Facts

The claimant, Rodney Dotson, the primary beneficiary of the Dotson Family Trust, filed a Petition for Surcharge seeking damages from respondent Richard Huber, Trustee of the Dotson Family Trust.

PETITIONER'S CONTENTIONS:
The claimant contended that the respondent did not act in good faith in the administration of the trust, made inappropriate investments of trust assets. Claimant claimed that respondent should not have pursued a quiet title action against the petitioner to set aside a deed to the petitioner of real property owned by the trust, and failed to pay an insurance policy for which petitioner was a beneficiary. Petitioner contended that the respondent, while he was trustee of the Dotson Family Trust breached his duties to the trust and that his conduct as trustee fell below the applicable standard of care for a trustee. Petitioner contended that his own financial advisor recommended investments that performed better than the investments selected by the respondent and that as a result, respondent's investment decisions fell below the applicable standard of care.

The petitioner alleged that the respondent should not have filed a quiet title action against petitioner after petitioner recorded a deed to himself of real property owned by the trustee and that this was a waste of assets in retaining counsel to do so. The petitioner contended that the respondent let a life insurance policy for petitioner lapse for non-payment of premiums and that his failure to pay the premiums was conduct below the applicable standard of care. The petitioner sought an order surcharging the respondent for $147,982.

RESPONDENT'S CONTENTIONS:
The respondent contended that, at all times, he acted in the best interests of the trust and in conformance with the trust agreement. The respondent testified that he selected appropriate, conservative investments for the trust assets that were recommended to him by a financial advisor experienced in advising trustees. The respondent's position was that he was justified in filing a quiet title action against the petitioner because the petitioner had recorded a deed to real property owned by the trust long after his parents death and after the property had been transferred into the trust.

The respondent testified that he inspected the property and that the petitioner had allowed the property to fall into disrepair, including an unfenced yard with a pool, creating potential liabilities for the trust. The respondent's position was that he was justified in filing the quiet title action because it resulted in the deed to petitioner being set aside and title to real property returned to and vested in the trust.

Finally, the respondent testified that he was unaware of the life insurance for petitioner or of the premiums due for the life insurance. Moreover, under the terms of the trust the standard for imposing liability on a trustee is only if the trustee acted with malice, fraud or gross negligence and that his conduct did not fall below these standards.

Result

The court found in favor of the respondent on all claims in the claimant's petition to surcharge the trustee. The court awarded respondent $60,000 for reimbursement of attorney fees and costs incurred in the defense of the petition. The court found that the respondent acted in good faith pursuant to the provisions of the trust and had selected an appropriately conservative investment portfolio. The court found that respondent was justified in filing the quiet title action which resulted in title to the real property being returned to and vested in the trust, and that he had no notice of the payment due for the insurance policy that had lapsed.

Other Information

FILING DATE: March 21, 2013.