaindermen.
The trustee bilked at least $55,325 from the trust as ‘loans.’ Unable to even argue that the withdrawals were permitted by the trust document, the defendant argued that the testator’s wife authorized the withdrawals.
The chancellor found that the trustee committed a blatant breach of fiduciary duty.
On appeal, a unanimous Court of Appeals found that there was substantial evidence to support the chancellor’s findings. The Court heavily relied on the Restatement (Third) of Trusts. The Court noted that under the Restatement, “even express authorization to engage in transactions otherwise prohibited under a trustee’s duty of loyalty does not ‘completely dispense with the trustee’s underlying fiduciary obligations to act in the interest of the beneficiaries and to exercise prudence in administering the trust.'”
Stated differently, a trustee must follow the trust agreement or their is a breach of trust. Period. No exceptions. No excuses. Follow the trust document or else. Don’t like it? Then don’t agree to serve as trustee.
The trustee also did a terrible job in maintaining trust records. Again citing the Restatement, the Court noted that a trustee who fails to maintain books and records is liable for loss or expense resulting from that failure and that poor record keeping may cause doubts to be resolved against the trustee.
A trustee finger-pointing at a beneficiary or arguing that a beneficiary consented to the violations of the trust document is the classic loser defense in trust cases.
Don’t take my word for it, ask Trustmark. Incidentally, there is currently pending in Hinds County Chancery Court a breach of trust case against Trustmark that makes the Weidner judgment look like chump-change.
I would like to report more on the case, but Trustmark’s lawyers had me thrown out of the courtroom when I went to watch the trial. Seriously. Open court. A good crowd including family members of the attorneys. And I got kicked out. But don’t worry Trustmark, I’ll get caught up when the Court’s decision comes down.
Trustmark appealed Wiender and then paid more than the judgment to settle the case before the Court decided the appeal. That’s not inside information. That’s buried in the appeal docket.
The problem with trustees finger-pointing at beneficiaries is that if the testator wanted to allow the beneficiary to make the decisions, he would not have gone to the trouble of setting up a trust. He would have just given them the assets. The Restatement of Trusts is built around this underlying premise. Trustees–especially institutional trustees–have a huge blind spot on on this point.
The chancellor’s and Court of Appeal’s decisions are completely consistent with the Restatement. That includes the fact that the plaintiff can recover attorney’s fees even without a punitive damages verdict–the Restatement says the Court should have that discretion.
The typical breach of trust case where the plaintiff wins at trial is an obvious breach of the trust document and a defendant that can’t get its brain around trust law.